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    Multi-Level Network Marketing

    Your image of network marketing (also known as multi-level marketing or direct sales marketing) has probably been greatly influenced by who explained the system to you. Network marketing companies include such well known corporations as Amway, Mary Kay Cosmetics, Avon and Tupperware, along with thousands of smaller companies. These companies have successfully recruited millions of people to be independent distributors for their products by explaining the huge amount of wealth which can be earned working within the network marketing system. Those who have been successful claim that network marketing is the best thing since sliced bread, while detractors often say it is nothing more than a "sell to your family and friends" scheme. The truth lies somewhere between the two opinions.

    The first, and most important, issue to make clear is that legitimate network marketing companies are not illegal pyramid schemes. Part of network marketing's huge image problem, however, comes from the fact that many illegal pyramid schemes today promote themselves as network marketing ventures and there are quite a few network marketing companies that live on the edge of being one or the other. Since it is often difficult for someone who has not thoroughly researched network marketing to tell the difference between the two, it is essential that you do your homework before committing any money to a network marketing venture.

    The easiest way to distinguish between an illegal pyramid scheme claiming to be a network marketing company and a reputable network marketing company is to understand where the company makes the majority of its profits. Illegal pyramid schemes grow by requiring large initial sign-up fees or expensive initial product purchases from new members which make up their main revenue source. Reputable network marketing companies, on the other hand, derive the majority of their revenue from the products or services being sold to the public by their independent distributors. If a company claims to be a network marketing entity, yet demands a large fee before you can start selling their product, or requires you to invest a significant amount of money for "inventory" before you begin selling, the red flags should be raised and you need to take an extra careful look to make sure the venture is legitimate.

    Another red flag is when the company explains that you can make huge amounts of money by simply recruiting others. When sales pitches wander off the subject of the companies products and begin to focus on recruiting others as your main revenue source, there is a good chance that the venture is an illegal pyramid scheme and not a legitimate network marketing enterprise. Another sign that things may not be legitimate is the company only having a single product for sale.

    Network marketing's appeal is obvious to anyone who has heard a network marketing network company's sales pitch. Not only do you get commissions on the products you sell, you will also receive commissions on the products which other independent distributors sell that you have recruited. The extra commissions can often come from a number of different independent distributor layers (called the distributors down-line) and it is easy to see even by those who aren't strong in math the potential earnings which can be made if a large down-line is created.

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    Network marketing companies are able to offer commissions on products sold by down-line distributors because their operating cost structure differs greatly from a normal retail company. For instance, network marketing companies don't need to spend huge amounts on advertising since their products are sold by word of mouth. They don't have to deal with the high cost of retail space since most independent distributors work from their home, while products are distributed directly to the buying customer avoiding distribution middlemen. The biggest savings, however, comes from the fact that network marketing companies don't have to pay a sales force (you, the independent distributor) a fixed base salary. The network marketing companies pass these savings onto their independent distributors for recruiting more independent distributors to sell their product so the company can grow.

    For example, after you become an independent distributor, you recruit person A to also be an independent distributor for the company. Person A in turn recruits person B and person C. Person C then recruits three more independent distributors, D, E and F. Each month you would not only receive the commissions on the products you sold, but you would also receive a smaller commission (i.e. 5%) on all the products that person A sold, a slightly lower commission (i.e.3%) on all the products which person B and person C sold, and an even lower commission (i.e. 2%) for any products which persons D, E and F sold even though you may have no idea who persons B,C,D E and F are. Since you can potentially earn commissions on products that you don't actually sell, creating a down-line below you can be quite financially rewarding and is what influences most people to join without fully researching what it will take to succeed.

    The actual commissions received and how deep the independent distributor down-line goes varies greatly depending on the network marketing company, although between three and seven layers is common. One issue to carefully investigate when considering a network marketing company is whether or not there is a monthly quota which must be maintained to keep your down-line distributors' commissions coming to you. This is vitally important because one below par month when you don't meet your quota can destroy years of network building. Quotas can also force an independent distributor to buy unneeded merchandise in order to not lose their down-line distributor commissions.

    One factor that is essential to understand to be successful in network marketing is that you have to enjoy sales. Becoming a independent distributor is basically becoming a sales agent for the company. Those with little or no sales experience will find success in network marketing difficult. Although the recruitment of others holds the potential to make you extra money, you should never join a network marketing company for the sole purpose of recruiting others if you don't feel that you can also sell the products they offer yourself.

    The start up costs for a legitimate network marketing company are small compared with most business ventures available. You may need sample products to show potential customers, but a catalog of the company's products should suffice for most of you sales. Costs for a network marketing service industry company should be minimal to nothing since you won't need to show any sample products to your potential customers.

    If you are considering getting involved in a network marketing venture, you should approach it with the same discretion you would with any other investment you would make. The biggest mistake people make when they decide to become a network marketing independent distributor is assuming it will be easy money. The potential to make a respectable second income exists, but it won't happen overnight. It will take years of hard work just as if you were beginning any other new business venture. SavingAdvice.com encourages thorough research in order to make a quality and informed decision when it comes to your money.

