What’s Wrong With Network Marketing?

What’s Wrong With Network Marketing and MLM?

Let me start by being very clear about something before we get started on the controversial subject matter of Network Marketing.

There is no such thing as a “Network Marketing Company”. Network Marketing, or Multi-Level Marketing is not an industry or business in and of itself.

Network Marketing is really a distribution method being used by many companies in a variety of industries.

There are companies that offer services such as Web Hosting, Telecommuncations, Nutritional Products, Beverages, etc… and they use a network marketing or multi-level distribution method to gather new customers.

Network Marketing as a means of income generation has been endorsed by celebrities such as Donald Trump, Robert Kiyosaki, Robert Allen, Mark Victor Hanson, T Harv Ecker, James Ray, and more.

Still, some people would rather announce that they have a communicable disease than admit to being involved in network marketing.

Network Marketing (also known as Multi-Level Marketing) is a marketing method used by many companies to promote their products and/or services to the public.

Legitimate network marketing involves the actual sale of real products and services to end users. To be clear, there is a profound difference between legitimate network marketing companies. This article isn’t intended to provide a full dissertation on the differences but one solid test is to simply ask, “Would I buy this product or service if there wasn’t some sort of ‘income opportunity’ attached?”

In other words, if you never made a dime from selling the product or service itself, would you still be happy with the product or service you purchased?

Fortunately, there are many companies where customers are able to answer this question with a resounding “yes”. And there are individuals who are also able to develop significant income using the network marketing or mlm approach to sales and distribution.

So why do so many people react negatively to network marketing and mlm?

Could it be the pyramid structure of the compensation plan? That wouldn’t make sense. It is pretty difficult to find a company today that doesn’t use some sort of multi-tiered (yes … multi-level) compensation structure. Virtually every large sales organization in the world utilizes some sort of multiple level pay plan. Sales people earn commissons on their own sales. Sales managers get paid overrides and commissions from the sales generated by their sales team. Sales directors get paid on top of that. Then the VP’s, upper level managers, CEO, etc… all get paid based on those same sales.

Look at the organizational chart of virtually any large business and you will see a similar “pyramid” type structure to the company. The US Government itself could be described as a pyramid type structure when viewed as a whole.

Maybe people take a negative view of network marketing and mlm because they have to pay to be involved. But that doesn’t really make sense, either. Any standard franchising model requires franchisees to pay the franchise home office before they can go in to business. And when you compare the typical start-up costs for a franchise and any network marketing or mlm plan, you’re talking about maybe a few hundred dollars as compared to tens of thousands or even millions of dollars.

No doubt there are plenty of illegal ponzi schemes operating in the name of network marketing or mlm but that doesn’t mean that all businesses that utilize this approach are illegal. Companies such as Amway, Melaleuca, PrePaid Legal have all built solid businesses by selling their products and services to end users, many who are simply customers without any interest in the opportunity itself.

Personally, I am a customer of a number of companies that adopt the network marketing or mlm approach. With some of them, I have referred a few other customers and I earn a commission. With some, I don’t refer anyone or earn anything but I have been a long-time customer because I truly benefit and/or enjoy the products or services offered.

When we look at it objectively, the problem with network marketing or mlm may be more of a percepton issue than anything else. And if that is the case, we have to examine where the perception comes from.

When you view network marketing objectively, it’s really sort of a “micro-franchise” set up where you are able to go in to business for yourself for a very low cost of entry. The potential to develop considerably high income levels is definitely present and there are people who achieve amazing, almost fairy tale levels of, income.

So, what’s wrong with network marketing? Perhaps the problem with how network marketing or mlm is perceived is that it can often attract individuals who are not qualified or prepared to be business owners. These sorts of people tend to…

•  over-sell the “opportunity” rather than focus on the quality of the product or service.
•  lack tact when discussing their offer or opportunity.
•  appear to be desperate to “recruit” their friends and family.
•  neglect basic business principles such as support and customer service.
•  not have their facts together when presentng their service, products, or opportunity.

As a result, these people tend to tarnish the overall reputations and credibility of those entrepreneurs who do understand that success in network marketing relies on the knowledge and application of solid business principles and a level of professionalism.

Network marketing is, in my own opinion, a great opportunity for motivated individuals to quickly and inexpensively start their own business. The key is to recognize it for what it is: a business model that will require discipline, training, and focus.

The expectation that simply joining any opportunity is going to create wealth is ridiculous. Joining any given company that offers a network marketing opportunity is nothing more than a step toward opening your own business. To succeed, you will be required to learn about your product or service line, be trained in how to present your products and servces, learn basic business and sales principles, and be prepared to work.

In essence, treat any network marketing opportunity you may join as a small business. Act like a business owner. Then you can expect to be treated like a business owner.

Brian Rooney