No matter where you are in your business journey, you need to hear this. I'm chatting with Maggie Patterson, who is absolutely incredible as you're about to get to hear. She's the editorial director at Scoop Studios and she's the creator of BS Free business. She's an advocate for humane business practices, rooted in respect, empathy, and trust. And she is someone who's really trying to change the way we have been taught to run our businesses and the way we've taught to market for the better.
So today, you're going to hear us dive into things like what online business has in common with cults, MLMs and self-help culture, scammy online business practices to watch out for both from a consumer standpoint, and also talking about how you yourself market your business.
We cover things like luxury lifestyle marketing, income claims, scarcity marketing, and so much more. We talk about the problem with these really super expensive luxury coaching packages and masterminds, the evolution of online business, and we even spent some time talking about the craziness that was 2020 for business owners and how that has impacted online business today, four years later.
You're going to love this conversation as much as I did. It’s jam-packed, so let’s dive in!
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I’ve heard you say that online business is the love child of self-help, MLMs, and cults. Can you unpack that and explain what you mean by that?
What we see today, especially here in 2024, is that many of the practices that have become “normal” in the online business world are rooted in manipulation, coercion, and mindset tactics that are often misused. These practices have their origins in self-help, MLMs, and even cult-like behavior.
If you think of it as a family tree, you can trace back many of the tactics considered "business as usual" to these sources. For example, the kind of control over behavior, thoughts, and emotions you see in large self-help groups is very similar to what you see in “online business events”. It's peak cult behavior.
And then there's the MLM aspect, with messaging like "I made this, it's so easy, I can work from home." This kind of messaging is very prevalent at the entry point of online business, where people often come from self-help backgrounds or MLMs. While they might not come directly from cults, they definitely use some cult-like practices.
Let's talk about some of those scammy practices. For example, "I can do it, you can too." Can you unpack what's wrong with that and why we end up doing it?
This tactic feels very natural because we want to share our success. For example, we see that a blog strategy we used or how we were able to double our freelance business worked for us, and we think we can teach others to do the same. However, it fails to consider the circumstances you had vs. what someone else might have. What worked for one person might not work for another due to various factors like financial resources, identities, and privileges.
Additionally, just because you figured something out doesn't make you an expert. We have an entire culture of "teach what you know," but we need to make sure what we're teaching has more than one success story. It’s not always malicious and it’s often well-intentioned. But ultimately, overselling what you can deliver sets up clients for failure, which damages your reputation.
Read more: 3 Unpopular Opinions about Girl Boss Business Culture
The first-to-market concept is also big where many celebrity entrepreneurs were the first to do something, which is why their results are different. How do we avoid falling victim to that and also not doing it ourselves?
Listen, we often get seduced by the promise of quick success and stray from our core skills (ie. copywriting, designing, etc). We see these celebrity entrepreneurs and think we can make more money by “becoming a coach” or “selling a course”.
However, it's so important to invest time in building the necessary skills if you want to pivot to something else (like coaching for example). Get the practice hours, obtain legitimate certifications, and build up your craft the same way you would in the real world. So many times we forget because it's online, that we're still dealing with real people. I think it can become very depersonalized and really about what we want to achieve and not about having a lot of respect for the people who are hiring us.
Additionally, we need to recognize that marketing heavily influences success. The reality is that overselling and making unrealistic promises is very common. We need to respect the people hiring us by not making promises we can't keep and by focusing on our core competencies.
Thinking about “luxury lifestyle marketing”, why do you think people fall for that, and why do others use it?
In Dr. Robert Cialdini's book, one of the principles of persuasion he talks about is “trappings”, so how do we signal to people that they can trust it. The idea of “trappings” is not always negative, but luxury lifestyle marketing uses trappings to signal success. It’s a cognitive shortcut where people assume that visible wealth means trustworthiness and success.
For example, seeing someone with red-bottom shoes, a private jet, or a luxury car makes people think they are successful. However, much of what is shown is often rented or fake. We need to take what we see with a healthy dose of skepticism. Especially now in 2024, many people are financially struggling and more vulnerable to these tactics.
