MLM - Network
Marketing - Is it a Pyramid?
Network Marketing is not a pyramid. You will hear an objection to
this business along those lines from time to time, so you should be prepared to
answer it. Although we don’t advocate spending too much time in your
presentation haggling over objections (there are many more fish in the sea), it
would do you well at the outset to at least lay this one to rest.
It has taken quite some time for Network Marketing to achieve the
levels of respectability that it has attained over the last few years, and the
legality of this approach to doing business has certainly been well established.
Numerous large corporations now employ Netwok Marketing as an ideal method to
market their products. Businesses see clearly the benefit of saving money
otherwise
spent in generic advertising media by handing over their marketing needs to MLM
professionals who can provide targeted results.
Nonetheless, the stigma remains in the minds of many people that
Network Marketing is a pyramid scheme. It should be useful to determine the
basic differences between a true pyramid scheme and Network Marketing. True,
both assume a hierarchical structure. However, a pyramid scheme does not sell
any products--it does not attempt to move goods and services in any sense of
the term.
Some pyramid schemes, purporting to be “legal,” dodge this important
distinction by presuming to make it appear that some service is, in fact, being
performed. One recalls the chain letter hoax that advises the gullible
participants to “add me to your mailing list” in exchange for the $10 fee that
is meant to get the pyramid rolling. Such rackets may play with the letter of
the law, but federal prosecutors are not so easily fooled. These schemes are
still illegal. A pyramid is a mathematical gambit based on exploiting the raw greed of multiple
participants. A product or “service,” if it is mentioned at all, is merely an
afterthought. It is the snowballing effect of those multiple “fees” that are
meant to accrue a return to the particpants, not profit from the sales of
tangible goods and services.
A Network Marketing program follows a hierarchical structure as
well, but it is all meant to move goods and services. Without these goods and
services, the structure is worthless. Further, there is a directly proportional
relationship between the amount of goods and services moved each month and the
amount of profit that participants make. It is not merely the trickling down of
commissions that make up the profits, but the magnitude of sales being
conducted. A commission on very few sales, regardless of how deep the structure
is, will not make anyone rich.
Network marketers are focused on selling quality products from
quality companies. These companies save money on advertising costs, and
therefore they deem the commissions they give to network marketers to be
adequate compensation for their efforts. These distinctions are important ones
to make to your recruits, and once made, you should feel no compunction or
embarrassment about the business you are in.
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