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[Peter Arnold Contribution Level: 3]

MLM => its PROS - CONS - FUTURE?

Hello Partners:

For what it's worth, I'd like to share with you own .02-cents worth (Canadian) on this...

First, having participated in th Network Marketing industry for over 20-years now - I feel I've seen the good, bad and ugly sides of MLM.

I believe the future for our industry CAN be very, very bright - but only IF we bring about, and adapt to => "change".

Personally, I love the 'basic' business structure of Network Marketing - its 'concept' is unparalleled anywhere - its distribution channel is proven.

But - MLM is far from 'perfect' - there are serious RISKS with simply "joining an MLM".

Let's take a closer look...


Some PROS of Network Marketing

-- MLM is perhaps the last bastion left in the Free Enterprise System where someone - without education - without a famous bloodline - without a large capital investment - can truly gain the "gifts" of both Time and Financial FREEDOM;

-- MLM can offer tens of thousands of people suffering from the current grim economy - a beacon of HOPE for making their futures more secure - IF they get the right guidance;

-- MLM can offer the awesome advantages of - RELATIONSHIPS - LEVERAGE - RESIDUAL INCOME - GEOMETRIC PROGRESSION / DUPLICATION

-- MLM is (in my opinion) way beyond the benefits (many) of either Internet Marketing or Affiliate Marketing. However, when MLM is "combined" with these two marketing strategies (with the right 'positioning') - into a diversified, business 'infrastructure' - we can have the ultimate in Home Business OWNERSHIP;

-- MLM start-up costs can be low -- the operating costs are reasonable -- there is usually NO stocking or inventory of products -- NO need to get bank financing -- NO need to ship products -- NO accounts receivable -- NO need to pay royalties -- NO need to go to expensive meetings / conventions [although that's a personal choice] -- NO need to distribute audios / videos / brochures / CDs [but again, that's a personal choice] -- NO need to collect taxes -- NO need to hire employees, etc.;

-- MLMs can take care of most of the RED TAPE associated with a 'traditional' business;

-- MLM can offer close relationships with Team partners - friendships - the opportunity for coaching / mentoring / recognition / travel / personal growth / leadership development;

-- MLM can offer the kind of SUPPORT and encouragement (like most Franchises) that very few traditional businesses [or Online businesses] offer - both from the company and from the upline (( Conference Calls - Trainings - Seminars - Conventions - Webinars - Videos - Audios - CDs, etc ));

-- MLM can be about 'empowering' people - about the pursuit of EXCELLENCE - about fulfillment of worthwhile DREAMS.


Some CONS of Network Marketing

-- MLM has too much HYPE surrounding it - too many false promises - too much unrealistic expectation - and thus, a high attrition rate. It also has too many illegal SCAMS and PYRAMID SCHEMES - too many lawsuits (unjust terminations, etc) - too many MLM Companies 'hitting the wall' - or making 'negative' changes (in their comp plans / their mission / their direction) - OR being run by a dictatorship at the top - OR too much Upline greed and ego - too many Heavy Hitters with strong self-interest. There are far too many good people getting hurt as a result of these quiet little secrets;

-- MLM businesses are primarily "Affiliate / Distributor heavy" - where the emphasis is on RECRUITING Reps as opposed to Customer acquisition. The primary Corp growth comes from SELF-consumption of the products / services by Affiliates / Distributors, through their monthly Autoship. Too little emphasis is given to building a CUSTOMER base -- too few companies have a RETAIL driven mandate. A healthy ratio should be about 75% Customers to 25% Affiliates - otherwise, downlines will become unstable and could start to unwind;

-- MLM downlines can be "destroyed" by the INTERNET - as good as the Internet is. This is because the vast majority of MLM businesses are DISTRIBUTOR based (and not CUSTOMER based), as already mentioned. The minute "new and/or better sounding deals" flood the Inboxes of frustrated or discouraged Network Marketers - where the grass looks greener - a Downline can be reduced over night. Some Affiliates / Distributors change companies like they change their socks. This can be catastrophic for anyone who 'relies totally' on that one revenue stream, and who perhaps hasn't invested heavily enough in building solid RELATIONSHIPS;

-- MLM is not real "business OWNERSHIP" ((as promoted in the glossy brochures)) - instead, the Affiliate / Distributor is strictly a "commissioned Sales Rep" for the MLM / Direct Sales company. Not that this is necessarily a "bad" thing - it's just the reality. Yes, they are listed as IC's (Independent Contractors), however, that's primarily for TAX purposes, so that they are not treated as Employees, with typical Employee benefits and tax deductions at source. But they are not considered IBOs (Independent Business Owners);

