Network Marketing, What Everyone Should Know

This is how many of those strange invitations that sometimes come to us to witness one of those – also strange – business presentations where they talk about the “new and revolutionary” way of making money begin.

In fact, the least they have is revolutionary since network marketing or multilevel businesses , whatever you want to call them, are not exactly new.  

In fact, some of the oldest network marketing companies were born in the USA in the 1950s. The only thing that eventually changes is the type of product or compensation system they use to generate income.

Many of us have surely attended these unusual presentations of a network business system where at first you don’t understand a damn how it works and over time… you understand less.    

And if you have never attended, it will surely be a matter of time before a close friend or family member invites you to hear about this mystical system that they say can give you ” financial freedom “.

But to be fair, not everything is really as bad as in some cases we come to perceive it. It’s just that the way of exposing it is quite unusual and unorthodox for what we have learned about business.  

However, with everything, it would be naive or even somewhat “foolish” to deny that direct sales networks through multilevel systems move hundreds of millions of dollars a year in diverse products, which, commercially speaking, makes them worthy of much respect.

And what about Robert Kiyosaki , the financial education guru who wrote an entire book dedicated to motivating network distribution business entrepreneurs called “The Business of the 21st Century.”  

Could it be a slip of this recognized master of finance? Or one more lesson to learn?

The countless examples of independent entrepreneurs (as they call themselves) who achieve an extraordinary lifestyle through these systems is another aspect that we should seriously analyze before completely excluding this option from our entrepreneurial alternatives.

And although their business model is quite unusual, like many others, there are de facto organizations whose sales volume would be the dream of many entrepreneurs who would like to invoice those numbers.  

Reason why it is even more necessary to explore and learn with a more open approach about the benefits and weaknesses of this interesting concept considered according to Wikipedia as ” strategies of the new economy “.

Personally, I had the opportunity to participate in a couple of network marketing businesses a few years ago that allowed me to learn in depth some of their most curious secrets, and that today give me the solvency to be able to make a serious and constructive criticism about these models. of business and that in some way it is convenient for us to know in order to decide, in the light of honest information, if they could work for us.

Finally, when we are thinking of starting a business, the first thing an entrepreneur does is analyze, study, seek advice and measure the scope of a proposal.  

And this would not be the exception. And so that my dear readers can draw their own conclusions, I have decided to title and divide this topic into three parts, namely: Network Marketing, the good, the bad and the ugly.

And for those who are less familiar with the operation of a multilevel system, I will allow myself to briefly describe its operation mode so that we can have more clarity regarding the ideas that I will present later.

HOW DOES A NETWORK MARKETING BUSINESS WORK?

Fundamentally, this class of business models is defined on the basis of the distribution of products through networks of associated people who sell directly under the figure of Independent Entrepreneurs.

This is quite convenient for companies because they actually save themselves the huge costs of having middlemen and sellers in the distribution of their products as well as millions of dollars in media advertising.

Instead, they build a growing network of people who promote, display, and sell the products and among whom what the company would spend on distribution costs is distributed as commissions.

The conception of the model is very convenient since the parent company pays commissions only on the product sold. In such a way that if there is no sale, there are no payments to make.   

The second thing is that, although the commissions are usually higher than usual (from 15% to 40%), they will also have an army of sellers interested in placing the product in order to also generate their extra income.

It is worth mentioning that the Internet affiliate model also fits into this figure to a certain extent.

On the side of the independent entrepreneur (or the salesperson), the model is also convenient because he has the opportunity to generate commission income from his volume sales using part of his idle time without having to attend an office, have a boss, make large initial investments or support work schedules.

Additionally, each person who enters the system has the opportunity to sponsor other people so that they also become distributors and can market the product. Which, represents the possibility of generating an additional income for commissions derived from the sales made by their network of associates or “downlines”.

If we see the whole picture we can appreciate that the system was naturally carefully thought out and conceived so that everyone can earn something based on their effort. And this is very laudable.

With that said, let’s move on to consider some of the benefits of MLM that many people choose to try.

Network Marketing – Excellent Training Systems

One of the most interesting things about MLM systems is that most of them give a lot of importance to the preparation of their associates. Both in the commercial and personal spheres, they have excellent permanent training programs that aim to fully develop people.

Its main value consists in the idea that if people grow, develop and earn money then they will be more motivated to work, associate others and build their business and therefore the income of your company will also improve proportionally.

It is extremely interesting to see how an associate from the first day and for as long as he remains active in a distribution network, has at his disposal a large number of training options ranging from motivational seminars, sales training, development of social skills , teamwork, leadership, product knowledge and much more.

