Follow the profit: How Mormon culture made Utah a hotbed for multi-level marketers
(KUTV) Utah is famous for many things: world-class ski resorts, the Church of Jesus Christ of Latter-day Saints and, most recently, Trump-hating Republicans who may vote Democrat for the first time since 1964.
Beyond that, however, Utah has a lesser-known claim to fame: It is the unofficial world capital of multi-level marketing and direct sales companies.
There are at least 15 major MLMs in Utah County alone, generating billions in annual revenue and making direct sales the second-biggest industry in Utah behind tourism, according to Loren Israelsen, executive director of the Utah-based United Natural Products Alliance.
Per capita, Utah has more MLMs than any other state.
“It must have something to do with the way LDS culture works in the valley,” said Ann Dalton, CEO of the beauty product direct-seller Perfectly Posh, from her Salt Lake City office.
Connections fostered in LDS communities, said Dalton, create a hotbed for businesses with a social sharing model. The prevalence of national and international missions by young men and women for the LDS church, she speculates, plays a huge role.
“You get a lot of return missionaries who speak every language on the planet, then all of a sudden you have a sales force that’s very well connected," she said. "They’re connecting with their friends, they know the languages, they’re tech savvy. That’s my untested theory.”
Kirk Jowers, VP of corporate relations and European markets at doTERRA, agrees.
“It would be very difficult for doTERRA to experience the success it's had in any other state,” Jowers said of the essential oils company, which boasts more than 50,000 doTERRA consultants, or “wellness advocates,” in Utah alone. “We are able to run a global office out of Utah, with 1,900 employees communicating in, literally, more than 100 languages.”
For Alyx Garner, Lipsense lipstick consultant and mother of two, the prevalence of MLMs in Utah is about more than an educated Mormon sales force.
“There’s so much pressure in LDS culture to be a stay-at-home mom,” said Garner, a devout Mormon who took up direct sales while raising her children.
The numbers back up Garner's claim: Utah has one of the highest concentration of stay-at-home mothers in the country, according to a national study by the New York Times, which estimates 46 percent of prime-age women in Provo are not working, while 8 percent of men are not.
“Heavily Mormon areas are a throwback,” wrote the Times. “The male-dominated nature of Mormon culture has kept non-employment rates for prime-age women extremely high – as high, in some areas, as they were for American women in the 1950s.”
Garner estimates about 75 percent of Utah women she knows are involved in direct sales, some because they want to stay in the workforce and others because they want to contribute to household income.
These women, Garner said, turned to direct sales companies as a way to bring in money and still work around motherhood’s demanding schedule. “A lot of moms still want to contribute financially to the home and help their husbands,” Garner said.
Garner has eight sellers in her “downline." For those who don’t speak MLM, that means she has eight people she personally recruited to sell products underneath her, earning her a small commission from their sales. Last month, she made about $1,000 in profit from personal sales and an additional $250 in commission from downline sellers.
“That’s pretty small,” Garner explained. “For now, it’s more about getting discounts on products and making some profit from what I’m selling. Down the line, if I’m one of those people who can make $12,000 a month with a million people under me, that would be cool.”
But direct sellers making a full-time salary are few and far between.
About 30,000 of doTERRA’s 3 million wellness advocates, for example, achieve “leadership ranks,” meaning they enroll other members and conduct business full-time, states doTERRA’s 2015 Opportunity and Earnings Disclosure Summary. The summary reports 5 percent of those leaders earn more than $115,000 per year – that’s 1,500 people out of 3 million.
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Jowers explained the majority of doTERRA wellness advocates treat selling like a hobby, not a business, but it’s numbers like DoTERRA's -- and other MLMs around the valley -- which can elicit fears of pyramid schemes and get-rich-quick fantasies.
“The industry has a really bad reputation and, in a lot of ways, they’ve earned it,” said Dalton. “You have founders in prison, and there are pyramid schemes which can turn into Ponzi schemes very quickly. That’s what most people think of when they think of MLMs, because there are such aggressive models. You get three people, who get three people, who get three people, then you’re paying $85 a month for a bottle of magic juice.”
Elder Dallin H. Oaks, an apostle in the LDS church, wrote in his book Pure in Heart about what makes Mormons susceptible to the temptations of pyramid schemes.
“There have been a succession of frauds worked by predominately Mormon entrepreneurs upon predominately Mormon victims,” wrote Oaks in the book, which was recently excerpted on LDS Living, citing stock manipulation, gold and diamond sales and pyramid schemes.
“Whether inherently too trusting or just naively overeager for a shortcut to the material prosperity some see as a badge of righteousness, some Latter-day Saints are apparently too vulnerable to the lure of sudden wealth.”
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Jowers and Dalton both confessed their pre-conceived notions of MLMs were, years ago, largely negative. Now, both say the business model suits their products – and the consultants selling them.
“If done right, it’s a personal and intimate form of sales," said Jowers. "I would be completely daunted trying to buy [doTERRA] products at the grocery store or something. It really works for our products.”
For Dalton, the flexibility direct selling provides Perfectly Posh consultants is one of the best parts of her job -- and the very thing that attracts so many LDS women to the industry in the first place.
“Women are starting businesses more and more,” Dalton said. “Things like this are really appealing because it lets them do it on their own terms, around their family, around another job. That’s very important to me.”