Are you sick and tired of your family members, neighbours, friends, co-workers, even total strangers coming up to you in odd places, trying to convince you to join a Network Marketing, MLM, Multi-Level Marketing, Direct Selling, Pyramid Selling or Referral Marketing business program? Yes, these terms all mean the same and work pretty much the same way, for the same exact purpose – and that is, to make money in a legal pyramid-style marketing program.

Some people will have nothing to do with this industry because of the bad reputation caused by a few scammers in the past but overall, the majority of the companies are legit. There are now government regulations in place to ensure these Network Marketing or Direct Selling companies are in compliance with the law. But for those who see the opportunity to own their own business with very low start-up cost, this type of business may be right for them.

Authors like Donald Trump and Robert Kiyosaki recommend Network Marketing or MLM in their best-selling book called: Why We Want You to Be Rich: Two Men, One Message. Even Donald Trump has his very own Network Marketing company now.

So, how do these Network Marketing, MLM, Multi-Level Marketing, Direct Selling, Pyramid Selling or Referral Marketing work? Can you really make money from this type of business model? What do you look for in a company? Do you need experience in order to join a Network Marketing, MLM, Multi-Level Marketing, Direct Selling, Pyramid Selling or Referral Marketing company?

These programs are set up to sell products or services that require the recruitment of others to generate personal sales, creating a downline of distributors. Multiple levels of compensation are then paid out to qualify distributors on a regular basis as a result of the sales. Everyone who enters the program will have the exact same opportunity to make money the same way. Best of all, no previous experience required as all Network Marketing or MLM companies will train their independent distributors to become successful.

Companies using the Network Marketing strategy benefit from not needing to hire their own sales staff; no need to advertise their products or services using regular media sources. Instead, they recruit independent, unsalaried salespeople (also referred to in this industry as: distributors, associates, independent agents, sales consultants, etc.) to represent the company. These independent sales people are paid by commission only, based upon the volume of products sold as their own sales plus, a smaller commission based on the sales generated by their own downline. This means, whenever the people you have signed up under you as an independent sales people are paid, you will also get paid a small percentage as well. Most companies will allow a downline payout many levels deep, which means more money for the person who signed them up in the first place – YOU! The advantage is that, once you have built a large downline, the commission generated will be passive, every month.

The products or services being sold using this type of marketing program are usually something that appears to be of higher quality or unique. Companies usually produce their own private brand of product line, but add special ingredients to enhance their perceived value, so that they are sold at a much higher than usual prices. This also allows the company to be able to pay their independent distributors a percentage, many levels deep.

  • Beware of companies selling products that are very inexpensive to produce but selling them at 100x more than their true value. Consumers are smart and they look for value for their money, even if this is for a Network Marketing program. Rule is: if it cost too much, people won’t buy.

One important point to remember is that before signing up for any Network Marketing program, try the products out. Test it out. Does it work? Does it accomplish what the claims are? Does it taste good? Don’t think about the potential income from the program as that may alter your evaluation of the product or service. How do you feel about the product? Are you willing to risk your name and credibility to promote it to others you know?

  • Beware of products that fail your evaluation. If it tastes like crap to you the first time you tried it, chances are, it will taste like crap to others. Don’t let the representative (your upline) talk you into signing up by saying, “it takes a while to get used to the taste.”

Most Network Marketing companies will have regular webinars or conference calls for people to learn more about their company, learn new ways to recruit new distributors or to learn more about their compensation plan or their product line. Most companies will have an online support or training system with tutorials, videos, audio files, contact management system to send emails and flyers to prospects. This is usually free of charge. This is important because in the Network Marketing industry, teaching others to do the same is very important and without duplication, the system will fail. These companies need you to be successful, therefore, the training should be free.

  • Beware of Network Marketing companies that require additional monthly fees for this online support system. If they want you to pay extra for support – they only want your money to increase their profit and don’t care if you succeed or fail.

The company’s vision or purpose is also important. After all, you will be representing and promoting their product or service. Some companies are just out for the money. For example, one company’s vision is to help generate 100 millionaires in 5 years. To many people, this sounds great, but that means all they want is to make billions of dollars for themselves. If they’re just out to make money, and that the purpose of their product or service is to take advantage of this legal pyramid-style marketing to generate the money, then, there’s no value to their product or service and that their prices are inflated to justify this money making scheme.

