8 Network Marketing Myths Busted

Throughout its history, network marketing or multi-level marketing (MLM) has had a bad image, much of it unwarranted. Many of these misconceptions and charges were fueled by unethical behavior by independent distributors or corporate officials, as well as the unfortunate timing of developing during a period of high growth in unlawful pyramid and Ponzi schemes.

Network marketing, when done correctly, is an ethical and fair approach to expand a firm. A true corporation will follow the business and tax regulations that apply to its country of operation, as well as the compliance rules that are required for its representatives to operate within those laws.

In the United States, government agencies such as the Federal Trade Commission and the Food and Drug Administration keep a tight eye on network marketing enterprises and the products—particularly those linked to health—sold by each company.

The Therapeutic Goods Administration (TGA) in Australia oversees all wellness goods offered through network marketing and is widely regarded as one of the most stringent in the world. While some may consider their criteria to be unduly stringent, it is important to know that items that satisfy the TGA guidelines assist ensure you are using a product that has been thoroughly investigated and certified for your use.

The Direct Selling Association (DSA) also plays an important role in assisting network marketing organizations in adhering to agreements regarding distributor connections. The DSA is a membership-based organization that provides assistance to its members and promotes network marketing and direct selling in the community. Any corporation that applies must also go through a one-year probation period before becoming an official member. This is to check that the company is authentic and that all rules are followed. When researching a company, ensure that it has applied for or is a member of the Direct Selling Association.

The industry has also established its own watchdogs and overseers. The Association of Network Marketing Professionals meets yearly to discuss issues concerning the industry’s future and improvement, and independent analysts such as Rod Cook, Len Clements, and Troy Dooly devote significant time to reviewing and commenting on network marketing events and company activities.

So, let’s take a deeper look at some of the most frequent network marketing misconceptions and see what’s true and what’s not.

1. Network Marketing Is a Pyramid Scheme 

The most common and widely held misconception is that legitimate network marketing is really a pyramid scheme. As a network marketer, you may encounter this as the first objection from a prospect. You must learn to deal with the fact that many individuals are afraid of becoming involved in a pyramid scheme.

While a network marketing program may appear to be a pyramid scheme, there is one significant difference: A service or product is provided by network marketing to an end user. A pyramid scheme is basically a money game in which monies are passed down a chain of people until the next person who rises to the top of the pyramid receives the accumulated contributions and returns to the bottom, ready to tempt others to join. True network marketing organizations promote a product or service through a network of distributors or representatives, but your money is not generated by climbing to the top of a pyramid. Your money can only be made by building a network of satisfied product users and promoters.

“Multilevel marketing, network marketing, and direct sales are the labels used by folks in that sort of firm to describe how their business model works,” Dave Ramsey, one of America’s most renowned and respected financial consultants, recently noted. These firms are not pyramid schemes; they are a legal way for some people to supplement their income and, in some cases, really start their own business.”

2. Network Marketing Is a Get-Rich-Quick Scheme

While network marketing is not a get-rich-quick scheme, many individuals see it as a method to build riches more quickly. There is no doubt that you have the opportunity to create riches because you have the opportunity to expand your business as quickly and as much as you possibly can.

Just keep in mind that being successful in this profession requires the same level of dedication as it does in any other. You must invest time and effort in order to enjoy the benefits. There are no short cuts.

3. It Takes a Lot of Money to Get Started

Almost every legitimate network marketing organization in operation includes affordable entry-level choices. These prices range from less than $100 to $2,500. Today, the typical start-up cost for a network marketing organization is between $500 and $800. This initial investment often includes a startup kit, marketing materials, an initial product order, and access to internet resources, not to mention support from your upline and the firm itself.

The company then handles delivering products, keeping track of your organization, organizing training events, and keeping you up-to-date through regular communication. You get a lot for the investment you have made. When you consider the costs incurred by starting most major franchises or businesses today, the price of getting involved in network marketing is extremely reasonable.

