Network Marketing - ewwwww!

I don't feel this way about network marketing, but a lot of people do, so I want to address some of the common issues around network marketing businesses.

First of all, network marketing is just one way of distributing product and services - getting it from the producer to the consumer.

Obviously traditional retailers (producer to wholesaler to retailer to consumer) is the most common method here in America, but direct order (catalog, TV, or now Internet) is another common method that is somewhat similar to network marketing. There are many others, but suffice it to say that network marketing is just one of many distribution methods.

I think most of our negative connotations with network marketing stem from 2 things:

1) Bad experiences with network marketing in the past. Most people that get into network marketing are very excited but have not received good training on how to introduce the products or business to others. Unfortunately, this can lead to "amateurs" approaching friends and family (the favorite first prospects) and really straining some relationships :)
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2) Our general distate for promotion. This is one of the most dangerous mindset issues that keep people from achieving true wealth. Most people resent when people are "promoting" a product or service. Yet, how else do we expect to find out about it? We may not be interested in that product or service, but that doesn't mean we should be opposed to hearing about it - we may know someone who could really use that particular item.

But network marketing is really an effective way for distributing certain products that require more education or explanation. A couple of examples:

Let's say you had a synthetic oil that is guaranted to last 25,000 miles or 1 year without having to be changed, yet it cost 10-20% more than other synthetic oils (more about this later :) ). If you saw this brand that you had never heard of (which also costs more) next to the other synthetic oils on the shelf at Wal-Mart, would you even spend enough time looking at it to see this special guarantee?

Similarly, when you go to the drugstore to look at vitamins and you see a $20/month vitamin with what looks to be about the same ingredients of the $75/month vitamin, which one are you going to pick?

In both cases, education as to the specific benefits of the products is required to fully explain the value. It does NOT mean that everyone will be interested even after the explanation (some network marketers don't seem to understand that the majority of people will not be interested in your product even after you explain it). Some people will be interested based upon the educational process (which conveys the product value), whereas almost noone would have been interested without that education.

So network marketing can be a great distribution method for products that require more education or explanation to really explain their value/differentiation.

As an aside - there are a number of network marketing companies (I would say the minority) that created a product just to make money. There is little or no real value to the product, the company just needed to create something for their marketing engine to promote. This also happens in all other forms of distibution as well, but network marketing is more prone to it in my opinion.

Network marketing also allows quick promotion of products with very little money upfront from the producer of the product or service. Some very large corporations have launched products this way because of their ability to spread quickly without a lot of money upfront (money is only made by network marketers by sales of product - commission only). No money is paid out to your network marketing sales force until actual sales are made.

The potential rewards (especially passive income) attracts a lot of talent to network marketing. I mean incomes of $100,000-$1,000,000 per year are achievable. There are a lot of people in network marketing making that kind of money and more, but there are also a lot more people that tried it for a little while, didn't experience any success, quit, and now say "network marketing doesn't work." Of course, like many other things, it does work but not for everyone.

This discussion is prologue to my own experiences with network marketing that I will share shortly. Stay tuned...