Pyramid Schemes vs Network Marketing – How to tell a scam from a legitimate company.
Network Marketing has come a long way. It used to be that people would run from anybody that professed to be associated with a company that marketed their products through direct sales like it was the bubonic plague. If you ever were one of these flee-ers, chances are you are still running, because Network Marketing has grown, and continues to grow in popularity as a method of product distribution. Unfortunately, some have taken advantage of the great business model that network marketing offers to try and turn a quick profit without offering anything of real value. This is where the term “Pyramid Scheme” comes from.
One of the biggest differences between a good network marketing company and a pyramid scheme is the product. A good company will always have a product that brings real value to the marketplace while a pyramid scheme may not have a real product at all. If you can honestly tell yourself that if somebody found the product in WalMart and would buy it for a similar price that is being asked, that is an indication that the company you are dealing with is legitimate.
One reason companies choose the network marketing model, both good and bad, is because they don’t have to spend a dime on advertising, which would generally cost them millions. Instead, they pay commissions to distributors for sharing their products with the people they know. The problem with this, is that sometimes the compensation plans to pay the distributors are written in a way to keep as much of the profits in the company’s hands as possible. Frequently distributors end up working for free because they don’t meet every requirement of the comp plan which often makes them ineligible to be paid and causes some or all of their sales volume to dry up. This is one of the main reasons that 97% of network marketers quit. (I say quit instead of fail, because nobody really “fails” at network marketing. Almost every time they quit before they get trained properly and really try to be successful.)
A good network marketing company is not going to have little gimmicks in the compensation plan to take money out of the hands of the distributors. There will undoubtedly still be requirements that the distributors will need to satisfy in order to get paid on certain sales volumes, but if there are any unfair policies that make commissions impossible to earn after a certain time frame has passed, you may be dealing with a “Pyramid Scheme”.
Some other reasons that people avoid network marketing are that they don’t like sales, they hate pestering all their friends and family to buy their products, and quite possibly themselves have in the past or have known somebody that has been swindled by a sub-par network marketing company or pyramid scheme. There is something that leaves a bad taste in your mouth when you get someone dear to you into a business and then things turn south for whatever reason.
They end up feeling cheated, and tend to blame you because you are the only person that they know – you are their closest contact with the company, in fact, the very reason they believed in the possibility of something that was apparently too good to be true. This is how network marketing has unfortunately become a derogatory word in some peoples’ vocabularies.
It is very important to make sure you have a solid company that is going to be around for a long time and not do anything to tarnish your name as a leader. The corporate leaders need to have the experience necessary and even more importantly, the heart and integrity to make the right decisions for the company. There needs to be sufficient funding behind the company to be able to handle the growth that is necessary for network marketing companies to succeed.
These are only a few of the important things you need to find out before uniting yourself with any network marketing venture.
Independent of what company you choose to work with, you will need a SYSTEM to save yourself time, energy and money.
With the advent of technology the opportunity has arisen for anybody with a pulse and a desire to learn the MLM SECRETS to become an expert inter-networker, seemingly overnight. These secret strategies are the things that will allow an average person to become the top sponsoring distributor in their respective company and to stay there on auto pilot! These secrets are so powerful that I dare say they can even make someone in a bad network marketing company a lot of money.
There is no way to stop the success that will flow with the combination of a solid company, an online system for generating leads, and a networker with a real desire to succeed through consistent action.
If you enjoyed this post, do me a solid and share it with with your facebook or twitter friends using the share buttons at the top of the post! (Or just leave me a comment... :) )To Your Smashing Success,
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I usually don’t usually post on many Blogs,but I love your blog, I often read here, still I just has to say thank you… keep up the amazing work.
This is one of the best posts that I’ve ever seen. So easy to understand! Thanks!
I liked your video about pyramid schemes, explaining both legitimate and illegitimate opportunities. Unfortunately, too many people are not educated enough to make the distinction so they bash everything as a ‘scam’.
Thanks! this post helps! i couldn’t agree with you more =).. companies that are good will always bring or deliver standard products to the market and the consumers. it gains trust from people.