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Articles - Network Marketing

THE WAY IT WAS

Author: Lon Lindsey

Let me, first mention the history of the MLM/networking industry. Networking was founded on the principles of great products and the sharing of such. In fact, the oldest direct sales company in America is now a network marketing company based on the sales of products and sharing the concept of retailing products to make money, but through a strategy of networking in order to find others who will do the same. 

The answer to the "Which Comes First" question really rests with the business opportunity seeker based on how he wants to build his business. What I am about to share with you may help you determine the kind of networking company you may want to align yourself with.

Let me start by saying "the face of the network marketing industry has changed drastically in the past 15 years." With the emergence of computer technology, network marketing has taken on a new look in terms of what is on the "front door" as you come knocking. With the introduction of the Internet as an additional medium for networking, the whole MLM industry has seen a new emphasis.

 PRODUCTS, PRODUCTS, PRODUCTS!

Just to give you an idea what I am talking about, 20 years ago a prospective sponsor would sit down across the kitchen table with you . .pull out his catalog of products ... show you some sample products or may even have a small home meeting demonstrating the excellence of their product line and then tell you how you can make money, not only selling the products, but having a distributorship. In so doing, you could set other people up with a distributorship which would allow you to retail products AND earn commissions from the products sold by your distributors you signed up under you. In other words, they led with the products first. There are companies that continue to use that approach today and with certain companies, that is a necessary approach to take and certainly makes sense.

 HOW ABOUT A BUSINESS OPPORTUNITY?

In the eighties we started seeing an emergence of "business opportunity" in the headlines as a way to attract people to MLM. This emergence led to a new approach in network marketing ...

"Mail Order." No longer was it necessary to have local meetings or to meet across the kitchen table with people. Simply send out a mail piece and sign people up. Companies had the ability to manage databases of people and to run commission checks so "business opportunity" became the lead-in rather than products. Although these type companies were backed up by products, the emphasis on products was not the same for some companies . . . and in fact . . .brought on certain companies that were "here today and gone tomorrow" because the products were not good enough to keep people involved. Remember, itís the sale of products that generate commissions for the distributors.

 LETíS MAKE SOME MONEY!

In the early nineties, the personal computer became so popular that it was possible for "John Doe" to start up his own program . . .right from his own kitchen table. With this came on the "Make Money" approach to MLM. Many times the word "business" was not even mentioned. It was about making money regardless of the products and in some cases illegal MLM schemes were developed with the intention of going out of business at some point ... even being put out of business due to attorney general probes or postal regulations. It was this phase of MLM that started giving MLM a questionable name because the good, the bad, the ugly were all grouped under MLM . .even if they were illegal pyramid schemes or ponzi schemes.

At this point, I might add that there were still legitimate product oriented MLM companies continuing to prod along just as they have been doing for years, but due to the hype of "make money" people were being lured toward these "make money" type companies. So what began to happen was the truly product oriented MLM companies began having competition from the short lived "make money" type programs.

 LETíS MAKE MONEY, AND I'LL DO IT FOR YOU!

Something else happened at this time as well. The "Make Money" programs hyped the "donít work hard" image and in some cases . . "weíll do it for you." Letís face it. If people could make money without working very hard . . either due to their not having time or their just not wanting to work hard . ..certainly people would jump on the bandwagon of the "make money" type companies over the slower to build product oriented companies and that is exactly what happened. The result was, many people  getting a bad impression of MLM due to a company going out of business or due to lack of focus on what the company had to offer other than  ust making money. This is why you will see ads that say "this is not MLM" because they know many people have been hurt in the "not so legitimate" companies. Unfortunately it takes only a few bad experiences and negative publicity to give the whole  industry a black eye.

 MAKE MONEY . . . FAST!!

Well, if that wasn't bad enough, the Internet emerged and it was no longer just "make money." Now it was "Make Money FAST!" It was no longer good enough to just make money. You had to make it fast . . . you know . . . like $90,000 in three months or become a millionaire in six months! In addition to that, the Internet began to attract another kind of person . . .the person who could barely afford his monthly ISP service, but accessed the Internet in the hope of getting his share of the Internet Gold. Along came people who not only could not afford products to buy, they could not afford the cost of adequately marketing their business in a way to build a solid foundation for that  business. The result has been a majority of the business seekers who join one program today to "Make Money FAST" . . find they didn't make it fast so they jumped to the  next company and so on. These "jumpers" are spending $50 here and $50 there, but they are not spending what is necessary to build a solid business . . time, energy, focus and persistence. Now I realize I just made a generalization and realize not everyone does this, but I have personally noticed a tremendous number of people who  basically can't afford even the products to build their business. In other words, there is no such thing as product loyalty because people often times join a company or program based only on the dream and hype of making fast money. So . .why do they get involved? Because we tell them they can make money FAST and itís easy! In order to compete, networkers have had to learn how to hype and this hype has led to disillusionment and disappointment, especially to the new networker who has no idea what it really takes to build a long-term successful business.

 THE GOOD NEWS!

