California Vitamins wanted to save money on advertising by selling through a team of independent distributors. This essentially started the trend of selling to friends and family because sales to those channels were so high. Continuing the trend, this form of marketing exploded into a successful industry. California Vitamins became Nutrilite, which was eventually bought by AmWay. Nutrilite is the best-selling vitamin in the world today. Since then, the network marketing industry has grown to over 3,000 active companies, 60 million independent distributors worldwide, and an industry sales volume of $120 billion annually.
In the 1940’s, a small California-based vitamins company founded the first network marketing company. Now, network marketing can make you a fortune – if you do it right.
Until recently, network marketing had a lot of misunderstandings surrounding it. Attracting abuse and hype because it was mistaken for pyramid schemes, get rich quick schemes, and other false stereotypes, network marketing has finally become widely accepted.
Though the existence of pyramid schemes can’t be denied, they usually don’t have legitimate products. There are web sites, blogs, and MLM watchdogs quickly identifying scams and exposing them to the public, so they die out quickly. Often they’ll attempt to come back under a different name, but they’re easy to identify again. These schemes are out to make a quick buck and let people dangle without a support team, mentor, leadership, or quality product.
Mr. Robert Kiyosaki, the, “cash-flow father,” educates new network marketers on how to invest 5 years into their network marketing business, reinvest the money, and retire wealthy.
The History of Network Marketing
If you compare products sold through network marketing to retail sale products, you’ll notice an incredible difference. While network marketing products are developed to produce results, retail products are produced to make money for large corporations.
Because the competition is so fierce in network marketing, industry leaders have applied some of the best technology and scientific development to their products in order to produce results. While retailers dump money into advertising, network marketing companies put money into product development. This industry has produced some of the most amazing science in health, wellness, skin care, and household products.
Accusations of High Failure Rates & Attrition
The hype is that most people (supposedly something like 97%) “fail” in network marketing. 7.8% of network marketers make a full-time living. 22% make a part-time living. So, really, this is a matter of perception: what is your definition of failure, success, full-time income, and part-time income? Obviously this will vary a great deal from one person to the next.
Over the last 60 years, network marketing has provided more income stability than real estate, stock brokerage, direct sales, and insurance.
Now for some brutal honesty: 90% of people aren’t wired to be highly successful at anything. Network Marketing is in that category, it’s just more exposed and misunderstood. This is a highly entrepreneurial business, meaning that a lot of people who dream big but won’t work for it are attracted to it. They expect the fortune to fall from the sky without working, which is completely unrealistic. This kind of failure is not the fault of the company; this is the fault of the individual having completely unrealistic “pie in the sky” expectations from a business opportunity.
This industry is extremely visible, with the failure stories getting just as much (if not more) exposure than the success stories. This generally doesn’t happen in any other industry. I mean there aren’t any blogs devoted to the failure stories of insurance agents or real estate agents, right?
The Impact of Abusive Compensation Plans
It takes an average person about 2-3 years to build a nice, steady residual income. The heavy hitters may make it to that after 6 months or sometimes even less, but the average person takes longer.
Fast start bonuses should be reachable and respectable. The best range for fast-start bonuses is $100-$300 per distributor you enroll personally. If you enroll 10 in a month and get $100 for each, that’s a $1000 bonus. That can help a family pay bills, make their mortgage, and just generally ease their financial situation.
Keeping things simple is the key to good compensation plans. By offering fast-start bonuses people can make money now, and at the same time continue building their network.
The Epidemic Lack of Training and Support
Most of the 60 million distributors involved in this industry have joined through a friend or family member who knew nothing about the business and had likely never experienced any kind of success in their lives. Connecting with a willing, supportive upline is a major factor in this business. A leadership team that will answer the phone, care about your success, and train you properly is hard to come by. I personally only had 1 solid upline in the very beginning of my career, but never after that.
That’s the reason I’ve provided training materials independently, for new and seasoned network marketers. Recruiting only goes so far – if you want your team to succeed, you have to be available and train them right.
Online, you find all sorts of different opinions on network marketing. Those who don’t succeed call it a scam, while those who succeed speak highly of it.
What really throws people are the affiliate marketers and other scam artists taking advantage of the good networkers and luring them into their worthless scams by talking bad about network marketing. They should be medicated.
But this is one of the main reasons why network marketers who succeed know that, in order to keep their hard-earned success, they have to work with integrity and honesty behind them and provide training and help to their downline in order for them to produce. Hope you liked this article about network marketing history.
In Your Success,
Matias Leiva
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