What’s Wrong with Network Marketing
This is a controversial topic.
But when I met with and talked about all my frustrations about network marketing with my mentor and coach, Ferny Ceballos, who has been in the network marketing space for the last 10 years, has made 8 figures, and helped others (including me) become successful, he explained it beautifully.
It all seemed to come together and just made sense.
I hadn’t been in this for very long, but there was something inside of me that was saying, “this is wrong.”
You’ll see what I mean later.
But let’s just start at the top…
Certain leaders don’t want to bring attention to the things that are blatantly wrong with the network marketing industry…but from my perspective, these issues MUST be addressed and corrected.
So I’m just going to spell it out.
And, being frank, I have a different take on the industry than the “orthodox,” old-school leaders.
Now, I’m not saying that I’m right and everyone else is wrong (…you’ll have to decide that for yourself and what works best for you).
But, just this once, I’m going to tell you exactly what I believe is wrong and what we can do about it.
What’s WRONG with network marketing today
To kick things off…
If you’re a top earner and you’re not a fan of somebody like me offering training to your people then this first item definitely applies to you, because it’s the primary reason networkers seek 3rd party training…
The lack of skills-based training is the first thing that’s wrong with network marketing.
That and the fact that the majority of company events are mostly hype.
Not all, of course, but a majority of company events are just full of hype and have very little skills-based training.
This is a huge problem because there are a lot of false expectations when people are first brought into the industry, and all those false expectations make it seem like it’s going to be easier than it really is.
On top of that, we don’t properly train people.
We don’t actually have any systems to teach people a real step-by-step process.
This is a BIG problem.
The reason why network marketing is not taken seriously is because the leadership doesn’t train their people as if they are operating a real business.
For instance, you go to a marketing conference for chiropractors and there’s going to be a lot of talk about the nuts-and-bolts of marketing and sales — there’s actual skill-based training that’s being given.
But in network marketing, you’re just told…
“Bring more people. It’s going to be easy. It’s not selling, it’s sharing.”
The dumbing down of the profession is a real problem
It begins with all the hype and it needs to change, because it gives this industry a bad name.
The bottom line is people are not getting real business training, even though you tell them “it’s a real business.”
I first went online because somebody was willing to teach me a process-oriented roadmap towards achieving my goals, and that’s exactly what I was able to do.
Was it easy?
Well, I’d say, relative to working 48 hours a week for 40 years…YES, it absolutely was.
But it still took a lot of work.
It took a couple of years for me to fully master the skillsets that allowed me to build online.
However you build, you can learn skillsets that are far better and more efficient than most of the stuff that’s out there right now.
Online or offline, you need the proper skills and training.
Another thing that’s wrong with network marketing is the emphasis on recruitment.
What’s wrong is essentially “recruitment only” based building.
Many companies focus solely on recruitment and not enough on generating customers and creating retail sales.
This turns ANY company into a thinly-veiled pyramid scheme, which is going to cause problems with the FTC.
You can read more about this here:
But that’s not the only problem.
You need to make retail sales for many reasons…
First because you can only recruit so many people, eventually you max out, and there’s only so much personal consumption that can happen.
Sure you might be able to make a lot of money initially, but eventually you’ll burn out.
That’s why you see big earners who join a company, get into momentum, hit it out of the park, and immediately make a ton of money.
But then, all of a sudden, their numbers start dipping.
And what happens after their income starts to fall?
They switch to another company, go into momentum again, and make more money solely through recruiting.
They don’t make retail sales.
Their volume is mostly the personal consumption of those they’ve recruited.
So eventually their income goes back down and they switch companies again.
And the cycle repeats.
This is what recruitment with no retail sales looks like
And the people that get screwed in these recruitment-based models are the regular distributors.
The leaders (and you probably know their names) are always going to thrive as they move from one company to the next.
There’s a top earner right now—and I can’t say his name—but I had a great conversation with him about a week and half ago.
He’s secretly building in a very traditional network marketing company.
He’s been involved in quite a few companies over the years, and now he’s building with an old, very well-known company.
“You know I’m done hopping around different companies, I’m going to build this one company.”
When he told me which company he’s building with I was like…
And then he showed me the numbers…
This particular company is extremely heavy on retail.
What happens is they are so focused on retail that people with relatively small organizations are making a massive amount of income, and the income is stable.
He also showed me some of the stats regarding reordering.
They have thousands of customers who are reordering—some for over 200 months in a row!
When he showed me that I was like…
“Okay I totally get why you joined this company.”
They have a really solid system for creating retail customers that create massive incomes, even if people aren’t monster recruiters.
