“It’s easy (they say)… get 5, then they get 5, and those people get 5, and then you’re rich”.
Welcome to the world of network marketing, aka multi-level marketing, aka direct sales, aka pyramid or Ponzi scheme.
If you’ve ever been involved in the industry you may have heard how easy it is from a person who looked desperate to have you say yes to the opportunity they presented you with.
Network marketing has had a bad reputation for a long time. We’re going to take a look at why that is and also how the internet is changing the game (and public perception) around the network marketing profession.
I’ve heard it said from people in the industry that it is the only home based business where you are never at home, and there used to be a lot of truth in that statement.
The network marketing industry spent the last 50 years as an infant and toddler, now it’s an adolescent teenager, and soon it will be all grown up.
With that growth comes an industry and business model poised to explode as technology and public perception catch up to it.
I bet you’d be surprised at some of the key points on our list of insane benefits of network marketing.
So if you’d like to reevaluate the idea of network marketing without the pressure that typically comes from your broke friend pitching his or her idea, here we go…
Below are some incredible reasons to reevaluate the network marketing industry.
1) Direct Sales is Being Replaced with Direct to Consumer
In the old days, building an organization was all about direct sales. Some companies are still in the direct sales business. However, many have switched to the direct to consumer model.
Direct Sales vs. Direct to Consumer
(What’s the Difference?)
Direct sales is exactly what it sounds like. This is when you are directly selling to the end consumer. You have product on hand and you make a profit when you make a sale.
Often, people participating in this type of compensation plan end up with a bunch of product stacked in their garage or a corner of their house because of inventory loading.
When a person orders from you, the parent company ships the items direct to the consumer and you are paid a commission for that sale.
What makes the model powerful is that this model automatically makes it more scalable.
If you have a hundred or a thousand customers you’ve acquired for the company, you get paid every time they order and you don’t need to ship anything or keep that much product on hand.
Additionally, as you build a sales team, you get paid a percentage of their sales.
Again, you and your team don’t need to stock items in the direct to consumer model.
Combine this with the leverage of technology and you’ve got a powerful way to make leveraged, passive income.
For example, you are on this page. I don’t know you, but you landed on this page. Should you decide to try our products or join our team and give it a go with us, I would get a commission from your order.
Want to know a secret?… I don’t bug friends and family.
I look for people who are looking with the use of attraction marketing. True story!
2) The Amway After-taste is Basically Gone
Let’s dive a little into the history of network marketing, which is also known as multi-level marketing. Network marketing was first conceived in a company called Nutrilite (though some argue it started with the California Perfume Company which later became Avon).
Anyway, Nutrilite was a vitamin company out of California in the 1940’s.
The industry seems to have been born by accident as distributors realized they were making more money by building an organization of other distributors selling a little rather than by selling the supplements to individual buyers themselves.
In a sense, they discovered the implicit leverage this industry provides.
As this phenomenon grew among the working distributors, Nutrilite added bonuses and recognition for the distributors that performed well.
A few distributors who recognized the tremendous opportunity they stumbled on realized this business model had the potential of massive wealth creation.
Consequently, they broke away to start their own company in the 1960’s. Those distributors were Richard DeVos and Jay Van Andel.
The company they started was Amway and it grew to be the largest multi-level marketing company in the world. They eventually bought out Nutrilite and merged it with their company.
If you’re of my generation or older, or ever done network marketing before, then just the mention of Amway probably makes you cringe.
Amway was the pioneer of the industry and with that came many problems and challenges.
I won’t get into why Amway makes people uneasy, but in my experience it does seem to have a negative effect and negative connotation with people.
I humbly suggest that anybody who successfully pioneers an industry makes mistakes others in the future don’t make.
Pioneering companies don’t have the benefit of learning from the mistakes of those before them because they are the “before them” that future companies learn from.
You may want to read the above statement again.
This is the position Amway would have been in.
However, as technology grows, there is a new generation of adults who have never heard of Amway, so that bitter aftertaste that’s been part of our society is almost gone.
When this new generation tries to build a business and somebody asks them, “Is this like Amway”, they will just look confused wonder what they’re talking about. They don’t even know what Amway is, let alone if their company is like it.
In addition, many established companies are so well known (Avon, Mary Kay, Pampered Chef) that multi-level marketing terminology may never even enter the conversation.
3) Technology Allows You to Sponsor Anywhere in the World
Another reason to reevaluate the network marketing industry is that times have changed and the world has shrunk. It used to be if your company opened a new market, let’s say in Europe, it didn’t affect you unless you knew somebody in Europe or could fly there to meet people.
