Multi-level marketing, network marketing, pyramid schemes or direct selling, whatever you call it, if you’ve had any experience with network marketing, chances are you have an opinion about it.
My personal experience with what used to be called multi-level marketing honestly didn’t leave a good taste in my mouth.
I’m going to share my experience briefly here and then share a guest post below from my good friend Doug Grootveld. Doug has had a much different experience with network marketing.
Then I’ll be curious to hear your thoughts on this controversial subject. Please share your experiences in the comments.
The Part of my Misspent Youth that Involved Selling Amway
I vaguely recall my parents going to “meetings” when I was a kid and returning with boxes of laundry detergent and household cleaners. They had been talked into becoming “associates” in a business my aunt and uncle were involved in.
The detergent and cleaners found uses around the house, but the brochures and cassette tapes my parents were supposed to use to recruit other associates into the business with sat around collecting dust.
No big loss for my folks in that case, but someone else in the family wasn’t so lucky. Let’s call him Tom. Tom was recruited into the same organization (anybody heard of Amway before?). The people who recruited him had been somewhat successful and so he bought into the whole idea deeply. Like, I’m talking maybe tens-of-thousands of dollars invested into “the business” (as it was called by insiders).
Tom spent a few years buying marketing materials, recruiting a few “downline” associates and attending conferences. He even recruited me at the age of 18 to join the “massive opportunity for passive income.”
After a few cringe-worthy attempts at selling to my friends’ parents and some strangers in the mall, I gave up. The whole experience probably cost me a thousand or so dollars and nine months of attending meetings. I suppose I learned something from the whole experience, mostly that I didn’t like cold-selling people anything in person.
Tom eventually gave up too, at least on that particular idea. I know he’s become an associate of a handful of other network marketing businesses since then, but hasn’t done much with them. I’m fairly certain that every one of these opportunities have cost him more than he’s made, which is fine for a hobby, but not for a business.
Why Am I Writing About Network Marketing Here if My Experience Wasn’t Positive?
Great question. There are three simple reasons why I’m dedicating an entire post to a business model that I haven’t had a positive outcome from.
Plus, let’s be honest. This is a controversial subject and I thought it would make for good discussion ;)
- Just because a business model has an overtly poor reputation doesn’t mean there aren’t better/legit/profitable ways to do it.
- Some of you don’t want to work online, but still want to support yourself with a independent lifestyle business.
- My friend Doug is starting to have some success with network marketing.
Take affiliate marketing as an example. For months I dismissed affiliate marketing as something I wanted nothing to do with. The whole industry seems sketchy and fake.
But then a few people I admire online started talking about their success with affiliate marketing. I trusted and respected people like Chris Guillebeau and Glen Allsopp so when they embraced affiliate marketing I knew it was worth looking into.
It could be that network marketing is the same way. Yes, the industry has a negative image, but perhaps there are certain opportunities and methods that are worth checking out.
Plus, the fact that Tom and I both didn’t succeed probably had more to do with our lack of effort, motivation and interest in the actual products we were selling than the business model itself.
What do you do if you don’t want to develop websites or blog for a living? Network marketing promises to be that opportunity.
This is honestly what sparked this whole discussion. Doug Grootveld is a close friend I originally met in Mexico. Doug’s an entrepreneurial guy (he’s been flipping houses during the summers and doing acupuncture in Mexico in the winters for the past 5+ years). Like some of you perhaps, Doug doesn’t want to sit behind a computer all day to earn a living.
We developed the Morning Spanish newsletter business together last year. I handled most of the website stuff, while Doug developed the content. It turns out neither of us are passionate about teaching language learning enough to fully commit to a business in that space. We sold the business for four figures last year and moved on.
Doug has already found alternative ways to earn a living that allow him to live in abroad for 6 months every year. He and his wife are a big reason why I started this entire journey to build a lifestyle business myself last year.
But Doug also knows he doesn’t want to practice acupuncture or be a real estate developer forever. He’s looking for something more passive, but still mostly offline. He thinks he’s found that in network marketing and asked if he could share his story with you.
Now it’s over to Doug to share his experience.
23 Months, 1 Network Marketing Company, Four Figures
How I did basically did nothing with a Network Marketing company in just under a year-and-a-half but finally got off my ass and am now starting to make some money and having fun doing it.
Network Marketing – Lifestyle Design Worthy?
Okay, so maybe my manifesto (aka short blog post) isn’t quite as inspiring as Corbett’s, but I was fortunate enough to be on the beaches of Mexico during this story too.
Let me begin by saying I’m not an expert network marketer. I’m not making 6 or 7 figures a year doing it, in fact I just had my best month where I cleared the 4 figure mark.
I’m an acupuncturist by trade, but my largest source of income the last 10 years has been buying and flipping houses. I don’t really enjoy this much anymore but it has become a means to end to support my travels and surfing addiction. You may have even read my bio in the early days of Free Pursuits under the alias of Darryl.
