Most People Don’t Know What Affiliate/Network Marketing Is And What It Is Not

I wanted to write a post about my understanding of the business of affiliate/network marketing and why so many people think it is an illegal scheme.  To be honest, I was also very skeptical of network marketing, and still have a very wary eye towards it, but having done the research on the subject, I know now what the differences are and hope to be able to clarify in understandable terms what it is all about.

I have stopped talking to friends and family about this business because to be honest I never had them in my business before so why would I want or need them in it now?  If they learn about what I am doing and are curious about it, then yes I’m happy to show it to them but, I’ve stopped trying to put a square peg in a round hole, that is just a frustrating experience and upsets everyone.  Since I made that decision, it has become a much better experience for me.

First: What Defines An Illegal Scheme

The Ponzi Scheme: If you go to Wikipedia, you will get a good grasp of it.  But, I’ll just give you the short of it.  First of all a Ponzi Scheme is an investment scheme.  Here is the first sentence in the Wikipedia article…

”A Ponzi scheme is a fraudulent investment operation that pays returns to its investors from their own money or the money paid by subsequent investors, rather than from profit earned by the individual or organization running the operation.”

So, this is one reason that network marketing is not a Ponzi scheme, it is not an investment business and should never be presented as one.

A Pyramid or Snowball Scheme is a little more difficult to define but here are the basics.

Basically the purest form is that there is no product of value available for retail sale and the line between being a retail customer and a potential income earning associate is non-existent or vague.  Money is simply passed up to those who got in earlier and no money is made when new people are not being brought in.  So, if a company is not creating new products for sale to existing customers then there is another sign of a questionable enterprise.  That is why some older network marketing companies have such a huge line of products, they must in order to keep their business viable.  You can only drink the same juice for so long, then you get tired of it, right?

Another difference is the direction the money flows.  If it flows vertically from the bottom of the organization to the top then that is an indication of a snowball effect.  The money must flow from the customer, through the company and then to the associate as a commission of actual product sold. The effect of a snowball system is that it accumulates as the money moves up the system and the people at the top naturally will make more than anyone at the bottom could ever make.  That is illegal.

Probably the most confusing part is the recruiting or sponsoring of new associates.  It is illegal to get paid for the recruitment or sponsoring of a member.  This is where most people misunderstand what recruiting and sponsoring is.  In Affiliate/Network Marketing as in any other business you must find new customers to buy your products AND new associates to help you sell your product or you will never have any growth and you go out of business.  Finding new customers and new associates is a common business practice. Where would McDonalds be if they weren’t allowed to franchise their business?  They would be a one store operation in California that no one had ever heard of.  The only way anyone can make money legally in Network Marketing is when it is a commission made on the sale of a product, never for the recruitment of a person.

In Affiliate/Network Marketing You Are Ultimately Going To Run Out Of People

One comment you always get is that an Affiliate/Network Marketing company must at some point fail because you are going to run out of people to make the business grow.  If it keeps doubling in size then at some point the entire world will be in it and then the whole thing comes crashing down.  Yes that is true!  I agree.  BUT, that will never happen because 95% of the people who get in won’t stay in and not everyone wants to be in the business being offered or the product that is being offered.  Everyone on earth does not drink Coke, and even when Coke is sold worldwide and everyone knows about it, does that mean that Coke will stop making coke?  Of course not!  Why?  Because of resale and more distributors being brought in to the business.

Avon is the number one Network Marketing business in the world. Their revenue is $11 billion and they have 6.5 million associates.  Everyone knows Avon, Amway, Mary Kaye and so on, but how many people do you actually know that are in a company at all.

There are 7 billion people on earth. You can’t and won’t run out of people, period. So this fear is totally ridiculous.  Either people are skeptical that no one is doing it and say it is nothing or they turn right around and say it is bound to fail because it will someday not be able to grow.  All of these arguments are ridiculous and based on fear, ignorance and wrong information.

There Are No Guarantees In Life

People want guarantees.  Here is the truth, there are no guarantees and those who make them will do anything to get out of them.  Health Insurance is a prime example, the theory is that if you pay your health insurance then when you get sick the Health Insurance will cover you, right?  WRONG!!!  All you have to do is look at the fine print and you will find a million reasons why they won’t pay you.  The USA is the worst country for this, because everyone seems to think it is OK to offer health insurance and then to allow the insurance company get out of paying for benefits when they are needed. THAT is a scam in the truest sense of the word.

People think because they have a job, that they always are guaranteed that job.  WRONG. If a company or government finds a way, they will fire you if they can or have to do without you.  Always remember the Golden Rule: Whoever has the Gold, makes the rules.

Affiliate/Network Marketing companies are harried by the government to publish and make unavoidable disclaimers about income.  Where other businesses are trying to give you guarantees, network marketing companies gives you disclaimers and no guarantees.  Why?  Because it is a business, a personal business that is available to anyone who wants to do it regardless of race, education, social standing, ability or past history.  The low cost of getting started allows for a large number of people to be eligible to start a business, but this brings with it a lot of people who aren’t business savey and thus most probably will fail.  There IS no guarantee because they don’t do a job interview for it or screen people to qualify.

I hope that this post has not been to long and I know that I don’t everything about this topic, but I do know that it is a fair business and it is designed to help every associate succeed, but they are not going to do your work for you. That you have to do for yourself, without pay. Welcome to the real world of business. Affiliate/Network Marketing is the best school you could ever get to learn about how to build a business.

One final word for today. Nothing is perfect.  People are not perfect.  You have those who play by the rules and those who try to cheat, and that exists in every profession and occupation around, from religious leaders, politicians, teachers, gas station attendants, business leaders and yes even in network marketing.  There are going to be problems with anything you do.

Probably the most important thing to remember about Affiliate/Network Marketing is that IT IS NOT AN INVESTMENT where you hope that you will make money simply by investing money, nor is it speculation on whether the value of something rises or falls.  Just because you pay money to buy products and join the business has nothing to do with making money from it, NOTHING!  It is important to remember that.

So, this is a long blog post, sorry about that, but I wanted to get some things cleared up.  If you are curious about blogging and how you can create an income from it, click here, enter your email address and watch the film which will play for you.  This is your first lesson in internet marketing, emailing and getting traffic.  Learn, do and teach!