Many people’s perception of Network Marketing (NM), or Multi-Level Marketing (MLM), is unfavorable for these reasons:
Some still associate the industry with unscrupulous business practices employed by a few companies, mostly in the early years of the industry that gave the illusion of a legitimate business but actually made money primarily from the people signed up as distributors.
Because money was made primarily from the new salespersons who had to buy the product in exchange for the perceived opportunity to earn money rather than on the actual sales of products, the organizational structure with one person on the top earning commissions on the people brought in after them, the structure was called a “pyramid scheme”.
This is unfortunate because many legitimate organizations have one person on the top with many persons at various levels producing beneath them (consider the insurance industry), so it’s not the structure that was abusive but rather the business practices employed.
The FTC has reviewed and established the rules by which an organization can and cannot operate under to be considered legal and today many dozens of organizations are operating within the guidelines and are providing amazing entrepreneurship opportunities (more on this later).
Many NM associates receive poor training and feel desperate to earn sales commissions quickly and look for sales in ways that they would not want to be treated. They may have been misled by the people who brought them into the business who had no experience in training properly.
This combination of unreasonable expectations of earning quick sales by salespersons desperate to pay their bills and poor training cause the failure rate to be unnecessarily high with disillusioned associates leaving the business with the belief that the sales model is flawed and “doesn’t work”. Both they and the one’s that care about them (but may not have a full understanding of the real details) work to dissuade others from making the same mistakes.
To combat perception with reality let’s do some unbiased analysis and fact finding. Regarding the pyramid shape of the organization, given that the FTC has determined that there is nothing illegal about it within the guidelines it sets, is it a good thing or a bad thing?
As I alluded to previously the insurance industry may have an office with several independent agents and pays its agents when they make a sale (commissions). A portion of the sales also goes to the head of the office that employs agents. Money is also earned when a policy is renewed (this is residual income). Additional money may be earned when an agent meets a pre-established quota in the form of a bonus. These are all concepts employed in the NM industry as well.
So, would you rather be the independent agent making 100% of the policies they sell or be the agency owner earning a percentage of the earnings of many people? As an employee in the IT industry for decades I can tell you there are hundreds of “headhunter agencies” that are making massive amounts from the efforts of the consultants they place at other companies. The business model extends far beyond the NM industry. The organizational structures in NM will be further discussed in sections below to demonstrate how a hybrid compensation plan employed in the industry is far superior to those offered in salaries.
While it may be true that some begin NM without a clear understanding of the nature of the work or the compensation or the effort required to attain it, consider the opportunity for what it really is and what it can provide. An associate in NM is not an employee – they are an independent business owner; i.e. they are entrepreneurs. Many associates do not have a proper respect for the power of entrepreneurship.
Our society is taught from an early age what is expected of them and perform to certain standards in order to receive a set compensation or outcome. Occasionally someone learns from another who has learned the value of entrepreneurship and steps out into a bold new world of risks and rewards. Many have never learned the disciplines required to be accountable to no one but themselves for their success (or failure).
Those who do and manage it well have an opportunity to earn from the efforts of other people (typically employees). In NM because a team consists of several independent businesses working in cooperation with each other – and incentivized by each other’s success – each independent business profits based on the productivity of their efforts and the associated team’s productivity without the hassle of having to manage employees. This alone is a strong incentive many small business owners can appreciate! Again, this will be examined further in sections to come as a full side-by-side comparison is illustrated.
Maybe you’re reading this because you are an industry skeptic. Maybe you are considering an opportunity and are doing your due diligence. Maybe from what you’ve heard it sounds too good to be true, well let’s get real.
A typical career in NM starts out working a lot, getting paid a little, then working a lot and earning a comfortable living, then working a little and getting paid a lot. If you can survive the early days with consistent activities you have a very real chance of a very comfortable lifestyle.
When new network marketers unaccustomed to being paid for their performance instead of their time feel that they can relax and take care of personal needs and desires, they will not treat their work as a job. Entrepreneurs understand they have to drive themselves hard to achieve results spending their time on income producing activities instead of “getting ready to work” activities like organizing, training, and general procrastinating. Note that training is essential but it can be an excuse to not doing income performing activities like talking to people.
