What is Network Marketing?

Is Network Marketing, also called Multilevel Marketing or MLM, always a scam as some people claim?

No! Definetly not! There are a lot of scams out there and you have to be careful, but to claim that the whole MLM industry should be a fraud would be totally wrong. I mean you have people like Donald Trump and Robert Kiyosaki speaking in favour or it!

Now, what is it then?

The usual definition is that it is a way to distribute products or services directly from the company to the consumer by independent distributers without the wholesale trade. The distributers take care of their own marketing, which keeps the costs low for the company.

A definition I found on the net is this: "Multilevel Marketing is selling products by using independent distributors and allowing these distributors to build and manage their own sales force by recruiting, motivating, supplying, and training others to sell products. The distributors' compensation includes their own sales and a percentage of the sales of their sales group (downline)."

So what i the difference between a MLM and a pyramid scheme?

I took the definition from smallbusinessnotes.com/glossary:"A pyramid scheme is an illegal multilevel marketing program in which people pay an entrance fee for the opportunity to recruit others to do the same. Pyramid schemes usually have no products. Chain letters in which you send money to the person who sent you the letter, then you forward the same letter to a number of others is an example of a pyramid scheme."

I found an article by Michael L. Sheffield, who is the co-founder and chair of the Multi Level Marketing International Association (MLMIA), whose members represent companies throughout the world, called
Is Network Marketing just a scam?

There he explains about MLM and how it differs from a pyramid scheme.

How does it work? How do I conduct a Network Marketing Business?

In the old model you would start by making a names list and contact everybody you know. Many networkers still do and teach it like this. But in the internet world of today there are better methods. It is called "Attraction Marketing" and means that you don't go chasing your prospects, instead you are attracting them. (Follow the link to read more about it! Just click on the colored text.)

The same goes for customers. You don't go out and try to sell your stuff to everybody you happen to see. Why should anybody be interested? When a salesman approaches, people start to run. You know it, you would do the same! You need to attract your customers too. (Ann Sieg wrote a very fascinating book about how to attract people to your business. It's called "The Renegade Network Marketer"

In her book she describes how she went from chasing people (and going broke on that model) to attracting so many people, that her team has grown into a massive organisation.

She also wrote a very controversial e-book called "The 7 Great Lies of Network Marketing" (which by the way is free to download) and in which she discusses the difficulties most networkers encounter and how to get around them. The content of the book is so controversial because the attraction marketing is a quite new concept to the network marketing industry and a lot of old school marketers absolutly hate it.

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