    #2
    Re: Multi-Level Network Marketing

    After spending years working with, developing and mixing with network marketers there are a couple of very common traits that become obvious.

    The people who make money in network marketing would make money in anything that did.

    The rewards for network marketing are just around the corner and will always come if you try a little harder or stick with it a little longer or so the sponsor says.

    The comment "This has to work because I need the money" is a heartfelt cry, not a reason why something will work.

    Yes there are benefits in multilevel marketing but those benefits require hard work and there is no guarantee that the situation won't change tomorrow.

    Enjoy Your Money
    The Budget Man
    www.PersonalityBudgeting.com wher you discover how to enjoy the money you have!

    Comment


      #3
      Re: Multi-Level Network Marketing

      curious to see how many people (if any) have ever engaged in this, and how is/was the experience?

      Comment


        #4
        Re: Multi-Level Network Marketing

        I haven't, but I have a friend who did (Equinox). He lost 6k before the "company" was legally slapped for fraud or something like that. Then they were banned from doing business in our city.

        There is another one that was doing hugely well a few years ago. I got "propositioned" quite often, and didn't know why until I foudn out that it could be because I lived close to where their main regional office was located.

        Finally, one of my erm co-workers is involved in a travel-agency one. He's a decent man who hasn't tried any gimmicky tricks, which I applaud him for. Istead, gave me the bottom line on the numbers and their internal documents. From the looks of it, very, very few people will make money off of it. This co-worker is out $500 at this point, and will continue to cost him $50 per month to maintain his web presence.

        Comment


          #5
          Re: Multi-Level Network Marketing

          Originally posted by Broken Arrow
          I haven't, but I have a friend who did (Equinox). He lost 6k before the "company" was legally slapped for fraud or something like that. Then they were banned from doing business in our city.

          There is another one that was doing hugely well a few years ago. I got "propositioned" quite often, and didn't know why until I foudn out that it could be because I lived close to where their main regional office was located.

          Finally, one of my erm co-workers is involved in a travel-agency one. He's a decent man who hasn't tried any gimmicky tricks, which I applaud him for. Istead, gave me the bottom line on the numbers and their internal documents. From the looks of it, very, very few people will make money off of it. This co-worker is out $500 at this point, and will continue to cost him $50 per month to maintain his web presence.

          so in other words not lookin to good from your perspective. Thanks for your input.

          Comment


            #6
            Re: Multi-Level Network Marketing

            I always find the people in MLM companies are great and over the years I've earnt far more money speaking at their meetings (about non MLM products) than I ever have made from selling their products.

            Enjoy Your Money
            The Budget Man

            www.PersonalityBudgeting.com
            Discover how to enjoy the money you have

            Comment


              #7
              Re: Multi-Level Network Marketing

              Originally posted by TMoney
              so in other words not lookin to good from your perspective. Thanks for your input.
              Well I admit I am not too fond of MLMs. But that's largely because I have yet to meet one that I actually like. In fact, here's my latest rant on it at the time of this writing.

              But, to be perfectly fair, I don't see anything inherently wrong with the direct/network marketing model if it actually conducts honest, sound business. The unfortunate fact is that many (perhaps most) does not. For example:

              1. As mentioned in my link, I was propositioned by a loan-based MLM. Making commissions based on loans. Think about that for a moment. You basically benefit by encouraging other people to go into as deep in debt as possible. It may not be illegal, but it certainly puts a bad taste in my mouth.

              2. Another co-worker of mine is involved in a travel agency MLM. Here, the problem doesn't lie in the core products/services. Rather, it was the business model. Specifically, they make you buy a version of their own website. Why do we need to do that? Doesn't it make more sense to establish a one-stop shop? The answer becomes painfully obvious when you look at the startup cost: $500 for them to set it up for you(!) AND $50 a month to maintain it! Please take a few seconds and let that sink in for a moment.

              3. Another friend of mine was involved in a MLM that sold health aids and beauty products. The main draw? Special ionized ginseng tonics that can be used for anything under the sun, from healthier skin to improved virility. Seriously! He lost $6,000 before our fair city sued that "company" for fraud, and was ultimately banned from doing business here.

              When people are considering MLMs, I hope they will ask themselves one simple question: Why are they trying to woo you so hard? The reason is simple: They are actually selling TWO products, not one. The first is a core product / service, and really, it could be anything under the sun. The second is that they are selling you a dream. They are preying on your ego, enticing you with hopes of quick, easy money. Yes, it's may be possible for some... but if you want the real truth, all you have to do is look at how YOUR hard-earned money is leaving your pocket and going into theirs. Remember, you're not just a potential "business partner". You're also their customer! That is the inherent nature of MLMs.

              But let me end this tirade with some balance. As I mentioned in the beginning, I DO think that it is possible for MLMs to do honest business. In the end, it's just a more elaborate version of a door-to-door salesman, and really, there's nothing wrong with that.

              However, as both a potential business partner as well as a customer, we need to put on our business hat and suit, and look at this with objectivity and critical thinking. If they want to do busines, let's do business! If they want to talk shop, let's talk shop! Don't let their flowery sales pitch fool you.

