Network Marketing: Legitimate Business or "Pyramid Scheme"?

I was having coffee recently with a sharp twenty something educated college grad (ivy league no less) and we talked about something he'd been thinking about: starting his own business. As a coach, people like to bounce ideas off of me. I had met him on a flight recently and immediately struck up a conversation with him. We were having coffee in a quaint suburb of Philadelphia discussing his options about business ownership. I, naturally, talked to him about my network marketing business. I was a little disappointed when he said, "That's certainly not the direction I was thinking about going." When I asked him to be truthful as to why he wasn't interested he said, "Truthfully? It looks like a typical pyramid scheme where the guy at the top makes all the money."

Now you have to know me. After a decade of involvement in network and referral based marketing, I've heard that many, many times. That's why I should have politely educated him on what truthfully is and isn't a pyramid scheme. But you know what I did instead? I froze. Not because I didn't know what to say but because I was so shocked and disappointed that a guy this young and bright thinks like that. Is this where our Ivy League schools are taking our future leaders? I actually know what they're doing. They're conditioning and programming (there's that word again) them to get jobs. And that's very, very sad. Needless to say, he'll be a customer until he realizes the facts I've outlined below about our legitimate business vs. pyramid schemes. Here they are:

• Every organization that has ever existed is a pyramid. Look at any org chart and you'll see one or two people at the top and everyone else under them. Your church is a pyramid. In fact, God chose this "Pyramid Scheme" to build his Son's church. Jesus sponsored 12 and they in turn went out and sponsored hundreds who went out and sponsored thousands who went out and sponsored millions. The apostle Paul spent his whole life building God's "pyramid". The product was God's message. If it's good enough for God shouldn't it be good enough for us?
• The biggest pyramids of all are the corporations. There's one person or a few people (CEO, president, board of directors) at the top who make the most money. Where are most of us in that "scheme"? Somewhere at the bottom or in the middle with no chance of ever being at the top of the "chain", right? In our business of network marketing or referral marketing, not only can we build an organization to sit on top of, but the person who got us involved will help us! It puts money in their pockets when they help us! And, better yet, if we work harder than they do we can make more money than them! Everyone has an equal opportunity, unlike a traditional company or corporation. In my 20+ years in the business world I've never had a CEO or board member offer to help me make more money then them. It just doesn't happen. That's the biggest "scheme" out there. If you want to work 50-60 hours a week for 40+ years building someone else's "pyramid scheme" with little or no chance of making it to the top, go right ahead and have fun doing it.
• Pyramid scheme's are usually illegal because there is no product flowing. There's only money changing hands and all the profit is made by bringing people into the company. This is also commonly known as a "Ponzi Scheme". Unfortunately, uninformed people confuse the old Ponzi Scheme with anything that resembles a similar structure.  Remember: If there is product flowing, it's usually legitimate.
• Major companies have chosen this "pyramid scheme" as a major distribution model to distribute their products. Companies like Coca Cola, AT&T, GE and Ford all sell there products through network marketing as do thousands of other well known companies. They understand, as did God, that "word-of-mouth advertising" is the most successful way of marketing. Why would they enroll in these distribution models if they weren't legitimate?
• Do you remember back in the 90s the phone company MCI? They had a program that took them to the number one spot in phone service called "Friends and Family". Guess what? That was network marketing and you were probably involved in it and didn't even realize it! Do you realize that every time you recommend a TV show, movie, book, recipe or church, you're participating in a "pyramid scheme"? Think about it - you're promoting a product or service based on your experience with it. That's exactly what people in network marketing do. They advertise by word of mouth - by telling someone.
• If the company you're looking at is a member of the Direct Selling Association (DSA) you're probably in good hands. They scrutinize the companies they approve for a full 12 months to make sure that they meet their strict Code of Ethics. Out of the thousands of network marketing companies out there, only a little over 200 are members of the DSA. I wouldn't make that a requirement for the business you're looking at but it certainly is a good thing. You can check out their website at www.dsa.org.

Now, does this mean that all companies that participate in network marketing are legitimate? Unfortunately, no. There are some people out there who want to make a quick buck using this distribution model and they give the industry a bad name. But generally, a company that's been around 3-5 years or more has stood the test of time. The bad one's usually don't last more than a year or two.

We've got to get our facts straight and we have to educate the consumer. Don't let someone tell you what your doing is bad. You don't have to get mad at them but you do have to educate them. Education is the only way to overcome this objection and put it to rest once and for all. I hope this helps and I hope you pass this on to anyone who gives you that objection.

I know you can do this and I definitely believe in you!

To learn more about living a successful life, click on the Sales Power DVD link on the right and purchase my program "Secrets of Sales Power."