Then it also ties into the fact that especially in the US and Canada (and Western culture in general), there is a lot of prosperity gospel where we feel entitled to wealth and riches. We believe that if we work hard enough we can get it. And there's a lot of us that have been convinced through different things that we're just one step away.
Overall, the aspirational aspect of this luxury lifestyle marketing makes it very appealing. It's important to be skeptical and recognize that many of these displays are not real indicators of success.
When I started my business in 2016, the goalposts kept shifting from 10K months to six-figure years and now to eight-figure businesses. What are your thoughts on the constant escalation of income claims?
Income claims have been continuously escalating, which is misleading. Many entrepreneurs don’t reach these figures and those who do often don’t share the whole story. Factors like expenses, team salaries, and marketing costs are usually left out. What really irks me is that studies show very few people, especially women and marginalized groups, ever reach these income levels.
We need to ask questions like:
- Did you pay yourself a salary?
- Were you first to market?
- What’s the timeframe on this?
- How much did you spend?
A lot of what we're seeing is fabricated, embellished, and not telling the whole story. And it's there to manipulate us into thinking again, much like the luxury lifestyle, we can have the exact same thing, and the reality is that it's a pipe dream for a lot of people.
Do I think you can make amazing money in the online business world and be super ethical? Yes, but from my point of view, you can do that without having to promise people how much money they will be making.
It’s so tempting to show income claims, what should we do instead?
So there's one thing I want everyone to think about with this is if you really want to make an income claim, can you guarantee that a hundred percent of your clients or even 90% will get it? Most of the time, you can't.
I think for us to be in integrity, we have to dig deeper to find the promise of the program or the coaching or the consulting we're doing. What is the thing that we can pretty much guarantee for the overwhelming majority of our clients? That's the thing that we should look for.
And does this mean we may have to do more marketing? Yes. May we have to work harder to earn trust? Yes. But I'll tell you this, the market is shifting in a big way right now. I've been talking about this stuff probably since 2017 and in the last two years people are way more open to having this conversation than they ever were before. More and more people are rejecting this idea of income claims.
I think too, that you need to decide at the end of the day, how do you want to run your business? And is this in line with your values? Is this for you something you consider ethical? I am not going to be the arbiter of what is or is not ethical, but in line with my values, income claim marketing is out of integrity because I cannot guarantee that result.
But what I can do is be very clear about the experience and the results I can deliver. And I will say this, as the market becomes more savvy, when you say “be a six-figure freelancer”, you start to sound like everybody else. It’s kind of lazy about your messaging.
I feel like from a marketing perspective across this industry, messaging is always been something that's skipped over to just cut right to the marketing. And the reality is for us to be able to articulate the value of what we're selling, we need to do more work on messaging and positioning. And that's not a sexy message. It doesn't make me popular, but it is the reality.
We saw a dramatic shift in the online space in 2020/2021. Can you talk about the shifts you’ve seen since then?
So I think what's interesting is that that year was absolutely a turning point because we had a number of conditions. Number one, we had stimulus money, there was money flowing. On top of that, we had people who were out of work having to get creative about work. So a lot of them started moving into this online space and then guess what? We were all trapped at home with our little tiny computers in our hands logging far too much screen time.
We had this really big influx and I will say 2020 was fascinating to watch because there was this influx of new people. So people who had been around for a while literally had some of the best years they've ever had, but there were also a lot of them making some really wild promises. A lot of the people that came in were not seasoned or they were desperate or they were looking for something to cling onto in a really uncertain time.
Then you bring in racial unrest and an election, there was just so much going on that was the perfect storm in a lot of ways and I don't know that we will ever see that level of conditions.
The other thing that happened that year was TikTok. We all really started using TikTok. So we had these kind of overnight influencers or celebrity entrepreneur types hitting it big on TikTok and all of a sudden selling their templates and making six figures a month. We saw some really wild things.
But then what happens is we come back to reality, the shine starts to wear off, the economy starts behaving in a certain way and people start to realize like, “Oh wait, that person totally took me for a ride”. And that was really where I saw it in late 2020 and then into early 2021. I saw a lot of people all of a sudden going, “Wait a second, I've been scammed”.
