Network Marketing Guide: The Myths & Truths, The Past & The Future

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Aniruddh Parmar

Senior editor

Parul Saxena

Chief editor

Last updated: May 20, 2021

Of all work-at-home schemes, network marketing is the one that is highly misunderstood and demonized. Some people think it is an unimportant business for mommies. There those that think it is something strange that people do make a kill off other people’s ignorance.

Even scary, there are some people that perceive it as a business full of greedy and manipulative shysters and salespeople. But once you cross the border to the other side – shake off the old misconceptions and attitudes – you will come to appreciate network marketing as a viable way for anyone to start a good business you can do at home.

What is Network Marketing?

In a nutshell, multi-level marketing is a different way of selling your (or someone’s) products to the end user. In the traditional business model, the manufacturer makes the products, and then a distributor distributes the products to retailers who in turn sell them to the end user.

Network marketing, on the other hand, does things differently. Unlike in the traditional model, the manufacturer makes the products and ships them directly to the end user. With MLM, there is no need for middlemen – distributors and retailers.

Looking for MLM Software? Check out SoftwareSuggest’s list of the best mlm software solutions.

They don’t do advertisements. They use their customers to recommend their products to other people. As a result, the money that would otherwise go into advertising is used to pay their customers which is a clean way of doing business.

Also, Read: How Will Bitcoins Affect the Network Marketing Model?

The Origin of the Multi-level Marketing Model

Network marketing was invented in 1945 by Carl Rehnborg to help boost the sales of Nutrilite, a supplements company. But the turning point of the industry came when his new consultants – Rich DeVos and Jay Andel- discovered the real power of the network marketing model. They also set up their (MLM) company – Amway – in 1972. Since then the fire still keeps burning.

Amway Network marketing products

Despite the myths going around and a few ugly scenarios, multi-level marketing has grown into a US$ 200 billion industry with over 100 million of marketers involved. Interestingly, tens of thousands of people join these networks around the world every year.

Getting to know about MLMs and their darkest corners can be a bit confusing. During these difficult economic times, no one wants to lose their hard-earned cash to dubious get-rich schemes.

The Power of Multi-level Marketing

Networking marketing may sound scary to you. But, once you execute it properly, it makes one of the best businesses currently available. Here are some of the reasons you might need to consider your entry into the business:

  • Time leverage

When working in regular day jobs, you have to put up about 40 hours of work each week. In other words, you have to trade your tie for a payment. Network marketing, on the other hand, allows you to work around your own schedule. Not one to push you or monitor your time in and time out. This flexibility is what attracts most people to MLMs.

  • Duplication

 There is always nothing new with regard to how MLMs do their business. When it comes to network marketers, you will be required to learn, and then teach and show others what to do or even help others succeed. Since everything revolves around the products you are selling, you can simply ‘copy paste’ the info and hand it in the hands of the trains. So in other words, they will be a copy of what you are. So no one, not even the CEO has an informational advantage over you.

  • Residual Earnings

 Actually, the actual power of MLM marketers isn’t the sales you are making. The actual energy of network marketing is the power of residual earnings. The ability to receive commissions over a long period of time for a simple effort that you make today makes the whole thing quite attractive.

Debunking the Myths

While network marketing is a good business, you need to separate all myths from the truth. What are some of the myths about the MLM model?

  • MLM Uses People

One of the complaints that people make about networking is how the company encourages them to use their family and friends to make money. But the truth is, no multi-level marketing company rewards people for using others. Your success in any of your network marketing endeavors comes from helping others achieve their goals.

The truth is, you cannot earn anything from the efforts of other people if you are not willing to assist along their journey. You spend time helping them make their money too. Well, there are those MLMs that see recruits as dollar minting machines but they are never as successful as the ones that prefer to follow a genuine course.

  • MLM Will Eventually Get Saturated

There is nothing like saturation because we’ll always have an infinite number of people. People are born every day. Others turn 18 every year. That means the market will forever keep on expanding, adding new potential end users marketers.

Debunking the saturation myth in his book Network Marketing for Dummies, Zig Ziglar argues that everyone needs a refrigerator. While most households have them, that fact doesn’t stop manufacturers from making and selling more of them.  

  • MLM Doesn’t Work

That is not true. According to research conducted by Direct Selling Association (2015), the direct sales industry hit US$36 billion plus in retail sales in the US alone. The global figures could even be more impressive. Besides, 20 million plus marketers in the United States are involved in direct sales. Since network marketing forms part of the direct sales, these statistics are a true testimony that MLM works. But, your success or failure depends on your commitment. There are a lot of e-commerce online stores, bloggers, Amazon Affiliates and eBayers out there. But not all of them do well in their craft and people are not going around whining about how their businesses are not working.