-- MLM does not give any power or control to the Affiliate / Distributor. Such control rests solely with the companies - as dictated by their Policies & Procedures (sadly, which are usually agreed to without any study or due dilligence first). The companies own all the assets, including - offices - products - patents - comp plan - marketing materials - even the Customer and Distributor 'downlines'). The P&Ps are written by the company's bank of attorneys to protect the company - not the Affiliate / Distributor;

-- MLM does not enable the creation of long term "passive" Residual Income to retire on ((contrary to what's printed and promoted in the glossy brochures)). Residual Income, yes - but not like "pension" or "annuity" income. The idea of some day 'retiring on the beaches' has become elusive. As stated in the P&Ps of the vast majority of MLM companies - in order to 'continue receiving' those monthly checks, Affiliates / Distributors will need to 'continue providing and producing' sales + training + support to their (the company's) downlines. And this 'ongoing' requirement gets heavier as the rank level of the Affiliate / Distributor increases. So, the great dream of eventually having a truly 'passive' Residual Income from an MLM is in reality, better named an 'active' Residual Income;

-- MLM businesses are governed by their Policies & Procedures (P&Ps). These are enforceable, Legal AGREEMENTS that you sign when joining an MLM. They in fact represent your CONTRACT to be "in business" with them. I cannot - cannot - stress enough, the critical importance of doing your due dilligence on this before you reach a decision to 'sign' the P&Ps. Believe it or not - there are companies out there (and some long term, well known ones) with Clauses in their P&Ps - which if invoked - could DESTROY your business in a heart-beat. IF there is high INTEGRITY at the ownership level - there will usually be a code of fairness and equity -- but the absolute need to PROTECT yourself ((through 'positioning')) remains paramount.


Some thoughts on the FUTURE of Network Marketing

Economy - As this is written, we are in a (now global) economic crisis like never before in our history. So many economists say things like -- "... in 1972, here's what we did about this." Well, this time is "different" - it's not "like" in the past - it's a meltdown unlike anything the world has had in the past. It will require fresh, intelligent thinking - out-of-the-box solutions - in order to "fix" it. And as good as their intentions are - Government has no "magic button" to push that will dig us out from the heavy job losses, business closings and high market gyrations. It will be largely up to each of "us" to look after our OWN financial futures, as guru Robert Kiyosaki and other leaders teach. This will be a long and painful ordeal before we see an economic upturn, with ramifications that will impact our children and grandchildren for decades ahead.

Network Marketing - This Recession could well be a time for "opportunity" for our industry too. If history is any guide (it isn't, always), recessions come and go. We've had a number of them. Times of prosperity always tend to 'follow' recessions. We need to prepare ourselves for this by looking for "positive" things in these times. Our MLM industry typically grows during hard times, as more and more people find themselves out of a job - or their earnings dwindling. They will search for alternative ways to "earn money" - not just additional income. They will start their own Home Businesses and look for ways to gain Customers (and Associates, in the case of MLM).

Our field does have some 'built-in protections' that cannot be found in most jobs - self-employment - businesses and professions. We become part of an industry that doesn’t 'depend' on a lot of the same infrastructure that traditional businesses do. We depend on our organizations - which are PEOPLE - people of like-mind, that can dream big dreams - and who are dedicated to sharing with others - supporting and training others - and who receive great rewards for helping to 'enhance the lives' of others

Change - However, I believe we'll need to 'adjust' our expectations somewhat - that things will not necessarily 'be business as usual' - at least for a while. We'll need to work more effectively - more creatively - with our minds 'open' to new ideas and to change.

Internet - Personally, I believe that the Internet is the "future" of Network Marketing - but only as a "support tool". Speaking of the Internet - there's no recession or financial shakiness in Cyberspace right now. Many Online marketers are using financial and business principles that are enabling them to build high net worth positions as they continue to create wealth from home.

Mindset - I believe that there is a right and a wrong way to SUCCEED in Network Marketing. The right way has more to do with better "empowering" ourselves to succeed. First, psychologically, we need to believe fervently that we "deserve" success. We need to conduct ourselves with the highest integrity, ethics and professionalism. We need to learn how to better "communicate" and "understand" others - how to build solid "relationships" with prospects, customers and biz partners - how to "attract" others to us by providing high VALUE to them - by becoming "solutions providers" to their concerns and problems - instead of 'pushing our deals' at them

Marketing Skills / Business Education - We need to become Continuing Education STUDENTS - advancing our knowledge in "all" forms of business and marketing strategies - adopting good Business Management practices - learning the Consultative Dialogue approach with prospects (as taught by Michael Oliver) - the Attraction model (as taught by Joe Schroeder - Ann Sieg - Mike Dillard - Mike Klingler, and others) - the 'right' way to do PPC (as taught by Jim Yaghi) - Social Media Marketing (as taught by McKay Earl and Mike Klinger) - SEO Optimization (as taught by Ferny & Ray) - OFFline & Direct Warm Market building - on and on.

