What Is Network Marketing | A Deep Dive Analysis

Exactly what is network marketing?

I have seen the good and ugly sides of network marketing.

Like everything else, there are two sides of the coin. I would like to explore the pros and cons of this business model. There are many misconceptions about the business model.

And to be honest, the skepticism is warranted. 

In my experience, many of the people who promote this type of business model do not do themselves any favors. The space is filled with too much hype and I have seen relationships seriously strained when someone decides to start this type of business.

It makes sense why people are looking for other options.

The increasing wealth disparity in the western world has been driving the gig economy for years now. And the age of COVID-19 has accelerated this to an unprecedented degree.

We’ll talk about how the global economy has changed over the years, how this has affected society, and why network marketing may or may not be a viable opportunity, 

How The Economy Has Changed

We are going to have to do a little history lesson before we dive into the pros and cons of network marketing.

Ever since the Global Financial Crisis of 2008/2009, I think it’s fair to say that everyone intuitively knows that something is fundamentally broken in the economy.

But the truth is, it goes back way further than 2008. The problems are much deeper and more entrenched than “greedy” bankers.

To get to the bottom of it, we need to go way back to a pre-World War I world.

For thousands of years, precious metals (particularly gold) were used as money.

The reason gold has historically been the best money is because there exists only a finite amount, preventing governments from arbitrarily creating money out of thin air.

The problem with gold is that it’s quite cumbersome to transport and carry around.

Because of this problem, governments and banks created paper money and coins which were backed up by gold. In this system, you could be assured that if you had twenty dollars paper cash in your back pocket, you could always go to the bank and redeem it for 1 ounce of gold, which was the true money;

it was the gold that contained the value, not the paper currency.

World War I

Wars are extremely expensive.

And the first World War was the most destructive conflict that the human race had ever seen.

Governments were forced to devalue their currencies in order to pay for the wars. In the 1930s, many countries were forced to reset their gold peg or in some cases, remove it entirely.

In the United States, the government made gold ownership illegal. Citizens were forced to sell their gold to the government, and the gold peg was reset from $20/oz to $34/oz.

Essentially, the United States had printed paper money out of thin air and had devalued the currency.

World War II

The United States homeland was virtually untouched during the wars. As a result of this, countries around the world shipped their gold to the United States for safekeeping.

This resulted in the US having a massive stockpile of gold. 

As World War II was coming to an end, the Bretton Woods system was established.

The simplified version is that the United States dollar was pegged to gold, and dozens of countries pegged their currencies to the US dollar.

This resulted in these other countries having a “gold-backed” currency by association. The US dollar was now the global reserve currency.

In the 1940s, the United States government had a debt to GDP (Gross Domestic Product) ratio of 120%. This was unsustainable and impossible to pay back in real terms. 

Gold Peg Removed

During the 1950s, 60s and 70s, the United States ran large fiscal deficits, resulting in the currency being devalued.

Inflation was rampant and the Federal Reserve pegged interest rates at near zero percent.

This allowed the debt to be “inflated away”. So the debt was never paid back. It was simply devalued as compared to GDP. This allowed the system to keep functioning without the United States government defaulting on their debt.

But the rest of the world became concerned.

They saw the United States spending like a drunken sailor and started demanding their gold back.

In 1971, President Nixon removed the gold standard from the dollar. Essentially, the United States government defaulted on their debt, albeit unofficially.

Fiat currency was born.

The Petrodollar System

In 1974, the United States lead by Richard Nixon, struck a deal with Saudi Arabia.

The simplified version is that Saudi Arabia and other OPEC nations would sell oil around the world exclusively in US dollars in exchange for US military protection.

This allowed the United States to hold on to their dollar global reserve status.

It has created some problems for the United States however. The Petrodollar system and the Eurodollar system (which we will not be discussing here) have resulted in large global demand for dollars.

As a result, the strength of the United States dollar is perpetually higher than many other nations, especially emerging markets.

This might not sound like a bad thing, but it has been a disaster for the United States middle class.

With the US dollar being so much stronger than emerging markets, like China for example, private businesses and citizens are incentivized to buy goods and services from countries like China.

This includes labor.

This has resulted in US citizens being able to buy goods for cheaper prices, but it has also resulted in the disappearance of the middle class’s manufacturing jobs.

They’ve all moved to countries like China and Mexico for example.. 