It’s not even an issue with the FTC where you’d think…
“Recruitment-based models suck now because the FTC isn’t going to let us have them anymore.”
Set aside the legal issues of recruitment-based businesses…
Retail is legitimately a better business model, in my opinion.
People misrepresent network marketing when they say it’s a business.
It’s NOT a business—it’s a profession.
Yup, it’s a profession, just like being a doctor or being a lawyer.
Simply getting your degree and becoming a doctor or a lawyer doesn’t mean you have a “business” in the way that Keith Cunningham (and later on Robert Kiyosaki) describe with the concept of the “Cashflow Quadrant.”
Network marketing is not a business for a few reasons:
First, because you don’t actually own anything; you don’t own your downline, you don’t own your distributorship.
They can be taken away from you at any point if you break a rule, or because you decide to build on the Internet and your company gets upset.
In fact, you can read more about this right here:
Whatever the case, if you have all these restrictions and rules, it’s not a true business (and there’s nothing wrong with that).
If you’re going to define it in using the “Cashflow Quadrant,” network marketing is an “S” (or self-employed) type of deal.
You’re an independent contractor
Essentially you’re responsible for producing sales for a company and you get paid commissions based on those sales.
And if you build a team you can get commissions based on their performances as well.
This isn’t the same thing as being in business for yourself.
Now, there’s nothing wrong with that, you just need to recognize this fact.
Importantly, you CAN evolve your distributorship into a business.
(And that’s what Ferny teaches in his free 10-day online recruiting bootcamp—how to take control of your brand so that your income is never solely dependent on what happens with your company.)
Now, when I include thinking you’re a business owner in my list of “what’s wrong,” I don’t mean this fact is something that’s actually wrong with the industry.
Instead, what’s wrong is how people perceive it, because they’re led to believe they are building a real business and that’s not true.
In reality, they’re developing the skillset for a new profession.
That’s what you are doing when you’re an “S”:
You have certain skillsets that are specific to that profession, just like being a doctor or a lawyer, who have very specific skillsets in those careers, but that doesn’t mean they are business owners.
Now, if a doctor or lawyer decided to expand their operations, bringing in more doctors or lawyers to create a firm or practice of some kind, where they had partners and underlings, then that is a real business, because the business would keep running on it’s own, even if someone were to walk away.
And sure, network marketing has some elements of that where you can take a vacation and it still keeps producing, but if anything big happens, such as the company shuts down, you’re screwed.
You have no control over it because it’s not your business.
…it’s somebody else’s business.
Now, I do want to clarify something before we move on…
You CAN create a real business by brand loyalty
You can convert your distributorship into a real business through building a brand that you control.
Then, your network marketing business is just a part of your overall business strategy.
You can do this through building a presence online, growing an email list where you have control over your communications with your people, and creating your own products.
That’s how you create a following and build a brand.
That’s a real business.
And once you develop a following outside of your company, you have leverage, because should anything happen to your network marketing company, you’ll still have your brand.
Now your reputation is based on the fact that people know, like, and trust you.
And your income is based on people’s loyalty to YOU, and not on their loyalty to a particular company.
That’s something you can control and leverage.
The final thing that’s wrong with network marketing is the pettiness.
A lot of top earners are spoiled.
They made their incomes with a very specific skillset, and that became their “truth,” which they defend at all costs.
And for whatever reason, they refuse to acknowledge that there are other ways that can also be effective.
This creates a pettiness and insecurity among top leaders.
Their ego says…
“I know the truth. I KNOW how this business is built.”
Then, when somebody else comes along and does it a different way, it threatens their belief system of how “right” they are.
Now, contrast that with, on the other hand, a business owner like me.
When I hear that somebody’s doing something different—more efficiently, better, using different methods, etc.—I immediately try to find out how they are doing what they’re doing, so I can incorporate those strategies into my business.
But unfortunately, that’s not how top earners operate in network marketing.
And I think it has to do with their lack of real business experience.
So I think there needs to be some humility among a lot of top earners.
The bigger the incomes, the bigger the egos, it seems
This pettiness needs to go, because the fact of the matter is, we have lot of diverse ways of building this business today.
A couple of days ago I spoke to a woman who was a top earner in her company and she built her organization by hiring bloggers to write about her business.
In fact, she consistently hires bloggers to do reviews about her products and her company, and this is her strategy.
Every single week she has a new blogger writing about her business and my response is…
“I’ve never heard of that. It’s weird!”
Point being that we have an amazing industry and people have diverse ways of building, and that should be embraced, not shunned.
