Network marketing is a growing sector in the United States. According to the Direct Selling Association, nearly 50% of American households are involved in the network marketing industry. The industry has received bad press over the past decade and I would like to assist in clearing the air for the industry just a bit. So what is network marketing, direct sales and MLMs?
Network marketing and MLMs (multi level marketing) are names or terms used for companies in the Direct Sales industry. Network marketing (or MLMs) is a system or selling method where independent agents serve as distributors of goods and services. These independent agents make money in three ways: 1. offering these good and services to the general public and obtaining a commission 2. recruiting others to be independent distributors and obtaining a percentage of the commission that the newly recruited individuals earn and 3. company incentives.
Myth #1 – Are network marketing companies pyramid schemes?
Network marketing and MLMs are not a pyramid scheme as long as goods or services are offered in exchange for compensation. Once we take the goods or services out of the picture, then we are talking pyramid scheme.
Here are some network marketing companies that you may have heard of before: Mary Kay, Avon ($10.0 billion in annual sales in 2013), Legal Shield, Herbalife, Amway (if you have ever been to Orlando, Florida you may have seen an arena named after this company, and if you are a basketball fan, the Amway Center is where the Orlando Magic play). These are just a few companies. There are over 100 network marketing companies.
Myth #2 – You cannot really make any money from network marketing.
Well here is where facts truly tell, but stories really sell! If you have ever been in the network marketing industry, you have probably heard that saying before.
When you take a peek at the top 50 earners in the network marketing industry worldwide, at the start of 2017 you will see a person who makes $4.8 million a month from a network marketing company. That is a documented fact, and yes, I said per month! Man, I need to find out if he needs an accountant, huh! All jokes aside, it is true. Numbers like that can blow you away and cause you to say to yourself, “Hey, that’s impossible!” I know if I didn’t know better, I’d say the same thing.
But here is where the story sells. I know of three individuals who make huge money from network marketing companies; two of them are mentors of mine. Put it like this—out of the three of them, the highest earner grosses about $60K per month and the lowest a little over $8K per month. And there are countless others doing well in the industry. I just don’t know them personally. But the bottom line is that you can earn some decent money from network marketing companies if you stick with it.
Myth #3 – Someone told me I can make an extra $500 – $1,000 a month pretty easily.
I think this issue and the next issue are the two biggest issues in network marketing. First, generating $500 – $1,000 a month in your first month is pretty easy. Here is how: you join the network marketing company; throw a home party or host a private conference call, or host an online presentation and invite a bunch, if not all of your family, friends, associates, co-workers, etc. More than likely, 1 out of 10 people who engage in the party, call or presentation will sign up. That equals a commission for you. The question is, how do you do that again the next month and the next month and the next month? You get the picture, right?
Network marketing is sometimes presented as a very easy way to earn $500 to $1,00 a month easily. For some people, it may be, but it is a business and business doesn’t always come easy. Network marketing requires training (maybe weekly, monthly or quarterly), it requires personal development (daily), it requires exposing the business in the right way to others (daily), it requires meeting with people during your “me time”, and it requires time, energy and a part of your life. That doesn’t sound easy. Many people walk into the industry thinking that it will be easy because it is sometimes presented as that. It isn’t always easy, but it is always fun building relationships and business.
Myth #4 – My warm market is the key to my fortune!
Unfortunately, when many people come into the industry, they are led to believe that their warm market – family, friends, neighbors, co-workers, church members, etc. will provide enough to get them to the top. In most cases this is not the case for three reasons:
- When some of your “warm market” contacts were launching their businesses and invited you to be a part of them, you turned them down. Sometimes those people return the favor!
- Your “warm market” may not be ready to launch a business or have a need for the product and services your company offers.
- Some of your “warm market” doesn’t want to see you succeed and will do everything that they can do to see to it that you don’t grow beyond them.
Because of these three things, you can start with your warm market but you can’t depend solely on them.
Hopefully this article has helped sort out some of the “issues” that have presented over the years about the networking marketing / MLM industry.