  • Beware of cheap products used as an excuse for a Network Marketing program. You know it doesn’t cost $50 for a box of energy drink mixes or for a bottle of multi-vitamins.

Network Marketing would work perfectly if everyone who signs up does two things:

  • 1. Everyone who becomes a distributor uses the product or service regularly because they like it. (This will generate income for everyone).

  • 2. Everyone who becomes a distributor continuously recruit new members to do the same because they know others will benefit from the product and the business opportunity. (This will generate more income for everyone because the new members will also be using the products).

This will generate a circle so that the company will have a constant cash flow to pay their distributors.

But before signing up, do take some time to think about the above. Can you see yourself using the products on a regular basis? Can you see yourself talking to others about the products and business opportunity? Can you handle the rejection from your family members, co-workers, friends, etc? Take a look at the pictures of the upline distributors who are successful and you will notice they all have the same expression on their faces. This is true. They all look alike and tell similar stories of their success. Can you look like one of them? Can you act like any of them? Do you want to be just like them? If not, Network Marketing is not for you.

Other things to avoid:

  • Are the products manufactured within your country? Are they available to customers in your country? Do the products have clearance from Customs? Are there any government health issues, restrictions or regulations with the products? It is best to have the products be shipped from within your country of residence to avoid shipping or customs delays or concerns. Recently, an USA-based Network Marketing company lost hundreds of their Canadian distributors because their products were banned by Customs Canada. If products can’t be shipped to the distributors, the business is over.

  • Avoid companies that require a large initial purchase when joining the program, in order to earn full commission. Unless you can use all the products or be able to sell them to others to get your money back, you don’t want to be stuck with lots of products. The commission structure should be fair and not structured upon your initial purchase.

  • Companies expanding all over the world like ‘5 Countries in 5 months’ may sound impressive, but how are they able to keep up with their growth? This sounds like the company is still very new and their brand is not yet recognized. Another tactic commonly used is that the company is in the process of explosive growth, so therefore, this is the best time to join. Beware if the company is not well recognized, no one will want to be a part of.

  • Some upline distributors will tell you that they are friends with the founder or that they are one of the founding members of the company and that you will be well positioned within the company. This is a very commonly used tactic to get people feeling they’re at the top position and will have more opportunities to make more money. In Network Marketing, everyone has the same opportunity to earn the same commission. It’s measured by the amount of effort you put into the business.

  • Take a look at the founder(s) of the company. Does he or she look genuine? He or she may have an impressive past Network Marketing background but does this person look like a sincere person? Or do they look like a bunch of fly by night scammers trying to sell a bunch of cheap products quickly and disappear?

  • Branding? It is very important that the Network Marketing company have a well recognized and respected brand name in the industry. Having two names just because one of the founders want to promote his ‘support system’ and the other founder just want to promote the products is nothing but confusion to potential distributors.

But there are thousands of Network Marketing companies out there selling similar products or services, so which company should you choose? You need to do your research. Find out which company has the products you enjoy using and would like to promote. Take a look at the Direct Selling Association or the Direct Selling 411 websites as they provide valuable information that may help you decide if Network Marketing or Direct Selling is right for you.

There are many books available on Amazon you may want to purchase, just so that you understand what it is like to be in Network Marketing or Direct Selling. There are great tips or strategies on building your team of distributors (your downline) or tips on becoming a great leader.

If you see the opportunity to own your own business with very little start-up cost, and the potential in making passive income, and you believe in the company’s vision and you are willing to take action and really work on it, plus you love using the product. If after all your research, you know you can do this, then, Network Marketing or Direct Selling may be for you.

Remember, Network Marketing or MLM is not a get-rich-quick scheme. It requires the actual work of introducing the products to other like-minded people who also understand the Network Marketing or MLM business model. Don’t expect to get paid large sums of money any time soon, as you need to build up your team of successful downline who will produce the passive income for you. But once this is set up, you will see that the income really is ‘passive’, month after month and you will become a Network Marketing or MLM expert soon. Like being a musician or athlete, you need to train yourself to perform the task, but after all the hard work, the results are constant.

With today’s economy, many people are looking for other sources of income. This is the best time to introduce your company’s business opportunity to them.

Should you worry about Network Marketing or Direct Selling scams?

Should you worry about pyramid-style of marketing?

Should you worry about which Network Marketing or Direct Selling company to sign up with?

You decide!

Copyright © 2011 All rights reserved.
Reproduction of this post in any form is prohibited by federal and international laws. Violators will be prosecuted.