Is Network Marketing One Of Those Pyramid Things?
It never ceases to amaze me especially here in New Zealand when you mention that you are a Network Marketer the inevitable next question is “is network marketing one of those pyramid things?”.
All businesses have a pyramid structure with the CEO at the top then senior management, middle management then the workers.
Based on that you could say network marketing is an upside down pyramid because with hard work there is nothing stopping the workers at the bottom rising to the top.
WHAT EXACTLY IS A PYRAMID SCHEME?
A pyramid scheme is essentially an investment scheme where each new participant pays into the system monies that are paid out to those who joined the scheme earlier.
In order to “get their money back,” the new participant must recruit new money into the system. Since everyone wants to get their money back, everyone keeps recruiting new money.
Like all schemes fueled by empty promises, hype, and greed, the shine eventually wears off and they go “out of momentum.” And when they do, the last people standing without enough recent new money end up losing theirs.
WHAT IS NETWORK MARKETING
First up Network Marketing is NOT a Pyramid scheme. If it it please let the likes of Warren Buffet, Richard Branson and Donald Trump know as they have all used this distribution model in the past.
Network Marketing is the distribution of products and services through a network of independent representatives. Each representative is responsible to retail and sell a small amount of product and then recruit others to do the same. Sales volume is generated through a lot of people each buying and selling a small amount of product.
Commissions are paid based on training new distributors and the consumption of products and services in the network. A company offering a product or service can eliminate the need for expensive advertising campaigns by deploying a network of individuals “who get paid for sharing products and services they love with others through word of mouth (social media marketing)
An individual seeking an income opportunity can generate an unlimited stream of commissions, through repeat business and sales within his or her growing organisation.
TRADITIONAL SALES VS NETWORK MARKETING
Traditionally if a company had a business plan of selling 1 Million dollars of product per month they might hire 100 full time sales representatives and give them each a territory and a sales quota of $10,000 per month. They would be monitored and if they didn’t perform they would be replaced with someone who hopefully could.
With the Network Marketing Model instead of hiring expensive full time sales people the company would rely on word of mouth advertising. They provide incentives to satisfied customers most of whom don’t like to sell, but are happy to tell others about the products they use themselves.. These customers are not full time or part time employees, they are some time, independent volunteers with no quotas and no protected territories. They “network” when they feel like it
Network marketing is not about personally selling a lot of product although some Distributors do. It is about using and recommending the product and getting paid to do so.
Some see the unlimited business potential and are attracted to the passive income element and go on to set up a substantial profitable business by recruiting many distributors and building a global organisation.
ROBERT KIYOSAKI’S TAKE ON NETWORK MARKETING
Robert T. Kiyosaki is best known as the author of Rich Dad Poor Dad. This is the #1 personal finance book of all time, which has challenged and changed the way tens of millions of people around the world think about money.
His book title holds four of the top ten spots on Nielsen Bookscan List’s Lift-to-Date Sales from 2001-2008 alone. In addition, Robert has been featured on shows such as Larry King Live, Oprah, The Doctors, Bloomberg International Television and CNN.
Educational Entrepreneur, founder of the financial education-based Rich Dad Company and author of New York Times Bestsellers: Rich Dad Poor Dad, Conspiracy of the Rich: The 8 New Rules of Money, and Unfair Advantage
FREE VIEWING “RISE OF THE ENTREPRENEUR” DOCUMENTARY
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Thanks to the following for the inspiration to put pen to paper to dispel some of the myths around this amazing profession of ours called Network Marketing .
- The Four Year Career: RICHARD BLISS BROOKE
- Beach Money: JORDAN ADLER
- GO Pro: ERIC WORRE
You can access their inspirational books and buy direct from their website Here
Network Marketing Professional
Home Business Coach
Author: Profiles On Success