What's so Good about Network Marketing?

Back in December, I began a thread looking at different aspects of the network marketing/direct selling business. Life and holidays intervened and I'd like to pick that up again. I'd gotten as far as "defining" network marketing before getting sidetracked, and while I may not have (or even know) an "official" definition, "A non-traditional way of selling and distributing a product or service in which the sales force is compensated not only for the product they sell but also for the distribution network they create" pretty much works for me.

Now I would like to take up the question of "so what, why bother?" What is it about network marketing that, despite the bad press and questionable reputation, makes it a uniquely attractive business opportunity? To me there are four key attributes of a reputable and viable network marketing business. And while these may not each be unique to network marketing, they combine to make it a business model that nearly everyone ought to at least take a look at.

1. Generally network marketing has a very low cost of entry. In the case of my Reliv business, $25.00. For companies that have achieved and maintain Direct Selling Association membership (and the best of them do), any initial inventory purchases should be accompanied by a 90%, one year money-back guarantee. Try asking your Coronary Burger franchise issuer for 90% of your money back if you change your mind a few months down the road. Network marketing offers you the opportunity to establish a real business for, often, less than $100.

2. Network marketing businesses require low or no overhead. You have no employees, no storefront, no equipment and, for the most part, not very much inventory. Large parts of your business can be done online and normally the tools you will need to get there are provided, sometimes for a small fee, by your supplier company.

3. Your potential income is unlimited. There really are people making 5-figure monthly incomes in network marketing businesses. As we discussed in an earlier post, that isn't typical. But it does happen. What are you doing now that even offers you a possibility of earning $10,000, $20,000 or more per month next year? Or five years from now? Or ever?

4. Residual income lasts a lifetime, and often beyond. This is without a doubt the most powerful and compelling feature of a network marketing business. That the distribution network you build today will continue to pay you for the rest of your life. Not only pay you, but continue to grow even if you choose to retire from actively working it yourself (most really successful network marketers never retire because they enjoy working this very social business), because your downline network is full of people who are still out building their own businesses.

There are lots of other attractive features of this type of business. No special background or education or training is usually needed, it can be built up gradually without having to leave an existing job until you are ready to do so, and you can set your own standard for success. But these four reasons top my list. If you need to generate some extra income, implement a Plan B for your retirement or just want to take on the challenge of building a business around your other chores and responsibilities it is hard to beat network marketing.

So then, if its so great why doesn't everyone have a network marketing business? We'll look at the reasons why in a future post.

US - Eurozone Accept Each Other's Organic Food Standards

After about 4 years of negotiations. American and European Union officials have decided that, with just a few minor exceptions, the differences in their standards for being considered an "organic" food were not significant and that they would begin to accept each others standards. This means that the market for organic foods, on both sides of the Atlantic, is about to double (at least from the producers' perspective). This should have the eventual effect of broadening selection and lowering costs (and, we may hope, prices). Good news for growers, distributors and consumers.

Coming Soon to Your Grocery Aisle: Organic Food from Europe

Energy Drink Contents Are Often a Mystery

How much does "proprietary energy blend" on an ingredient label really tell us about what it is we are consuming? With emergency room visits for the effects of caffeine over-consumption up by a factor of 10 between 2005 and 2010, and about half of American college students using "energy drinks" on a regular basis, maybe it would be a good idea to find out?

Listen to this report from yesterday's NPR Morning Edition and decide for yourself.

A Thought for the New year

When I was in the 4th Grade, and dinosaurs walked the earth, there was a boy in my class named Robert. Now Robert had a tough life. He wasn't very popular. He was fat, not especially good looking, or smart, and not blessed with any talent or sports. His social skills were, to be kind, non-existent. Unsurprisingly, he was painfully shy. Fourth graders being who they are, Robert was the victim of ceaseless pranks, teasing and the sort of indifferent and casual cruelties that only other children can inflict. I am not proud to admit that I was one of his tormentors.

That January, right after Christmas Vacation (it was a Parochial school) Robert's mother had a meeting at school about the problem. "This needs to stop," she reportedly said. "I don't know what else I can do. I've told him 'Robert, you have a new shirt, new pants, new socks and shoes, and even new underwear. You're a new boy. Now go into that classroom and act like a new boy'."

But here's the thing. Robert was still Robert. Despite the new shirt, new pants, new socks and shoes and even the new underwear, Robert was not a new boy.

As the clock ticks away the last few minutes of 2011, how many of us are standing in Robert's new shoes? We look back at the year, its triumphs and defeats, and firmly resolve that next year will be better. We'll stop the snackin' and slackin' and get back in shape. We'll improve our diet, and we'll get up and moving more. We'll rebuild that relationship that we have been neglecting. Take our business or career to a new level. Start that new hobby or activity we've always wanted to try. Reduce our debt. Save for retirement. Be better. Be happy.

But here's the thing. You are still you. Despite all the heartfelt good intentions, you are not a new you. If you want 2012 to be different, than YOU need to be different.

I will leave you with a thought from Stephen Covey's wonderful book, First Things First:  "Each decision we make is an important decision. Some may seem small at the time, but the reality is that they add upon one another to become habits of the heart that move us with increasing force toward some destiny. We are not the product of our past, we are the product of our choices."

I wish you a happy, healthy and successful New Year.

Seriously. What is "Network Marketing"

It's a scam. It's a pyramid scheme. Its overpriced products. It's a "get rich quick" scheme. They just want to sell you a garage full of stuff and cut you lose.The products are usually either bogus or are available somewhere else to the public at the same or lesser prices. The idea is recruiting new people to either buy into the program or else to buy products that are grossly overpriced.

