Sunday, December 6

Network Marketing (Part 1)


I have always been a very open guy. I have attended all kinds of talks, ranging from investments, motivational and network marketing talks.

I'm constantly amazed at how narrow minded Singaporeans can be. I can't blame them actually, many wants to get rich, but they are also too practical and cautious to try out new things.

Take Network Marketing for example, it is a very taboo word. If a local ever get invited for a business opportunity, one of the first question that he might ask is "Is it network marketing?" And if he were to get a "Yes" for that answer, he will probably say "Errr.... actually I'm not very into this kind of thing", and just simply dismiss it without even bothering to know what the company does.

We cant blame them, with all the scary stories circulating around the newspapers. Stories about people who have spent alot in network marketing, and yet not earned a single cent.

As I always said, there are 3 kinds of people.
(1) Those who fail and give up.
(2) Those who fail, didn't give up and keep failing again because they sticked to the SAME way.
(3) Those who fail, didn't give up and FINALLY succeed because they keep ADJUSTING their approach till it's right.

And people who fail normally are those in (1) or (2).

I have written many articles regarding Network Marketing, but I have never shared my views on the blog.

I'm in a good mood today, so I will take the chance to clear some common misconceptions. It should be noted that I'm not for or against the industry.

You may agree or disagree with what I say, so let me know your viewpoint. There's really no right or wrong.

Q1: Network Marketing equals to scam?

In theory, there is a clear distinction between network marketing and pyramid selling.

Network Marketing has 2 components, the compensation plan and the products.

Pyramid selling on the other hand, is more about the compensation plan. as the products are in some cases fictitious or way way overpriced to be mentioned much.

Pyramid selling is about recruiting people mindlessly so that the downlines feed the uplines. It's also known as a Ponzi scheme. And that is why it's illegal in many countries. It's promises exponential returns and reassure potential clients that it's the best decision they ever made. And then sooner or later, the company folds up.

And then the poor entire Network Marketing industry gets another tainted reputation because of this black sheep.

In short, pyramid-selling is a non-sustainable business model that involves the exchange of money primarily for enrolling other people into the scheme.

And REAL Network Marketing companies survive! Amway has been around for more than 20 years and still going strong (despite having a so-so compensation plan. =p).

Q2: How do I know whether the company is a network marketing or pyramid-selling company?

A rich male friend of mine once asked this question - did the girl love me for what I am, or is she after my money? Clearly, no one knows the answer to that except the girl involved. What we can do is to test the girl, but seriously, if she's smart enough, she will pass all the test even if she REALLY is only keen about his money.

Similarly, no pyramid-selling company will tell you that it's a scam. That's digging their own graves. But here are a few tests that you can employ, but just remember there's no guarantee.

(1) Pyramid-selling companies have VERY little emphasis on the products, because their products are overpriced or fictitious. Their primary emphasis is on the compensation plan - how you can leverage on the downlines, and easily rope your friends in. And they show you plenty of examples of people who have gone from blokes to riches, just by joining the scheme.

(2) Pyramid-selling companies have very little ethics by assuring you that getting your friends to join is easy. It is NEVER easy to get your friends to attend the talk because that's how Singapore goes. And your potential uplines assure you that they can add downlines for you. If you REALLY understand how the compensation structure works, you will know why they will NOT add downlines for you.

(3) The ultimate test to determine pyramid-selling companies. If the company is REALLY so good and everyone in the whole world joined, can you still make money? If the primary money-earning method is ONLY by recruitment, there won't be anyone else for you to recruit because the whole world has joined.

And that is why Network Marketing (not pyramid-selling) companies survive, because the emphasis is on the products.

I can spend the next 49 hours typing essays on this topic, but I'll stop here. If you have any questions to ask, let me know and I'll probably compile my views on Part 2.

Cheers!

Note: You may have note that I use the word Network Marketing as opposed to Multi-Level Marketing. The latter has a negative connotation and places too much emphasis of a ponzi scheme recruitment exercise. Real network marketing is VERY much about sales.

19 comments:

wenn said...

i learnt about NM in july 2005 when I joined the pm-international based in KL, but originated in Germany. I even went to Germany then to see the company there.. NM is interesting..

SJ said...

your diagram looks like a inheritance diagram hehe

A smile from SJ =)

Lily Riani said...

i never knew the diff, this is rather enlightening. i wanna read the 2nd part before commenting... not that i hv much views....hehehhee... but its a good to know thingy.

Mei Teng said...