We need to create a "balance" in our overall methodologies - and these methodologies can serve as the initial TOOLS to kickstart, and expand, the whole ATTRACTION / RELATIONSHIP business model.

More importantly, we need to constantly 'apply' ourselves for continuing education in business and marketing through places like - Magnetic Sponsoring / Building On A Budget / Black Belt Sponsoring - The Renegade Network Marketer / The Renegade System - Renegade Ubiversity and Professional - The 90-Day Marketer - My Private Classroom - the Better Networker Community, etc. etc.

It's an ongoing price that I believe we 'must' pay.

Products & Services that are 'Essential' - Network Marketing and Direct Sales entrepreneurs need to evaluate their products & services in times of economic hardship. When money is tight, products that are considered non-essentials will be more difficult to market, unless your target market is affluent, and aren't greatly effected by the financial downturn. Having a product or service that's more 'essential' and of high value is important anyway, but it is particularly vital in a tough economy. Typically, 'skin care' products do well in Recessions.

Reasonable Start-Ups + Monthly Autoships - Also, a low start-up cost is critical (ideally, less than $500) -- as is a low monthly Product / Service Autoship (perhaps offered as an option) - say, $50/mo. In tough times, a $100-$150-$200/mo Autoship may well see a lot of cancellations.

Influx of Execs & Professionals - More and more Business Executives, Professionals and Baby Boomers will be entering our industry - especially given the times. This will be both good and bad -- good because of their much greater 'circles of influences' (they'll attract many strong leaders who know and respect them - causing more leverage + faster biz growth) -- but bad because they will also have high expectations and strong demands of the MLM companies, in terms of their "business partnership" with them. Which leads to - - -

Policies & Procedures - These same talented people will be doing their own 'due dilligence' (or having their advisors do it) before they 'sign' on the dotted line to associate with MLM companies. They will not like what they find in the binding Legal Agreements (P&Ps). Unless the MLM companies are prepared to 'soften' their one-sided, archaic and extremely harsh (boiler-plate) P&Ps (and bring about a better "balance" between Corp and the field) - there is no way that the majority of these Biz Execs, Pros and Baby Boomers will join them. The risks with the P&Ps are simply too high with the vast majority of MLM companies.

What will (and should) happen instead - for all of us - is - - -

Diversification / Self Branding - For greater protection, flexibility and a better chance to control our OWN destiny - we need to "position" ourselves appropriately as Home Business entrepreneurs.

H-O-W?

(1)- First, by implementing a strategy that I'll call...

Integrated Business Marketing (IBM) - which will include all of these => Affiliate Marketing + Internet Marketing + Network Marketing + Direct Marketing (OFFline /Warm) -- and...

(2)- Second, by putting together a...

Diversified, Business Infrastructure - where we first - pick a good NICHE - then brand OURSELVES & attract others from that niche - build our OWN List by offering VALUE to that niche - develop RELATIONSHIPS with our List in that niche - market BUSINESS SOLUTIONS to our List in that niche - and finally, expose our MLM to our List in that niche -IF- they're looking.

Such a 2-step formula is similar to what Joe Schroder, Mike Dillard, Diane Hochman, Ann Sieg and Mike Klingler (all 'pioneers' in Relationship Marketing) teach us. It takes a little time and effort, but this will enable us to build a truly solid business working from home - one where we can "leverage our time, effort and money - one where WE can have the control - and the ownership - one where we can have "multiple" revenue streams (('including' that from our (back end) MLM = residual income)).

It's called => Y-O-U, Inc.

Bottom Line

Hopefully, you won't take from all this that I am "against" Network Marketing as a Home Biz option - I'm not. I simply feel that times have changed, and that we (and the majority of MLM companies) need to change with them.

We need to become more progressive and forward-thinking and dig out from many of the old ways.

DRA - I am priviledged to serve as Canada's representative on the Board Of Directors of our DRA (Distributor Rights Association - http://www.TheDRA.org ). Our DRA is the "only" organization in the world that serves to educate, protect and preserve the 'rights' of Affiliates / Distributors everywhere. We are a non-profit group - we publish the "only" Manual that sets out the global STANDARDS for Independent Contractors and Companies within the MLM / Direct Sales industries. We on the Board all gladly serve you voluntarily, without any remuneration whatsoever.

