Real Problem with Network Marketing

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

Daily I’m amazed at the polarization associated with network marketing. What is the problem with network marketing? If you have ever heard anything about network marketing you will find the first thought of many is; it’s a pyramid scheme.

At the other end, you have may reputable authors like Robert Allen, Mark Victor Hansen and Robert Kiyosaki advocating it and building a MLM business.

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What is the Problem With Network Marketing and MLM?

It must be the pyramid compensation model. No, but wait, can this really be the problem? Almost every organization in our global economy has a structure like this. Sales people get commissions, and sales managers get overrides or bonuses on top of that, and sales directors on top of that, and VPs on top of that.

I’ve got it. It must be because there is a cost to participate in the network marketing model. Oh, that’s right, that is similar to the traditional franchising model, but the cost is exponentially higher for franchising.

They must all be “ponzi” schemes. This is where money is being made without any product ever being delivered. Just a moment, there are companies that have been around for years such as: Amway, Excel, PrePaid Legal, USANA and any others that have sold millions of dollars in products with happy customers and distributors.

Maybe there is a perception problem with network marketing and it’s not the business model!

Network Marketing has a Perception Problem Not a Bad Business Model

I think some of the real problem with network marketing is the people it attracts. Network marketing is 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 or other than that of employer/employees/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

This puts people at a disadvantage immediately unless they have a team of people who will help them succeed and train them so they get through the huge learning curve.

As a result of lack of training and skills going into network marketing many 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

What is the Solution?

Do your research
Get with a team that has training programs set up to help you
Talk to and understand who you are getting in business with
Take your time and keep educating yourself

There is not a problem with network marketing if you work it like a small business and educate yourself.

Network marketers who are serious about building a business should be reading and learning about business fundamentals, strategies for networking and business development, etc.