Strengthening of the Family Nucleus

Another of the great values ​​that these companies manage is their focus on caring for and developing families. They continually create and promote family unity and many of their activities and objectives are carried out always seeking to strengthen relationships between parents and children or between spouses.

Hence, many family-type activities are carried out and some of the incentives occasionally include couple or family trips. 

This undoubtedly represents one of the great values ​​of many organizations of this kind compared to the traditional company, which in most cases is interested only and above all in the production of the employee.

Testimonials of Great Successes

Like any business, the beginning requires a lot of effort and dedication to climb to the top of success, which once achieved is palpable.  

There are many true cases of people who, after a few years of hard work, manage to achieve the greatest advantages in the compensation system, which not only provides them with excellent commissions, bonuses and other prizes, but also with greater availability of time and travel for enjoy with family.

This is especially attributed to the fact that the system is designed to grow logarithmically in terms of profits. The same that are growing in great proportion as the employer works to develop his own team of associates.

It is amazing to see some of these great leaders of the network marketing industry show off their trips, luxury cars like Hollywood stars or high value jewelry that especially seek to motivate others to pursue their dream with a clear message: “if possible “.

Personal fulfillment

Finding a motivated group with a clear vision and led by people of integrity can be the greatest blessing because it allows people to develop, achieving greater personal security and better communication skills.   

Their family relationship improves as a result of their comprehensive growth and as if this were not enough, they learn about business issues.

Thanks to sales courses, many people learn to overcome shyness and, in general, all the improvements that this process entails are reflected in their character.

Probably the best thing that could be said about MLM systems is that many people experience this gradual process of personal growth and fulfillment.

Network Marketing

As in any movie, there are always some villains who make things ugly. And in network marketing businesses, this often happens too.

In fact, I dare to think that in the vast majority of cases that I know of and that I was able to see up close, many of the benefits and good things that these systems have and that I have mentioned, are clouded by the fact of bad behavior or the greed of many people who, far from taking advantage of the business concept as a vehicle for their growth, see it as a simple means of “using other people” for their benefit.

Greedy and Vision less People

Unfortunately, many people do not understand that the success of network businesses consists precisely in building “a network” of people who share a vision, a system and who work as a team to obtain the financial benefits that the system offers.   

And instead of dedicating themselves to work, they occupy themselves with manipulating the system to obtain the greatest benefit for themselves, completely altering the rules and therefore unraveling what could be an excellent means of generating income.

And I say unfortunate because really the root of the problem is the fact that most of us are not trained to do business. Less to work in solidarity as a team. And if we talk about leadership, don’t even say it.   

Probably these types of phenomena are just the result of a poor and outdated educational system that teaches us math, science and some arts, but nothing useful that really allows us to develop as entrepreneurs.

Of course I’m not going to get into more problems trying to solve the educational problem of our countries here, but I can’t find another cruder explanation than this to understand why so many people fail from the moment they enter the system.

Hence, the main problem of multilevel businesses is that they are plagued by bad members and pseudo-leaders who fail and often end up not only destroying the dreams of others, but also affecting the general reputation of the organizations to which they belong and that over time become reasons for pointing out by those who could not achieve it and who left with the only balance of a bad experience to their credit.

Comfortable and Lazy People

The counterpart of the problem that makes MLM systems look bad, and which is most certainly also a consequence of the previous conclusion related to education, is the fact that many people enter with the desire to earn some extra money to improve their income but they do it with a comfortable attitude and a minimum effort mentality.

He is the classic character who wants to win a lot but doing little.  

“They’re looking for easy money and we all know that in real life that doesn’t exist.”

These people, unless they manage to develop the correct vision in a short time, are the kind of partners who will not last more than six months in the system. They are the type of people who have a very poor attitude, they don’t make an effort, they don’t make calls, they don’t look for clients, they don’t attend training, they hardly know their products and if that weren’t enough, they complain and lament that they are not doing well.

We all know that in this business model as in any other of the traditional type, attitude, dedication and intelligent and hard work are essential to achieve success.

Do you know any great company that has managed to grow without applying these principles? Probably not. And therefore, we know that any business, run with a deplorable attitude like the one described, can only lead to a certain destination: failure.

The Bad Reputation After Failure

As you can see, the two main weaknesses I have mentioned so far have to do with people. Which is ironic because most network marketing systems proclaim from the rooftops that their main goal is to make people grow financially and help themselves.

This makes the failure rate very high and not precisely because the products or the system are bad. In most cases, failure is the result of conflicts resulting from differences between associates, lack of information, lack of vision, laziness and little determination on the part of both sponsors and sponsored.

