Top-Ten Network Marketing Myths (written July, 2009)
Myth #10) You can make more money in a ground-floor opportunity. Many of the distributors who are the highest earners in network marketing were some of the first recruited to the company. Even more have joined ground-floor opportunities that did not make it or quit before the company took off. Over 95% of new network marketing companies fail in the first two years. So on the average, one would have to join and work at least five ground-floor opportunities to find the one that is successful. In most cases, companies who have had exponential growth did not achieve it until after two years. The highest earners who have come in early have been successful usually because of their ability, not their position in the company. In many cases, they were sought after in the beginning in the first place because of their proven ability in the past with other programs. In other cases, the reason that a company beat the odds was because of the hard work and ability of a few of the first distributors recruited. These distributors would be successful no matter when they came in. In fact many pros consider Amway’s compensation plan to be one of the hardest to make a significant income, yet Amway is one of the largest and oldest multi-level programs. Yet even in Amway, there have been recent cases of new distributors earning a million dollars only after a couple years.
Myth #9) I can work more than one program at a time. This is my full time occupation. The majority of MLM distributors are part time. It is hard enough to get them to work one program in the first place. They don’t have the time, financial resources or the ability to work more than one program. If you do get them to work more than one program, you almost assure their failure in network marketing. Many prospects join because of the product and not the income opportunity. Others join to support a friend or relative. The only reason that these distributors should join another program is to purchase a product or service that their first company does not offer so they can purchase it at wholesale.
Myth #8) We don’t want the typical MLM junkie. The definition of an MLM junkie is a distributor who takes their downline and moves them to another company’s program. In contrast, an “MLM Pro” is a distributor who takes their downline from another program and joins yours! It really is just a matter of perspective. In any company, 80 to 90% of the recruiting is done by 5 to 10% of the sales force. These “business builders” are usually experienced network marketers. Companies who try to build their programs with inexperienced product users always plateau and then go under when the company’s own recruiting efforts equal the natural attribution rate, since product users are not recruiters. When all is said and done, nothing beats experience.
Myth #7) I can build one downline and move it into several programs earning multiple commissions. 50% of most downlines are made up of wholesale product users. They are distributors because they like the products and want to buy them at wholesale or they want to support a friend or relative. They are not in for the income and do not want to belong to several programs. Other distributors who do not want more income may still not have enough disposable income to make minimum purchases in several programs. Since companies do not pay out 100% or more, no matter how you load the downline in each program, on the average more money is being spent on product purchases than is being paid out on commissions. HHistorically unless there was something wrong with the first company, even charismatic leaders have had only 10 to 15% of their downline follow them from one program to another. After all most of their downline is their downline’s downline anyway!
Myth #6) I can do all my marketing over the Internet. The Internet is one of the fastest growing phenomena in history. It is here to stay. It has proven to be a useful communication and management tool. Nevertheless there has never been anything in the history of mankind that has been hyped up as much as the Internet. Although programs have been developed to help recruit over the Internet, they require distributors to develop a relationship for weeks before a sales presentation can be made. This may be a useful tool to supplement a continual integrated marketing approach, but it will frustrate most distributors and will not be a cost-effective use of marketing time. The Internet has not been an effective marketing tool. In fact more money is being spent on marketing internet sites than all the revenue that the Internet generates! Unfortunately when you combine the Internet and network marketing, the hype seems to get even worse. One marketing group is claiming to have sponsored thousands over the Internet in a short time. What it doesn’t tell you is that it was giving free sign-ups. When it came time to activate its distributorships with a purchase, the vast majority dropped out. When the rest saw that, they almost all dropped out the second month! Bottom line: the Internet is another useful network marketing support tool and can help make a profitable network marketing product, but it should be only one part of a multiple integrated marketing approach.
Myth #5) Product is not important so just be a recruiter not a retailer. Product is always important. It is what separates an illegal pyramid scheme from a legitimate direct sales program. A company’s long-term success depends on the quality and value of its products. The more retailing that is done in your downline, the more commission you and everyone else will earn. But they will only do retailing if they see their upline retailing. By teaching your new downline recruits to retail first, they will earn a profit sooner and attrition will decrease. After all earning income from recruiting takes much longer than earning immediate profits from retailing. Plus the fact is that retailing is a lot easier than recruiting for most new distributors.
Myth #4) The majority of people lose money on MLM. In legitimate MLM programs, you will only lose if you are both greedy and lazy. In legitimate MLM programs, there are no charges to participate. You purchase quality products at wholesale prices for your family’s personal consumption or for resale. So in a worst case scenario, if you are unsuccessful as a distributor, you have gotten good value for your dollar, especially because you have bought quality products at wholesale prices. It is only when you get greedy and lazy and try to advance by purchasing large inventories of product and then get too lazy to retail the products or recruit new distributors that you lose. If you advance by working and only buy quality products at wholesale pricing that you need, you will not lose in MLM.
Myth #3) My upline will do all the work. Even if your upline has good intentions, their efforts get increasingly diluted as the downline geometrically grows. This approach defeats the main benefit of MLM, which of course is leverage. Large incomes are only possible in MLM through the efforts of many distributors in the downline doing their own share of the work. To be honest, most of the time an upline says they will do most or all of the work, they provide the least help. Since this marketing approach invites lazy people that is what type of people join. Even when the upline (or company) has a plan & good intentions, such a system always is doomed to fail & should be avoided.
Myth #2) Recruit your warm market. Although there may be a couple of individuals who know that they want to be involved in direct sales, most of that person’s warm market does not. By encouraging downlines to recruit their warm market, they are being set up for failure when people in their warm market do not duplicate themselves. The geometric growth from duplication then does not happen as they were told it would. It is better to retail one’s warm market and recruit like-minded people. When those of the warm market become users of the products and then want to participate in the opportunity, they will come forward. At that time they will become productive distributors. The common teaching of recruiting warm markets has resulted in the very high turnovers experienced in MLM. This has in turn created much of the negative perception of MLM. After all people don’t want to admit that they failed in MLM because they didn’t work. They would rather say that MLM doesn’t work.
Myth #1) Network Marketing/MLM is a get-rich-quick-and-easy scheme. One difference between Network Marketing/MLM and other careers is that you can get rich in it. Where in a “job,” you are usually kept “just over broke.” But it takes the right company and the right product along with long hours of hard work and dedication. Although people can learn the skills to succeed in Network Marketing/MLM, people will need both skill and desire. Those who search for a get-rich-quick-and-easy scheme, never will get rich. Network Marketing/MLM is a get-rich-hard system, but you can get rich if you are willing to work hard. Are You?
The author of this article is Larry Costello, President of All-American Print & Mail, 2200 Wilson Blvd #102-57, Arlington, VA 22201.