A little less than two years ago I stumbled into Network Marketing knowing nothing about it (including the stigma). A friend invited my wife and I out for a drink. She showed us a health product, and as a health care practitioner, I did recognize the benefits and it was unique.
Then she said the magic words for me: “potential for passive income.” Since that first Rich Dad, Poor Dad book I read while still in acupuncture school, passive income has been an obsession. The idea of making money while screwing off is so seductive to me (this my idea of lifestyle design). The house flipping actually began with the idea having rentals, but I quickly found out that buying houses that cash-flowed was not quite as easy as in Robert Kiosaki’s books.
So anyway, I signed up for my first network marketing company right away much to my wife’s dismay.
Unfortunately the business side wasn’t all rainbows and waterfalls for me in the beginning. Between my laziness, lack of understanding of how the business worked, and more importantly, pretty much ignoring the successful people in company trying to help me, I wasn’t really making much of that passive income I was hoping for.
I decided about 6 months ago to put a little effort (about 15 hours a week) into it and really listen and learn from those who are successful.
Amazingly it is starting to work.
From my many mistakes and bit of success I thought I’d give you a little breakdown on what this business is all about.
Network Marketing is simply a business model. It’s a method of marketing and distribution that is a little different than your average retail setup.
The products tend to be unique and instead of a company spending large sums of money on advertising, celebrity endorsements, and retail shelf space, they compensate individual consumers for “spreading the word” instead.
Unfortunately for the industry, this model has also been manipulated to form illegal pyramid schemes or to hawk stupid shit that nobody wants using high-pressure sales techniques.
I’m here to tell you that much like affiliate marketing, there are good ways and bad ways to go about network marketing. I’ve found what works for me, and it doesn’t include high-pressure sales or selling things I don’t truly believe in. Read on to find out how I’ve made it work.
How do you choose a company to work with?
- The Right Product or Service — Find something that you are really interested in (and think others would be interested in also). The product should be unique, and something you would tell people about whether you were affiliated with it or not.
Also try to find a highly consumable product or service that people need to reorder every month. Even if the company and compensation plan is super badass, if you are not into using the product or service yourself, the people you approach will see that in you. Also, make sure it isn’t a fad, i.e.: long distance telephone minutes are pretty irrelevant now days.
Note: if it is kind of vague what the product or service actually is, be very careful, it may be a cover for a pyramid and ponzi scheme. A friend of mine lost about $10,000 on “website traffic” company that was shut down after being found to be a ponzi scheme.
- The Right Company — Check out the company behind the product. A lot of network marketing companies go out of business in the first couple years. It’s probably best to get involved with one that is at least a few years old.
Also, check out the distributors that you will be working with and the “company culture.” Do you get along with them? Are they total cheese-dicks? Are they pushy or do they seem like legit business people? Are they having fun?
- The Compensation Plan — Sometimes these can be a bit confusing at first to understand on paper, but the main thing is to see if people are making money. When I first signed up I met a lot of really cool people that had all been involved a short period of time that were making good money – many had even replaced an income within a couple years.
Ask about the retention rate as well. This is a good way to judge both the product popularity and the compensation. A higher rate means people are using the product and/or service and they are getting paid (the industry average is around 10%).
What it takes to be a good network marketer
Choosing the right product and network marketing company won’t guarantee your success, but it will increase the odds. I was lucky as “I fell into” one that was right for me. As with any business, success ultimately comes down to your effort. The name of the game in network marketing is building a network of people buying and using the products or services you are promoting (and using them yourself).
Here is the basic formula that all successful marketers use: provide information about your business and product/service to people, answer any questions or concerns (or refer them to someone who can), follow up with them, sign them up if they are interested, help train and support so they can do it, repeat the process again.
Another important point is not to be a pushy asshole. Don’t get involved with one of these companies that invite people to secret meetings and then use high-pressure techniques to sign them up. Find a company where the product/service can stand on its own merit.
On the other side of the coin though, you have to get over the fear of introducing your business to as many people as possible and also tempering your disappointment if they are not interested. This may mean that your dad and your best friend don’t sign up – that’s okay, it’s not for everybody (and if you’re not weird about it they won’t think any less of you).
If you may have never considered something like network marketing, I hope these tips are helpful. The best thing about this business is that it can be done part time, with a low cost of entry, and for the handful of you out there that this matters to, very little computer skills.
I’m happy to answer any questions you have in the comments, and appreciate Corbett giving me the chance to share my experience with you here. Get in touch with me if you’d like to learn more or talk to me directly.
Doug Grootveld spends half of his year in Portland, Oregon and the other half searching for the perfect wave in Mexico. He’s a certified Chinese Medicine Doctor and part-time network marketing business owner and consultant.
Read more about Doug’s business or contact him to learn more about how to succeed in network marketing in a friendly, ethical way.
How about you? What experiences have you had with network marketing? What’s your opinion of the industry as a whole? Do you think there are legitimate opportunities to pursue (especially for those who don’t want to work behind a computer all day)?
Let’s discuss in the comments!
photo by Intersection Consulting