The Internet abounds with articles in praise of, or decrying as a scam, multi-level marketing (MLM), often known as network marketing. Why does this form of marketing elicit such extreme views?
The reality
MLM companies provide an opportunity for big profits for a relatively small initial investment and no specific skills. This is both a plus and a minus. There is no doubt that it is possible to be successful, and that there are many network marketing millionaires. However, the low cost and promised big incomes attract mainly those who have no previous business experience and very little cash behind them. While these do not preclude success, they are not an ideal starting springboard. Many of these people would not be successful starting out in any business.
The reality for most who do achieve success is that MLM takes time, seeding money, a professional attitude, commitment, and all of the characteristics that might be expected with any other business. It is not, (unless you are extremely lucky), a quick and easy way to make tons of money.
The rewards
MLM companies reward those who achieve above the average. The implication on signing up is that you will be able to earn your investment back quickly. However, the big bonuses and rewards will be yours only if you are able to do better than most. In the early period (which might be weeks, months or years), expect that your expenses are likely to exceed your income.
It may be simple, it's not easy
It sounds so easy to sell a product that you wanted to buy and sign up a few friends to do the same as you. However, you are likely to find that most friends are wary of MLM opportunities. Finding and retaining your own customers can be hard work. If it really was that easy, everyone would already be doing/buying it.
Don't let your enthusiasm destroy your market
The most common mistake of new network marketers is to try to sell the product and/or opportunity at every opportunity, and to use relationships to apply pressure to family and friends for support. The MLM companies tend to encourage this. It is this approach that leads to many of the accusations of 'scam'.
It's often said that 'ignorance on fire' is worth more than 'knowledge on ice'. Enthusiasm can be a more effective tool than knowledge. Enthusiasm is greatest and knowledge least at the beginning. Try to rein enthusiasm in to a professional level and don't use social occasions to sell. At most, ask if it would be okay to phone to make a time to meet to discuss your new business opportunity.
Success takes time and effort
The success rate of MLMers is quoted at around 5%. This figure does not include those who achieve their primary goal of supplementing income for a few years but don't build a successful downline team. However, a large proportion of those entering network marketing don't achieve the initial success that they expected, and give up without ever making a serious effort.
Choosing your company
Choose an MLM company that suits you. Some broad categories are:
- Party plan companies, selling products such as jewellery, lingerie, household and cleaning products. You are reliant on constantly finding new hosts unless you can build a regular clientele;
- Products sold one-on-one and by referrals; examples include health and nutritional products;
- Services, such as telecommunications and energy, also one-on-one, with implied ongoing commitment;
- Internet companies, selling a wide variety of products from a web site, travel is one example,.
Summary
Network marketing/MLM does offer a legitimate business opportunity. As with any business, it can take years to achieve a significant, ongoing income and success is never guaranteed. However, with a similar commitment, the probability of significant financial rewards in network marketing is at least as good as with most small businesses. In addition, start-up costs are less, and the time commitment is more flexible.
