MLM - Reports
Your Time Is Now - Network marketing soared in the 90's... and the best is
yet to come
Author: Jeffrey A. Babener
Corporate America has been downsizing and job security has faded into dimly
remembered history. Statistics show that most new jobs now come from small
business. Home-based business has become a reality for millions of Americans -
inspiring millions more to dream about opening one. The term
"networking" has become a buzzword in the business press, as more
people realize the crucial role of referrals in the economy. The Internal
Revenue Service has adapted its rules (somewhat) to the new home-based economy
by recognizing independent contractor status and publishing specific
tax-preparation guidelines for "direct sellers".
There are a number of reasons why the network marketing industry reached
maturity and respect in the 1990s. As millions of Americans launched home-based
businesses and entrepreneurial ventures of every kind, they created a climate in
which network marketing could flourish. For instance, it was not so strange
anymore for an attorney to leave his practice in order to run a new company of
some kind out of his den. Most people have come to know someone who dropped out
of the 9-to-5 world and turned entrepreneurial. Hourly and salaried employees
have become intrigued with the idea of financial freedom and economic autonomy.
Suddenly, they are much more open to change - and better prospects for network
marketing.
Another change that favors the networking industry has to do with sex. In the
past, most direct sellers were women. As a result, this was often seen as a
woman's business, which tended to discourage male recruits. But as opportunities
in the industry have increased, more men have been attracted to it; in turn, the
all-female perception has faded, increasing the industry's ability to attract
men.
The sheer number of network marketers also has exploded. By the end of the
1990s, more than 10 million people were involved in the industry here in the
U.S., racking up more than $20 billion in yearly sales. Worldwide, the number of
distributors has topped 30 million, generating more than $80 billion in annual
sales.
When an industry gets that big, even corporate bureaucrats begin to notice.
Major multinational corporations are taking account of the networking
phenomenon, building it into their own plans for distributing products and
services. Here are a few of the marketing partnerships that have been formed:
Avon-Mattel; Tupperware-Disney; Amway-Rubbermaid; DuPont /ConAgra-Legacy. The
new "virtual networking" company will outsource almost all its
activities: manufacturing, customer service - even accounting. One of the
world's largest banks, Citigroup - formed of the merger between Citibank and
Traveler's Group - has a network marketing division, Primerica Financial
Services (formerly the A.L. Williams Company) that is one of the most profitable
distribution channels for the corporation's many financial products. These range
from insurance policies to checking accounts.
Corporate America has validated the success of the industry by embracing
public offerings of network marketing companies on Wall Street. Excel
Telecommunications, Amway Asia-Pacific, and Nu Skin all successfully launched
initial public stock offerings on major exchanges. Herbalife, Mannatech, Market
America, Nature's Sunshine, Pre-Paid Legal, and Rexall, to name a few, are also
publicly traded.
In the 1990s, high-tech and financial companies became enamored of the
networking industry, as network marketing companies broadened their lines to
include services as well as consumer products. Soon, it seemed every high-tech
company was looking to networking as a means of guerrilla distribution in
competitive markets. Companies in telecommunications, paging, Internet service,
satellite TV, financial, and travel services were the chief beneficiaries of
alliances with networking companies. Today, even electric power is being sold by
network marketing.
Why did conventional corporations cast their lot with the wild and woolly
entrepreneurs of the network marketing industry? Because they could see
that it works. Specifically, network marketing distribution has several distinct
advantages:
It is a powerful technique for introducing brand-new products - especially
items that require demonstration or testimonials.
It generates strong "word of mouth," by directly rewarding consumers
for sharing their excitement about a company's products or services.
Network marketing techniques can penetrate new markets quickly.
Since commissions are only paid on actual sales and since word-of-mouth replaces
costly advertising campaigns, network distribution is an efficient and
economical way to market a product or service.
Going Global
As it entered whole new business categories in the 1990s, the network industry
also planted its flag in dozens of new markets around the world. Amway and Nu
Skin had singular successes in Japan, which proved to be as amenable to network
marketing as the industry's birthplace, the U.S.A. Nu Skin pioneered global
seamless sponsoring, which allows a distributor to sponsor people living
anywhere in the world into one down-line organization - as long as the
corporation does business in the country where the recruit lives. For many of
the largest networking companies, sales outside the U.S. proved to be the
majority. The Internet, global communication, and satellite TV provided the
tools for global expansion.
It wasn't just Yankees who have been on the march during this decade. Many
foreign-based networking companies set up shop in the U.S. One of the major
success stories of the 1990s - health products giant Nikken - came to the U.S.
from Fukuoka, Japan, at the beginning of the decade with virtually no American
customer base. Nikken posted annual U.S. sales in the hundreds of millions by
the end of the decade and established its new worldwide headquarters in
California. Read All About It Finally, the decade just ending has seen a
sea-change in media and public perceptions of the network marketing industry. In
the 1980s, the press acknowledged the existence of network marketing - but the
attention was often negative. Stories had names like "The mess called
MLM" and "Here come the scam artists." Some of the abuses cited
were real, but good companies were usually lumped together with bad -
effectively misinforming the public about a major industry.
In recent years, this trend has begun to turn around. Positive stories on
network marketing have appeared in The Wall Street Journal, Inc., Success,
Entrepreneur, Wealth Building, Business Startups and Home Office Computing.
Articles continued to treat the industry to its dose of honest criticism, but
they also began to include the positive side: the fact that millions of
Americans were finding opportunity where they had never expected to see it -
among their relatives, friends, neighbors, and colleagues.
Unless you have been living in a cave, you can't have missed experts'
predictions that the Internet will be one of the most powerful business forces
in the 21st Century. As available bandwidth increases, ever more information -
and more money - will be exchanged over the Net. As a future-oriented industry,
network marketing will respond, adopting the new technology enthusiastically.
The Internet will become the prime means of communication, training, and
ordering for network marketing distributors. Sales kits and videos may become
obsolete as sophisticated multimedia demonstrations on laptops (and over e-mail)
become the main recruiting tool, and cyberspace becomes the chief venue for
training. The Internet will encourage rapid expansion on a global scale with
instantaneous communication between network marketing corporate headquarters and
the distributor force.
Documentation, sales kits, distributor agreements, and policies and procedures
will reside primarily on Web sites, where new prospects can download them.
(Courts already recognize electronic signatures as binding.) Distributors will
order directly from the Net, reducing the need for call centers and human
operators.
Companies will pay commissions by direct deposit to bank accounts or credit card
accounts. The new, "virtual networking" company will out-source almost
all its activities: private-label manufacturing, customer service, fulfillment,
graphics - even genealogy and account processing. The technology revolution will
level the playing field.
But don't let all this technological razzle-dazzle distract you from the basics.
Regardless of what gadgets they adopt, the network marketing companies that
succeed will always be those that maintain their respect for personal
relationships. Get as virtual as you like - you will always need to get out
there and press the flesh.
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About the author:
Jeffrey A. Babener Network Marketing Lifestyles