Network Marketing Today

Posted on June 5, 2013. Filed under: Business | Tags: , , , , , , |


Network Marketing has always been a profitable way to market a product because it uses word of mouth to promote a product line.  Incentives to work hard in selling products and to become a personal user is accomplished by a Distributor Marketing Plan.

Most popular Marketing Plans include three to five levels or variations of a binary plan (where a distributor works two or more direct legs as independent businesses).  Often new recruitments in the individual legs of a binary system (or variations) are placed under other distributors to build up a leg; however, the person with whom the recruit is placed under may not have had any part in the recruiting of him or her.

  • Bonuses go to the sponsor that the person is placed under with the idea that total volume will increase and so will everyone’s bonus increased.
  • This is NOT usually true when the new recruitment you brought is placed under someone above you.
  • The bonus goes up and not down.  For example, Sandy gets Connie to a meeting and tells her about the products and the marketing plan.  When Connie signs up, she is placed under Chris. The person who got $1700 checks was Chris, who did absolutely nothing in sponsoring Connie, and Sandy gets a $300 check on Connie’s volume.  This is the negative side of binary systems.

With every Network Marketing Plan I’ve seen or been a part of,  except for Amway, the upper level tiers make a bundle of money off the downline.  Many of those at the very top do not use the same Marketing Plan as the downline because they came in on the ground floor or more likely, they bought into a position.  This means their profits are based on the entire business and does not stop at levels or sponsorship.

Some Marketing Plans, such as Amway, are the most profitable for a distributors when it pays on total volume (on all levels) of the business. Some plans pay a different percentage on total volume from a distributorship when it qualify at higher levels than their sponsor’s.  For example, what separates Amway from other Marketing Plans is a distributorship can reach the top level (i.e., $7500 total volume) and break away to become it’s own business but the sponsor will still receive a percentage of that distributorship’s total volume (even a Diamond’s level or whatever level).

I am not trying to praise Amway as being the best Marketing Plan (even if I do believe that’s true), neither am I a distributor.  I use Amway only to show differences in the old standard of Multi-Level Marketing to other Network Marketing Plans being used today.

Is It A Pyramid?

What makes a Marketing Plan a pyramid is the inability of downline to recruit and make the same income as upline.  In other words, they’ll never make their money back on salespeople because there’s no one left to recruit!  Their opportunity to recruit ends.

I remember when Amway was investigated around the late 1970’s for an illegal pyramid and was found “Not Guilty”.   From that investigation, I learned how to quickly spot an illegal pyramid.

When the market is saturated with new distributors who are in the same pool as others trying to recruit.  For example, those who got into a business early are at the top of the pyramid and they’ve already made their money on the hundreds of new recruits.  Yet now, all new distributors have to compete with hundreds of distributors for the same small pool of potential recruits. The odds of a new recruit making his/her money back are worse than playing roulette in Vegas (source Taylor).

Most Network Marketing Companies are reputable and have an honest record after they have been in business for several years.  It’s when someone approaches you with a “ground floor opportunity” and says you can make a lot of money within a short period of time, it should send you packing in the opposite direction — unless you are an unscrupulous opportunist.

If you want to use and abuse your friends and associates to make money off their trust or ignorance, then you will do just that in spite of what I say.  There will always be people such as these so you must be leery of them.  You will easily find them in the entrepreneur world so you would be wise to stay far away from them.  You will lose your own reputation by being associated with them and you may never again earn trust from those you know.

My recommendations are as follows:

  • Take your time before jumping into a new “ground floor” business.
  • Test the integrity of those upline from you.
  • Evaluate how committed top upline are in teaching and practicing sound business principles.
  • Listen to what they teach and consider if it makes sense to you or if it seems more like a bunch of hype to get you signed up quickly.
  • Realize that “group meetings” are useful in getting you around other associates, and helpful in you evaluating the upline.
  • However, keep in mind that group meetings are also useful in getting you caught up in the enthusiasm of new recruits and people who are signing up at the meeting.  These activities often get you to step in without much time to test the business and upline.
  • If they are in a hurry to get you signed up, then that should cause you to be cautious.
  • Don’t be afraid to immediately walk away when something seems wrong or too hard to believe; which means you must drive yourself to the meeting versus meeting in your home or at a group meeting so you can leave when you want.
  • Be sure to ask a lot of questions to see how the perspective sponsor and/or upline responds.

If you have questions, feel free to send me an email with your questions.


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