I read some interesting things this morning about network marketing. It said that it is a scam preying on the poor because it has a 99% failure rate. In this post I want to look at some of the claims made about network marketing and talk about what network marketing is not.
There is a lot of hype about network marketing. People make a lot of claims about what it is, from both within and without the industry. I want to look at some of those claims and see what is really true, and what is false.
What Network Marketing Is Not
Network marketing is not anything new. It’s been around for years and many people do make money with it. Unfortunately, thanks to some marketers over the years, network marketing has a bad reputation with some people.
There is a lot of hype about network marketing. Some recruiters make it sound like a get-rich-scheme while other people say that it is a pyramid scheme or some other kind of scam. With all that, what’s the truth? Is network marketing a bad thing?
What Network Marketing is Not – A Get-Rich-Quick Scheme
When you go to a network marketing meeting you get a lot of hype. The person on the stage is very well dressed and looks like they make a lot of money. That may or may not be true, but they definitely have a lot of charisma. He or she tells you about how you make a lot of money by helping a lot of people. It sounds really good and it is so easy to get swept up in it.
The recruiters make network marketing sound like a get-rich-quick scheme. Just sign up all of your family and your friends and the money just flows in. It’s so easy! You can’t even really call it work.
What Network Marketing Is – A Business Opportunity That Takes Time & Effort
It doesn’t really work that way for most people. Network marketing actually takes a lot of time and effort. Most people don’t want a business of their own, so don’t try to sell them on one. Schools teach people to get jobs and it’s hard to go against that programming. Your friends and family think you are crazy to start a business and are much happier in their job.
From my experience, the quicker way to money is to sell product to outside customers. Most people are more familiar with playing the customer role, so let them play that it. After you build up a steady retail income then you work on your team of distributors, and teach them to find customers.
What Network Marketing is Not – a Pyramid Scheme
The pyramid scheme is the most common accusation I hear about network marketing. The definition of a pyramid scheme constantly changes as well.
When I started my network marketing business, a pyramid scheme was something where you invested money with no real value in return. They keep adding people to the bottom of the pyramid to keep the scheme going, but it has to fail eventually.
Regulators now require network marketing companies to show that more than half of their revenue comes from outside – from retail sales to customers outside of the distributor organizations. This is good for distributors to build a reliable source of income and eventually create more credibility for network marketing.
Pyramid Schemes in Network Marketing
Some distributors build their teams like a pyramid scheme. They focus exclusively on recruiting. This gives network marketing the bad name it has earned because these organizations cannot make money at the lower levels. The only way to earn money at the lower levels is through retail sales.
I built my business on retail sales and I make a lot more money every month than other distributors with much larger teams because nobody in those large organizations actually sells any product. I do.
What Network Marketing is Not – A Scam
Many people claim that network marketing is a scam. It isn’t, though you could argue that some distributors run their businesses as scams.
You see ads for ground floor network marketing opportunities all the time, and they claim that you don’t have to sell a thing. They build your downline for you. These always scream “scam” for me. You have to do something to make money. As much as I would love to, I have never found a way around it. You invest either your time or your money, or maybe both for some kind of return value. Without the investment, there is no return.
Some network marketers use deceptive tactics to get new people to their recruiting meetings. I remember one time I was looking for a new IT job and scheduled an interview only to find out that it was a recruiting meeting.
I heard once of network marketers who promoted their meetings as bible studies. Of course, the attendees usually became offended and left.
I don’t know why people still try those tactics after all these years. The deception gets people in the door, but they don’t stay very long.
What Network Marketing Is
Enough of what network marketing is not. Let’s talk about what network marketing is. It is an opportunity to create your own business in sales. You contract with a company that provides a product and that handles all of the payment processing and order fulfillment.
You build a sales team and generate orders. That’s all you do. Your sales team consists of people who don’t work for you. You support them and motivate them, but like you, they contract directly with the company and the company handles their commission payments directly. You may get a percentage of their sales depending on the compensation plan.
Network marketing is like a franchise, say McDonald’s, but you don’t have all of the overhead of a physical location, employees and inventory. That keeps the cost of entry low and makes it easier for more people to take advantage of the opportunity.
My Experience of Network Marketing
I started my network marketing business in April 2006 and have only been with one company in all that time. A lot of people jump around a lot because they think that another opportunity will somehow work better than their old opportunity. Their problems usually follow them because it isn’t the opportunity. Just about any company works as long as the company is legitimate with a real product or service.
I feel that older companies are better because established companies are less likely to fail than brand new ones. Most companies, regardless of the industry, fail within the first 5 years or so. That’s just the nature of business and has nothing to do with network marketing. The company that I chose to work with has been around for more than 40 years and shown good financial responsibility, so they have a lot of stability.
I’ve been very happy with my experience so far. I build my network marketing business online and don’t get involved in all the hype of live meetings and such.
Is Network Marketing Right for You?
My network marketing business works very well for me. I get to work from home and spend a lot more time with my family than I would if I worked a regular job. I live and work by my own rules and at my own pace.
Do you see network marketing as a pyramid scheme or a scam? Leave me a comment below and let’s discuss it. I would also appreciate it if you would take a moment to share this post with your followers on social media. Thanks for reading.