From then, I think that continues to build more momentum because the reality of what we've been promised and actually what happens are just so disconnected. It’s a bit of a self-fulfilling prophecy, because the more people that speak up about it, the more people are willing to talk about their experiences because we de-stigmatized them.
I want to just say for anybody who's felt like they were taken for a ride or scammed or wasted money, there is no shame. These tactics work for a reason. The people executing them, whether they're doing it purposefully or not, are really good at their marketing tactics and they're designed to shortcut your critical thinking and get you to a place where you make the buy and you will invest whatever amount of money is required to work with them.
It’s crazy how misleading these claims can be. Speaking of which, what are your thoughts on the high prices of luxury coaching and masterminds?
High-priced masterminds and coaching programs often don't justify their cost. They promise proximity to success but rarely deliver the ROI. Many of these programs are more about being in the room with certain people rather than providing real value.
When making investments, it’s important to be realistic about what you can afford and whether the potential return justifies the cost. For example, paying $30,000 for a mastermind might not be the best investment when you could use that money for something more tangible, like real estate. We need to be critical of these high prices and make sure we are getting real value.
This market has created an entire bubble around pricing that is literally at the point where people want to charge $5,000 for 45 minutes of coaching. I really believe in my heart of hearts, that it's going to be exceptionally difficult to get an ROI from that. And guess what? People at big consulting firms, the highest people, people who are researchers and experts on these things, they're not charging that. So what are we playing at here? It is straight up delusional.
Read more: Keys to Building a Wildly Successful Mastermind and Membership Community with Amber Housley
There's a stigma against service business owners, with a push towards courses and other scalable products. How can service business owners avoid this trap?
So one of the reasons we get so sucked in is because we get indoctrinated with this idea that we have to constantly grow. We constantly need to make more money, we constantly need to add our team. And what if we just remembered why we started our businesses and what we wanted to do?
So in the case of service business owners, I think it's really interesting because I have a lot of conversations where people are like, “but I should launch a course. I need to diversify my income”. And I'm always like, hold up. Do you even really want to do those things? And the reality is no, they don't want to do those things, but they think they should.
Here's what I see in this market: there are a million templates, courses, etc. And I'm not saying there's not room for those things, but the more time that goes by, the harder it gets for people to be successful with those things because the market is more and more saturated. And what is always missing from this story of courses or templates or whatever is how much marketing you will have to do to be successful with that. What people don't understand is you're now trading your client work for marketing work.
I have to do a lot of marketing. I'm sure you do too, Elizabeth. The more hands-off your offers are, the more marketing you are going to have to do, and the more of an audience build you're going to have to do. And not everyone wants to do that.
The done-for-you service model is a proven model. It's not going anywhere. The only reason people are negative about service businesses is to try to sell you their course on creating a course or their mastermind about building a mastermind.
Then on the flip side, the solo business owners are made to feel like they are playing small. And the reality is, I think it's like 80% of businesses in the US are one-person entities. The majority of businesses are solo businesses. That's not to say you can't have an accountant or a VA you work with occasionally, but not every service business owner wants to run an agency. Not everyone wants to have a team.
A lot of us started businesses so we do not have to do things in this traditional way. So constantly pushing people to have a team or to have passive products or memberships or courses or whatever, is not serving them.
If you're a service business owner who wants to stay solo, focus on getting good at what you do, focus on what you need to run your business, make sure that you're not over-investing, and focus on just paying yourself really well. Yes, you need to invest in some things, but maybe not the things you think, and definitely not a $25,000 mastermind.
People are going from “hustling” to “resting” and ignoring the fact they built their business by hustling. What do you have to say about that?
They are so disingenuous. It has honestly been really interesting to watch, but I'm sure you're with me, extraordinarily frustrating. Everyone is on their health journey and it's all about rest and everything else. Meanwhile, we've been watching them hustle their faces off forever, and you didn't get to your 10 million a year business by not hustling, so please stop telling me I can do it as you did. At the end of the day, we all have to figure out for ourselves what is important to us. For me, I want to be able to go to the gym in the morning. I want to be able to make jam at four o'clock if I want. I just got a new plant stand, I'll probably build that at lunch today. That's way more important to me than the money once my financial needs are met.
