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What is the problem with Network Marketing and Multi-Level Marketing (MLM)?

November 11, 2011

It never ceases to amaze me the extreme polar views on the subject of network marketing and MLM. Some people are passionate about it in the end, and there are famous authors, including the likes of Robert Allen, Mark Victor Hansen and Robert Kiyosaki make and defend. However, in many circles, you might as well be declared a leper to admit that in network marketing.

So, what’s the problem with MLM and network marketing?

Maybe it’s the structure of the pyramid? But you can not really disagree with the structure, almost all compensation levels large sales organization in the world does. Salespeople get commission, and sales managers overrides or bonuses on top of this, sales managers and above that, and vice president at the top of this.

Or perhaps the fact that you have to pay to participate in it? But that can not be-that’s a standard model of the franchise. And I assure you, the franchise fee of most traditional franchises dwarf the cost of registration of any MLM program by comparison.

But, certainly, are not illegal pyramid or “Ponzi” schemes. This is where the money is all that was done outside the firm to others, with little or no real product that is delivered every time. But despite all that may have perceptions of people, the fact is that Amway, Excel, Meleleuca, PrePaid Legal, USANA, and many others have sold millions and millions of dollars of products to happy customers, many of the repeats which are not. Therefore, there may be a perception problem here, but if so, the perception is out of line with reality.

But surely the bad reputation MLM’ers has a base a little more on the fact that the illegal pyramid scheme and then?

The real problem with MLM is not MLM itself, but some of the people it attracts. Network marketing is a business model, and it really is a “micro-franchising”. Its advantage is that it has a very low cost of entry, with exceptional earning potential, and some people get it.

However, the very things that make it attractive make it attractive to many who are not really qualified or prepared to become business owners. The salient features of MLM make it attractive for people who:

* There have been no well in his business or profession and have little money saved to invest
* No previous experience in the ownership or management of a company
* No previous experience in sales
* They have little or no experience developing business relationships other than the employer / employee / colleague
* Not satisfied with their current income level
* They have unrealistic expectations of the amount of work compared to revenues

Do not get me wrong, I’m not saying there is anything wrong with any of these things, or even that this describes the majority of network marketers, only describes a disproportionate number of network marketers, and many of them never do anything about it.

As a result, many marketers end-to-network:

* Over-selling opportunity
* Inappropriate discuss business in social situations
* Coming across as desperate
* Too much focus on new recruits and neglecting existing customers as a result
* Be incorrect or misleading when it comes to your business

Again, I’m certainly not saying that this describes the majority of network marketers, but describes enough to tarnish the reputation of others. To pre-judge someone based on the basis of a small minority of people in that group is horribly unfair, but we must realize that most prejudices have some basis in reality, although it has been distorted.

So what’s the solution?

There’s a first time for everything. And network marketing / MLM is a great opportunity for people to have their first business, your first sales role, etc. What I mean is it to recognize what it is, is a business, and you are an owner of business. And if you’ve never owned a business before, if you’ve never done sales before, if you’ve never net before you need to learn how, not just the network marketing / MLM experts, but from established experts in these fields.

Network marketers who are serious about building a business should read and learn about business fundamentals, the latest sales techniques and marketing strategies for networking and business development, etc, not only to exchange tips on weekly or monthly meeting of his team. It acts as a small business, and people will treat you as such.

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