The Good, Bad and Ugly of Network Marketing

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During a dip in the economy, my primary business had started to slow down. Being an entrepreneur, I sought out other business opportunities that are easy to start, have a low investment cost and that could bring in some extra income. I got in touch with a friend of a friend who had incredible success with her NWM business and so of course, I was interested in learning more. The business model looked and sounded good for the company I choose. There were in fact, many people making good livings at it, especially locals in my city. I was so excited to start and unfortunately, I jumped in way too fast and didn’t do enough of my homework. I got blind sided by how good the numbers looked for what “could be” based on just a handful of wildly successful Consultants instead of looking at “what is” — meaning, the majority of consultants either quit from lack of sales or they weren’t making more than 50–100 dollars per month on average.

I found that the people who have the most success in their NWM businesses have the right conditions to work with (especially when they are getting started), know the right people, have the right network and they love what they are selling. If you’re thinking of getting into Network Marketing, here are 6 real life things you should know before you start based on my experiences:

1. It’s all about memberships and recruiting.

If you think for one minute the name of the game is to sell your products, you’re wrong. The reason some consultants hit it big is because they are really good at getting others to join their businesses as Consultants through them. Typically, when consultants start out, they need to have a “Sponsor” who is already in the company to sign them up and get them set up with the product kits they will need to do promos. The products that you purchase initially are your investment cost to join and can be used to market your business (this can cost anywhere from $500 — $2000+). The Sponsor is essentially selling these items to the new consultant and makes a commission on the products plus another commission for getting someone new to join as a Consultant. The more Consultants they have on their team, the higher their ranking in the company. A higher ranking means better commissions. Basically, the ones who have the biggest teams make the most money. It’s sort of like a reward for referrals. Another bonus is the Sponsor will continue getting commissions from whatever the new Consultant buys and sells until the new Consultant meets the sales quota which allows them to rank up. So of course, everyone is striving really hard to get a higher ranking all the time because they’ll make more commissions on sales. Additionally, if you’re struggling in the business, it’s going to be that much harder to get anyone interested in what you have to offer. Fewer people will join you if they don’t see success in what you’re already doing. The trickiest part when you’re starting out is to convince others to join as Consultants when you haven’t been very successful in your business so far (more on this later in the article).

Your Sponsor is supposed to help you get started by teaching you how to grow your business. They are supposed to become your mentor. Make sure that you actually like your Sponsor before you join their NWM business. If you don’t click with that person but still want to get invested, find someone else in the same company who you DO click with as you will be spending a lot of time with them and relying on them a lot at first for help on getting started.

NWM companies also reward Consultants based on how many memberships they sell. Memberships are not free and even the Consultants need to pay a yearly membership fee in order to continue selling with the company. Regular clients are encouraged to become Members for the reason of, you guessed it, to encourage them to buy more at discounted prices so that you (the Consultant) make more sales and get more commission. If you’re doing well in the business and have the right people in your network for growth then selling memberships are really good win-win investments.

2. NWM is extremely competitive, especially in saturated markets.

You need to get your products in front of as many people as possible and the best way to do that is by asking friends to host parties for you to demo the products to their friends. This is a great way to build your network and client base IF you can convince someone to host in the first place! It sounds super easy but I was surprised at how many people were reluctant to host. Most of them have already been approached by several others to help them out by hosting parties and I could tell they were burnt out on it. I imagined personally, that my friends would get tired of coming to different “parties” at my place each weekend, only for someone new to be there trying to sell their stuff to them. Hosting can be exhausting, especially if you continually “trick” your friends into coming over by promising a relaxing night of facials and wine, only for them to be greeted by a high pressure sales person once they are inside. If your network is full of people who know of one, two or more other people who are already doing NWM it’s going to be hard to convince them to host a party for you, let alone to join your business. Chances are they’ve heard it all before from their other friends, like you, who are just trying to get by. That being said, if you have the right network of people, you have a great product that people can use and enjoy without needing to present to them by using a scripted demo, your success will probably come a lot easier.