I also think it’s worth saying that making more and more money doesn't enhance the quality of my life. And I mean, I don't have a particularly luxurious life, but I'm very comfortable. So I have kind of reached a place where I know what those numbers are, and as long as I'm meeting them, I'm good.
Now, if you're not there already, you need to know that there is going to be hard work involved, but you don't necessarily have to hustle like they did. This whole soft life thing they're doing, most businesses aren’t built that way.
There's got to be a happy medium of having a joyful fulfilled life and building your business over time because building your business takes a lot of time and energy. It takes much longer than anyone realizes.
The other thing these people have done, I don't know if you've clocked this one yet, is there were a lot of them that built teams really big, and now they’ve “descaled”. Now they're preaching the value of the solo business. And it’s like, OK, you built your list, you built your reputation, you built your marketing network all based on that, so please knock it off.
And one of the things, if you're like, how do I avoid these people? Before you give someone a lot of time, attention, money, especially money, slow down and watch them for a long time. A lot of these celebrity entrepreneurs will move with the message and shift with the trends. They're very, very clever. So we have to be much more astute and discerning about how they might be doing this. And if you watch them over time, you start to really see the pattern.
How can we make sure that we're marketing ethically and not falling into any of the traps we talked about today?
So number one thing is a gut check. And if your gut's not working quite right, please detox yourself from social media. If you're not sure about someone or an investment, just disengage with it. The longer you consume a steady diet of this stuff, the more it gets into your brain and gets into your head. It makes you think all these things like,” oh, they might have the solution. Oh, I'm missing something. Oh, I have a mindset issue”. You have to remember that in some cases, they are manufacturing problems for you.
So when you look at your own marketing gut, check that tactic. Does this align with your values? How do I want my person on the receiving end to feel? I want them to feel excited to work with me, not scared. We see a lot of conversations about “if this triggers you…”, but for me? I don't want to work with someone who feels triggered by me. That's a terrible place to start a relationship.
One of the things we see a lot in the way of marketing is these celebrity entrepreneurs know they have more power and they use that in a way that makes people feel terrible about themselves so they buy. So you can pick apart each individual tactic and also question where the tactic came from. A lot of times, these “tactics” are just scammy things that someone made up.
Another thing I like to say is, “Would a normal consumer brand do this?”. If that answer is no, I’m not going to do it in my own business. If you feel at all embarrassed about it, there’s a good chance that it's ickWhat should we do to change the state of the online business?
Number one: we can't influence everybody, but who can we influence? You can influence your business friends and you can influence your clients (especially if you're a done-for-you service provider). So by being vocal, and being willing to stick your neck out just a little bit to start, you'll build that muscle over time.
The other thing is, as a consumer, we have the ability to choose to not do business with these people. So I have a list of things that if I see someone doing them, I will never ever work with them. So if I see someone using an income claim, they're immediately on my absolutely will never work with you list. Each of us needs to have a list of things that it's like, these are the business practices that are unacceptable to me. They're out of alignment with my values. I don't feel like they're ethical. I don't want any part of them.
Part of that is committing to slowing down and recognizing a lot of these tactics are designed to speed up the sales process and get us in there before we can even stop and think. So if you are in a situation where you're like, your two friends have bought this course and it's closing in three minutes at midnight, and you are trying to decide, back away from the computer and put the credit card away. That is a tactic designed to rush you through your thinking process.
Not spending your money is probably the most powerful thing we have because it is really hard to run a business when you have fewer and fewer customers. So if we each collectively decide like, “Hey, that person who says eight-figure businesses are totally normal, I’m not going to work with them,” we just cut them off at the knees.
Connect with Maggie Patterson
Check out my website here for ways we can work together. I also host two podcasts: "Duped: The Dark Side of Online Business" and "The BS Free Service Business Show," which will soon be renamed "Staying Solo."
I'm also on Instagram and Threads at @bsfreebusiness. I'd love to connect there!
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