The State Of The Economy Today

I think we can all agree that there is a general unease in the population these days.

The rich are getting richer, the middle class is increasingly struggling, and nobody really understands why.

Republicans run large fiscal deficits in order to cut taxes for corporations in the hopes that the wealth will trickle down to the middle class.

It doesn’t.

Corporations use their new surpluses to buy back shares in order to boost stock prices. The incentive to outsource labor across seas is still there.

Then they try to combat this by implementing tariffs on emerging markets, resulting in an even stronger dollar.

Alas, the problem only gets worse.

Democrats run large fiscal deficits in order to provide benefits to the middle class like health care and welfare checks. This too doesn’t really work because now people are not incentivized to work for their income.

When people don’t have a purpose, they become bitter and angry, which can result in social unrest.

And many of these fiscal deficits have been financed by the Federal Reserve, the US central bank.

The Fed buys US Treasuries (loans) with newly printed money and the US government tries to feed this money that it borrowed from the Fed into the real economy.

This will lead to a serious devaluing of the currency and we will likely experience a lot of inflation in the years to come.

This doesn’t just apply to the United States; countries all around the world are printing money like drunken sailors.

We discussed earlier how the US “inflated away” their debt after the world wars.

As I’m writing this in early 2022, the United States is again approaching 130% debt to GDP. Western countries like Canada, the UK, Australia, and others are all in the same boat.

As inflation increases, countries have combated inflation in the past by raising interest rates. However, if interest rates were to rise dramatically now, it would likely bankrupt every Western nation on the globe.

So what will they do?

You guessed it…

Let inflation run hot, peg interest rates to at or below zero, and inflate away the government debt.

Prices will be rising in the future, and savings will be devalued.

So why does this matter?

The Rise Of The Gig Economy

Since the 1900s, the US dollar has lost over 90% of its purchasing power.

Historically, as currencies are devalued, wages rise along with everything else, albeit with a lag.

But since the gold peg was removed in 1971, real wages (after accounting for inflation) have actually dropped. This means that your money now buys you less goods and services than it did pre-1971.

Prior to the 1970s, most households were supported by only one breadwinner. But in recent decades, families have been forced to bring in more income in order to put food on the table.

Women have entered the workforce, which in and of itself is certainly not a bad thing. The tragedy is that they HAVE to work in order to support their families.

On top of that, household debt is at historic highs, showing that even with two breadwinners in a household, it’s still difficult for families to make ends meet.

This is certainly not the case across the board, but on average it holds true.

This has given rise to the gig economy.

There has been a huge rise in side hustles, especially among women and young people. They are pursuing freelance writing, web design, handyman type work, affiliate marketing, and yes, network marketing.

The truth is, things have become more difficult for the middle class in the Western world in terms of finances.

But feeling bitter and complaining about it truly doesn’t do any good. It doesn’t change anything.

What we really need is for people to adapt.

And many people are.

In the age of COVID-19, working from home has become commonplace.

I predict that in a post-COVID world, there will be a huge acceleration in work from home careers. Everyone has realized that with the technology we possess, it’s actually possible to work from home. 

And everyone intuitively feels that the economy as a whole is somewhat unstable, and they’re not wrong. The rise in part-time home based businesses is unprecedented and it will only accelerate from here.

What Is Network Marketing?

Now that we’ve finished our history lesson, let’s talk about network marketing.

There are certainly pros and cons to this business model, but let’s start with simply describing what is network marketing.

Network marketing, also known as direct sales, multi-level marketing or MLM, is simply a business model that pays its customers to distribute its products.

A typical corporation in the western world will pay millions of dollars in advertising, marketing, and distribution fees in order to get their products on store shelves such as Walmart or other big retail stores.

This eats away at their profit margins, forcing them to find ways to save money such as shipping their manufacturing sector overseas.

In network marketing however, customers can choose to become distributors and begin earning an income by sharing the products with people they know as well as recruiting other people to become distributors.

This is a very efficient business model because the company only pays out commissions based on how many goods or services are actually sold, rather than paying massive arbitrary fees for advertising campaigns.

How Does Network Marketing Work?

So let’s say you join a network marketing business.

You buy products every month from this company and you really love the products. You start sharing the products with your friends and family and a few of them decide to buy something from you.

And you will receive a commission for every sale that’s made.