ALERT - The ONLY way that we as Affiliates / Distributors can do "our" part to bring about positive CHANGE within our great Network Marketing / Direct Sales industries - in terms of our 'protection' and our 'relationship' with our companies - is to build our DRA membership to very L--A--R--G--E numbers. Yes - and we can DO it.

And once we've accomplished this - we WILL have all the "leverage" we need to impact our futures for the better - we will have a meaningful "voice" for CHANGE.

These are strictly my "own" thoughts here - do you wish to share yours?

Sincerely / Peter A.
http://www.PeterArnoldOnline.com

Peter Arnold, CLU, CFC / Founder
Business Achievers Academy / Canada

[Sandeep Nath Company: MyLeadSystemPRO Contribution Level: 6]

Sir, that was lovely. We need people with your kind of insight at the BN Group 'Live In Abundance'. Awaiting you.

--
Millionaire Mindsets Create Millionaires
http://ArriveAtSuccess.ws

[Peter Arnold Contribution Level: 3]

Hi Sandeep:

Very nice to 'meet' you - all the way from India! - and many thanks for your kind words.

I'm simply a Network Marketer, like you - in an industry I love - with perhaps a few more years experience.

As well, I'm very active in the "only" organization that represents us as Affiliates / Distributors in this industry - our DRA.

As much as I love this great industry, and participate in it - it's one that is greatly misunderstood in my opinion.

I see times changing rapidly - yet in many respects, our industry is not keeping pace. WE have the capacity to alter our direction towards positive change.

It is my strong belief that our DRA ( http://www.TheDRA.org ) "can" be the instrument for the change that we need - IF we "all" become members. Only last week, we had 57 brand new members join our DRA, from Russia (thanks to our DRA Chairman, Rod Cook).

It's only 'tip of the iceburg' of what we can accomplish when we band together as an industry - and what's even better Sandeep - it can be done with a touch of 'humour' as well!

Again, my thanks for your very nice comment - I wish you much success and happiness.

Warmly / Peter A.
http://www.PeterArnoldOnline.com

Peter Arnold, CLU, CFC / Founder
Business Achievers Academy / Canada

[Sandeep Nath Company: MyLeadSystemPRO Contribution Level: 6]

Thank you. Awaiting you on the abundance group as well

[Gregory Elfrink Company: ViSalus Sciences Contribution Level: 3]

Excellent, excellent post.

How would you recommend marketing a higher-valued product with an autoship of $125-150 a month?

And what is your advice for a budding 19 year old who is still trying to learn how to grow his circle of influence?

When I say that, I mean offline and online! I joined the Chamber of Commerce as one way to network more with others, other than that have been going around town trying to offer to give away a $10 gift card to customers of various businesses around town here in good ol' Alaska.

In closing, I would like to personally invite you my colleague to the BN group The Professional Network Marketer. Raising MLM to higher standards and better business practices industry-wide! (Perfect place for your non-profit!)


All the best,
Gregory Elfrink
http://www.recruitmagnet.com

[greg Kinear Contribution Level: 2]

I think your point about now being a great opportunity for network marketing, because of the financial situation is very valid. Now more than ever people are looking for a way to take control of their lives as our financial system crumbles. Its only going to get better for us in my opinion!

[Daniel D. Smith Contribution Level: 1]

UNFORTUNITLY ALOT OF PEOPLE OUT THERE IN THE REAL WORLD WILL ALWAYS WAY UP THE CONS OVER THE PROS, WHICH IS QUITE SAD.

YOU MAKE A VERY VALID POINT IN REGARDS TO THE CURRENT ECONOMICAL CRISIS.
PEOPLE WILL START TO FEEL THE PINCH AND THEY WILL START TO LOOK FOR THAT
'EXIT' WE ALL HAVE BEEN LOOKING FOR.

YOU ALSO STATE THAT THE INTERNET IS A GUIDE TOOL IN NETWORK MARKETING, WHICH CAN LEAD TO POSITIVE OUTCOMES, BUT LIKE YOU ALSO STATED IT CAN RUIN DOWNLINES.
THE PROBLEM WITH THE INTERNET IS THAT THERE IS ALOT OF 'FAKERS' TRYING TO CONVINCE YOU TO BUY
THERE E-BOOK, STATING THAT THEY HAVE THE ANSWERS TO BECOMING A HEAVY HITTER IN YOUR COMPANY.... I AM STILL A BIT HESITANT WITH THE INTERNET, YET I USE IT.