  • Network Marketing Can’t Make You Rich

Network marketing money

Not everyone succeeds in their businesses. In the same way, not everyone succeeds in their network marketing business. In fact, the top crème (1-10%) making fortunes with MLM are the same 1-10% network marketers that work tirelessly and consistently in their business.

  • MLM is Cult

It is true, some of the network marketers are fanatical about the industry but fanatics exist everywhere – including sports, religion or science. But, you don’t have to be a fanatic to take a plunge or make cash in any MLM.  In fact, most of the companies work hard to keep their marketers grounded in figures and facts.

  • MLM is a Pyramid Scheme

Network marketing pyramid scheme often makes people think it is a pyramid scheme. But, almost all organizations assume the same shape – schools, governments, churches and different business entities. Pyramid schemes are simply defined as money games where you invest money, bring other friends, gain some profits, plough more money than eventually lose everything to a con artist.

What makes it different from others is because there is no exchange of any service or product. But when it comes to MLMs, your sales – whether products or services – determine what your income will be. It is not the number of recruits you are going to bring into the company.

  • The Guy at the Top is the Overall Beneficiary

Some people think that the people at the top are the ones that make huge sums of money. Well, there is some truth in it, as it happens everywhere else. You can’t make more money than the CEO of your company although some of the employees in the company might be working harder than their CEO.

But, that is not entirely true when it comes to network marketing. With network marketing, you are always rewarded for your efforts. That means the harder you work, the higher you earn. So much so that you can even end up earning more than your CEO.

  • You Have to be Extroverted/SalesPerson

We all buy what excites us and what solves our problems. Whether you are pushy or not, it is all about benefits. If you want to be a perfect network marketer you have to be a good listener and most importantly, a solution finder. But not being pushy.

Why Networking Marketing is the Future of Business

If you drive the highways in most western countries, you realize many traditional businesses have closed shops. They haven’t just closed them to attend some functions elsewhere, the shops are closed for good.

Why is this happening? For one, the cost that goes into maintaining the businesses deters them from competing with large conglomerates. It would be an uphill task for the average entrepreneur to battle it out with fat-chequed corporations in the tumultuous business environment.

That is where we need to look at things differently by embracing more friendly business models. Unlike other businesses, network marketing is not more about investing money but about investing your time resources.

Here are some of the reasons you will need it in the future:

  • The Risk Spectrum is Low

Starting a brick and mortar business will cost you fortunes. The starts costs can be anywhere from US$ 1,000,000 and above. Give or take. Besides, the risk that comes with the massive investment is too high.

Fortunately, most of the multi-level marketing businesses you might be involved in won’t require much for you to get started. In fact, you might be required to invest about US$500 or less. The low risk makes the model attractive to most people.

Unfortunately, the amount of energy people put up to grow and sustain their business is directly proportional to the amount of money they have invested in their business. If you want the best of your MLM business, choose to believe that you have invested millions of money in it and you can’t wait to lose your massive investment. Work harder as if that was true.

  • You Can Work Any Time You Want

Network marketing work

The traditional job requires you to appear for the job on a regular basis and within a certain time interval. With network marketing, you don’t have to bow to the pressures of the 9 to 5 grind. Flexibility is everything. You can work when you want. For example, if you want to work through the night or a few hours during the day, it is all up to you. You are your own boss here.

  • A Perfect Opportunity to Build a Future for Your Family

When you have children, you need to know that in case you pass away, your children won’t turn into paupers. Today’s economic climate, however, is very hostile. Others are wallowing in huge debts, they just don’t know how they can come out of the debt rut. But, if you start a good multi-level marketing business, you are sure to leave something for your loved ones or the people who are left behind you.

  • Enjoy More Tax Benefits

At times, the tax can be burdensome. One of the ways of getting tax deductions is by starting your home-based multi-level marketing company. You could even work on it part-time. But the beauty of it all is that you will enjoy a number of deductions on your taxes. For example, you can deduct auto costs, housing costs, and a host of other costs because you own that MLM business.

  • Increased Regulation

Over time, network marketing has gained a bad rep and there are good reasons for that. The ugliest of all is that most con artists take advantage of the model to create “avenues” (pyramid schemes) that help them take and run with their customers’ money.

It is these unfortunate situations that have created mistrust network marketing. To stem the menace, more regulations are coming up to strengthen the industry and rid it of con artists making just as safe and secure as traditional brick and mortar /retail industry.

Summing it up

It is true, there is still a huge number of people that don’t trust MLMs. The myths that are going round and a number of con artists that exploited the loopholes in the industry to swindle unsuspecting people have tainted the image of the industry.

But the truth is, its still one of the best and highly lucrative industries out there if you approach and execute it well. Besides, because of current economic situations, people will have no choice but to embrace business models that don’t require them to dig deeper into their pockets and yet promise good returns.

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Aniruddh is Blogger and Digital Marketing Specialist at SoftwareSuggest. Ready to grab a cup of coffee anytime if you want to talk about tech, cars, businesses or cricket.

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