Eventually, a few people are curious about the business model, and decide to join the business as a distributor.

Now for every sale made by the person that you recruited, you will also get a commission on each of those sales.

If you are able to successfully grow a network marketing organization, your income could potentially grow exponentially.

If you recruit three, and every one of those recruits three, equals nine distributors. Each of those recruits three equals 27… equals 81… equals 243, 729, 2187…

There is certainly a lot of power in this type of business model but it’s very important to have realistic expectations.

The data shows that the vast majority of people who become a distributor will never recruit anyone. But some do, and that’s where the magic happens.

You may have noticed that as the organization grows, it starts to take the shape of a pyramid.

And that might lead you to wonder, is this one of those infamous pyramid schemes that I’m always being warned about?

Is Network Marketing A Pyramid Scheme?

Let’s start by defining exactly what a pyramid scheme is.

The following definition comes from the Oxford Dictionary:

A form of investment (illegal in the US and elsewhere) in which each paying participant recruits two further participants, with returns being given to early participants using money contributed by later ones.

So let’s break that down.

If you were to invest a sum of money into a pyramid scheme, you would likely be told that your money is being invested into the markets by a professional hedge fund manager or trader, and that this financial expert is able to get you consistent high returns regardless of what the broader stock market is doing.

Maybe you’re offered an incentive to bring more people into this investment firm.

So you do.

The investment firm sends you statements every single month and sure enough, your investment is performing exactly as promised. 

The problem is what’s going on behind the scenes.

In reality, your money was never invested. It’s simply sitting in an account somewhere and all the statements you received were fake.

As long as more people keep joining the investment scheme, there’s always money available to pay anyone who needs to make a withdrawal.

Until too many people start feeling suspicious and take their money out all at once.

Suddenly, there’s not enough money to pay everyone who wants their money back, and the whole pyramid collapses.

This is essentially how the Bernie Madoff scheme worked.

People simply paid into the pyramid scheme, didn’t receive any products, and needed people to keep joining in order to keep making money.

The difference between a pyramid scheme and network marketing AKA multilevel marketing is stark.

In network marketing, the only way somebody gets paid is when a product is sold.

Full stop.

The only difference between MLM and a traditional corporation is that all the sales reps are typically customers too, and they work on a 100% commission basis.

The organization can’t topple like a pyramid scheme because you’re not simply paying into some murky organization. You’re buying/selling products.

It’s a value for value exchange just like any other business.

In fact, the typical corporate structure appears to be very similar to the network marketing structure.

The main difference is that network marketing is inherently more fair.

No matter how far down in the organization you happen to be, your income potential is theoretically unlimited, capped only by how skilled you become and how hard you are willing to work.

As opposed to the typical corporate structure, if you work in a corporation as an accounting manager, you will never earn as much as the CEO of the business.

I’m not necessarily saying that disparagingly.

It’s just how the hierarchical system works, and it’s neither good nor bad. 

You may be interested in having a look at our detailed article where we specifically talk about pyramid schemes as they relate to network marketing.

A Real Ponzi Scheme Example

Most people don’t know how the banking system really works.

On a fiat currency system like we currently have, our dollar bills only have value because the government decrees it to be so. They make our local currency legal tender and make taxes only payable in the local currency.

This creates demand for the currency, which is really where the value comes from.

In the United States, a dollar bill is nothing more than a Federal Reserve note.

It’s an IOU, a liability of the Federal Reserve.

One of the ways that new money is introduced into the system is when the Federal Reserve prints money and buys government debt with that newly created money.

We discussed this earlier; this process is known as quantitative easing or QE.

The other way that new money is introduced into the economy is through bank lending.

When you go to take out a mortgage and your bank lends you $100,000 to buy a house, that money has essentially been created out of nothing.

The banks are regulated by the Federal Reserve, and are required to have only 10% of the money in reserve on which they can create loans.

This system is called Fractional Reserve Banking.

For example: If your bank gives you $100,000 to buy a new house, the bank really only has $10,000 in reserve. The other 90% was created digitally, simply added to the bank ledger.

Where do these “reserves” come from?

They come from me and you.

When we deposit money into our checking or savings accounts, that money is now in the banks’ books as reserves.

All the money that they have on reserve can be used to create loans. If they have $10,000 in depositors’ checking/savings accounts, they have room to create $100,000 worth of loans.

This process is called the money multiplier. 