              Look at what they are selling. Is it a good, honest product?

              Look at how they are structured. Is it a good, honest networking model?

              Look at what you are investing in. Is it actually a viable investment for your own hard-earned money?

              Then decide if it can work for you. And I honestly do believe that it can work for some.

              But whatever it is, don't let them insult your intelligence. Be that savvy business man that they claim you are. Listen to everything, weigh everything, then decide if MLMs are actually right for you.

              Comment


                #8
                Re: Multi-Level Network Marketing

                Broken Arrow you have put the situation perfectly.

                Enjoy Your Money
                The Budget Man

                www.PersonalityBudgeting.com
                How to live happily with the income you have!

                Comment


                  #9
                  I never even knew about this stuff...thanks!

                  Comment


                    #10
                    I have experience with I think 3 network marketing companies. I have a recommendation for you. If you want affiliate commissions go with affiliate programs. They are free, and program claiming to be an affiliate program that wants you to pay them so you can sell their products is not a true affiliate program in my mind. The only reason to pay so that you can sell something is if you are getting a service you already pay for. If it will work out to not cost you anything but may potentially get you a reward, why not do it. As many people as I am going to make mad saying this, do you really need $200 a month worth of vitamins? a $10000 dollar 3 to5 day vacation so you can sell them making $1000 each(good luck finding friends to take that with you)? ; I seriously doubt it. Is it worth spending $500 to get a website then $100 a month just for permission to sell a product for a company? You are helping the company out by selling their products and they are charging you for it. I am not saying that all of these programs are bad, far from it. I am still a member of 1 MLM, but I am not going to say what it is. Why will I talk like this and still be a member of 1? I use the products, I don't pay extra for it, it is worth it for what I do. I am a new member and not just promoting I found this site while working on one of my affiliate based websites and wanted to state what I have learned the hard way. I don't want to see anyone give away the thousands of dollars I did looking to find money. It does not cost money to make money in the electronic online age. If you don't use the product, in the quantity you will have to get, and it will cost you extra money every month I hate to tell you this but you are moving further from where you want to be. Yes you clean your house, but not to the extent of spending $200 a month on cleaners, You may take Vitamins but I bet they don't cost you $100/ month. You want to be making money, not spending more of it. If you would use the product, and not be paying any extra for it, it does in my opinion count as free; there is no added cost from it. If not, a more logical idea if you are in need of more money without more debt would be an affiliate program. If I offended anyone I am sorry my username is the same everywhere. No need to get angry and stay that way find me blow up my email with spam, my messages everywhere, etc... I really am sorry for anyone that I may have offended I am not singling out any specific product, service or person. With that said I want people to realize that you can not logically join a company for a person or name on the company. The products, business plan, compensation plan, and cost are the only things you should be looking at.

                    Comment


                      #11
                      I think that some like pampered chef, tupperware, etc. Are good for stay at home mom's. They have a good history, good warrenty on products. BUT you have to have the personality for it. I did Pampered chef for a while, but didn't like rejections so I quit it.

                      Comment


                        #12
                        Interesting discussion, I just havn't ever seen any success for myself or others with network marketing. Plus so many of the companies seem to be so scammy. Though not all. I'm sure that there are those able to succeed at it though.

                        Comment


                          #13
                          Interesting discussion, I just havn't ever seen any success for myself or others with network marketing. Plus so many of the companies seem to be so scammy. Though not all. I'm sure that there are those able to succeed at it though

                          Comment


                            #14
                            Network Marketing Companies

                            Sounds like there has not been a lot of positive experience with network marketing companies amongst the members of this forum.

                            As a consultant to home-based business people over the years I must admit that I have come across LOTS OF SCAMS!!! However there are literally hundreds of legitimate companies out there and people who are quietly (and not so quietly) making money running those businesses.

                            Part of the problem with MLM is that it has gotten a reputation as being a bunch of "get rich quick" schemes. This is reinforced by shady individuals who jump from program to program making promises of big payouts without little or no work. Any legitimate network marketing business is going to take time to build. Just like any other business it is going to take an investment of time and money.

                            Just like you can't open a more traditional store without learning the business,investing in product,and putting in time, a network marketing company is not going to build itself.

                            Yes, the potential is unlimited but it is not for everybody. No matter how good the product, it is sales. Can you handle the 10 nos you need to get to yes?

                            First you need to believe in and USE the products or services yourself.

                            Second, you need to be involved with a solid company with quality products and a support system.

                            Third, you need to choose your sponsor wisely. do they seem knowledgeable about the product? Can you ask questions and get information? Are they able to assist you in selling and recruiting?

                            I know quite a few people who have made and who are making a part-time and even a very good full-time living with solid network marketing companies. Including myself.

                            It is not the business model that is the culprit, its usually the misrepresentation of that model that gives the industry a bad name.

                            Comment


                              #15
                              When I first heard about network marketing, I was against it. But after opening my mind, I began to see advantages that few other business opportunities offer. Long-term success in life is a reflection of your education, life experience and personal character

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