The Real Problem with Network Marketing and Multi-Level Marketing (MLM)

HINT: It’s not the business model is it...

It never ceases to amaze me the extreme polar views on the topic of network marketing and MLM. Some people are passionate about it in the extreme, and there are even top celebrity authors like Robert Allen, Mark Victor Hansen, and Robert Kiyosaki doing it and advocating it. Yet, in many circles, you might as well declare yourself a leper as admit to being in network marketing.

So, what is the problem with MLM and network marketing?

Maybe it’s the pyramid structure? But you can’t really take issue with the tiered compensation structure—almost every large sales organization in the world has that. Salespeople get commission, and sales managers get overrides or bonuses on top of that, and sales directors on top of that, and VPs on top of that.

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

Now certainly, there are illegal pyramid, or “Ponzi”, schemes. This is where the money is all being made off of signing up other people, with little or no real product ever being delivered. But in spite of whatever perceptions people may have, the fact is that Amway, Excel, Meleleuca, PrePaid Legal, USANA, and many others have sold millions upon millions of dollars of products to happy customers, many of whom are NOT also reps. So, there may be a perception problem here, but if so, the perception is out of line with the reality.

But surely the bad reputation MLM’ers has some more basis in fact than the occasional illegal pyramid scheme?

The real problem with MLM is not MLM itself, but some of the people it attracts. Network marketing is just a business model, and it really amounts to “micro-franchising”. Its upside is that it has a very low cost of entry, with the potential for exceptional revenue, and there are those who achieve that.

But those same things that make it attractive make it attractive to many who are NOT really qualified or prepared to become business owners. The salient characteristics of MLM make it attractive to people who:

* have not done well in their business or profession and have little money saved up to invest
* have no previous experience owning or running a business
* have no previous experience in sales
* have little or no experience developing business relationships other than that of employer/employee/co-worker
* are not satisfied with their current level of income
* have unrealistic expectations of the amount of work involved compared to the revenue realized

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

As a result, many network marketers end up:

* over-selling the opportunity
* inappropriately discussing business in social situations
* coming across as desperate
* over-focused on new recruits and neglecting existing customers as a result
* being either inaccurate or deceptive when talking about their business

Again, I’m certainly not saying that this describes a majority of network marketers, but it does describe enough of them to tarnish the reputation of the rest. 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, even if 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, their first sales role, etc. My point is this—recognize it for what it is: it’s a business, and you are a business owner. And if you’ve never owned a business before, if you’ve never done sales before, if you’ve never networked before, you need to learn about how to do so, not just from the network marketing/MLM experts, but from established experts in those fields.

Network marketers who are serious about building a business should be reading and learning about business fundamentals, the latest sales and marketing techniques, strategies for networking and business development, etc., not just swapping tips at your team’s weekly or monthly meeting. Act like a small business owner, and people will treat you like one.

Thanks for this article! This has got to be the main problem for Network Marketing; attracting those who mar up the reputation of it. I have seen them all the time, They join an opportunity, and never show up for training. They figure they know it all and commit the dreaded sin: trying to re-invent the wheel. Either that or they never put enough time into the company's marketing model. And when they don't see results, they turn around and bad-mouth the opportunity, or even network marketing itself.

Take heed, all of you who read this article. Make sure you are learning the right ways to present your opportunity to interested individuals, from your program owners and other trusted sources. It is imperative to your success to do so!

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These are great descriptions of what's wrong in MLM, but there's one serious problem: descriptions only describe effects... the symptoms of the REAL underlying causes.

They don't define the reasons WHY things work — or don't work. They fail to reveal or explain the cause-and-effect relationships at work — or not.

The very real danger is that, in relieving those symptoms, you only mask the underlying disease, which festers on, untreated, until it kills the host organism... in this case, your MLM business.

So you swallow the painkillers — and mask the brain tumors silently causing those blinding headaches.

You apply new band-aids — and cover up the gangrene now poisoning your blood supply.

Some people claim that FEAR is the main problem — but fear is just a symptom, too. Something is causing that fear. (Visit MasterYourFEAR.com for more information.)

The REAL underlying cause of almost all problems in MLM is down to a single word — the exact same cause that sinks 90% of ALL small and home-based business owners:

IGNORANCE

They don't KNOW what they need to know to succeed!

Without the right know-how, they're doomed to failure. But knowing WHAT to do and HOW to do it isn't enough to put them in control. They also need to know WHY to do it, or they won't have a clue what's causing the problems if things don't work for them.

John

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Network marketing has a bad rap, no question about that. But then... so do a lot of other things.

The real question is why should you care what a few naysayers think? What really matters is whether what they think is true or not. If their negative statements blanket the entire industry, then you can be sure they are not based on fact. Otherwise, there would not be decades old companies with an A+ rating with the Better Business Bureau and fully compliant registrations with the proper authoritative bodies.

Once you look at a legitimate business model in the network marketing field, you'll be able to spot the shams in seconds flat. Avoiding those shams is the first step in being successful in this industry.

So rather than worry about what others might think... find a business model that actually works, that is easy to duplicate, that is based on a high standard of ethics. Talk to people with experience in this field to help you uncover the gems that might be suitable for you. You want something that's good for life. You do not want to have redo all your efforts a year or two down the road. For this reason, the company you choose to work with must be exemplary. If they are not, they will sooner or later fold.

Once you've found a company that you can put your heart into, get educated. Your company should provide you with all kinds of education. So should your team. There are legitimate folks who provide exceptional training... but buyer beware... most of its useless to a beginner. You need to know exactly how to make your first few bucks. How to get your first customers. And quickly.

Avoid the training that focuses on online marketing. It takes years to become any good at that! If you want money coming in now... then you need to employ methods that work now.

That may be contrary to everything you've learned so far... but all you need to do to see if it's true is to examine your results. Are you any closer to your goals than you were last week? Last month? Last year?

If you really want success in business... you need to focus on what works. Forget those who don't get it. The mlm model itself is not the problem. It's usually us... we're green and greedy, both of which can lead us down the wrong path. Contact me if you're struggling to find a company that's worth your efforts and if you want to know how to quickly get your first customers.

I'm on the lookout for folks who've got vision, guts and stamina. Is that you?

I think this is the biggest problem. I have been willing to put in 12 hours a day every day and yet without knowing what I should be doing I'm spinning my wheels and getting nowhere (yet!). I have tonnes of internet and computer skills but it's income skills I require and getting it by "osmosis" just from being on the internet is not going to get the job done.

I (personally) need specific guidance and steps from people who know what they are doing, are doing it and know what I have to do to make it work for me. Another problem I think we all face is not knowing who to believe. This is why it's important to find someone to follow (even at first) and to have some defined goals so you know how to proportionately spend your efforts.

I've followed heaps of (ill thinking) people only to be lead down garden paths often followed by many of my trusted subscribers (that sucks when you lead people down the wrong road innocently and accidentally). But what choice do we have? We are going to have to keep on taking a punt on people until we find the right person to follow. University lecturers and Professors are there for a reason. They KNOW what they are talking about and there's little question of that. We need to find people like that but in the internet income field.

Discussions (like this forum) are very helpful because they allow real people to discuss real results and to filter out the waste.