Don’t Touch Network Marketing – It’s a Pyramid

How many times do experienced networkers hear that comment, and another golden opportunity for a new person bites the dust? Unfortunately, if the potential sponsor does not know how to overcome this objection, their prospect does not hear the correct story, and that’s another poor soul that will end up selling his or her time for money, for the rest of their lives with their J.O.B (Just Over Broke).Pyramid selling was actually made illegal about 20 years ago, but the memory lingers on. Pyramid selling, for example, is where I sell you say 1,000 pens at 2p each, and tell you that you can sell them at 4p for a quick profit. You may then sell off these thousand pens at 4P each, and tell your buyer that they can sell them for 10P each. Then, someone goes into a stationers store and finds the same pens on sale at 3p each. So, the poor sucker at the end of the line has shelled out £40 for a load of over-priced pens. No wonder this practice was banned! (Mind you, it sounds a bit like normal retail practice to me…)Network or direct marketing however is now a very substantial type of approved marketing. All it does is cut out the middle men – the advertisers, the marketers, the shop premises, the shopkeeper the salesman, the accountant and so forth.Let’s say a factory produces a toaster ex-factory gate for £2 and wants to distribute it through what you may call the ‘conventional’ system. By the time this reaches the supermarket shelves, this toaster gets sold at say £49. The mark-up of £47 would be shared across all of the warehousing, transport, advertising, marketing, shop premises, shop assistants, and knowing most supermarkets, a healthy profit mark-up will be placed on top.Now let’s say that the same factory produces a new super toaster that can do all sorts of fancy things, that really needs somebody to explain to the customer on how to get the best out of this whizzy device. This time, they are approached by a network marketing organisation, and they agree that this whizzy toaster will only be sold though an established or growing network of self-employed people.The factory and the network marketing company can of course be one and the same.In this case, if they are the same entity, the company may determine an RRP (recommended retail price) of say £48 for an all-singing-all-dancing toaster. In this case, the mark-up is going to be £44. The networking company then decides that for every toaster sold, 50% will be shared across all of its distributors, in an amount determined by how much effort any one distributor puts in, and the power and the imagination of the ‘Compensation Plan’. This will usually be determined by the size of the team that this distributor has built up. This method of distribution cuts out the massive marketing and advertising budgets normally needed to promote a product. Also, a good distributor, as part of his or her team-building expertise, will train their downline in the best way to get the goods moved on, dramatically lowering training costs.One point about this sort of distribution is that every member of the team will have to buy a toaster. Why? Not just to boost their up line’s business, but so they can talk sensibly to the end user (who may want to become a distributor as well), and so increase the likelihood of more sales.However, within the team that a distributor builds up, as long as the compensation plan is powerful enough, there is nothing to stop any distributor anywhere in the team earning far more than their Upline. And will their Upline object? No, as they will be getting a percentage of everything that their team members produce.This is the real beauty of network marketing. You can start it as a part-time business, or full-time, and if you want to earn more than the man at the top – he or she will actually encourage you – as they will get a percentage of what you do. No more ‘dead man’s shoes’ or ‘knives in back’ syndromes.A true team game – where everyone is the winner!Nowadays, literally billions of pounds worth of products and services are moved in this manner, including household names like Avon, number 1 on the list (1886 – $10.7 Billion turnover), Tupperware No 7 (1946 $2.2 Billion), Mona Vie No 14 (2005 $1 billion), Telecom Plus (Utility Warehouse) (No 32 $301 million). In total, they employ millions of distributors around the world.It is actually worth looking at the latest lists published by the Direct Marketing Association, because if you are looking for the best opportunities for personal growth, then a younger company (under 20 years) will always be far more exciting than the older ones, which could be over 100 years old!So, if anybody offers you an opportunity in network marketing, don’t just dismiss it out of hand as being either stupid, illegal, immoral, and a pyramid – you may well live to regret it when your neighbour suddenly moves to that sought-after end of town. Speak to people also involved in the industry, as you would even with a conventional employment.