The good news is, there have been some legitimate networking companies that have come on the scene that have taken network marketing a step further. It is the new age of networking and leaves behind the days of stocking products, going door to door and emphasizing the retailing of products. This new approach is called "Referral Marketing." It is now possible for a distributor to simply refer customers and other "distributors to be" directly to the company with the sponsor getting credit for any products sold from that direct referral. The question is still about do we lead with products first or the opportunity first, but with referral marketing, one can very easily lead with either one.

Because of what has taken place over the past few years, leading with the business opportunity is a necessity, BUT only if it can be backed up with excellent products.

Let me provide you with three examples.

1. Suppose I approach you with this: "I've got the best nutritional supplement product available on the market and because of that, you can make money" Feel free to substitute another product . . like ISP, web hosting, telephone service, etc. As a business seeker, does that excite you?

2. Now, suppose I approach you with this: "I've got this product that no one else has and I have the sole rights to it so we will be the only ones able to market it. Because of that, you have a tremendous opportunity to make money." Understanding that it is hard to respond to such unless you know what the product is, the intrigue and power is in the fact that this company has exclusive rights to a unique product that no one else has.

3. Now suppose I approach you with this statement: "I have a business opportunity that has a compensation plan that is so powerful that you will make an excellent income in a very short period of time." Often times the first question is "what is the product" but the real interest of the network marketer is regarding the compensation plan.

For me, the second example would be most powerful because the thought of a product that people would want with my being associated with the only company in which they could get it from would seem to be a tremendous opportunity. The problem is, it seems such products either do not exist or they get copied so they are no longer a unique product or service. In fact, I've even heard the statement that "if we had a product no one else has or can produce, why would we need MLM to distribute it?" So
although this second example may be the most powerful of the three examples, in reality it really doesn't exist in the MLM arena.

The third example is where the action is in todayís MLM arena. It all boils down to making money. If the product is good enough to promote notice . . I didn't say the best . . .just good enough) and if people can make money promoting the compensation plan knowing they have good enough products to back them up, then that is what is attracting people to MLM.

 IS THERE REALLY TRUE PRODUCT LOYALTY?

The truth is there is no real loyalty in products. Loyalty is based on making money. When I say no real loyalty in products, I'm talking about if a person would use those products even if they didn't participate in the business opportunity. It is easy to be a loyal product user when starting a company and certainly when making money with that company, but the true test is whether a person will use the products even when they are not making money. If people showed their loyalty to products even if they were not making money, more people would make money because people are consuming the product which is the basis of commission generation.

 CHANGING PEOPLEíS HABITS

Another factor is changing habits of people. For the most part, people go to stores and purchase products. That is a habit based on years of doing such. Changing ones  habits require motivation to do so. If the motivation is based on making money rather than being really sold and loyal to the products, then once a person decides he cannot make money based on that company/product and moves on to another, will he continue to use those products? I maintain the answer to that is "no" with the result being people going back to their old habits or moving on to another company and trying a different set of products. You see, the name of the game is making money . . .not promoting the best products. I've seen it time and time again . .. We have the best products money can buy, but only as long as I'm successfully building my business. All of a sudden, the products seem not to be the best products money can buy.

 ITíS THE NEEDS AND DREAMS THAT DICTATE

Itís the needs and dreams that dictate our actions. You see, we ] don't "need" to have the best products. We don't "need" to purchase products from a MLM company. We don't dream of being able to buy or sell products. Instead we have a need to make money. We have a dream to become financially independent. Itís our needs and dreams that motivate us to take action so what interests us the most is making money.

 SO WHICH IS IT . . . PRODUCTS OR THE OPPORTUNITY?

Based on that, it would seem the answer to the question . . which comes first . . .Products or the opportunity . . the answer is clearly the opportunity . . .but more clearly, the compensation plan. In other words, can I show you a compensation plan that will allow you to make money rather quickly, yet am backed up by good enough products to promote AND a company that is legitimate and stable?

The old companies, of the past, that are trying to continue and grow based on their heritage and products, are not growing at the same rate as those companies that have developed state-of-the-art compensation plans. By state-of-the-art compensation plans, I'm talking about compensation plans that adequately reward the beginner as well as lucratively rewarding the seasoned MLMer who builds a huge business organization. In other words, the ideal compensation plan is one that will keep the beginner involved long enough to make money quickly so he will stick with the business and at the same time lucratively compensate the leaders for reaching leader levels in the compensation plan.

I've seen newer companies with state-of-the-art compensation plans generate more volume in one month than some of the older companies with outdated compensation plans do in a full year.  The rebuttal is usually "but our company won't go out of business while those new companies will probably be out of business within two to five years." There is some truth to that, but there are now companies that are 3 - 20 years old that have become stable growth companies with state-of- the art compensation plans. It is now possible to align yourself to a company with a compensation plan that is stable enough to feel confident that they will be around for the long haul.


About the author:
Lon Lindsey is publisher and editor of his own ezine called "The Master Networker . . The Art of Building A Business." For past informative articles on the network marketing industry and for future insights on network marketing, you can FREELY subscribe to The Master Networker by going to http://www.Masternetworker.com

 

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