On another note, you shouldn’t rely on your friends and family to be directly responsible for your success (usually they aren’t anyway) but its nice if they can be supportive enough to give you referrals to others they know who might be interested. If you’re super gung-ho on doing this business, keep asking people to host you until someone says yes.

3. Success will be hard if you don’t love what you’re selling and you’re only in it to make a profit.

Before becoming a Consultant, I had only tried the products I was about to sell through some samples I received. Although I had no history with the products (or the company), the thing that really attracted me was that they were natural and I was really excited about sharing and promoting good, toxic free stuff with everyone I knew. The products were nice but the problem was that everything the company sold was ridiculously overpriced and even with my Consultant discount, I could barely afford to purchase products for myself let alone to give away to others for samples, gifts etc. Although the company is a “luxury brand”, I knew that I could get similar products for less money and I eventually hated the idea of trying to sell these overpriced items to my friends who couldn’t really afford them either. The last thing I wanted to do was rip my friends off. Eventually, I didn’t love what I was selling. In fact, I was starting to hate the company and felt like I was duped into something that really wasn’t for me. If you don’t love what you’re selling, its gonna be really hard to convince others to love it. Relying on product popularity and demand wasn’t going to cut it for me in this case, especially considering we were in the middle of an economic recession. I learned quickly that if you’re desperate for quick cash, this isn’t the gig for you.

4. There’s a lot of pressure on you to make sales… and to put more money into the company’s pocket.

When you do well in your NWM business so do others, especially those other Consultants who are higher than you in ranking and including the Company itself. Most NWM companies have sales targets to motivate Consultants to “do well” and meet quotas every so often. They encourage you to sign up as many new Consultants as you can to meet sales targets and in most cases if you do, they reward you with extra cash or gratis (free products) or even free trips! You make a small percentage of what you sell, but the attractive thing about this business is that the more you sell and the higher up you get in your ranking, the more commission you’ll make. All of these things sound REALLY attractive but the downfall is if you aren’t making your quotas, you lose your “status”. In turn, you lose your ability to earn certain higher commissions and they essentially make you start over from square one to compete again for a higher ranking. NWM can be very competitive for this reason, and it’s tough if you’re trying to operate in an area that is already very saturated with other Consultants from the same company.

The “motivational” events that these companies put on each month to attract newbies and pump up existing Consultants are designed to make you look away from reality and to instead focus on the one off’s who do so well in the company. Be careful to not get caught up in the glam, glitz and testimonials of success stories that they are flashing at you in the meetings. A lot of the attractive things they say is just smoke and mirrors.

One month into my new Consulting gig with the NWM company, all the new Consultants were being pressured to fork out thousands to attend a special “Consultant Training” event in Niagara (which is on the other side of the country). The team leaders absolutely insisted that we attend the event and that our businesses’ success depended on it. Huh? I was amazed that they were using scare tactics and fear to convince new consultants who actually could not afford it, to put this expensive trip on their credit cards and go anyway. My Sponsor called me several times trying to convince me to go, completely ignoring the fact that I had just invested over $1000 into the business (money of which I had not even made back yet in sales)and that I was maxed out. Of course, the team leaders and consultants with the higher ranking got to go for free. It was absurd. I listened to my pocketbook and my intuition and decided not to attend the event. It was the best decision I made, especially hearing later on from other Consultants that the event was mediocre at best and that it did not help to transform their businesses. Trust me, there was nothing special or life changing about that event to go broke over. In the following months, there were more and more similar “training events” that we were pressured to pay big money to attend. I was starting to lose more and more respect for this company each month that passed.

In addition to the pressure to addend expensive “training courses”, the company wants you to purchase more and more of their products to use as demos for clients. This is a great idea to market the products to increase sales but it only works if you have the right clientele to sell to. If you’re not making sales, chances are you aren’t going to be able to afford to stock up on more gimmicky products for marketing purposes. I spent hundreds buying more products from the company hoping that friends, family and acquaintances would agree to borrow them to test them out at home which could lead to a sale for me. Unfortunately, very few people I talked to were interested in trying out the products and even fewer people had never even used products from that company before. The upside to purchasing more products (even if they are intended to be testers) is that you can use the products yourself if nobody else wants them.