How The Banking Ponzi Fails

Let’s say that a crisis happens and more than 10% of people decide to withdraw all their money from their checking accounts.

But the banks only have 10% available to them…

This is known as a bank run and can result in the collapse of the financial system or the freezing of depositors’ accounts.

This is essentially what happened in the 2008/09 financial crisis as well as in March 2020 when the economy was shut down due to COVID-19.

The financial system was on the verge of collapse in both situations, so the Federal Reserve had to come in and perform massive QE (print money out of nothing) in order to recapitalize the banks.

The banking system that we all rely on is a Ponzi scheme in the truest sense.

The only way it has stayed alive until now is through the Federal Reserve stepping in to provide reserves for the banks during times when too many people demanded their money back.

Be sure to read our detailed article on the history of money and how it works today.

Network Marketing Pros and Cons

I’m not here to paint a purely rosy picture of direct sales or network marketing.

There are certainly advantages to becoming a distributor for a multi level marketing or direct sales company, but there are also a few cons.

The Bad Of MLM

As you’re researching the question “what is network marketing”, you will find a lot of negativity.

So let’s be frank…

It’s not all good.

Rather than just getting one point of view, you should understand the good, bad, and ugly of network marketing.

Stigma

The network marketing industry has gotten a bad rap over the decade.

The truth is, there have been some real pyramid schemes that have marketed themselves as legitimate network marketing companies. Some of these businesses got a lot of publicity and gave the whole industry a really bad reputation.

Almost everyone has heard of a pyramid scheme, and very few people know the difference between a pyramid and a real legitimate network marketing opportunity.

Cult-like

Many network marketing organizations can come across as over-exuberant.

Some distributors market their business in an unprofessional way. They make unrealistic claims about how quickly you might earn life changing income.

They might make unrealistic claims about the effectiveness of their products.

The truth is, this isn’t usually a reflection of the company itself. It’s usually brand new, unskilled, overly-excited distributors trying to make sales and recruit people quickly.

Unfortunately, this can leave a bad taste in people’s mouths.

Strained Relationships

Most network marketing organizations will teach you to speak to your friends and family first to try to make sales or recruit new reps.

While this is a good place to start, it’s wise for you to expect to be turned down by most or all of them.

The problem is, when you join a network marketing business, you start to see your loved ones differently.

Like they’ve got a target on their back.

You see everyone as a potential customer or recruit.

And when you speak to them about your new business, you’re deflated and sometimes angry when they don’t see your new business for the life changing opportunity that it is.

Pure Results Based Compensation

When you first start to see the potential that a network marketing business could offer, it can be tempting to simply quit your job (fire your boss) and go full time into your new business.

This is almost always a bad idea.

Even if you are successful right out of the gate, it will likely take some time for your results to compound on each other to the point where the income would replace your full time job.

It’s important to remember that network marketing is not a get rich quick scheme.

It’s a long term business and your expectations must be kept in check.

You may wanna check out this article where we discuss the difference between network marketing vs job.

The Good of MLM

While there are many downsides to network marketing, there is also much good to be said.

If done right, this could be a career that provides time freedom and no income cap.

So what is good about network marketing?

Low Barrier To Entry

As far as businesses go, network marketing does have a very low barrier to entry.

If you want to start a business but you don’t have a product to sell or are unable to invest hundreds of thousands into a startup, network marketing could be a good alternative.

I like to compare it to a franchise business model.

If you were to start a McDonalds for example, all the marketing is done for you. The products have been created, supply chains secured, and systems are in place to give you the best odds of success.

A traditional franchise business does have a pretty high startup cost however.

Network marketing allows you to get started with as little as a few hundred dollars. You typically don’t need to stock any product, own any real estate, or hire employees.

Can Be Done Part Time

Most people who work a network marketing business start out part time, just to supplement their income.

You don’t need to (nor should you) quit your day job to get started in MLM.

Digital Marketing

We live in a digital world, which means you could use the internet to build a network marketing organization that spans the globe.

You’re not tied to a physical location and you can host or participate in team meetings no matter where you live.

You could just as easily recruit someone from your hometown as someone who lives on the other side of the globe.

Pure Results Based Compensation

This can certainly be a pro or a con.

Let’s look at the silver lining.

Most jobs have an inherent income cap. Even most small businesses have some type of income cap unless you can find an efficient way to scale the business.

