Network Marketing and Pyramid Selling

Did you know that NM is a 120 billion $ industry operating in 100 countries and involving 67 million people. All those people cannot be wrong.

The definition of Network Marketing

“Network Marketing is the dominant form of Direct Sales where there are two opportunities; the first is the Direct Sales income opportunity to build a customer base. The other is a business opportunity to develop a Marketing Network from which you will earn commissions on the sales of multiple levels of Networkers. This is why it used to be called Multi-Level Marketing, or MLM”.

The excitement of Network Marketing is that with a minimal investment there is the possibility to create an enormous and residual income. The flexibility of the opportunity allows for incomes from a few hundred pounds to many thousands of pounds (and even millions are possible) from the same basic Network Leadership franchise concept.

What I want to do now before we move forward is to nail the bane of our lives The Pyramid, save to say it has proven to be the most resilient structure ever to be built by man, (ironic).

People bracket NM and Pyramid selling as one and the same, questioning whether it is legal or not. We are plagued by this phantom beast called “Pyramid Selling”. It is the tool used by sceptical and uninspiring pessimists to attack less confident distributors. As I have also explained people do not know what they are talking about when they ask is it a pyramid?

The facts are:
· The term Pyramid Selling is coined when the majority of income for the company is made from the money people invest when they join, rather than from product sales. Companies that employ this Strategy are no more than recruiting schemes where for every winner there is a loser. Customers are the only people who can introduce profit into a business and make it legitimate.

· Franchising was originally called Pyramid Selling because companies made their money based on people joining rather than customer sales so many people failed, losing their investment in the process. The British Franchise Association was created primarily to try to disassociate reputable franchisors from pyramid selling operations which had proliferated in the late 1960’s and early 1970’s.

So you can see that Pyramid selling came out of the franchising industry and not the direct selling industry. See you didn’t know that and neither does anybody else. So when the next person says is it a pyramid ask, “Please tell me what you understand is pyramid selling and then please tell me how that relates to Network marketing”?

A pyramid scheme is simple to detect. You do this by looking at the product and by asking yourself whether it offers real value and excitement to a set customer target market? If it does not and customer sales are unlikely then the scheme will eventually be totally focussed on recruiting people and is, therefore, a pyramid.