Network Marketing – 4 Reasons Why They Have Such a Bad Reputation
Why is it that businesses which pay other people to sell their product to friends and family have such a bad reputation when marketing experts agree that the most powerful advertising out there is word-of-mouth?
Well, as I and others have observed in the last twenty years in the industry, there is a trend that very well may be causing this bad wrap, if not at least a major player in contributing to it.
I call it DEFAULT.
We’ve all experienced it. You get a program and fine tune it to your needs. What a joy it is. The sun is shining, the birds are singing. The blossoms are filling the air with fragrance. Then one day something happens and returns all your settings to DEFAULT. And there is no way to retrieve your former settings except by starting at the beginning again. Dark clouds gather. Hours are lost, appointments missed, decisions delayed, emotions run high, and many other things go wrong. All because of DEFAULT.
Almost every business around runs on a pyramid plan, not only network marketing businesses. Let me explain. There at the top of the company is the big CEO or president who’s the leader of the whole show. This person has a few people he/she trusts who help run everything. These folks are the managers, right under the CEO and report to him/her. The Managers in turn have others who report to them, and so on down the levels with more and more people on each level down. Of course, the wages are according to your level. You wouldn’t imagine the janitor being paid more than the president, or the manager being paid more than the president, right? That’s the basics of the business model.
Then MLM comes along and changes the paradigm… so they say.
They sit down and draw circles all over a piece of paper while they croon to you. “If you just follow our easy plan, you’ll be able to take vacations whenever you want to, live like a CEO, travel all over the place, and have tons of family time. We have the best business plan out there!”
And so you try it and everything goes incredibly wellfor a short time. Then suddenly, a dark day dawns and you find that everything you’ve worked so hard to set into motion is gone, all gone, and everything has turned back to DEFAULT. You find yourself again at the bottom of the pyramid just like if you worked at your local retail store stocking shelves.
Most people don’t realize that nearly every network marketing plan is designed with a DEFUALT button. This causes it to go back to the old pyramid style of big CEO at the top racking in the cash and little guys on the bottom scrounging around for whatever little money they can make. This DEFAULT system works with various methods. They’re called by a variety of names, but we’ll list only four here. I think you’ll recognize them.
1. Jump-Start: Knowing full well that most people will never get beyond the initial “buy-in”, these companies push you to “tell all your friends and family” about the opportunity. This gives the company free advertising and quick profits from the “packet” that you had to buy.
2. Breakage: if you don’t meet your monthly quota then you have to forfeit your “bonuses” or “points” and then the company keeps the money.
3. Break-away: when you “advance” to a higher level you leave behind some earning potential you had struggled hard to achieve. The company keeps the money.
4. Exhaustion: The company wears you out by requiring constant new “enrollees”. They know you won’t stay long because you’ll get so tired of finding new people to sign on. When you leave, they keep all those enrollees and make money off them, without having to pay it to you!
So that’s a brief description of some of the systems that most network marketing programs use. They actually intend to cause your business to DEFAULT back to the conventional business pyramid “scheme”.
But the good news is that not all MLM opportunities do this! Look for those who specialize in helping the “little guy”, who don’t use the mechanisms mentioned above.
Filed under: Home Based Business