I just wanted to share this article with you folks. I found the insights of the author interesting. The opinions of others about this industry have always amazed me. Over the years I have come to know so many folks that are earning much more in this industry than I have ever earned as a pharmacist and they have so much more time for their family and just seem to be happy. Something I do not see much when I am around other pharmacists. Their enthusiasm and happiness is exactly why I have chosen to pursue this business as a profession. To learn more about what I am doing visit http://AIMHighForSuccess.com
Why are are we so turned off by network marketing opportunities and the friends who offer them?
January 30, 2016 by
Have you ever had a friend invite you out to catch up and then enthusiastically delve into an “exciting new business new opportunity” they can’t wait to share? And you get blindsided with an invitation to join a new multi-level marketing program they’ve signed up for and want you to become a part of their team. Wha?!?
“Hey!” you might think, “I thought this was about catching up on our lives! Not about creating a business opportunity!” And you might feel a few ways about that. Most of them not good. You may feel you’ve been misled, unless the new business is something you are excited about. I mean, it’s an MLM (multi level marketing) for goodness sake. And that’s just not usually seen as cool.
Let’s be honest, MLM’s have had a stigma attached to them as being at worst a type of “pyramid scheme” (which they aren’t), or at least something less than a “real business” until some brilliant marketing genius started calling it “Network Marketing” a few years ago. I personally know people that have reached high levels of success and done incredibly well financially in MLM’s and they never get the street cred as being in a “real business.” What’s up that that?
Why is that? Where does this stigma come from?
As someone who owns a ” brick and mortar business” and knows how tough that can be (overhead, payroll, surprise expenses, support expenses, insurance, taxes, and etc) I wonder: maybe these network marketers are onto something. Since I’m naturally curious, I started asking questions about this and what I found really surprised the heck outta me.
To understand the industry and background I went to Paul Devlin, a respected no-nonsense industry analyst and speaker on the national level. Paul’s style is a “tell it like it is, hold no punches” way of looking at business and people and he’s someone I knew could explain it to me.
“Think of it this way, if I told someone I was the National Sales Manager at a named company they’d be somewhat impressed that I’d reached a certain level of success. I’d probably also be working 70-80 hours a week and never see my four kids. But tell them it’s in network marketing, that I see my kids all the time, have passive income and invariably someone will dismiss it as something bored housewives selling soap.” Indeed it seems there is a stigma even for top guns in the industry like Devlin.
So where did this whole system begin?
Back in the late 19th century, traveling sales folk were called peddlers, or hawkers and traveled around selling products almost door to door. Henry Heinz created an organization of salespeople to sell vegetable products to those that didn’t grow their own, focusing mainly on pickles and tomatoes (in the form of ketchup). In 1868 J.R. Watkins created a multi-tiered structure to his medical products company to sell the end consumers.
The concept: after a product was created, instead of spending millions of dollars on marketing, that money could be paid out in commissions to a personal sales force.
The concept was that after a product was created, instead of spending millions of dollars on marketing, that money could be paid out in commissions to a personal sales force. This sales force could earn money by selling goods that either people would normally be purchasing from stores (soap, household goods, etc) or couldn’t get from stores (now think advanced neutraceutcials, vitamins, supplements, skincare, or health/wellness that are using ingredients regarded as safe).
Today? The network marketing industry is a $120-$130 billion dollar industry (Devlin explains that some of the companies are privately held so their sales aren’t public). Some of the longest lasting companies are Amway (a $14 billion dollar company), Avon, Mary Kay, Tupperware, Shaklee, and Herbalife.
According to Devlin, some companies pay commissions up to 58% to their sales team and that’s money which traditionally companies spent on marketing or getting their products on the shelves of stores so consumers can conveniently pick them up. Most networking marketing company ship directly to the consumers, so there’s no retail store to speak of and most “distributors” aren’t encouraged to keep a large back stock (anymore). With the advancement of the internet, the network marketing business has also seen a rise. In 2008 when the economy struggled and major distributors of household products saw decreases of up to 30%, network marketing companies grew.
There’s an interesting inverse relationship with the economy according to Devlin. “When the economy is down, more people join networking marketing companies. When the economy is booming, more people buy goods from network marketing companies.
Where did the stigma of networking marketing being embarrassing begin?
Devlin points out that in the 1970’s the MLM’s started to really see a big rise in market share and the large distributors were not happy. Think of all those companies that put your household items on the shelves at major retailers, they became unhappy. They were losing market share. And those were the ones sponsoring large portions of the media at that time.
Comedian Johnny Carson among others, became infamous for poking fun at Amway on “The Tonight Show” and with so many viewers, the stigma not only stuck but became a type of cultural meme. People going door to door, bored housewives selling facials or makeup, or friends trying to talk friends into buying soap. The poking fun worked, and the stigma stuck.
After being publicly humiliated, distributors for many network marketing companies at that time fell into the underground covert method of recruitment and weren’t always upfront about why they wanted to meet with a friend or colleague. While their aim and goal might have been true, their methods may have been lacking.
The “hey, let’s get together for coffee and catch up” routine of getting people to a meeting happened more at that time. “I want you to meet a friend of mine.” Or “Let’s set up a job interview.” People who thought they were being interviewed for a job were actually being introduced to a professional networker in a network marketing company. (This happened to me many times, so I know of what I speak!).
“In Japan it’s considered rude or insulting if you don’t bring a new business opportunity to your friends and family first. For many years the Japanese were leaders in the networking marketing industry for this reason.” Paul Devlin
Devlin says that it’s changing for the most part; he thinks in major part due to better training. More access to information. And with the success stories being real, based on the hard work and effort of people we know and trust. Someone like prosperity guru Randy Gage, author of the new book Mad Genius (read a terrific GMP review here), who is also heavily involved in network marketing, has been a huge advocate of both the industry and companies that allow people to grow and get over their blocks to success.
As we see friends earning thousands, tens of thousands, and even hundreds of thousands of dollars of income through organizations they’ve built from the ground up through network marketing we are more apt to believe the dream.
“It’s odd,” Paul Devlin recounts, “In Japan it’s considered rude or insulting if you don’t bring a new business opportunity to your friends and family first. For many years the Japanese were leaders in the networking marketing industry for this reason. But in the U.S., it’s been the opposite. People can almost be offended or insulted if someone brings them a business venture, explains they want them on their team, or asks them to consider an opportunity.”
What about the long-held belief that network marketing is a pyramid scheme?
The rumblings of “pyramid schemes” began in the 1970’s when MLM’s where still be joked about as “bored housewives”, or “get rich quick” schemes where someone at the top of the chain earns money from everyone below them, as all the money flows up, regardless of the amount of effortless “work” someone puts in. In fact, Amway was taken to court by the FTC and in 1978 the Supreme Court found that the business practices were sound and a “legitimate business opportunity” and there was no pyramid scheme.
“Pyramids don’t actually exist in network marketing,” says Devlin.“The person that is at the top of an organization is an entrepreneur and may be able to create a passive income based on work they’ve put into building up that organization, but it’s just like owning any other type of business. You create a network. Instead of employees, you have an entire organization of volunteers that are either motivated or unmotivated, depending on your leadership. Some distributors will flourish if they treat their organization like a business and work on it as a business. Those that have the “lottery mentality” or expect the “get rich quick” thing to happen are usually sorely disappointed and don’t last long. It’s a business. It’s your business. And it can be very successful if you treat it that way.”