But network marketing truly does allow a single mom to earn $100k+ per month, working at home in her PJs.

Now I want to be very clear…

This is not the norm.

Most people make very little income from an MLM business.

But there are many people who become downright wealthy with MLM, and you could too. The point is, it can be done. No matter your sex, age, or skin color.

Finding The Top Network Marketing Companies

If you’re reading this, I’m guessing you may have been approached by someone who is interested in recruiting you into their business.

Or perhaps you’ve been in the business for years.

You’ve been in several network marketing companies in the past and just haven’t been able to make the business work for you.

You might be starting to wonder if this thing is just a pipe dream.

Is network marketing success even possible?

Maybe you feel as though you just haven’t found the right multilevel marketing company?

Hey, I’ve been there.

I’ll share with you some tips on how to succeed in network marketing, but first let’s talk about what you should look out for when trying to find a good, legitimate network marketing opportunity.

The truth is, there are definitely some shady MLM companies out there.

Some companies will buy the rights to some generic private label product, like a multivitamin for example, and launch their company with a lucrative pay plan in the hopes of getting rich.

But that’s not all of them.

There are some great companies out there.

Full disclosure, I am not currently a distributor for any network marketing business, but I have been in the past.

In fact, the very first direct sales business that I joined was a health and wellness MLM. Even though I decided that particular business wasn’t for me, I am still using the products from that company every single day, almost ten years later.

The products are simply that good.

The direct sales/network marketing industry has produced some fantastic, even groundbreaking products.

These businesses tend to have larger profit margins than traditional businesses since they don’t have to pay retailers and marketing/advertising fees.

This gives them the ability to hire researchers and scientists and develop top notch products.

Here are a few key things to consider when looking for the best network marketing company:

1. How long has the company been around?

Most network marketing companies (or indeed ANY business) fail in the first two years.

So ideally you want them to have been around for a few years to ensure they are well established.

2. How far is the reach?

Can you sell products and recruit builders in your country only, or would you have a global reach?

Ideally you would want to be able to reach people all over the world so you can build a deep organization.

3. Do the products excite you?

If you are trying to sell products or services that you’re not passionate about or don’t believe in, you will not build a business effectively.

Whatever business you decide to build, you need to believe in it enough to recruit or sell to your own mother.

4. Does the product line create repeat customers?

If the direct sales business you’re looking at sells something like vacuum cleaners, I would argue that’s not a great product line for this business.

The whole goal of network marketing is to build a residual income stream.

And people don’t buy vacuum cleaners every month.

But they do buy vitamins, food, beauty products and cleaning products month after month.

5. Does the majority of the company’s income come from product sales?

If it doesn’t, the company will likely run into regulatory problems in the future.

The whole point of a direct sales business should not be earning income from the practice of recruiting itself.

The income should be coming from the sale of products.

6. Are there people in the business who are customers only?

If so, this is a good sign.

The sign of a good product line is that people are willing to pay and use the products even if they are not building the business.

7. Does the company require you to buy a ton of inventory?

If so, stay away.

You shouldn’t ever have to stock inventory unless you want to.

Your customers can simply place their orders through your online “store” and have it shipped directly to them.

Many MLM companies require you to place an order of a certain size per month in order to retain your distributor status.

This is OK and besides, you should be buying and using the products from your business anyway, right?

8. Does the business allow for online marketing?

Most companies allow this now and even have effective and efficient systems built out that you can utilize. Our world is becoming increasingly more digital, and it’s not just a fad.

Entrepreneurs need to get ahead of the curve on this.

9. Is the company debt free?

One thing I’ve seen many network marketing companies brag about is the fact that they are debt free.

In my opinion, this is a non-issue.

The truth is, if it’s a brand new startup company and they’re debt free, it could simply be because they didn’t have any credit and couldn’t borrow money if they wanted to.

Any young company will experience growing pains especially in the network marketing space.

Early growth tends to be exponential and companies often run into cash flow problems, requiring them to borrow money. This is normal and possibly even a good sign.

However if you’re looking at a company that is very well established and older than twenty years, then being debt free could be a sign of a responsibly run company.

Network Marketing Compensation Plans

As we discussed earlier, the typical network marketing compensation plan tends to take on the shape of a pyramid.

But what organization doesn’t?

It’s a basic rule of nature that hierarchies can’t be avoided.