If we remember what I described at the beginning, network marketing systems actually base their strategy on replacing media advertising and all that marketing infrastructure with people who want to do individual work and word of mouth advertising. 

An intelligent strategy that is based on people. But that also requires that people at all levels of the organization respect and uphold the rules of the system, because otherwise the result is chaos and failure.

And of course, with the subsequent bad reputation that the company obtains after the imminent failure of those bad associates who, far from accepting their responsibility, end up blaming and pestering the business system and this makes the reputation of many network marketing companies is affected and weakens over time.

Network Marketing – The pyramids

As I concluded in the previous section, the bad actions of many associates and even of some managers and administrators of multilevel companies come to upset the system to the point of creating enormous discomfort in active members and great resentment in those who leave.

And derived from this, they have to bear the consequences of a mismanagement of the system that translates into defamation, a bad image and even legal claims in some cases under the argument of an unfulfilled promise.

Hence, the following potential partners who could use these business concepts for their personal benefit, are met with unfortunate expressions such as:

– “that’s a pyramid”, 

-“beware of the pyramids”, 

or even more serious ones such as: – “they can scam you” or 

– “That’s a religious sect, then you won’t be able to leave.”

And it is not for less because humans are specialists in magnifying problems and making something seem very bad, even without having experienced it firsthand. It is probably a natural but wrong reaction to defend ourselves against the unknown.

However, with everything, if there is a real problem that exists in all this topic of marketing networks and that we must know so as not to fall prey to the predators that exist everywhere.

Unfortunately, the fact that many network marketing business models are real and successful gave rise to the creation of a parallel concept that is not exactly legitimate, that confuses and makes the choice for the entrepreneur to find a good business channel on which to work and they are the pyramids.

To describe it in a simple and understandable way, pyramids are nothing more than a supposed business concept disguised as network marketing where people enter and can earn “a lot of money” to the extent that they get other people to also enter the system and duplicate this practice of associating others and paying their membership.

The pyramids are usually very harmful and even fraudulent because their primary objective is based on the recruitment of people only to accumulate money funds that are distributed among the members who occupy preferential places at the top of the pyramid, for the simple fact of having entered with anticipation of the system. But they offer that sooner or later the person may also be in that privileged position and then, yes, make a fortune.

The pyramids have proven to be a failed concept for many years because there is no type of value or principle that is salvageable from every point of view. And in all cases, the only ones who keep the money are those who started the supposed and ephemeral company.

Now the million dollar question is how do you distinguish between a pyramid and a real network marketing system?

And the answer, although it is actually much simpler than it seems, is not for those who have less training on the subject or are completely unaware of the existence of the pyramids.  

And it is that a pyramid is immediately distinguished because in reality there is no real product or service whose value can be commercially determined in the market.

While in legitimate marketing networks the entrepreneur is motivated to market the company’s products and earn some commissions for it, in the pyramid model the only premise is to get more people to enter and pay to be a part without any commitment because in reality there are no real products or services.

In marketing networks, people learn to grow and develop along with their business.  

They understand that achieving their dreams requires effort, persistence and dedication. They learn to create teams of associates and support each other at work. Work that over time, thanks to the system, will allow them to earn a good additional income and begin to fulfill their dreams.

In the pyramids, on the contrary, the promise is immediate money. They hypnotize people with the offer of getting rich quick and that they can achieve it just by gathering X number of people who pay to join. They base their ephemeral success on people’s greed.

However, pyramids over the years have been the negative and disastrous part of the concept of multilevel networks because although they cannot be classified in this category, their effects have been devastating for those who at some point looked for a legitimate business option in them. to help them get ahead and that unfortunately due to lack of knowledge or ignorance, they did not find.

Conclusions

As I mentioned at the beginning, rejecting the concept of blind marketing networks without seriously analyzing its characteristics would be unreasonable because just as many strange and negative things are heard, there are also many documented testimonials of success in many countries of people who are doing good legitimate money through MLM companies.

Of course, the topic is extensive and we could go deeper and analyze each company and each documented case and try to discover what has failed or worked in each one.

However, for entrepreneurs who are really looking for a good option to invest their money and time, network marketing can certainly be a positive and promising option to start.  

Of course, as long as it is chosen wisely, taking into account that it should be built like any other business: with a lot of work, persistence, dedication and knowing that the results come but not by magic and being clear that in no way way you will get rich overnight.

If you are on that path I wish you much success.

If you are already part of a network marketing network, I encourage you to move forward with the right vision and attitude.

If you are a network leader, I encourage you to work under principles and support your associates to achieve their goals in a transparent and legitimate manner.

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