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.