Network Marketing and the Pyramid Mentality

Ever heard the saying; “Don’t you judge a book by its cover?” This has never been more true than with Network Marketing.

The strange thing is that, for some strange reason, the term “network marketing” has become a four-letter word in many people’s minds. There are even groups on Facebook that pride themselves on bragging that they are not involved. That is nothing short of tragic. Think of all these people who believe there is something wrong with that marketing structure, and are passing up the opportunity of a lifetime because they are too ignorant or narrow-minded to find out the truth before passing judgment. Sad.

I was in a “soap business” twenty years ago, all I heard left and right was “That’s a pyramid!”

I heard it so often I thought it was in Egypt! (ba-dump-bump)

What didn’t make sense to me about that statement was; a pyramid scheme is illegal, but what it was doing in 1990 had been around for 30 years, affiliated with fortune 500 companies, highly accredited with the Better Business Bureau, and had a mountain of products.

That’s not a pyramid scam. That’s not even close to a Ponzi scheme. And, the real network marketing opportunities on the internet today ARE NOT CLOSE to pyramid scams.

I quickly realized that most people don’t know what that really is, they just use it as a lazy metaphor. Often as an excuse when they don’t understand the opportunity presented to them.

The term “pyramid scam” (or scheme) originated in the 1970s and initially involved bogus actions on Wall Street. Today we refer to them as “Ponzi Schemes” or “Bernie Madoff Retirement Plan.”

Somehow, that phrase migrated from “Financial Row” and mutated, attaching itself to any opportunity that didn’t involve working for someone else. This amazes me, because a JOB (Just Over Broke) is one of the largest pyramids known to mankind!

Think about it; you have a business owner at the top of the pyramid and he makes most of the money. Then there are your front line managers who make the second most money in the company, then there are the ones who report to them who make the least, then the ones below them, over and over again, until you get to the guy/girl who punch a clock and work for peanuts.

Now THAT is a pyramid! But it’s not a scam (those who tick the clock may not agree).

Why?

A very simple element makes it legal. All businesses must have one of two things;

They must sell or offer a product or service to be a legitimate entity in the eyes of the Federal Trade Commission.

Wikipedia defines it like this:

“A pyramid scheme is an unsustainable business model that involves promising payment to participants, primarily to enroll other people in the scheme or train them to participate, rather than providing any investment or sale of products or services to the public.”

So there you have it. Network marketing (as a whole) is not a scam at all. It’s a legitimate business structure when you have products and/or services, and it’s one of the best ways for the “average person” to succeed in today’s marketplace.

Take “Herbalife,” for example. It is a perfectly legitimate and highly profitable network structure, which has produced hundreds of millionaires since its inception in the late 1970s.

At first, people made fun of it, calling it a pyramid and a silly little vitamin scheme. That silly little vitamin concert reported sales of 2.7 BILLION in sales in 2010! Not bad for a guy who started selling vitamins out of the trunk of his car!

You just have to remember, when entering a network, you have to be diligent in your evaluation and do your research, but of course, DO NOT judge it by its coverage.

There are several online businesses that seem a bit cheesy, that are real money makers, and then, there are those that shine like a million bucks that a ten foot pole wouldn’t touch.

It can be quite difficult to know which concepts not to get involved in and which are the best investment of your time and money. Fortunately, there are ways to reduce the gauntlet.

The only challenge is; “Which do you choose?” There are hundreds of them on the Internet. Let’s delve into some weeding techniques through these opportunities:

1) Google it.

Trust me; if there’s something wrong with a business, someone’s been mad enough to write about it. Rip-Off Report is a way for people to express their frustrations.

Another way to investigate the legitimacy of a company is to enter it into the Google (or any other search engine) search box and search for it.

Others will even blog about their unfortunate entanglement with the rogues. But, even here, you must take all things into consideration. If a company has been around for ten years and two people didn’t like something that seems pretty inconsequential, then chances are the company isn’t wrong. Sometimes people are disappointed in an opportunity because of their own expectations, and nothing else. For me, a company is a scam if they don’t pay me what they advertise, and if they keep my money and don’t pay me back if I’m not satisfied.

Also:

2) Check to see if they have a Better Business Bureau (BBB) ​​rating and what it is.

Naturally, the “A” listings are the best.

If they are not accredited with BBB, check to see if they are registered with DSA (Direct Selling Association). This organization is very thorough and has its fingers on the pulse of the industry. It’s just as good to have a rating with the DSA, as it is with the BBB.

v Ask online.

Here you have to be careful. When I say ask, I don’t mean ask your friend who thinks everyone online is on the take. Don’t ask the guy or gal who thinks all online opportunities are pyramid schemes.

Remember, there are “mis” informed people who think that everything online is “il” legitimate. They pay no attention to the fact that an opportunity has been highlighted positively on news shows or in high-profile magazines.

Regardless of these truths, they think that you are trying to “steal” their wallet through an Internet connection. That’s how it is. You can open their eyes, but it takes time.

I remember a gentleman (actually, he wasn’t that nice) told me bluntly; because it was an online opportunity, it just had to be illegal.

How silly is that? That’s like saying; “Because I don’t like a certain food, it may not taste good to anyone else.”

That’s ridiculous! This guy was caught up in some stupid thing! It wouldn’t have mattered if he was marketing Walmart gift cards; he would have resisted the very idea that it was an electronic promotion.

Now, he’s one of my best producing associates.

People change. They can, and they grow. You just can’t let their negativity hold you back or slow you down. If he hadn’t been patient—but persistent—he never would have jumped on the opportunity I was promoting, and his life and mine would have been so much less for it. Obviously, the truth couldn’t be further from his thought at the time, and he knows it now. The internet is full of very real and incredible opportunities, some of which can help you fund your marketing campaigns for free. But, if the mind is caught up in “con syndrome,” then there’s little chance a person will open up enough to take advantage of those opportunities, or even learn what they’re all about before passing judgment.

So don’t ask just anyone. Ask professional people to give you a complete and honest evaluation of the business/opportunity you are researching. There are plenty of people online who will be happy to give their decent and unbiased opinion.

Another thing to look at is the cost:

ü How much does it cost to participate?

ü Is it a one-time or recurring fee (weekly, monthly?)

ü Are there hidden costs such as promotional tools, banners, advertisements, etc.?

ü How difficult is it to market?

Arguably the last one on this list is the most important. Many online opportunities don’t cost much to get into. One of the best I know of, it’s only $10 to join, and another one costs nothing! These are easily marketable businesses, because it costs very little to get involved (and in one case nothing at all), making them what is known in the industry as a “no-brainer.”

But, if the opportunity costs too much, it can be a hard sell, even for experienced sellers, and even if you can afford it. Remember, the name of the game in “Network Marketing” is duplication. The initial investment in high dollars is not very duplicable, especially in this economy (let’s be real, in this economy the term “high dollar” is relative).

I STRONGLY recommend that you do not fall for these types of programs UNLESS you can afford them and have the knowledge and skills to market them quickly and effectively. Otherwise, you’re wasting your and your uplines’ time, because all you’ll end up doing is getting stuck, frustrated, and eventually quitting the program.

Remember, this is a business. You are investing in it and it may be some time before you see a return on that investment. I suggest you stick with the ones that won’t cost you an arm and a leg, and won’t do the same to any of your prospects. As a general rule of thumb, in the beginning, you should probably stick to the ones that only cost $10-$25 per month and can return your investment in the shortest amount of time.