If you haven’t tried network marketing, you probably have a family member or friend who has. It’s one of the fastest growing sales models in America. If you have considered network marketing weird or slimy, it’s time to rethink.
Let’s address some of the common misconceptions about network marketing or MLM:
#1 – It’s a Pyramid Scheme
Recently I was at dinner with my wife and daughter. We admired the charisma and spirit of our waiter as he told us about his career goals, yet confessed the field he wanted to pursue wouldn’t deliver a very high salary. We suggested network marketing. He quickly threw out the “Pyramid Scheme” nomenclature and the conversation wrapped. He has no idea how successful my wife is.
We tried.
99.9% of the people who use the term “pyramid scheme” have no idea what they’re talking about. They think they sound cool, but in reality they’re advertising a lack of knowledge. People assume that if a business resembles a pyramid, it’s a pyramid scheme. That’s like saying a hot air balloon must be a planet because it’s round and positioned high in the air.
The GAP Retail Store Example
Let’s use Gap Inc. as an example. Most of us have purchased a clothing item from Gap (who also owns Old Navy and Banana Republic). I used to work for Banana Republic back in the day, and have seen behind the scenes details of how things work.
At the very top of Gap Inc. sits Art Peck (as of 2019). Under him you’ll find the Global Presidents of Old Navy, Gap and Banana Republic. Somewhere under these executive roles you’ll hit regional managers. Then district managers, individual store managers, assistant managers and eventually you’ll end up at the lowly sales associates who are actually responsible for selling the products, yet make the least out of everyone.
If you consider the GAP business structure, what does it sound like?
Bingo.
Pretty much every institution in our country, from the American Government to your family tree, resembles a pyramid. And guess what? There’s nothing wrong with that. The Egyptians definitely dug it.
So if a pyramid structure isn’t bad, what is a pyramid scheme? Investopedia.com has a definition that explains it well:
See the difference? A pyramid scheme is Gap Inc. minus the clothing.
A quality network marketing company is all about their products, with the majority of customers being just that – customers. Only a small percentage of people involved in a network marketing company are actual distributors or business builders.
#2 – Prices Are Raised to Pay Distributors
This is a common claim you’ll hear. People accuse network marketing companies of hiking product costs to pay distributors. This argument (yet again) broadcasts a lack of understanding of the modern business world.
Let’s stick with the Gap Inc. example and discuss areas that affect product cost:
A) Product Quality
Having worked for Banana Republic, I can tell you the majority of BR clothing is pretty high quality. But you pay for that. In the Gap Inc. family you’ll find the lowest quality of clothing at Old Navy, then Gap and then Banana Republic crushing both of them. This difference in quality also means a sharp difference in price.
The same goes for network marketing. Consider Young Living Essential Oils. This is the network marketing company my wife and I are involved with. Young Living has been around longer than any other essential oils company. They’re the only ones with a Seed to Seal® quality guarantee. Young Living also uses the most sophisticated lab testing processes in the world.
And guess what? You pay for all of that.
Can someone go purchase lavender oil from their local health food store for less than Young Living? Sure. I think you can even get them at Target now. Is the quality the same? Not even in the same vicinity.
B) Marketing & Sales
So here’s where things really get interesting:
All retail companies spend a lot on marketing. It’s reported that Gap spends around $650 million dollars a year on advertising – give or take a few million.
Did that sink in?
This doesn’t include what Gap pays out to their CEO, global brand presidents, regional managers, district managers, store managers, assistant managers and sales associates.
You know… the pyramid.
That $650 million also doesn’t take into account the costs of leasing thousands of store fronts, annual utility costs and employee benefits.
Ouch.
Every piece of clothing you see neatly hanging in an Old Navy, Gap or Banana Republic store is wildly marked up to cover these business costs.
Network marketing companies can be very efficient with operating costs.
Going back to Young Living Essential Oils: They don’t have to spend money on storefronts, employee benefits, TV ads or marketing campaigns. Instead they use their money to pay distributors who are carrying the sales and marketing load. Young Living doesn’t need to hike product costs to pay. They simply take the money they didn’t spend on retail stores, employee benefits, and crazy expensive marketing strategies.
So are network marketing products overpriced to pay distributors? No more than every other item you purchase from your local grocery store, Best Buy or Gap Inc. Ever wonder why you can buy a shirt at Banana for 40-50% off most of the year?