MAYBE I MAKE NO SENSE, BUT ALL IN ALL I JUST QUOTED A COUPLE OF THINGS YOU POSTED, AND I BELIEVE YOU DID A REALLY GREAT JOB IN EXPLAINING THE PROS AND CONS IN NETWORK MARKETING.

[Peter Arnold Contribution Level: 3]

Gregory, Terry, Daniel and others - it's really cool to see your interaction on this thread.

I have been a "positive ambassador" for our Network Marketing industry for many, many years.

As I've said many times - in my opinion, there is NO finer business 'concept' on the planet than Network Marketing. None.

And this is especially so when we "combine" Network Marketing with -- Affiliate Marketing + Internet Marketing (= InterNetwork Marketing).

Change - However, times are changing rapidly - and I believe WE in Network Marketing (both Distributors and Companies) need to better "adapt" to these changes - particularly, given our grave economic outlook.

Yes, change is usually painful, for all of us - but we're now in the "21st" century. We in this industry are "stuck" in many of the OLD (archaic) ways.

The FUTURE - We need to embrace the future - and do it in more creative, progressive, inclusive and "positive" ways (referring to both the field + corp - P&Ps, etc) .

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Gregory, you asked a couple of excellent questions - I'll give you my 'own' thoughts...

-- Autoships - People are losing their jobs at an alarming rate right now. Cash flow will be tight. Even though "some" NON-essential products, including "bad" ones (beer, cigs, fries, etc) will not be affected that much - I feel that if MLM A/ships are too high, we'll see cancellations until we recover economically - unless consumers feel they're purchasing something each month they "absolutely MUST have" - say, for their health (in which case, they'll 'find' the money somewhere). Many (excellent) Nutritional MLMs have A/ships in the $100-$200/mo range - that will be a challenge for many. So the 'marketing' for such products will need to stress things like -- exclusivity -- evidence-based, scientific proof of efficacy -- strong patents -- convenience -- powerful testimonials, etc.

-- Circle Of Influence - My sense is, from your positive attitude, that you won't have any difficulty in growing a solid circle of friends, customers, biz partners, referrals, etc. - both OFFline + ONline!

If we build trusting "relationships" with people, by "networking" with them and "giving to GIVE" and putting "their" interests first -- if we add VALUE to people's lives -- if we show them courtesy and RESPECT -- we'll gradually "attract" them to us - in both Warm and Cold markets. You've already started that with your Chamber Of Commerce. Another excellent way to network is through BNI - the largest referral organization in the world ( http://www.BNI.com/ ), although I don't know if they have any Chapters in your state of Alaska. Iike your definition for SUCCESS.

Many thanks for the invite to your BN group, Gregory - 'The Professional Network Marketer' - I'll certainly check that out!

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Some More Thoughts on our Industry

MLM - a PEOPLE Biz - This is first and foremost a PEOPLE business => if we as leaders, build "people" -- they will build the "business".

MLM - a PROFESSION - As a professional myself, I personally consider Network Marketing to be a "profession" - yet I know we need to constantly "raise the bar" in terms of our professional reputation, our credibility and our standards. We in the non-profit DRA ( http://www,TheDRA.org ) are "committed" to that end.

MLM - CHALLENGES - Yes, the challenges are out there - they always will be - we cannot hide from them. To W-I-N in MLM, in today's competitive and uncertain climate - we need a strong Desire + the Belief, the Work Ethic, the Determination and the Persistence, for starters.

But knowlege + human ingenuity will empower us. Resolve + positioning will cause us to win - BIG. The opportunities are there, for those of us who are ready. We are a resourceful industry. Personally, I have a passion for its purpose - but we need to believe in our dreams - act on our vision. We can build great successes in future, together. I truly believe this.

MLM - it's MISSION - WHY do I believe this? Because of what we DO in our Network Marketing world -- because of the CAUSE we represent -- because of the HUMANITY we serve. We in this industry -- reach out to more people -- we touch more lives -- we bring more good -- we spread more WELLNESS (personal / financial / business / legal / spiritual / + +) -- than just about any other calling on this earth.

I believe that we should RECOGNIZE this -- that we should be PROUD of this -- and that we should do whatever is absolutely necessary to PRESERVE this heritage, as it is an awesome responsibility that we all hold in our hands => the gift of HOPE.

Sincerely / Peter A.
http://www.PeterArnoldOnline.com

Peter Arnold, CLU, CFC / Founder
Business Achievers Academy / Canada