4. You Can Make a Lot of Money by Doing Next to Nothing

This may be a marketing ploy to get you signed up, but you can be sure that doing nothing after you are in the system will also earn you nothing. This business is not a get-rich-quick scheme. It offers no free rides. You get out what you put in, and in the beginning that can seem like a lot. It takes a lot of effort and patience to grow a team and your income. Sitting on your hands and hoping your business will grow without effort is not a game plan.

5. You Have to Sell to Friends and Family 

You can sell to friends and family, and if the products are that good, you should. But the notion that you will be spending a large part of your time convincing family and friends to buy from you is an outdated one. 

Many of today’s sales techniques revolve around conversationally marketing the product, mentioning it almost casually during normal banter with your friends and family. For example, if you are marketing a weight-loss product, your own results will show for themselves and have others interested in what you are using. You can then use the company’s videos or online resources to help share your excitement. 

If you are using a service that saves you money, you can casually mention it to your friends and allow them to ask for more information rather than you harassing them to sign on with your company. The bottom line is the days of begging family and friends to buy from you are long gone. Product results will often speak for themselves, and exceptional marketing material provided by your company is all you need to stir interest with the people you know.

6. Only the People at the Top Make Money 

A hangover from illegitimate pyramid schemes, the view that only those who get in first make the big money is no longer applicable with today’s compensation plans. Plans are now structured so anybody entering the business at any stage can earn as much or even more than a rep who has been working with the company since its pre-launch period. 

Positioning and timing still play an important role, but they won’t benefit you if you simply take a position in an organization and fail to do what is required to build a business—selling products, creating sales volume, and developing an organization. If you are not focused on these key areas, a new rep who enters the business five years from today will out-earn you.

7. Network Marketing Is a Cult 

In the late ’70s and early ’80s, the industry entered a new phase. Leaders within many of the major companies began to look for ways to help keep reps from quitting due to the difficulties of developing such an unconventional business. Many reps found it difficult to stay upbeat as they dealt with rejection and reluctant prospects. Company owners and upline leaders were struggling to find an answer. But not for long. The marriage between network marketing and the personal development industry became the perfect match. Books such as Think and Grow Rich by Napoleon Hill, The Magic of Thinking Big by Dr. David J. Schwartz, and almost anything written by Og Mandino were now featured at network marketing companies’ conventions and training events. 

Today, How Successful People Think by John C. Maxwell and The 7 Habits of Highly Effective People by Stephen R. Covey are also among the books that network marketing companies recommend to their reps. A shift from training reps in sales and marketing skills to working on their mindset and attitude proved to be a winning strategy. Positive, upbeat reps are willing to do whatever it takes to achieve their dream, overcome their limitations, and take their opportunities. 

At the same time, many large network marketing companies began to dictate dress and behavior codes for their associates and encouraged reps to stay away from family and friends who didn’t support their new career and outlook. 

At a time when most people were unfamiliar with personal development pro- grams, and a friend or relative suddenly exhibited a personality change and began avoiding friends and family, it wasn’t uncommon for suspicions or fears to arise. As a result, some people began to theorize that these companies were cult-like. Today, more people are aware of training programs that focus on self-esteem, a positive image, and self-actualization, and the cult comparison is diminishing.

8. The Market Will Quickly Become Saturated 

According to the saturation theory, if a network marketing company works the way it should, every person on the planet will be a distributor or rep within months and there will be nobody left to recruit or sell products to. While that sounds possible theoretically, there are several reasons that this is unlikely to happen. 

The first reason is that, quite simply, not everyone will be interested in your business or product. No matter what you do or say, there are people who will find no need to be part of your team. That leaves a huge section of the population out of the equation. The second is the fact that there are millions of babies born every year, which in turn means that eighteen years later they are fresh candidates for a network marketing business. 

There are more births occurring every year than the number of people joining network marketing, so the possibility of selling to everyone is extremely remote. And finally, many people try this business for a short time and then, for various reasons, move on to other things. Not everyone is suited to this type of business, so there will always be openings for people who are receptive to a career in network marketing.