Network marketing although a relatively new term, is not a new idea. One-to-one, word of mouth marketing and tell your friends and family has been the most effective marketing of any product or service.
Tell someone your company is Multi-level, or network marketing and some people will recoil in fear or immediate distrust when actually many things in our lives are really multi level already. Nearly every business has a top level person who has several persons who report to him/her, and that person has departments or committees who report to them, and those people have employees as well. Even families are multi level if you look at them: Grandparents, the parents, the children, then grandchildren, I wonder how many MLM companies will now quote this paragraph, and I wonder if they will credit me?
In this challenged economy and downsizing of countless workers, some companies identified as network marketing and MLM, have given many people the opportunity to get into a business of their own - with no experience and very little money. Some people learn success tools and challenge themselves to new heights and succeed in ways that they could not have imagined previously. These people get up in the morning with a renewed sense of hope. There are Network marketing companies today who offer legitimate and life changing opportunities.
At the same time other companies are more hype than help. Some companies use flashy videos and sales meetings to stimulate rather than educate. They withhold vital information until they have you hooked. Some will nag about "get out of your J-O-B", and "quit making someone else rich". It's funny that every successful entrepreneur I talk with believes that their business is their job and no matter what company you work with or product you sell - someone else is benefiting financially from your efforts. With the internet it has become easier for people to post long winded web pages promising instant business success and with outrageous promises.
Is it wrong for want a business or opportunity that will make a person rich quickly? Not necessarily. Not all people that are looking for a quick result or a result with minimal effort, are lazy or looking to scam anyone. So many people have worked very hard their entire lives with minor results. Some have felt like they have been kicked down so many times that all they want is for life to be easier. Some people are in such a financial bind that they feel like a quick influx of money will help them get their heads up again. These ethical people can sometimes be lured into something that creates more problems for them instead of solutions.
As an entrepreneur coach, I am asked for my opinions on various companies and business opportunities, so I continue to observe and research and share my results.
Every day I am sent a link to yet another web page that promises huge financial success with little or no effort, but won't give you any answers on how this is done this until you purchase their product which is usually a book or alleged proprietary software. Every contact I receive from them is filled with alleged testimonials of people who are making amazing incomes following this same program. No real answers, no clues of what is required until you purchase their product. The success of this program comes when you replicate the exact same sales page and re-sell the same product, which in this case is a book. The book then instructs you to duplicate the exact same sales page and resell the book that is telling you to duplicate........ I felt like I was in a house of mirrors.
One company promised me instant answers with a $4.95 instant download of a report, and what I got for $4.95 was a pdf file of the same webpage text and hype, and a sales pitch for their $197 product. Even though they stated in the purchase offer of these instant answers, that I had 60 days to return for a refund, the fine print of the download stated that "digital products because of their nature are not refundable". A few thousand of these downloads a day can add up for an unscrupulous marketer.
For those people I mentioned about that are desperately looking for a way, these small investments are really quite costly to them.
Some programs actually encourage breaking the law. Some "gifting programs" are guilty of this behavior suggesting ways on how to avoid paying taxes, playing games with phrases or advising how to interpret the IRS gift tax laws when they are not tax experts or authorities. Generally, these gifting programs recruit people to "gift" a specific amount of money to the person who invited them, and by the golden rule or law of attraction process and sometimes using specific software, you have the potential of being gifted in return. Usually the "have the potential" part is less visible than the videos and testimonials of people who were gifted in return while they slept. Certain gifting is legal and ethical, however, many of these gifting programs appear similar to a cloaked ponzi scheme, where each Giftor collects payments from a stream of people, promising them all “the potential” of a quick high rate of return on their gift. In these schemes the money from new recruits is used to pays the “gifts” owed to the longer-standing members of the program. At some point the trickle down will run out and the newest members to the program will Gift but not receive. When I originally wrote this paragraph in another blog, I received a barrage of emails from people stating that their program was not a ponzi scheme, yet they admitted their gifts did come from other people that had been recruited to Gift; and from some of the people that they recruited to Gift and people that their recruits had recruited to Gift. It's beginning to sound a lot like Ponzi...
Some business opportunities promise hundreds of thousands and millions of dollars in income when the people making the promises aren't able to make their own mortgage. I met someone through Twitter and visited her website. I read that her life was filled with family and God and her goals were to share her success and teach others how to be successful entrepreneurs. One of the pages in her website was devoted to a cash making program with an ad promising up to a six figure income. So I wrote to her (twice) and asked if she was making this level of income. If you read the copy on her page she says her goal is to teach others how do do what she has done, and is doing. Unfortunately, two direct emails to her and no reply.(?)