Unfortunately, I think this belief in particular is probably the one that gets me in trouble most of the time.
It creates riffs with other top earners, who maybe like me personally, but don’t want to associate with what we do online.
It either threatens their truth (or their company’s perception of the truth) and therefore they don’t want to rock the boat.
So there you have it..
That’s what’s wrong with network marketing.
I would love to see these things to be corrected and for the mindsets of our leadership to change.
I don’t suggest you hold your breath.
But, make no mistake, there’s a lot to be thankful for…
What’s right with network marketing
There’s a lot right with network marketing and my criticism is in no way an attempt to “prosecute” the industry.
Bottom line—there is NO other industry, there’s no other profession, that allows you to start an “S”-type business and eventually move it to a “B”-type business, at such a low cost.
There’s nothing else that compares.
So the #1 thing that’s right is the ability to basically start in this industry and have unlimited income potential for such a low startup cost.
And on that note, I’d like to address something…
Some people complain that they “spent a lot of money” in network marketing and it “didn’t work” for them.
Well, people can pull on my heart strings about a lot of things…but working the business for a couple of years and investing $10,000/$20,000 before giving up, and then complaining about it…isn’t one of them!
This issue has more to do with hype and unrealistic expectations than anything else.
Because in ANY other business—even if I started a practice as a lawyer—I’m going to need an initial investment to start, and if it doesn’t go well, then I will likely be out tens, if not hundreds of thousands of dollars.
I didn’t talk about “risk” in terms of what’s wrong with the industry, because there’s so littlerisk compared to any other opportunity.
So, again, what’s right is the low cost of opportunity and the high income potential.
What’s also right is the ingrained culture of personal development.
It’s funny because there’s so little skills-based training.
And I think the industry tries to make up for it by being insanely good at helping people with personal development through helping them overcome their own personal demons so they can persevere and eventually figure this industry out.
I’ve gotten so much in “free”—at least they didn’t charge me extra for it—amazing personal development that I cannot say enough.
It’s one of the reasons I persevered so long in this industry (to the point of almost going into bankruptcy) was that I was willing to persevere due to the personal development training I received.
So personal development is definitely what’s right in this industry.
No other industry compares.
Finally, the beautiful thing is that even with all its warts, there’s nothing that can duplicate the potential of the success inherent in the opportunity of network marketing.
The truth is…
Network marketing saves people from mediocrity.
What I truly love about network marketing is that it saved me from mediocrity.
Given my background as an MIT graduate, the world was my oyster, professionally.
As far as people were concerned, going into the aerospace industry with top secret clearances and working on what would seem like pretty cool programs, seemed great.
But I didn’t enjoy what I was doing.
And I felt like I was just selling myself short if I just settled working at a job that I didn’t like.
No matter how much I was being paid, for me that was mediocrity.
Not being happy and fulfilled at what I was doing was taking it’s toll on me emotionally.
The only option that anyone offered me as an alternative, back in 2005, was network marketing.
This industry saved me from mediocrity and it’s saving people all over the world from mediocrity too.
Even if you ultimately don’t end up building a big network marketing business…
It’s a gateway into entrepreneurship…
It’s a gateway towards thinking differently…
It’s a gateway to personal development…
And it’s a gateway towards other opportunities that might otherwise not exist.
Saving people from mediocrity I think is the biggest reason why we should all support the profession, while, at the same time, being open and critical about the things that are wrong and can be improved.
That’s not unreasonable, right?
So, to recap, what’s WRONG with network marketing…
- The hype and lack of skill-based training (which creates false expectations and makes it seem too easy)
- Recruitment-only models, which are not sustainable
- Believing that network marketing is a business and not a profession
- The pettiness, egos, and insecurities of a lot of top earners because they don’t operate like a real business owner
And again, here’s what’s RIGHT with network marketing…
- Low costs and high income potential
- Ingrained personal development
- Saving people from mediocrity
We’ve got to be able to look at what’s good and bad, the wrong and the right, and, most importantly, what’s going to work and not work for you and your business.
And on that note, if you’re ready to start learning actual business skillsets, such as how to develop an online brand and create a loyal following…
Then I highly recommend signing up for the free online recruiting bootcamp.
You’ll learn the exact online business building strategies Ferny uses to passively generate 300–500 leads per day, 30–50 customers per day, and recruit 70–100 new serious business builders into his business each month.
These are the exact strategies he used when he first started, while literally living out of a bedroom at his mom’s house, and subsequently used to create a world-wide brand and over 14 million dollars in revenue.
So if you’re ready to get started…
And if you found this content helpful, I would love to read your comments below!