5. Risking your integrity just to make sales is not worth it.

Most of us at one time or another have been approached by someone we know who was eager to “share” their new business with us, or have seen frequent posts on our social media from acquaintances advertising sales on their “pyramid scheme” products. Old friends or acquaintances seem to seep out of the woodwork, more excited than ever to reconnect and share their exciting new business with you. They want to let you know about this really great opportunity they have, these products they’re carrying or the diet they’re promoting and why you should be interested in them too. Like you, I’ve had other people try these sales tactics with me and personally, I didn’t much care for it. The worst thing about the business for me was how much encouragement (and pressure) consultants receive to approach their networks this way.

The whole point of network marketing is to tap into your network and they say the best way to do that is by using social media. Even though I felt super uncomfortable about this, my Sponsor pushed me to reach out to everyone on my Facebook to “reconnect” with them. She had a fair point in that you never know who might be interested in your opportunity (meaning, getting others to join my business and to make sales). This was in fact how a lot of the successful Consultants got their big breaks. The problem was that I didn’t even like half of the people on my social media and I certainly didn’t want to reach out to them and pretend to be friends just to make a sale… but I did it anyway. People were starting to avoid me and I felt awful. Because I didn’t have the right network for what I was selling, not only did reaching out to those people make me feel and look desperate but they all knew that I probably wasn’t being 100% genuine. I felt like I had lost my integrity by not listening to my better judgement. The Sponsor was just trying to help but she also didn’t respect that I needed to tap into my network differently. I also had no idea how to take this network and turn them into people who wanted what I had to sell. It’s easy to make sales to people who want what you have but badgering people on social media is a really good way to lose face if you’re not careful. Being overly pushy, demanding or too much in people’s faces won’t get anyone very far in the long run.

6. If your network sucks…

I already wasn’t loving the products, the price of them, the company, my Sponsor and on top of that, I realized the NWM company’s ideal consumer was completely different from the types of people in my personal network. Sure, I could teach my friends about the benefits of the products, give them some samples and they would love it but that didn’t mean they would become long term customers or even want to join me as Consultants. I honestly thought that my 5 close friends and a couple of family members were enough to get me started. I was so wrong. Even after reaching out to acquaintances and people on social media who I didn’t even really know, I was clear that I didn’t have a strong enough network for the business I choose to take off on. I didn’t love the company or products enough to create a new network of people for the sole purpose to attract recruits or customers. If you’re not changing or expanding your network to suit your business, you might not make it to success. Pick a NWM business that fits into your network, your budget and that suits your interests.

Network Marketing businesses aren’t for everyone. However, if you have the time, money, the right market available and are passionate about the niche you’ve chosen, NWM can be great side gig for anyone looking to generate some extra income. Running any business is a lot of work so if you’re considering such an investment, to do the proper research on the company and take a close look at your current network to see if you really do have a fair chance at this. Taking a stab in the dark without a plan or a goal is rarely the road to success.

In summary:

  • Treat this business the same way as you would for any other type of investment. If the rates of potential returns on the investment look too low, then perhaps it’s not the right business for you.
  • Plan for success by researching the target market and typical customer who likes to purchase the products. Make sure that you have the right people in your network who can help you get started so you have a fair chance. For example, if you’re selling expensive “luxury” products, and your network usually purchases low end drug store products, this might not be a good fit. It’s not worth losing friends over if they aren’t supporting you because they can’t afford it.
  • Get to know the products and the company before jumping in so that you have a better idea of what you’ll be getting into.
  • Make sure you can afford to invest and don’t get caught up in the company’s smoke and mirrors sales tactics to lure you into expensive events and products you can’t afford. Don’t invest if it means you can’t make your rent or mortgage payment at the end of the month.
  • NWM is supposed to be fun. If it’s not, take a step back and re-evaluate the points above.

In the end, I did break even in my investment and even came out a little bit ahead. Plus I got some great products to use and learned a lot about sales. However, I decided that the company I was with just wasn’t a good fit for me. Would I do it again? Yes, but next time I would follow my own advice and make wiser decisions before I invest my time and money again.



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