The Network Marketing Phenomenon

“According to Beverly Adler, there are over 500,000 millionaires in the United States and 20% of them made their fortune in the last six years in Network Marketing.”
-Bob Andrews

“It has to be the most accessible way for an ordinary person to build extraordinary wealth.”
-Deidre Sala

Now just a minute. Before we get any further down the road let’s get this pelican business straight. What is networking? It is a process in which individuals help other individuals achieve separate goals. It is not teamwork, where each member works toward a common end. In fact networkers need not have anything in common with each other. The diversity offers even more opportunity for trade. Doctors network with Pharmaceuticals and insurance companies. Salesman network with retailers and wholesaler, and of course politicians have been networking with everybody for years. Networking is just an organized approach to a basic human instinct for survival. “I’ll help you, if you help me.”

What is network marketing? It is a specific type of network in which an entrepreneur or small independent, businessperson has the merchandising rights to a product or service, and may sponsor (or recruit) others into the association, sharing with them the proceeds from the business generated. In some companies a person may even earn bonuses for volume generated by the distributors that his own distributors recruit. The same process may extend to yet another level of distributors, and another. You sign up Bob, he signs up Jim, who signs up Alice, and you earn bonuses from the volume of them all. Within a short time you could end up with dozens of distributors or independent business people in your network. Each one earning you yet another small bonus. Those small bonuses sometimes add up to a lot of money.

Don’t be fooled. This can be more than just a neighborhood business. In my own network business I’ve sponsored a governor of the state of Connecticut, a governor of the state of Florida, a White House speechwriter, a presidential candidate, a U.S. Senator, the American Secretary of the Interior, a star of an Academy Award-winning motion picture, and the list goes one. Incidentally, I also sponsored my neighbor. So far, he’s been the most successful.

What kid of products are we talking about? Almost anything. In 1984, the Wall Street Journal predicted that between 50% and 65% of all good and services will be sold through network marketing by the 1990’s. They weren’t far off. Today, AT&T, General Motors, Coca Cola, IBM, MCI, Packard-Bell, Pierre Cardin, Remington, Wedgewood, and more than 600 other major companies in the United States sell products through such networks. And it is the same story in Australia where distributors merchandise everything from Seiko watches to Vidal Sassoon shampoo. In Hungary the great Psion Company and Hungary Kodak are involved. One can buy or sell almost anything through network marketing.

What does it cost to become a distributor? It depends on the company, of course. Some of the biggest and best charge as little as $150.

How do you make money? Where does the money come from?

The money is generated from the sale of product and balloons quickly become of low overhead. A retail show requires money for rent, personnel, advertising, stocking of merchandize. In network marketing those dollars are captured and redistributed as bonuses to the network.

A word of caution. Fly-by-night, poorly-financed network companies abound. They are simply trying to get in on the shift in the marketplace. Watch out. Make sure the company qualifies with these six criteria:

1.) Does it stand by its product? Does it offer your money back, no questions asked? If not, forget it.

2.) Does it charge an exorbitant entry fee? Or suggest that you buy a lot of product to begin with? If so the alarm bells should be going off. In most countries this is illegal. It’s called “front loading.” The company wants to get its money out of you at the beginning because it knows that its marketing plan is weak and you won’t easily be able to sell its product.

3.) Can you theoretically earn more money than the person who recruits you? If not, you may be looking at an illegal pyramid scheme.

4.) Does the company have a variety of products? The more products available the easier it is to build a network. Less time is needed to develop a customer base. Fewer customers buying more things generate just as much money as a lot of customers buying a few things. This allows you to get a flow of money coming into the pipeline quickly while you concentrate on building a network.

5.) Make sure the company has a catalog. In the United State, catalog sales alone have now passed that of department store chains. They comprise more than 80% of network marketing sales. You can’t fight those percentages.

6.) Work with a company big enough to provide political protection. As you can imagine, not everyone is thrilled with the changes in the marketplace. Major retailers are suffering. In some countries, huge business lobbies attempt to get government to limit their networking competitors. Work with a company big enough to provide public relations support.

Since the industry is driven by personal recruitment and not by advertising, the press and media can occasionally be hostile. Major retailers spend millions of dollars for advertisements in their pages. Why should the press support the networking industry and see their own source of revenue diminish? Some networking companies in the industry become easy targets. Large firms have the resources to launch public service campaigns promoting charities or community projects. The media is appeased by the large advertising budgets and the public is more accepting.

Assuming you have found the right company. Where do you start? What is the quickest way to make it work? What do the most successful entrepreneurs have to say?