In a fast changing world and difficult economic scenarios, it is but normal that individuals will turn towards innovation, fortitude and creativity in order to ramp up or bolster their earnings. The time for that though, as we all know, is past. No longer can individuals supplement earnings by taking on extra work. With the labor markets, worldwide, in depression, millions of people have to find themselves a primary source of income in order to meet the most basic expenses. And data coming out of nations around the world (at one time heralded as economic juggernauts that would help drive the world past the banking crisis) shows that even India and China are beginning to reel under the impacts of European and USA economic issues.
So the outlook isn’t rosy, but that doesn’t mean the end of the world or a shutdown of economic activity. It does however; necessitate a need to look at avenues of income generation from a fresh perspective. And this article intends to discuss a specific route of employment and income creation, its associated pitfalls, the overwhelming misinformation about the work genre, the competitive advantages the industry enjoys and how the Internet is helping push revenues up higher than ever before. Welcome to the world of Network Marketing in the Internet Era.
Network Marketing – An intro
Network Marketing, also called Referral Marketing or MLM (Multilevel Marketing) is a business model where employees are hired as marketers for a business or product, and are rewarded on both, the sales they generate, as well as the sales invoiced by the staff they subsequently hire. Essentially each member has to sell products as well as recruit new sales people in order to reach the highest earning potential. (For this article, MLM and Network Marketing will be used interchangeably)
So for example you sell home insurance for AIG (just an example), and you process 3 policies successfully, you get a share/commission of the sale value.
Now, you can hire more staff to help you sell these policies, and when they do, you get a percentage of the total policy value sold by the people You hire as a reward for increasing the sales force and generating revenues for the firm. In marketing speak, your recruits will be referred to as Your down line, that is to say this stream of income was started by you, making you eligible for higher benefits.
Some people confuse MLM and direct selling. While it is true that MLM or network marketing is heavily reliant on customer referrals, word of mouth promotions and direct selling techniques, MLM is just one form of direct selling.
Network Marketing Criticism
MLM or network marketing has come under the scanner for practices that opponents say are unethical, designed to serve a handful of people, and can rupture personal relationships, but they continue to thrive. In fact some of the world’s most successful firms including Avon and Amway are examples of how well MLM can work for representatives and the parent entity. The issue though, is that many critics vehemently argue that Amway is the best example of Pyramid Marketing schemes that serve the interest of the parent firm and not its representatives.
And here’s the issue. People tend to conflate Pyramid Schemes with Network Marketing which, widespread as it is, is also misleading. Pyramid Schemes stand out from MLM or Network Marketing in that they tend to require entry fees and promise exaggerated returns without any grounding in fact or performance records.
Therein lies the rub. Network Marketing has been used as a convenient label for firms who have been known to indulge in Pyramid Schemes thereby devaluing what is, a legitimate marketing strategy and business model.
Independent Investigations and Findings
This is what the Federal Trade Commission of the USA delved into when it investigated Amway in 1979 for Pyramid practices.
However, court rulings and governmental investigations into MLM have firmly established that Amway is not a ‘pyramid’ scheme. The Federal Trade Commission’s (USA) ruling In the Matter of Amway Corporation, Inc., et al.) in 1979, concerning the business practices of the firm explicitly stated that Amway was not an illegal pyramid scheme.
The rulings reinforced what many marketers propagated for years. Marketing strategies come in all shapes and sizes, and the misuse of a practice does not make it illegal or unethical.
Think of it like this. Internet Marketing is a growing practice for firms and individuals across the world. And we all know the impact spam has had on our virtual existence. Unsolicited, mass communiqués that people dispose of before they even look at them. Usually sent by ‘bots’ or computer programs that flood email addresses, forums and comment posts, it has become the bane of Internet Marketers. Can you say that ‘bots’ are the standard tools of practice for all internet marketing?
No. Because it’s a few individuals who are using underhand techniques, and who do not have the necessary expertise in Internet marketing causing the issue. Not the practice or functional area itself. The same applies to MLM or Network Marketing. The tarring of a whole industry with the same brush due to some unethical practitioners and extremely vocal opponents despite it enjoying significant advantages is frequently overlooked in the den of criticism.
Strategic Advantage of MLM
Now that this article has discussed the potential issues and the criticisms of the Network Marketing professionals, it is prudent and in the interests of fairness that the unique advantages that MLM enjoys be looked at.
The biggest advantage that MLM brings to prospective practitioners is the availability of a rather large mentoring team. These individuals have had experience in the practices that yield results, how to nurture client relationships and be consistent with efforts to drive achievements.
With firms like Amway and Avon, the huge expenses of advertising are nullified for distributors and marketers, helping them enter a market with almost no overheads and investment costs.