At least a network marketing plan allows absolutely anyone to be in the middle of this pyramid-shaped organization and still build an organization underneath them.

The important point to remember is that a pyramid or Ponzi scheme doesn’t have any product flow, or at least most of the revenue is derived from recruitments rather than product sales.

A true life-changing network marketing opportunity is not that different from any other type of business:

income and revenue is derived from the sale of products.

A value for value exchange.

There are four main types of compensation plans used by network marketing companies.

Let’s briefly go over each one.

Unilevel Plan

The unilevel plan allows you to earn from the volume of a predefined level of depth.

In the example above, you can earn commissions from the sales of 3 levels deep in your organization, although most MLM companies have more depth, typically around 6 or 7 levels deep.

The width of the organization you can build is unlimited, so this incentivizes constant recruiting forever.

The downside of this model is the fact that you can only earn from a predefined level of depth.

As we will discuss later, the true power of network marketing is building an organization that will pay you passive residual income for years into the future.

This model caps the true potential of network marketing.

Breakaway Plan

The Breakaway compensation plan is similar in structure to the Unilevel plan.

The main difference is that if one of your distributors surpasses you in rank by building faster and deeper than you, they would break away from your downline.

You would no longer get paid on any of the volume this team member produces. This could potentially cause a large part of your income to disappear.

It doesn’t really incentivize you to help your teammates too much in case they outperform you and get removed from your downline.

This doesn’t truly foster teamwork.

Forced Matrix

The Forced Matrix compensation plan can come in various sizes: 3×3, 4×4, 7×7, 4×7 etc.

For example sake we will be talking about a 3×3 Forced Matrix as shown in the picture above. 

In this example, you can build to a maximum width of 3 people; so you would only ever have a maximum of 3 people directly underneath you in your downline.

You would also have a maximum depth of 3 levels. 

What if you continue to recruit more people after your “frontline” is filled up?

Well you would be able to place those people anywhere in your organization as you see fit. So if you have a distributor that’s struggling, you could do her a favor and add someone to her downline in order to boost her motivation for her business. 

The downside to this compensation plan is that there tends to be a lot of turnover.

Leaders aren’t necessarily incentivized to train or motivate the distributors they sign up.

Many of them lose motivation and simply leave.

Binary Plan

The Binary compensation plan consists of two legs, meaning you can build only two wide.

Any distributors you add after your first two will be added underneath one of your existing distributors.

Typically, whichever leg has earned less commissions in a given pay period is the one that you will get paid out. This incentivizes you to build out both legs rather than concentrating on only one.

It’s always better to have an even organization as opposed to a lopsided one. 

The biggest advantage to this type of compensation plan is that it tends to produce explosive growth and a lot of excitement in your organization as you place people under people in your downline.

You could also have people placed in your organization from your upline.

One of the potential downsides to this plan is that there is a possibility of commissions ballooning to a point where it becomes dangerous for the company.

As with all the different types of compensation plans, there are nuances to the Binary plan that we will not be discussing in this article.

Hybrid Compensation Plans

The truth is, few network marketing companies use only one of these compensation plans anymore.

All four models have advantages, but they also have profound disadvantages.

This is why most MLM companies take bits and pieces of several or all the compensation plans and create their own unique pay structures.

There can be a lot of nuance to each of the different compensation plans and I plan to write an in-depth article in the future about the details of all these pay plans.

Honestly, if you choose a network marketing company that is well established, you probably don’t have to be too concerned about weaknesses in the compensation plan.

If they’ve been around a long time and have paid out billions in commissions like Amway or Shaklee, you can pretty much be assured that the plan has been carefully crafted to achieve the best of all worlds.

An ideal plan would allow for a brand new distributor to come in and earn decent commissions quickly in order to build motivation.

It should also be extremely generous to the top leaders in the business so that the network marketing leaders are incentivized to stay with the company rather than looking for another one that will pay higher commissions.

Achieving Network Marketing Success

Hopefully you now adequately understand exactly what is network marketing.

So let’s talk about how to succeed in network marketing.

You’ve found your company, you love the products that you will be promoting, and you believe in your opportunity. But it’s important to remember that this is a real business.

Success in network marketing is pretty simple, but do not confuse that with easy.

It’s not easy.

If it was, everybody would be doing it.

Have Realistic Expectations

Before you do anything, you need to check your expectations.

