Network Marketing: Is This Some Kind Of Pyramid Scheme?
Well, I’m sure anyone who has ever been in a network marketing company has heard the answer: “Is this some kind of pyramid scheme?” Although this question is annoying and somewhat insulting, stay friendly and don’t respond with a smug comment.
When faced with this question, I first ask you to tell me what a pyramid scheme is in your own words. Most of the time you are completely wrong and frankly you have no idea what answer you are looking 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 to tell them how wonderful your products are. Rather, you want to educate them on what a pyramid scheme is and encourage them to do a little research on their own. The reason you don’t want this person in your organization is because they are already giving off a negative vibe and will likely complain about everything they come across.
Nobody wants to drag someone who is just kicking up dust and not really there to accomplish anything. I promise you will thank me later, after having 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 a sweat on equity to achieve success.
So some of you reading this blog post may not know what a pyramid scheme is and that’s perfectly fine. I am here to enlighten you. For those of you who do, good for you !!! Simply put, a pyramid scheme is an illegal money game, in which money is exchanged and no product or service is delivered.
For example, most pyramid schemes are based on a strategy in which people are recruited to make payments to other people above them and then expected to be paid by people hired below them. Ultimately, the number of new recruits fails to maintain the pay structure and the scheme collapses and most people lose the money they paid.
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 listed below:
1.) Distributors can only be paid by selling the product, not just by recruiting.
2.) The compensation plan is limited to a limited number. In other words, there are restrictions that the company places on its compensation plan that limit the number of people who can be paid for a sale. This control makes the business model sustainable and erases the theory that you have to get to the top. With this structure, it doesn’t matter where you come from, top or bottom, so to speak, since 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 network marketing startups that will be legitimate and not pyramid schemes even though they do not have an established sales history. For a new business, do a lot of research and study the compensation plan. If you are unfamiliar with compensation plans, ask someone you know to review the plan for you.
Another angle I use to deviate from the negative connotation behind network marketing and the pyramid scheme is to advertise the actual pyramid scheme that CEOs and shareholders hide 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 workers at the bottom.
However, the biggest difference between the two is that you, in your own network marketing company, can be the CEO of your business and expand your business. General workers do not have the authority to act as CEOs of the companies they work for, nor do they have the ability to earn more or even as much money than the people above them in the hierarchical structure of the company.
It takes many years of dedication and education to move up the corporate ladder, but it takes much less time to build a successful network marketing company, especially with the explosion of social media. I am puzzled by this paradox and irritated that we are the ones who are called crazy for thinking of a better box to live our lives in !!!