New network marketers also must learn to face and overcome their fears. Fears take many shapes including fear of talking to people, fear of what to say, fear of not being perfect, fear of not making enough income, fear of failure, and (strangely) fear of success. One of the greatest things about being an entrepreneur is becoming a more confident, skilled, admired, and helpful leader.
Network marketers will need to have thick skin – they will face rejection – a lot. They will experience abandonment issues from their upline and their downline. They will find it difficult to get customers. Rejection will cause more people to throw in the towel more than anything else. Sales is an odd profession in that some are much more successful than others. Network marketing professionals understand that this means that they need to improve a key skill and apply it consistently. The good news is that to be successful there are only a few skills they must master.
Tim Sales is an outstanding NM advocate and educator. He breaks these skills into what he refers to as a “pipeline” and it looks like this.
If you aren’t seeing results in one of these areas the right response is to learn how to improve your skills in that area – not to quit. Check out his YouTube channel for great training videos.
Network marketers also need to learn to trust the system. Often you can do the right things and not get the right results. But these actions applied consistently will eventually bring the desired results, and there isn’t many things that compare to seeing your business start to click.
If the previous discussion about the challenges of network marketing have dissuaded you from being excited about that career option consider what your life is like in a traditional job. If college isn’t your thing you can work for someone for $xx/hr (which is never enough for you to pay your bills and get ahead so you’ll work extra shifts and weekends to make what you need). You will need college for a professional job and incur the tens of thousands in college debt only to find the golden handcuffs keep you working extra hours for no extra pay.
Either way you’ll beg for time off when you need it, find yourself competing for the next promotion with your peers (so no incentive for helping them get ahead), working for a boss that does not appreciate you or help you. You may get the 2% raise (after going through the humiliation of crafting a self-appraisal 5 pages deep) and feel grateful; you’ll get to the end of your career with little in retirement savings – if retirement is an option. I’ve lived it – I speak from experience. With traditional jobs come fears of layoffs, downsizing, negative pay adjustments, and economic cycles.
Tim Sales did a series of YouTube videos in 2020 comparing NM to other career options – definitely worth seeing.
There is a desirable feature in careers outside NM. It’s generally safe and predictable. It’s socially acceptable (mom and dad brim with pride as they tell their friends “my son or daughter is a doctor” not knowing how miserable their offspring are for the hours they work, being on call constantly, in harm’s way of viruses and bacteria and subject to licensure reviews and malpractice.) Compare that to mom and dad having to tell their friends their child is a network marketer…
The safety comes from knowing that a paycheck comes on a regular basis. Kevin O’Leary of Shark Tank fame has said a salary is the drug they give you to make you forget your dreams.
For those who can master the challenges that come with NM the list of advantages is both extensive and impressive. I won’t try to sell you the “you’ll be a millionaire” story, although it’s a very real possibility that certainly isn’t available to you in a traditional career option. Every MLM company can showcase several who have crossed that threshold and some who blew past it. The point one percent in NM earn several million a year. How’s your 2% raise looking again?
So here’s my list. If mom & dad knew they’d perk up in the conversation about their kids…
Some companies send top performers on luxurious vacations.
Even after all this some of you are still throwing up obstacles in your mind – reasons why it “just doesn’t work”. My answer to all of them is the same – the industry has a proven track record of success, even with people who didn’t have enough belief in themselves that it would work. With proper frame of mind, proper training, consistent actions over an extended period of time (much shorter than most think), and a desire to help others, almost anyone can be successful in this industry, and a richer life awaits.
People are hungry for an opportunity to work from home without the baggage of a traditional career – a career option that frees them from time or place restrictions – people live in RV’s or on homesteads or travel and crave the opportunities this offers. It truly is – The Better Way…
Many people’s perception of Network Marketing (NM), or Multi-Level Marketing (MLM), is unfavorable for these reasons…
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