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Tuesday
17Jun2008

Is Network Marketing a Scam?

Network Marketing is possibly one of the most controversial subjects on the planet – at least in the home-based business world. It generates more positive and negative feelings from people than just about anything – other than religion and politics. Some see it as their savior – others see it as the purest form of evil. Why is there such a huge amount of emotions – both for and against – for this seemingly innocent industry?

Let’s look at the negative side first. In another article we’ll review the positive aspects of network marketing.

Where do the bad feelings come from?

Is it the pyramid structure of the industry? I don’t really think so. Almost any sales organization in the world uses a structure similar to this. Salespeople get commissions; sales managers get bonuses on top of that, sales directors more, vice presidents more. Same type of deal.

Maybe it’s the idea that MLM’s are illegal pyramid schemes. This is where all the money is being made by signing up other people, with little or no product being moved. This is just a perception, however; the fact is that Amway, Melaleuca, Mannatech, PrePaid Legal, Usana, and many other companies have sold billions of dollars of products to happy customers, and not just to distributors. So this perception is just not reality.

Could it be that it costs money to get started? No, that’s common in starting a business. And compared to buying into a franchise, the cost is miniscule.

Then what is the reason that Network Marketers get people running for the hills faster than a swarm of killer bees?

It’s not the industry, it’s some of the people it attracts.

Two of the main positive things about network marketing are also two of the things that lead to the biggest problems. These two aspects are the low cost of entry, and the potential for huge income. This formula attracts people who are not suited to having their own business, for the following reasons:

  • They don’t have any money saved up to invest in a business, so they probably don’t have the right makeup for success.
  • They have no previous experience in owning or running a business. Therefore, they have an “employee” attitude, not one of “I’ll do what it takes to succeed”.
  • They have no experience in sales.
  • They want something for nothing – they’re basically lazy.

As a result of this, many network marketers approach their business in the wrong way:

  • They lie about the opportunity.
  • They promote their business to the wrong people and in the wrong situations.
  • They hype it up.
  • They come across as desperate.

This doesn’t describe all network marketers, but it does describe enough to tarnish the reputation of them all. It gets really bad when one of these types becomes a leader, and teaches these methods to the new recruit. It perpetuates itself, and becomes more the norm than the exception.

For these reasons, network marketing has had a bad reputation over the years. But this may be changing. In today’s society, people are much more skeptical than in the past, so the old methods aren’t working any more. Networkers have to find new ways to prospect, and it looks like the new ways are much more value oriented and less pushy. In fact, the best method is the attraction-based model outlined in the books Magnetic Sponsoring by Mike Dillard and The Renegade Network Marketer by Ann Sieg. Either one of these books, or both, will show you the new, better way to do network marketing. If you’re thinking about joining this wonderful industry, or already are a part of it, I strongly suggest you purchase one of these excellent books.

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Reader Comments (8)

Thanks for the info. This is where all the money is being made by signing up other people, with little or no product being moved.

October 23, 2008 | Unregistered CommenterExtenze

Useful info, It gets really bad when one of these types becomes a leader, and teaches these methods to the new recruit.

October 31, 2008 | Unregistered Commentercheap flights to chennai

Nice BLOG. This is just a perception, however; the fact is that Amway, Melaleuca, Mannatech, PrePaid Legal, Usana, and many other companies have sold billions of dollars of products to happy customers, and not just to distributors. So this perception is just not reality.

November 4, 2008 | Unregistered CommenterMesothelioma

Networkers have to find new ways to prospect, and it looks like the new ways are much more value oriented and less pushy.

November 11, 2008 | Unregistered CommenterMonavie

Great list. This doesn’t describe all network marketers, but it does describe enough to tarnish the reputation of them all.

November 25, 2008 | Unregistered Commenterdetox body

Great list. Networkers have to find new ways to prospect, and it looks like the new ways are much more value oriented and less pushy.

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Nice blog. This is where all the money is being made by signing up other people, with little or no product being moved.

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