Now, people can literally get online and make contacts all over the world. You really can build a world wide business from the comfort of your home.
Let’s suppose your company is opening up a new market in Brazil? You have the ability to get online and meet some people in Brazil who are looking for a home based business or for your product line.
It’s not rocket science and it’s not expensive.
In fact, everyone is online anyway, so the monetary cost is zero. The only thing necessary is time. In the past, for me to communicate with you, we would have to be face to face or on the phone, but now you could be anywhere in the world digesting this information.
4) The MLM Risk vs. Reward Ratio is Still Intact
What you risk verses the potential payoff has always (and still is) the single greatest reason to look at the industry as a whole. This is the one thing that hasn’t changed, if anything it’s gotten better.
With more companies to choose from and more competition, the companies in this industry must keep their products top shelf and affordable, as well as keep a strong distributor compensation plan.
Let’s take a look at how it HAS changed.
Twenty years ago if your friend Joe came to you and said “I just got into this great company and I think you’d be interested too”, you only had two options. You could say “yes” or you could say “no”.
Yes or no, that’s it.
You couldn’t really say to yourself, this is a great idea in theory but what else is out there?
Now you can research and seek out a company or upline you are interested in working with, then join and get started building something that is a fit for you. It’s also easier than ever to explore a company and the industry before making a decision.
Maybe your friend Joe is an idiot, but once you do some research, you realize the company and compensation plan is excellent. In the past, you’d just pass because Joe is an idiot. But now, you may join anyway in spite of Joe’s idiocy.
You do this because even though Joe is an idiot, someone in his upline probably isn’t.
Sometimes idiots get lucky too.
But I digress. Let’s get back to the risk vs. reward ratio. With all these companies competing they’ve got to keep their prices down and their compensation plan aggressive if they want to survive.
This is a fantastic thing for distributors because it’s now much more feasible to find a company and compensation plan that resonates with you.
So what EXACTLY do I mean when I say risk versus reward ratio?
What I mean is, that for relatively low risk, you can “give it a go” as Richard Branson says. If you don’t make it happen, you’ve really lost very little. You may take a small financial loss and a knock to your ego, but if you aren’t willing to risk those two things you shouldn’t be an entrepreneur in the first place.
Network Marketing creates an imbalanced opportunity for entrepreneurs who want to build wealth. This is a good imbalance, as it’s heavily in favor of distributors.
The only true cost is the monthly autoship that these companies have you stay on to be qualified for commissions.
However, at this point many companies have basic autoship options which typically give you just enough product for personal consumption.
In the past, the idea was to have lots of product shipped to you to share and sell to others. That’s why people had garages full of stuff. It’s not necessary for commissions but it was almost a necessity to build the business.
Unfortunately, some companies operate this way to this day.
Now that everything is online, people can do research and if interested, order a small amount for themselves to try, while still giving credit to the distributor for the sale; thus, taking the financial burden off the distributor to purchase lots of extra product.
So for $150 (more or less) every month, a person can start building a business that moves massive amounts of product all over the world and earn commissions on that volume. Some compensation plans may be more difficult than others, but building a profitable organization is doable for everyone.
This is an imbalanced risk and reward because if you keep building your organization it can swell to a massive size, producing serious profits, and the only cost of doing business is your recurring monthly order (which you control).
The company takes care of keeping up with the shipping, constantly growing infrastructure, customer support, and other issues that come with running a business. At the end of the day, the only risk is that you will not be profitable.
Put that side by side, next to a traditional businesses that cost 50-100K (or more) to open, and it’s easy to see how much less risky a home based network marketing business is.
5) Network Marketing Success Means You can ACTUALLY Create Time Freedom
I mentioned it once, but I’ll repeat it.
Someone said that network marketing is the only home based business in which you are never home. People talk about getting their time back and having freedom to spend with their family. But my first run in with multi-level marketing did not turn out that way. Here’s my story…
I joined a company in hopes of replacing my income so I could spend time with my family. I did create a sizable side hustle. But no matter how big it got I realized it would never give me the freedom to spend the time with my wife and kids as I thought.
The reason is because in the old days, you had to leave the house to build your business. Whether I was doing a home meeting for somebody or meeting one-on-one with somebody, it was usually done in the evenings because that’s when people are free from their jobs.
The problem was, my wife and kids were at home during the evenings as well.
