Network Marketing Uncovering The Common Myths and Perceptions
Network Marketing Uncovering The Common Myths and Perceptions
Ask anyone to describe what Network Marketing is all about and you get a multitude of ideas and views involving everything from pyramid selling to timeshare touts and vitamin pills. Generally it conjures up more negative pictures of a pushy sales industry and get rich quick schemes plastered all over the Internet.
So are these images realistic or myth?
Myth: 1 Network Marketing is an Industry.
Truth: Network Marketing is a business model employed by many industry sectors.
Network Marketing companies are also referred to as multi level marketing companies reflecting the two up or more levels or tiers in the business but the first myth is that Network Marketing is not an industry as such but a business system used by a growing number of sectors to sell services and products.
The model involves cutting out complex distribution systems and selling direct to the end user at a more competitive price. It is actually, therefore, a method of marketing whereby independent distributors are used to supply to a network that wouldn't normally be accessible to the company hence the term Network marketing'. The distributors are often also referred to as associates, representatives, independent business owners or independent consultants. The clue is in independent because there is absolutely no employment contract of any kind between the two sides. Distributors receive a commission on the sale of the product. Some companies insist on supplying the end customer direct and some get the distributors to store inventory.
Myth 2: Network marketing businesses are pyramid schemes.
Truth: Network marketing businesses are not pyramids though tiered levels offer the potential of bigger gains at the top.
In its simplest form a pyramid scheme is like chain mail. A letter is received which has to be passed onto five or more other people who then each pass it on to five others and so on. However, with pyramid selling it is hard cash that is actually being passed along. The scheme is totally dependent on new participants continually joining and eventually the pool of investors dries up.
So the characteristics of pyramid schemes are clear;
The position in the scheme is important
You only earn money by recruiting others
Profits come from other investors.
These schemes are totally illegal in the UK, US and Europe. The reason many people associate pyramid selling with MLM companies is the tiered approach and the concept of the down line where you can earn profits by sponsoring new members. The key difference is having products and services to sell. There are a multitude of MLM companies across all sectors these days from solar power and alternative energy suppliers to the luxury holiday marketplace, Financial Services, Healthcare and Self Improvement/Personal Development industry. The most well known brands that people associate with Network Marketing are Amway and Herbal life and Avon, Mary Kay Tupperware and Kleeneze.
Many MLM companies and models promote themselves with the promise of great wealth.
Myth 3: Network Marketing businesses are get rich quick schemes
Truth: Network Marketing is the same as any other business you have to work hard to get results.
It is easy to see why so many people fall into the trip of believing this myth. Given the nature of the business model and the fact there are no real barriers to entry then many poorly qualified distributors can give the whole a bad reputation promoting over hyped sales messages about how easy it all is and how all the work is done for you while you sleep.
As the saying goes you don't get something for nothing' and like any business you need to put the time, effort and focus in to reap the rewards. The most positive aspect of Network Marketing that is often ignored is that it genuinely offers a democratic opportunity for anyone to generate a substantial income with no limits by leveraging time, experience, systems and technology from others. There are systems in place that can be duplicated and you can learn fast from your sponsors who have a vested interest in your success.Many people are lured by the prospect of a better work lifebalance from working from homeand the false belief of easy money. Like anything in life the more passionate you are about the product and the greater your belief in its quality and benefits then the more authentic and thus convincing you will be. Passion aside, to be successful you need focus, daily action and continued commitment.
Myth 4: You don't earn anything if you're at the bottom of the system.
Truth: This totally depends on the company and compensation model
Essentially the higher end direct selling compensation plans offer the best returns for all concerned. You get paid up front on the products you sell and high end product or service lines generate high profit margins without the need to find new recruits or the hassle of high attrition of low priced MLM programmes. They are not dependent then on selling mass to generate a sensible income return and typically these models do not require a percentage of the sale going to the sponsor though there may be an activating sale. Schemes offering the potential of residual income over time through repeat custom and depth of sales team allows everyone the chance to work smarter not harder and enjoy six or seven figures once a down line is established.
In principle these compensation schemes are not that dissimilar to traditional business reward schemes where a Sales Director or Manager will typically enjoy higher bonuses than the sales people. The key difference here, however, is that it is very hard to enjoy uncapped earnings when you're employed in a job and unlikely that you could retire very early from your overall earnings.
Myth 5: The Internet is the Promised Land for Network Marketing
Truth: The Internet is killing Network marketing as we know it.
We've all heard about how the Internet is revolutionising marketing globally opening up possibilities that were not available a decade ago. But with this we are bombarded with information and overwhelm. This creates transparency, competition, and opinions which can make or destroy you in an instant. The Internet is a communication tool on a scale never seen before, opinions, rumours, advertisements spread quickly many of which have no foundation. Revenues and down lines can be lost over night with negative opinion and rumours from leaders who have jumped ship or set up their own product or service. Distributors can become easily distracted by the latest tools and systems which can prohibit their effectiveness.
Network marketing is a very effective alternative method to employing a direct sales force. It offers significant advantages to the company and the independent distributor who is looking to work from home online and enjoy a more balanced life. Network marketing offers many the chance of free enterprise and the kind of wealth creation that is just not pheasible from a traditional employee modelbut like with any traditional businesses it is all about the quality and effectiveness of the product or service and the people selling that product or service.
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