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An ex-insider’s take on network marketing

April 27, 2012

An ex-insider’s take on network marketing

Monday, 20 February 2012 11:24 PM Edmund Lao

Networking marketing. Multi-level marketing. Relational Marketing. A mere mention of these words create fear in the minds of many. Somehow people have associated these with pyramiding and get-rich-quick scams – an injustice to one of the most wonderful and powerful marketing tools ever invented.

Some years back, when I was in this legitimate industry, people would ask” “Isn’t that the same as pyramiding?” I would reply in jest: “Pyramids are only found in Egypt,” which would invariably draw laughter.

Seriously, if network marking is a pyramid, then what do we call the structure of the majority of thecompanies in the corporate world? Isn’t the corporate world an exact duplicate of the pyramid? The top always leverages on the effort of those below. In essence, pyramids are very stable in structure, hence companies use the principle of pyramids in running their business. Those who hate or are afraid of network marketing due to fear of pyramids just do not know that they are already in it.

Network marketing is a powerful marketing vehicle that gives unlimited opportunities and income to an individual, but only if he does his work.  The advantage of this tool over traditional ones is that growth is almost boundless and overhead costs limited.

Let us make a comparative study of network and traditonal ways of doing business.

  1. In  traditional sales, the Sales or Unit Manager generates passive income through over rides from the sales of his group.The agents under him will have to wait to be promoted by their immediate superior before they can start to earn the same. In network marketing, the individual promotes himself to the position equal to his upline. On his way to the position of his upline, he can already earn over ride commission due to his earned position. In traditional sales, when an agent gets promoted, his previous manager will no longer earn over ride from him. While in network marketing, there is a continuous income stream coming from spread commission.
  2. In traditional sales, the company has to hire people to boost sales. The company has to pay for salaries, commissions, allowances, representations, and transportation. These add up to the overhead cost of the company. In network marketing, the individual pays to join the company and start his business. All expenses are incurred by the individual because it is his business. The company has minimal overhead.
  3. In traditional sales, the distribution of product is limited to the area covered by the company agent. While in network marketing, distribution is wide spread due to the recruitment of good quality sales force all over the country and sometimes overseas.
  4. In traditional sales, the training is more of building sales by working hard and building clients, while in network marketing, the training is more of building sales by working smart and building a team. Training in the corporate world is done by hired trainers while in the network marketing industry, training is done by successful people who share their experience on their way to the top.
  5. In traditional sales, agents outperform each other to get the bigger sale. They practice greed and most of the times steal clients from other agents. While in network marketing, selflessness is practiced. Everyone is given equal and fair chance to help each other earn more by match-ups.

 

A good example of this is the Internaitonal Marketing Group (IMG). Some years back, the said company was able to capture 25 per cent of the sales production of Philam Plans through the use of distribution network. It’s local head office is in Makati but has branches in Hong Kong, Singapore, Malaysia, Dubai, Italy catering to the needs of our fellow Filipinos overseas. Such is the power of this marketing tool. IMG is one of the biggest and most successful brokerage companies here in the Philippines.

The sad truth is that while network marketing is such a good instrument, it is being abused by unscrupulous individuals who are out to swindle people out of their hard-earned money, which has led to the negative reputation of the industry. There was once, for example, a group that charged one hundred thousand pesos joining fee and would then issue official recaipt in the amount of sixty thousand pesos worth of products. The balance was not accounted for. The gullible applicant, not knowing he was duped, would then recruit other gullible people into the system. This is not anymore a pyramid but a blackhole where all the monies are sucked into the pocket of the founder. Another perfect example is the Multitel scam where billion of pesos were funnelled into their system. Greed was the prime factor that moved the scammer to lure investors to the system to earn five percent a month only to lose the principal in a few months. Below are some pointers to determine the legitimacy of a company to avoid scams and failures:

  1. Check the company by inquiring with government agencies like DSAP ot DTI . Do not be swayed by high pressure selling or sweet talking agents into joining them immediately.
  2. Check the products they endorse. Chances are that the products are already being sold publicly. Also check the marketing plan and see if the compensation plan is too good to be true. If it is, then politely turn them down and walk away.
  3. Do not be awed by the cheques they show during presentation. There is no such thing as get-rich-quick in any business. All businesses require hard work on the first part and smart work on the latter part.
  4. Check emotion. Do not be overcome by impulsiveness. Always remain calm even if excited about the new business offered. Think twice or thrice before jumping in. Ask around for advice from others who are in the same industry.
  5. Check your passion. Is this the thing you love to do? If not, then this is not for you. Network marketing is not for everyone.What is good for one may not be good for another.

Happy networking!

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