A lot of network marketing organizations are marketed in a way that makes it appear to outsiders as though everybody on their team is getting rich.

And when you get started, you may find that the team is very high in emotion and a bit over enthusiastic.

While enthusiasm is a good thing, it can also be dangerous.

When you start sharing your products and looking for people to help build the business, you WILL get more no’s than yesses.

This can be devastating for new network marketers because they had created this story in their mind where they were recruiting new people every single week.

This never happens.

Be prepared.

You will need a thick skin.

We talked earlier about how network marketing has developed a stigma. You will quickly find that many of the people you talk to have already heard of network marketing, and they don’t exactly view it in a positive light.

Follow The Process

Your sponsor or business leader (whoever is training you in the business) will likely tell you to make a list of 50 to 100 people before talking to anyone.

Don’t take this lightly.

The reason this process is taught is simply because it works.

You will be tempted to talk to only a select few people about your exciting new business.

Maybe you’ve got two or three people in mind.

Well statistically, these two or three people will probably say no to your offer.

This can be very devastating and will lead you to procrastinate in reaching out to more people or worse, quit the business completely.

But if you’ve got a list of 50-100 people and you make a commitment to call twenty of them per day, the odds are in your favor that you will have at least a few people who are somewhat receptive to meeting you and hearing more about it.

Keep these phone calls short and if you can help it, don’t end on a bad call.

Bad calls happen but if your last planned call didn’t go well, you need to force yourself to make another call or two so that you can end your day on a good note.

This increases the odds of you staying motivated to keep making calls the following day.

It’s extremely important for you to follow the process that’s laid out before you.

Like we already discussed, the process that you will be taught has been created intentionally and designed in a specific way because it works.

Create Duplication

The most important thing to remember about network marketing is that the only way you will truly succeed long term and truly make life changing money is by creating duplication in your downline.

That is the real power of network marketing.

If you deliberately follow the process that you’re taught, your team members will see that and they will likely do the same thing.

This is how you can create deep organizations that will pay you passive residual income for the long term.

If you have some complex closing system that you learned from a course online, that’s not going to duplicate in your team.

You will find yourself needing to constantly recruit more people in order to replace the people that drop out.

If this is how you choose to run your network marketing business, you might as well get a sales job.

The real power of network marketing comes from others eventually building your organization deeper for you. 

Beware Of The Internet

You may find yourself being tempted to look online for ideas on how to build your business using the internet.

You will find systems that claim you never need to make another phone call, and that you can build your business from your home in your underwear. 

Don’t fall for this!

At least not in the beginning.

You might be able to recruit some people online using some of these sales funnel type systems, but it will NOT duplicate. 

Unless it is done in a very specific way using social media or personal branding.

If you are looking for a fully online business model, you may want to look into affiliate marketing.

Internet marketing is really not that effective if you want to build a deep, long term network marketing team unless you follow a proven plan specifically designed for network marketing.

Now I’m not saying that internet marketing doesn’t have its place.

In fact, I think you should turn to the internet to build a personal brand, but not in the beginning of your network marketing career.

In the beginning, you need to focus on the basics: share your products, add team members, and teach and train them in order to create duplication.

Before you know it, your team will start to take on a life of its own and will be growing without you.

You shouldn’t ever stop recruiting, but when your team grows to a thousand or more people, you could start slowing down a bit and start focusing on building a leadership brand online.

Treat It Like The Business That It Is

Another thing to keep in mind is you should be treating this like a real business.

Schedule in time to work the business, don’t just work on it when you “feel like it”. Your “business hours” should be scheduled ahead of time and adhered to strictly. 

You should also be willing to invest in your business. Don’t be afraid to spend some money on training, get to your company’s events, get some business cards, and invest in yourself.

After all, if you don’t invest in yourself, who will?

This can be a serious business and if you want to enjoy all the benefits MLM can offer, you treat it as such.

If you don’t treat it seriously, it’s simply a hobby.

Always remember: a business will make you money while a hobby will cost you money.

Learn From Network Marketing Trainers

Anthony Robbins has said:

Success leaves clues. Find out what successful people before you have done, repeat the same steps, and you will achieve similar results.

It’s not a bad idea to follow a few leaders in the network marketing space and learn from them.

Read all their books, listen to their podcasts, and follow their advice as long as it doesn’t contradict the system you’re being taught by your business leader or upline.