Even if I created massive income and stayed home all day, I would need to leave at night to meet with people, thus taking me away from my family time. Sometimes those meetings were far away, so I would leave after work and get home after my kids were sleeping.
That model doesn’t work for me, my priorities are my kids and family. That model wouldn’t support what I wanted. Eventually I stopped working that business even though I was making money and later I left it completely, vowing never to get involved in this industry again.
The reason was the time away from family at the most critical part of the family’s day – evening time.
Years later, I was approached about building a team again and I passed. I truly wasn’t interested in.
After mentioning it to my wife (who wanted nothing to do with it the first time around), she surprised me by suggesting we get involved. I think her exact words were… “You’re gonna do it”.
Her reasoning was that we made money last time and we can do it differently this time. She mentioned how many of her friends were building businesses through Facebook. I had a Facebook account but I was not the Facebook guy. So I did some more online research and looked around Facebook.
To my surprise, there were quite a few people I know who were using that medium to build their businesses, (all in different companies), and having success.
In addition, there was a plethora of information online about how to build organizations using social media and the internet.
This is still a fairly new concept though. There are companies and even uplines who only promote belly to belly, home meeting to home meeting business tactics.
Those who see the long term vision of this new model and go after it though, are going to reap the greatest rewards because they will be first to the party.
I believe the greatest earner in network marketing hasn’t even stepped onto the field yet.
6) Social Media Upgraded the Multi-Level Marketing Industry
So naturally, I called my friend back (if wifey aint happy, aint nobody happy). I told him I wanted to get involved but I wouldn’t be doing home meetings or parties, etc. I would build it online, my way, on my time.
As of this writing, I’ve only ever done 1 home meeting and it was with a couple who came to my house (on my time) to hear about it. I wouldn’t have it any other way and truth be told, I wouldn’t even consider it a home meeting. Not like the old days.
The internet has made it possible for people to build sizable businesses without leaving their homes and that has changed the game, especially with the younger generation.
Think about it. There was really only one thing that separated those who built profitable businesses in the old days and those who didn’t… it was their willingness to make a list of people and talk to them about it.
Of course, the more well connected they were and the more influence they had, the larger the organization they grew.
Facebook (social media) solves the three biggest network marketing roadblocks:
-The “list” is already made.
If you’ve ever been in network marketing the first thing you’re told is to make a list of people you know. People usually have a hard time with this because they are prejudging based on whether or not they think the person would do it or how comfortable they are talking to them.
The average person has 300-400 friends on Facebook. Even my most successful distributors never made a list of more than that. In this day and age, everyone has at least that many Facebook friends, some have 2-4 times that many already on their “list”.
I’m not even going to bring up cell phone technology- a lot of names are stored in your phone… I’m just sayin’.
At the end of the day, this is about timing, marketing, salesmanship, and leadership… but it’s also a numbers game. Relationships increase the conversion of those numbers but it’s still a numbers game.
Facebook solves that problem by showing you what your starting numbers are. I had seven hundred friends when I started my second run building a multi-level marketing business.
Our compensation plan is a binary. That means I need 2 people to start the process. That’s less than 1/2 percent of 700. C’mon… I’m pretty sure on a bad day anybody can get .005%.
– People are braver behind a computer screen
The thing that got me the most excited about Facebook was that for some reason, people will post anything and not feel any shame about it. My teams biggest issue the first time I was involved was the fear of talking to people. They just didn’t want to bring up the subject.
But if you’ve ever been on Facebook, you’ve probably asked yourself more than once, “why would he/she post that”? I know I have. People just seem to refuse to acknowledge that when they post something everyone sees it (and can share it).
Look at all the people who have said things that have made them lose their jobs. Why did they do it?… who knows. I’ve even read articles of people being arrested while doing a live video feed of themselves partaking in illegal substances.
But this phenomenon can be leveraged. If somebody isn’t afraid to post about why they hate their boss, knowing that their boss will inevitably see it; or a live feed of themselves getting high, they won’t be afraid to ask somebody if they’re interested in making some extra cash.
If they’re actually talking to people about it, they will find people who are interested. You can say the wrong thing to the right person and they may still see it because of where they are in their life. So the fear that kept people from taking action is no longer such an issue.
– Sharing What You Do Can be Effectively Done by Everyone
I did have some people in my last team who were fearless but ineffective. They would talk to people and try to explain it, but they just weren’t good at it. I couldn’t talk to everyone with them and really I shouldn’t have to. That doesn’t build sustainability and it’s not scalable.
Building a network marketing business on Facebook solves this because people can be taught to just send a link to somebody that explains it after gauging interest.