Now that’s markup!
#3 – Network Marketers Are Pushy & Slimy
Can network marketing pros do it wrong? Oh my goodness yes.
One day an old friend I’d attended grade school with reconnected with me on Facebook. When I saw the friend request I quickly approved it. They proceeded to send me a message. I opened it only to realize they were asking me to get involved in their network marketing company. After 20 years of silence, this is what they had to say? Honestly, I was really offended.
We’ve all had that distant relative or friend who reappears in our life only to ask us to buy their amazing products. And it’s all too easy to quickly stereotype the sales model because of this.
But have you ever had a bad experience at a retail establishment?
I have. The last one was Home Depot on the island of Kauai. It was horrible customer service. Does this mean all retail stores are bad? Does it even mean all Home Depot stores are bad?
Of course not.
I’d be stupid to boycott Home Depot because a single sales manager at an island store didn’t give a rat’s rear about customer service.
It’s not the sales model, but rather individuals who taint the model and cause the problems. However with that, for some reason it seems that people do it the wrong way more often in network marketing.
Why is that?
A) Uneducated Business Owners
The reason your long-lost-friend-turned-network-marketer hits you as slimy is because they simply don’t know how to operate a business. IMHO, this is the primary issue with network marketing: People can be business owners without any training on how to sell.
Let’s say I still worked for Banana Republic, and every time I sat down to have a drink with friends, all I wanted to talk about was the latest dress shirts or chinos. Would my friends want to hang out with me? No. What if I called my long lost uncle and asked him to come in and purchase a BR dress shirt from the store I worked at? Would that call go over well? Of course not.
But when you’re an employee at a Banana Republic store, they teach you how to sell the right way.
B) No Walls for Business
Here’s something you must understand: In most professions, your work is forced into the four walls of a building.
When I punched the clock at BR, the last thing I thought about was trying to sell another piece of clothing. But for network marketers, the entire world is the sales floor. It takes learning to navigate this correctly.
Network Marketers also have to pursue training on their own: There is no sales lead or manager telling them how to do it right, unless they have an experience team leader above them.
“Don’t be weird!” is what my wife Sandi is always telling her people. When Sandi first started selling Young Living, she spent a lot of time and money in training. A lot of time and money. Sandi learned how to sell the right way, and her hard work really paid off. It helped her be successful while protecting relationships.
C) Poor Products
Another problem that damages the network marketing model are companies with lame products. Since network marketing is still “new” and different, it’s easy for a single company to tarnish the entire industry. But that simply isn’t fair.
If I go to Old Navy and have a bad experience, I apply my opinion to the brand as opposed to forming a global stereotype of Gap Inc. or the retail model as a whole.
Just like there are many inferior products in the retail industry, there are many inferior products pushed via network marketing. As with anything you purchase, you must do your research. Trust me, you’re going to have friends and family who become network marketers selling a product that just isn’t the best out there.
Don’t judge the model. Judge the company.
#4 – I Don’t Want to Be Different
For many people (if they’re honest) they just don’t have the guts to be different. They’d rather punch the clock and be a slave to the grind. But hey, at least they’re “normal.”
My wife isn’t normal. She can take off an entire month at the beach and still get a paycheck. Nobody with a normal job can do that. But my wife has worked hard, built up leaders and put systems in place that maximize the network marketing model.
As luxurious as the beach life sounds, most Americans want to be normal more than they want freedom. But think about it: The people we respect both current day and from history were the ones who had the guts to not be normal. Think about our Founding Fathers. Think William Wallace. Think King David or Moses. Each of these sacrificed a life of ease for something greater.
I rest my case.
In Summary
Remember the Gap Inc. organizational pyramid I described above?
Here’s the rub with that model: It will take you years and years to climb to the top and sit on the throne as Pharaoh of Gap Inc. — If you can even get there before turning into a mummy.
Same with all retail: How many Apple employees got to even talk to Steve Jobs? In most large companies, someone typically has to move up or out to allow room for you.
With network marketing you can make your own miracles happen. Not without training and work and God’s blessing, but when those things line up it’s really amazing to see.
Interested? Take the plunge and change your paycheck, your home, your future. I say this from personal experience. But you need to have the guts to be a little different — Just like the other successful people in the world.
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