These types of behaviors tarnish the reputation of the entire business community.
Sometimes it's not the company, but it's representative. A few years ago a friend bought into a network marketing company and then decided he wanted to promote his opportunity in ways differently that the company's approved marketing. He blamed the company for having a multi page agreement as his reason for not reading it and seeing that that the company had restrictions on the type of marketing that could be done. They soon parted ways.
Affiliate marketing is also becoming multi level. Affiliate marketing is where one company rewards another company or person for bringing them new customers. The company with a website places ads text links, or product links from an advertiser in return for a commission when a sale is made or when a lead is acquired. Amazon.com is one of the first and largest affiliate marketing companies. You will see links on countless websites for products sold through Amazon,com. The websites hosting these ads will get a commission from Amazon.com for the new customers who click these links and buy the product advertised. Many companies are now offereing two and three level rewards to motivate their affiliates to not only bring them new buying customers but more websites to show their ads. There are now hundreds of legitimate companies offering affiliate programs.
Some companies emphasize making money by only recruiting others.
I was first introduced to Network Marketing in 1972 with a now defunct company called Holiday Magic. In those years it was common for products to be sold one-on-one and door to door. Selling was personal and making a commission on sales was common, although the commission percentage might have been small. During that time a number of other companies sprouted up that promised people huge cash earnings. It was the beginning (and end) of many MLM companies. Some of these companies were legitimate and had viable products and income potential. However, others promoted buying your way to the top and less emphasis or support was given to actually selling any product. Buying into the company gave you the title of a Distributor which commonly defined means to distribute "something", usually a product. Instead of earning money with the profit from the sale of product, the distributors were motivated to make a larger commission on the recruitment of other distributors. A top level position could be bought into without the sale of even one bottle of product. Even though each rise in position in the company required that part of the investment included the purchase of product, there was very little training on how to actually sell the products. The company continued to make a profit and garages became full of products as more distributors were recruited. People could no longer park in their garages, which didn't matter because some sold their cars to get the investment money and others lost their cars because they couldn't pay for them any longer. Some people were spending their life savings and being unable to recruit other distributors, didn't know how to sell the product or recoup their investment. It was happening through hundreds of MLM companies nationwide and to hundreds of thousands if not millions of trusting individuals.
The government did step in and the term "Illegal Pyramid" was born. Suspicious companies were scrutinized, some passed and many others failed the microscope. Sadly many did not survive, and people who actually used their products still report that they had a quality product line, There is a very educational article on the FTC website that explains the precedent from the 1970's, What is a Pyramid Scheme and What is Legitimate Marketing? and tips when considering investing into a Network marketing company. My first red flag today would be a company who is afraid for you to read what this FTC report has to say.
There are still many Network marketing companies today who offer legitimate and life changing opportunities. The difference in these companies is the level of honesty, not only in what they promote but in how they support the people who buy into their company. I have met a few admirable companies through their successful representatives and I hope to see more. The people who succeed with these companies are usually doing more than simply spending a few dollars. They have made a commitment to the long term success in their life. These successful people educate themselves, run their organization like a real business and honestly care about the success of their downline, the people they recruited. There will still be people who take the initial step into these companies, but won't do the work required for the same success. They are looking for a get-rich-quick avenue, and they usually don't find it with these companies. That doesn't make the company or the potential entrepreneur wrong; just not the right fit.
The best solution is to take the time and do your research.
> Look at the 10 warning signs listed in the FTC document;
> Write a list of what you need this business opportunity to do for you;
> Write another list of why this is the best opportunity for you. Many people jump in out of desperation and end up in a business that either doesn't fit them, they don't understand or they don't like.
> Write your goals;
> Write your plan how you will work this business;
> Make a list of where you will get the support you will need, whether that support is in the form of education, training or financial assistance.
When you are convinced by your own assessment that this is the right business for you - then go for it will all your passion.
Wishing you awesome and continuing success.
About the Author, Sumner M. Davenport
Sumner is an Solutions Consultant, Author and Speaker.
Her deepest passion is to see people empowering others while living the life of their dreams. When coaching entrepreneurs, she employs a unique method of clarifying and envisioning business goals which assists her clients to break out of their habitual box of thinking and planning. She is a member of the Solve theEntrepreneur Puzzle (STEP) Network. She can be reached through her website: http://SumnerDavenport.com
These books and audios have been recommended. No representations, warranties or guarantees are given, either expressed or implied, that this information will guarantee success for the purchaser, end user or end user’s intended use.
Comments and opinions are welcomed. All comments will be moderated to remove sales pitches to join or invest in a particular company or business opportunity.