Listening to successful network marketing professionals can be a great source for inspiration and motivation.

Turn off CNN, delete Instagram and Facebook, and ignore all the fear porn you hear in corporate media. None of it will serve you and you will be better off by shutting it all out.

You have the power to choose what type of information you consume.

And don’t be fooled…

You are being programmed by whatever information you consume. It’s up to you to decide what type of programming you will undergo!

I have to warn you about one thing though…

Don’t follow too many people online.

Seriously!

Many of the people you will find online who claim to be teaching network marketing are actually peddling products and programs.

There’s a syndrome that many people get called the “shiny object syndrome” and it can be particularly dangerous for a new network marketer.

This syndrome will cause the sufferer to buy one product after another, hoping for the magic bullet, the secret sauce, the shortcut that will make them rich overnight.

Let me be very clear…

Network marketing IS the shortcut.

Don’t try to find a shortcut to the shortcut.

It does not exist.

So before you start looking for a true professional that you can follow online, you need to go through your emails and unsubscribe from every single email list that you’re on, especially if it has anything to do with home business.

Find two or three network marketing trainers MAXIMUM to follow, and consume all their content. Buy all their books and read them carefully.

I can make a few recommendations in terms of credible network marketing trainers to follow online. 

Network Marketing Books

My top pick is Randy Gage.

His latest book Direct Selling Success: From Amway To Zombies is arguably one of the best books to read as an aspiring network marketing professional.

Randy has built several multi-million dollar organizations and is a true professional.

He takes the business very seriously and despises anyone who smears the MLM business model.

Eric Worre is another great follow.

His book Go Pro – 7 Steps To Becoming A Network Marketing Professional is another must read for someone coming into this business.

Eric is another network marketing trainer who’s made it his mission to increase the level of professionalism in network marketing.

Tom “Big Al” Schreiter

Tom “Big Al” Schreiter has been in network marketing for over fifty years.

His book How To Build MLM Leaders is a must read for any aspiring MLM leader.

Tom is a world class network marketing trainer. He holds huge training events all over the world and has contributed to countless peoples’ success all over the planet.

He’s a fun guy, a great storyteller and has a way of simplifying things so even a beginner can catch on quickly.

These are my top three picks but by all means, I encourage you to read any and all books that you can about business and leadership.

Here’s a few more MLM book recommendations.

Just be very cautious about who and how many people you follow online.

Don’t even pay attention to more than two or three MLM trainers online and stay off of email lists if at all possible.

Email lists are for making money and you do not need extra distractions if you plan on building a big network marketing organization.

MLM FAQ

Let’s cover some of the most common questions I get about the network marketing business. You can also visit our MLM FAQ page for a comprehensive list of questions and answers.

What Is Network Marketing | Summary

As risks increase in the global economy, people are looking for ways to protect themselves and their families from a financial standpoint.

While network marketing does have its downsides, it can be a viable opportunity to actually make life changing income. 

Many people you talk to about your business will be concerned that you’ve been roped into some type of pyramid or Ponzi scheme.

But after reading this article, you know that the truest and biggest Ponzi scheme in the history of the world is our financial system.

It’s the dollars, pounds, or yen that you carry around.

And this Ponzi scheme has been organized by the people that many of us depend on to lead our nations.

The only solution is to take personal responsibility for your future.

Your government won’t do it.

Social security is completely insolvent in all Western nations.

Don’t put your future in the hands of power hungry politicians.

Whether or not you decide that network marketing will be a part of your future, you have to take control of your financial destiny.

As you get started in your network marketing career, you should expect that most or all of your close contacts and friends will say no to your business opportunity.

That’s OK.

Just move on.

Don’t fall into the trap of seeing your loved one as a target, always being ready to pounce and bombard them with your opportunity.

If they say no, then leave it alone and move on to your next prospect.

Quick network marketing story…

I remember one of my cousins got involved in a network marketing company over ten years ago.

He spoke to me about it once, in the very beginning.

Then, I never heard about it again.

I just assumed he quit the business.

But I recently found out that he’s been quietly building all this time, and me and most of my family had no idea.

He’s now more than replaced the income that he earned from his previous career.

That’s how this business should be handled. You could be quietly building a fortune without your family even knowing it.

Whatever you do, don’t let it put a strain on your relationships.

Your relationships are way more important than your finances.