I am one of those people who have reservations about network marketing...although I believe there are genuine ones out there. One bad apple does not mean a case of a basketful of bad apples..although it can be hard to convince people.

MKL said...

I knew the differences between the two concepts, but I'm not a fan of either one. ;)

Ai Shiang said...

I have to agree with MKL. I'm not a fan either. I've seen them, heard of them too many times around the world.

I admit I am a selfish person. I don't see why my hard work should pay off someone else's?

Besides, what happen when everyone stops buying? Does that mean the house of card will fall? I do have the concept of simple economic though. There can never be a one sided economy when there are only "buyers".

ladyviral said...

NM isn't for all people. Some can do it, some just can't. I have a friend who is doing NM now, and he complains everyday that his life is stressful. So I wonder why he does it is another question haha.

autumn said...

"Those who fail, didn't give up and keep failing again because they sticked to the SAME way." ---> this is me... so far. =P

but in other stuff lah, coz i dun rly dig network marketing >.< altho i do agree amway has got some pretty good products =)

Danny99 said...

Network Marketing involves tapping into the networks not only to sell product but also to offer the business opportunity to potential new distributors who then start the process of developing their own networks for selling and recruiting. Network marketing is usually associated with scams. This is because the main difference between a legal network marketing firm and a pyramid scam is that the first one offer real products and services, the second only promises opportunities and generates money from the cost of entry of the recruited members.

HappySurfer said...

There's money to be made in NM if done right though it involves determination and hardwork.

mrdes said...

look forward to part 2...I know the word "MLM" but not Network Marketing... Based on what you've written, the main difference is that NM has some product to sell, while PS has none (which is rather difficult for a layman to determine?)? Hence, the emphasis by PS on recruitment?

I once attended a talk before by a PS company and the company really goes to a huge extent to "show" they have a product to sell. It was so "fake" that I saw through it immediately! (sorry, no comment on the details:P)

Kelvin said...

Wow, thanks for this post, it has answer many of my queries.

Shingo T said...

wenn:
Good to know you have a great experience with Network Marketing!

SJ:
You mean like a family tree? Haha.

Lily Riani:
Thanks for being open-minded. Many people would have skipped to another blog after reading the first few lines.

Mei Teng:
Yes, it's difficult to change people's mindset when it comes to NM. But NM is actually a very common and more acceptable industry in the United States.

MKL:
I respect your opinion, bro. To be frank, I was anti-NM when I was young.

Ai Shiang:
I will answer your questions in Part 2. They are very common questions people tend to question about NM.

ladyviral:
Setting up appointments is normally the most stressful part. Until he can break that barrier, he will find it tough, and probably should go for a normal job.

autumn:
Gotta move with circumstances, else you get shelved to one side.

Some people condemn products just because they belong to a NM company.

Danny99:
Totally agreed.

HappySurfer:
NM is actually just like any other business ventures, where the majority fail and few succeed. And yes, it's ALOT of hard work.

mrdes:
Yes, you have gotten the difference right. I agree with you also that a skilled PS marketer can make his speech sound like a legitimate company.

Part 2 will come soon, but there's so much for me to write, I don't know which to start next!

Kelvin:
Glad you enjoy it. I will share more of my views in Part 2.

Roxy. said...

Nicely done. I can learn a lot from this since i am now taking a marketing module too.

camilynn said...

Hi,

Good one on Network Marketing (Part 1).If you are a network marketer and interested to know how to be successful and earn high income then http://debtfreeliving.thecopywritersguild.com can help you.

Thanks,
Jenifer.

foongpc said...

Are you involved in NM now? I was in involved in NM before and get-rich-quick schemes as well. So yes, you are very right about the differences between the two. Although for most people it's hard to spot and that's why all the illegal get-rich-quick schemes fooled so many people! And also why some people misunderstand and do not want to get involved in NM.

foongpc said...

I'm no longer invovled in NM as I find that I'm not really for it. I mean, NM is for everyone but not everyone is for NM.

However, in my years of NM, I find that it helps to build my confidence, determination and positive values. I would say NM is a good life training and I recommend it to all!

foongpc said...

Not sure about Singapore, but in Malaysia, NM is all the rage! Malaysia is such a hotspot for NM that a lot of MLM companies want to start business here!

Shingo T said...

Roxy:
thanks for being open minded. The more we learn, the more options we have in life.

camilynn:
thanks. Will drop by your site soon.

foongpc:
Network Marketing is a very dirty word in Singapore. Heard also that in Malaysia, the industry is more popular.

Agree totally with you that Network Marketing build up much needed sales skills and confidence, which can be applied anywhere in life.

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