Do You Really Get MLM?

This past Halloween I was trick or treating with my kids. As they went up to each house I waited at the bottom of each driveway - as did most of the other parents. I heard two of the fathers speaking. One said to the other, "Well, it's one of those MLM/network marketing things, but the product is so good."

I chuckled to myself. He was discounting the network marketing aspect, when, in fact, it's because of network marketing that he's enjoying the benefits of the product that is "so good."

I've also heard people say, with respects to network marketing, some version of, "For ethical reasons I do not believe in pyramid schemes."

This brings us to my first point: Simply put, network marketing is not a pyramid scheme or pyramid program.

To digest my above statement, you need a definition for pyramid program.

Pyramid Program: 1) a program where people invest money based on the promise that other people will invest money and money will filtrate back to all who invest; 2) a program which is strictly a money game and has no basis in real commerce. Meaning, there is no product involved and only money is changing hands.

Based on the above definition, you can see how modern-day pyramid programs may have a product, but it's there just to disguise the money game. It's not hard to spot these. Simply ask yourself if you're getting value for what you would be paying for the product or service.

To put it another way: does the price for the product or service seem inflated? Are you being told not to worry about paying that amount of money because you'll "get it back and then some" once you get someone else to join?

Also, if a program offers to pay commissions for recruiting new distributors, you might be dealing with a program that is bordering on being a pyramid. Most state laws prohibit this practice stating that a network-marketing program can only pay commissions for sales of goods or services, not for recruiting new distributors.

Why? To protect people who get involved in the program.

Let me explain. If a program pays commissions for recruiting new distributors, that program is in jeopardy of collapsing if no new distributors are recruited. When a program collapses, most of the people involved lose their money. They also loose the benefits of all of their hard.

In contrast, network marketing is a not game and does not compensate for recruiting new distributors.

What network marketing is: Network marketing, or multilevel marketing (MLM), is a legitimate business model. The cornerstone of the network marketing business model is leverage.

Many of us have heard the name J. Paul Getty. He created one of the world's greatest fortunes. Getty said, "I would rather make 1 percent on the efforts of 100 people than 100 percent on my own efforts."

Getty was illustrating leverage. So, let's look at how one leverages oneself in network marketing:

John joins a network marketing company as an independent distributor. He starts talking to people about the company's products and business program. Some people buy the products. John receives commissions on these sales.

Some of the people John talks to who purchase products and also sign-up to be distributors. John's new distributors start talking to people and some of these people purchase product. John receives commissions on these sales as well. John has leveraged himself.

Here is another fact to digest: In network marketing, the better a person is at training, teaching, and coaching the people they recruit into the business, the better that person does financially.

John can further leverage himself by helping the people he brings into the business (typically referred to as the people that he "sponsors") to sponsor others, thus duplicating himself.

As this process continues, you create compound growth that can lead to hundreds or even thousands of people coming into your business. You leverage your time by helping others be successful and earn an income from all their efforts.

Being successful in network marketing takes skill, dedication, time, and work. Realistically, few people get rich and some make a part-time income. Those who do well in network marketing work hard, stick with it, and aren't turned off by the "rah rah" involved in getting others to try something or to join their organization.