The established reputations and credentials of firms like Amway and Avon also help the Marketer in gaining authority with their prospective clients, negating the need for years of carefully cultivated marketing messages and demonstrated product excellence that a startup/newcomer would need.
And perhaps the biggest advantage is Brand Recall. Individuals from the American East Coast, to the towns of India and the shires of Australia, immediately understand who Amway or Avon are. Demonstrated quality and products which are complemented by excellent MLM strategies. However, the Internet has opened up larger potential for Amway, Avon and MLM professionals.
Network Marketing in the Internet Age
With the internet opening up markets internationally, and borders becoming as irrelevant as VHS tapes thanks to Skype and Email, it is fairly sensible for marketers to move their model onto this much larger canvass, thereby triggering potential windfalls for their firms and employees.
Distributors utilize Internet Network Marketing strategies to build networks online and use them to spread their reach across a larger consumer and employee base. The crux of the strategy, as with offline initiatives, it to prospect potential distributors and representatives, and there are 3 ways in which firms approach their online presence.
• Internet Communication Prospecting
So let’s suppose you are a MLM professional and you manage to source some leads for your products. Traditionally you would call them and try to setup an appointment so you can then present your product and idea to the client.
With the internet, the same thing applies. Except now you aren’t limited to the people you meet offline. You can search through groups, forums and chat rooms for specific members who match your target market, introduce yourself and then send them an email outlining your firm, its advantages and how they stand to gain from developing an association with you. And with Skype, you aren’t limited to chat conversations, but a video conference, and a global reach.
• Internet Attraction Marketing
Internet Attraction Marketing is a strategy that uses the online presence of a firm to bolster its attraction to potential clients. This strategy is in no form or manner one that’s exclusive to MLM or Network Marketing. One of the most prominent uses of this tactic is the ‘learn how I made $1000 in a day’ advertisements that you see everywhere on the web.
And it’s used by bloggers, by e-vendors, by public speakers and all sorts of businesses that are moving their product and services onto the virtual environment. By giving out free material, so let’s say, a brochure advertising the exact steps you took to succeed at MLM, you can reach out to a large audience and all they need to do is sign up for your newsletter or ‘webinar’ (a seminar you can hold online using basic communication software) where you can then convince them to join your MLM business.
• Internet Advertising Prospecting
While prospecting for clients is one of the challenges of MLM, there is no reason that you cannot make the prospects come to you. Unlike offline prospecting, in the online world you can choose your advertising methods, budgets and placement far more carefully.
A MLM firm can purchase banner ads or use pay per click advertising where the audience clicks on an advertisement and are directed to your home page where you can then explain the product and its benefits in greater detail.
It also scores over conventional prospecting by drastically slashing your commuting and travel expenses since you can effectively cater to a larger segment online so long as you have a good grasp on the Internet, Search Engines and Online Marketing.
Network Marketing has, traditionally, been an extremely competitive marketplace like many other professions. The issue though is the fact that extremely low entry costs make it an attractive proposition for numerous people. This can lead to what people call ‘market saturation’ i.e. supply far outstrips demand. This is, unfortunately, misleading.
And here’s why. Low costs do mean higher people get on board, but a lot of people, paradoxically, don’t invest the time and effort required to grow ANY business since they have almost literally ‘nothing to lose’. This means a fair few prospective MLM professionals drop out very early and don’t pay enough attention to strategy and marketing initiatives, relying on luck or some other manner of good fortune to bestow them with the success that their ‘up line’ associates may have gathered.
Such individual shortcomings cannot, and indeed, should not be used to malign MLM/Network Marketing professionals who use legitimate means to promote legal products to consumers. And this is evident from the success of Amway, not just as a firm, but as a defendant in the 1979 ruling by the FTC (USA).
Access to mentors, a large network and low costs make MLM a great professional choice, as well as a brilliant way for individuals to generate income in a struggling global economic environment.
And with the advent of the Internet, professional marketers can utilize outreach strategies that outstrip traditional methods by huge leaps and bounds. Cutting across cultures, boundaries and demographics, the Internet can be utilized to sift through potentials and leads by allowing the audience to connect with you, which translates into higher interest, and therefore, a much more likely sale for Network Marketers.
It’s fair to say, and indeed this article has pointed it out, that MLM has become the boogie man of Modern Marketing techniques. The issue is that people confuse unethical practitioners with unethical industries which are not the same.
And with the economic forecast for the immediate future not looking like it will become brighter in the near future, individuals have to, like we pointed out at the start, become creative about their career choices. And the Internet makes the job doubly easier. There is no reason for prospective MLM professionals to not do their research, ask the right questions from their ‘up line’ sources and not be enthused by the opportunities that are on offer.