Network Marketing – So is This Some Kind of Pyramid Scheme?
Okay, so I am sure anyone who has ever been in a network marketing company has heard the reply, “Is this some kind of pyramid scheme?” Although, this question is annoying and somewhat insulting, stay friendly and don’t reply with a snooty comment.
When I am faced with this question, I first ask them to tell me what a pyramid scheme is in their own words. Most times he or she is dead wrong and quite frankly have no idea what answer they are searching to receive. In other words, they are clueless about network marketing and the power of the business model.
Your goal in this situation is not to convince them to join your company or tell them how wonderful your products are. Rather you want to educate them on what a pyramid scheme is and encourage them to do some research on their own. The reason you don’t want this individual in your organization is because they are already giving off a negative vibe and probably will complain about everything along the way.
No one wants to drag someone along who is just kicking up dust and not really there to achieve anything. I promise you, you will thank me later after you have spent several weeks, even months tirelessly training this person on how to run a successful business. However, this person will not grow your business or theirs because they do not want to put in the sweat equity to achieve success.
So some of you reading this blog post may not know what a pyramid scheme is and that is perfectly fine. I am here to enlighten you. For those of you who do, good for you!!! Put simply, a pyramid scheme is an illegal money game, where money is exchanged and no product or service is being delivered.
For example, most pyramid schemes are based on a strategy where people are recruited to make payments to others above them and then expect to get paid from people recruited below them. Ultimately the number of new recruits fails to sustain the payment structure, and the scheme collapses with most people losing the money they paid in.
This sounds very similar to a network marketing company. Well it is based on the same principle. However, there are 3 main differences between network marketing and pyramid schemes which are listed below:
1.)Distributors can get paid solely by selling the product not just by recruiting.
2.)The compensation plan is capped at a limited number. In other words, there are restrictions the company puts on its compensation plan that limits the number of people who can get paid on a sale. This control makes the business model sustainable and erases the theory that you have to get in at the top. With this structure, it doesn’t matter where you come in, at the top or at the bottom so to say as everyone has the same opportunity to make money.
3.)The company has been around for several years and has a proven track record. Yes, there will be new start-up network marketing companies that will be legit and not pyramid schemes despite lacking an established sales history. For a new company, do a lot of research as well as study the compensation plan. If you are not savvy with compensation plans, ask someone you know who is to review the plan for you.
Another angle I use to divert from the negative connotation behind network marketing and the pyramid scheme is to announce the real pyramid scheme that CEO’s and shareholders cover up by giving it a clever name: The Corporate Ladder. The structure of a network marketing company is similar to a corporate structure with the CEO at the top and the general laborers at the bottom.
However, the biggest difference between the two is that you in your own network marketing company get to be the CEO of your business and expand your business down. General laborers do not have the authority to act as the CEOs of the companies in which they work nor do they have the ability to make more or even as much money than the people above them in the company’s hierarchy structure.
It takes long years of dedication and education to climb the corporate ladder, but takes far less time to build a successful network marketing company, especially with the explosion of social media. I am left bewildered by this paradox and irritated that we are the ones who get called crazy for thinking up a better box to live our lives in!!!