This system also solves the time issue for effective business builders because nobody needs you to go help share it with somebody. Just send them a link, if they’re interested they’re interested, if they’re not, they’re not. Easy peasy, as long as the approach is right.
– You never run out of people to talk to.
The proverbial wall. When I built my first business, myself and my most successful partners would all eventually hit the same wall. We’d run out of people to talk to. Doesn’t matter how motivated or driven you are, it’s hard to share what you’re doing with others if you have nobody to talk to.
The solution to this (we are told) is to go where there are people and strike up random conversations that lead to the opportunity. Hogwash!
It’s a special form of hogwash for an introvert like me. Not only is it difficult to have a meaningful conversation with somebody while in line at the grocery store, it’s also hard to build trust in a short conversation. Yes, it can and does work for some, but not for me, and I would argue not for the majority.
Facebook solved this problem by putting billions (with a B) of people online socializing through the same medium. You can meet people through groups and friends of friends.
You can take your time getting to know people and share with them at an appropriate time. More importantly, you never run out of prospects so you don’t come across as needy. You can truly look for those who are looking, take “no” with a grain of salt, and move on.
All these advances have created a perfect storm for network marketing. For years, people have been looking for ways to make money online and from home. It’s one of the most searched topics on the internet and there’s a lot of pie in the sky programs for sale that only do one thing, separate people from their money.
Want to learn to stuff envelopes and make 5k a week… just kidding!
But as network marketing meets social media, it’s fusing a hybrid solution to those who want to work from home but still be part of a team. There’s still a place for meetings and conferences, but everyone is working together collaborating on the same goal.
In the next few years, I think somebody, in some company, will use the leverage of the internet and social media (probably a youngster) to rise quickly as the most successful network marketer of all time.
Might as well be you… or me… or your nephew. Somebody is gonna do it.
7) Generation Y’ers are Culturally Predisposed to A Home Based Business
Generation Y, also called Millennials are the generation now hitting the workforce. If you’ve ever studied different generational thinking, people born during the same time period commonly have similar characteristics.
Most of the values and beliefs are formed by the culture and time period people grew up in. This creates a large segment of people with common core beliefs, values, views, and characteristics.
The millennials (as they’re commonly called) have A LOT of characteristics that predispose them to be open to something like network marketing.
They are typically tech savvy, they’re ambitious and achievement oriented, though they tend to be more interested in balance and quality of life than a high pay check.
However, they would happily take a high pay check if they could still have balance and freedom in their lives.They are also team oriented and usually good communicators who value attention and love.
All these characteristics thrown in with the technical knowledge and ambition they have, make them prime candidates for a networking opportunity that can actually be worked from home.
When I built my first business, this generation was still in elementary or middle school, so I’m excited to see what some of them bring to the table.
8) The “Marketing” Part of Network Marketing Can Now Be Implemented
In the past, network marketing was mostly about networking and utilizing your network to build a solid and leveraged business. The problem was, not everyone who joined the industry had a large enough network to be successful.
At that point, they were taught to talk to more people and it basically it became a sales position. Of course, you would be told “we don’t sell”, we “share”. But c’mon, anybody with common sense knows you were trying to sell.
Occasionally, somebody (I was one of them) would experiment with the 2nd word… marketing. The problem was, back then the marketing channels available to the average person were not very effective and were very expensive.
You basically had newspaper ads, billboards (very expensive), and direct mail (also very expensive).
If you did get a sale, it certainly wouldn’t cover the cost of the marketing. So typically, people who did experiment with marketing eventually stopped because they were losing too much money.
But now the world has changed. Average people can market on all kinds of platforms that fall in all kinds of price ranges. Youtube, Google, Facebook, LinkedIn, Instagram, twitter, StumbleUpon, Pinterest, etc.).
So if you’re good at copy-writing and driving sales through traditional marketing (or willing to learn), you can actually get some traction that just wasn’t possible 15 years ago.
Back then, unless you had a huge marketing budget and were willing to spend a lot of money experimenting, you just had to ignore the “marketing” part of network marketing.
I hope you found this article informative and valuable. Time changes all things and it certainly changed my perspective on the “how” of network marketing, especially for an introvert like myself.
If you’re currently looking for a way to supplement your income and think building the business the way I described it might be a good fit for you, please contact me and I’ll be happy to answer any questions you have.
Remember, if nothing changes… nothing changes.
In the words of Zig Ziglar, we’ll see you at the top”.
Jason & Daniele