It’s incredible how polarizing the terms “network marketing” or “multi-level marketing” can be when brought up in general conversations. Some people are very passionate about MLM, sometimes even to the extreme, and there are even many celebrity authors like Robert Kiyoaki and Mark Victor Hansen who advocate network marketing.
However, in many circles, you might as well become an outcast if you admit to having any interest in network marketing.
So What Exactly IS The Problem With Network Marketing And MLM?
Perhaps the issue is the pyramid structure. This can’t be it because you really can’t take issue with a tiered compensation that almost every large sales organization in the world has. Salespeople get commissions, and sales managers get overrides or bonuses on top of those. Sales directors get bonuses on top of that, and VPs on top of that, all the way to the top.
Maybe the issue is that you have to pay to participate in the company. That’s a standard franchising model though. If you want to own a McDonald’s, you’re going to pay a franchise fee the same way you would in an MLM.
Now, this isn’t to say there aren’t an illegal pyramid schemes, as well as Ponzi schemes. There certainly are, and this is where all the money being made is done so by signing up other individuals with little to no product in sight.
In spite of whatever people think though, companies like Amway, USANA, Excel and plenty others have sold millions – even billions of dollars of products. Many of these companies have tens of thousands of happy customers – many of whom do not happen to be reps for the companies. So while there may be the perception may be a problem here, but the perception is not in line with the reality.
Surely those that participant in MLMs contribute to the problem?
The real problem with MLM is not the MLM in itself. Instead, the problem is some of the people MLM attracts. The keyword is some, not all. Network marketing is just a business model, and it can be summed up as micro franchising. It has the upside that it has a low cost of entry, with the potential for large revenue, and there are plenty of people who achieve just that.
However, the same things that make it attractive also make it attractive to people who are NOT qualified to become a business owner. These things attract people who:
o Have not done well in their business or profession and have little – if any money saved up to invest in the MLM
o Are not qualified to own a business and/or have no experience owning a business
o Are not satisfied with their current income
o Have no experience in sales/marketing
o Lack the skills necessary to develop business relationships other than in the form of employer/employee
o Have unrealistic expectations of the amount of work needed to succeed compared to the revenue opportunities
This is not to say that there is anything wrong with any of these things since not everybody can come from a background in sales, have previous experience as a business owner, etc. These things mentioned above don’t even mention a majority of the people in network marketing.
In reality, this only describes a disproportionate amount of network marketers, most of whom never do anything about it. As a result, many network marketers simply end up:
o Being inaccurate or deceptive when discussing their business
o Come across as desperate
o Focus too much on new recruits and neglecting existing customers
o Inappropriately discussing business when out in public
o Over-selling the opportunity
Once again, this does not describe most of the network marketers, but it does describe enough of them to damage the reputation of network marketers in general. To judge someone based on a small minority of people is unfair, but these prejudices do have some merit, even if they have been distorted.
What Is The Solution?
There’s a wise old saying – there’s a first time for everything. Network marketing/MLM provide a great opportunity for individuals to start their first business, their first sales job, etc.
The main point is to remember that it is a business, and you as a participant in MLM are a business owner. If you’ve never owned a business, been in sales, have never networked, then you need to learn how to do so, not just from MLM experts, but from other experts in those fields.
Network marketers who want to succeed should read about how to build a business, get educated about the latest sales and marketing techniques, and strategies for business development. By acting like a real small business owner, people will start to treat you like one.