Everyone has an opinion about multi-level marketing (MLM). Are there MLM companies out there guilty of all of the above and more? You bet there are. But there are plenty of dishonest traditional companies out there too. Like any other business or financial venture, you have to do your research before getting involved - whether its an MLM, a franchise, a corporation or a mom and pop sole proprietorship. But that's a topic for another post.

What, really, is a multi-level marketing (or network marketing or direct selling) organization?

Here is my take on it, as someone who has been actively involved in MLM for almost 3 years and from my conversations with many business and marketing professionals.

Network Marketing is a non-traditional method of marketing, selling and distributing a product or service in which the salesforce is paid not only for their own sales, but also for the sales of the network of distributors that they recruit, train and support.

That's it, I think. It is simply a method for selling and distributing a product. Whether or not any particular MLM company represents a real opportunity or gives you a reason to run fast and far is an important, but separate question. One we'll look into in a future post.

No More Apologies for Network Marketing!

Most of the time I discuss issues related to health and nutrition here. That is my passion and the place that I believe I can have the greatest positive impact on people's lives. I don't intend to change that. But the way I chose to be involved in the nutrition problem in America is through Reliv International, a network marketing company.

I know many of you are involved in network marketing, and I don't know what your personal experience has been. But my unscientific guesstimate is that 80% of the people I talk with have a strongly negative view of network marketing and are put off by the very idea. For a long time that intimidated me. Deep down I guess I shared their distrust to a great degree. I'd had at least one awful experience with the industry, and found many of the people that I had met who were involved with it to be, to be blunt, pushy and obnoxious about it. But as I became personally involved with a company and with other people who had high ethical standards and a genuine desire to be of service to people, my perspective changed.

Like most things, network marketing is what you make it. Network marketing blogger Sachin Goyal says that "Network Marketing is broadly misunderstood, has a large public image problem and is mostly ignored." I agree. But I also firmly believe that, for most people, it represents a solid and exciting opportunity to improve their financial, social and personal lives. At Reliv we say that we have a personal development opportunity disguised as network marketing. I believe that to be true for most people and most solid MLM companies.

So with that by way of prologue, I plan to spend the next several posts discussing network marketing, my own experience operating a MLM business and offering some ideas for anyone who may be considering entering the industry but is unsure of what to look for - and what to avoid. Please chime in with your own thoughts and worldly wisdom.

To start us out, I want to just share some statistics about the industry that some people (both within and outside it) might find surprising. These come from the Direct Selling Association, the industry's premier professional association and ethical watchdog. And no. "Network Marketing" and "Ethical" are definitely not antithetical.

Total revenue, worldwide, for the network marketing industry last year was $114 billion (US). There are a handful of MLM companies posting annual revenues of a billion dollars, but only a handful, so that number represents hundreds of companies (some great, some shady; some long tenured, some just out of the gate). Of that, about $29 billion (US) is generated in the United States by just over 16 million direct selling distributors. Again, these are all 2010 numbers from the DSA.

How are all these millions of distributors doing? Some are doing very well indeed. Many are doing very poorly. The average (actually the median) distributor in the US earns $2,400 annually, about $200 a month. Not exactly enough to retire on. On the other hand, I have never met anyone who would tear up a check for $200 that had their name on it. And in the US, the average monthly family budget shortfall leading to personal bankruptcy is $300. So for many people $200 a month extra income is not insignificant. And remember, it is largely residual, meaning it can be counted upon month after month.

When you look at how income is distributed, it is not exactly egalitarian. In fact it should give us pause regarding the use of huge monthly income numbers as a recruiting technique. The fact is, the great majority of MLM distributors make very little. The average income is below the median income (which for you non-statisticians means that the income distribution is skewed to the lower end). According to the DSA, in 2010, about 30% of US distributors made nothing at all or lost money. The next 30% made an average annual income of about $1,800. Only the top 10% of US distributors made more than $50,000 a year from their MLM business. That bottom 60% is responsible for a lot of the bad reputation that network marketing has acquired. But is it really that bad?

According to the Bureau of Labor Statistics, about 34% of new businesses fail within the first two years, and nearly 60% fail in 4 years. Not all that different from the MLM experience, is it? That is going to be a recurring theme through my next few posts. Network marketing is a business, and for the most part, all of the generally accepted business principles and practices apply. More about that later.

Next time I'll take a crack at defining "network marketing".

Junk Food "as Addictive as Cocaine"?

A recent study in the journal Nature Neuroscience seems to indicate that junk food may not simply be bad for us, but may also be highly addictive - producing brain chemistry changes that are similar to those observed in people addicted to nicotine, cocaine and other drugs. The study by Paul Kenny and Paul M Johnson of of Scripps Research Institute, offered rats a choice between healthy, nutritious food and a selection of salty, high calorie snack-foods including bacon, sausage, chocolate and even cheesecake. The rodents quickly developed a preference for the snacks and became obese and "dependent" on ever increasing amounts of junk foods.

"Most people who are overweight would say, 'I would like to control my weight and my eating,' but they find it very hard to control their feeding behavior," says Kenny. But eating can trigger the release of dopamine, a feel-good neurotransmitter in the brain. This internal chemical reward, in turn, increases the likelihood that the associated action (eating junk food, in this case) will eventually become habitual through positive reinforcement conditioning. If allowed to continue (and lets face it, we are all encouraged to continue by non-stop, 360 marketing), stopping can be every bit as difficult as ending a drug habit. "Counseling techniques, therapy and even pharmaceutical treatments that have shown success for substance abuse might show promise for those who struggle with overeating," Kenny notes.

If the original study seems a bit technical, here is a more accessible summary from Scientific American. The bottom line? Its likely that overeating and eating too much of the wrong things can be an addictive cycle, and that many people simply will not be able to break the cycled by willpower alone.