There are always fads
and fashions in any industry, profession, trade or business system where there’s
intense competition. Network Marketing is no exception – it’s just that competition
in MLM is less about products and customers and more about attracting and keepingdistributors.
Fads come and go constantly.
Trends, on the other hand, develop over a period of time and are linked to underlying
causes that reflect the changing needs of human society as a whole.
There have been three major
trends developing over recent years in MLM, each of which has had a profound impact
on the way we do business – and the results we get. Sometimes, those results can
turn out to be less than desirable.
Trend 1 – Technology
Technological progress in
two specific areas has transformed MLM over the past decade, and will continue to
do so in the foreseeable future.
Computer technology
Telecommunications technology
The impact of computers –
hardware, software and networking – have revolutionised the nature and operation
of network marketing. Automated record keeping, reward calculation and processing
(including electronic funds transfer), desktop publishing, database creation and
maintenance, mailing and more have made the four essential components of successful
networking more accessible, affordable and more effective. Those four components
are…
communicating with
your distributors
training your distributors
recognising your
distributors
supporting and encouraging your distributors
Traditionally, there have
been three serious obstacles to these…
time
distance
cost
Computer and telecommunications
technology have all but eliminated these three obstacles. Nowhere has this been more
evident than the Internet.
All the developments in telecommunications
– voice mail, fax, fax on demand, conference calls, e-mail, autoresponders, etc –
have changed the nature and speed of evolution of network marketing, and the rate
of change is accelerating.
Technology by itself is neither
good nor bad. It depends on what we do with it, and why and how we do it.
Just as there have been major benefits for us all from these technological changes,
there are major risks as well.
The main one, from the standpoint
of network marketing, is that we risk losing the personal touch so vital to creating
and maintaining personal relationships. Automation is fine for improving efficiency.
But efficiency is not the same thing as effectiveness. We need to be aware of this
risk, and avoid the tendency that often develops in connection with technology… impersonal
“processing” rather than personal interaction.
Like most tools, technology
is a brilliant servant, but a disastrous master.
This trend has been well-documented
in Richard Poe’s popular book “Wave Three” (Prima Publishing). In fact, the
book has accelerated the trend markedly.
Trend 2 – Appeasement
This trend has been at the
heart of most developments in reward plans over nearly two decades. What it boils
down to is this… companies (that is, the people who own and run MLM companies) have
figured that if they make rewards easier to obtain, they’ll attract more distributors.
There’s a certain logic to
this argument, but it overlooks some important realities of human behaviour.
If you make it easier for
people to do nothing, that’s precisely what they’ll tend to do.
If your main appeal is to
greed, laziness, fear of loss or gullibility, that’s the kind of people you’ll tend
to attract.
The results of this trend
are easy to recognise.
Larger networks producing
lower leverage results
Most people dislike the
idea of “selling”. So part of the trend has been to appease this dislike by telling
people they don’t have to sell – just buy.
The result is huge networks
of consumers – single customers who buy only for themselves at wholesale prices.
This has led to confusion
in the marketplace. Some companies claim they have bigger, faster-growing networks
than their competitors, yet those competitors who encourage retailing may have a
true customer base many times that of the consumption-based, wholesale buyer networks.
They just don’t have all their customers registered as distributors.
The illusion of progess
through controlled group structure
Most network marketers find
it harder to get new distributors than new customers. So, having “solved” that problem
by simply recruiting customers, some companies add to the “smoke and mirrors” strategy
by artificially creating an illusion of achievement and progress through the use
of contrived network structures.
The automatrix (or forced matrix)
is such a device. By structuring the reward plan so that only a limited number of
people can fit onto each level, you create the illusion that rapid network growth
– and, therefore, income growth – is being achieved through features such as “spillover”.
This is what occurs when, say, the matrix limits you to only 3 people on your first
level, 9 on your second level, 27 on your third, 81 on your fourth and so on. If
you sponsor six people, only three will fit onto your first level – the others will
“spill over” to places further downline.
This gives rise to claims
that the system builds your downline for you.
In a sense, it does. But
what many people fail to recognise is that the reward plan cuts out after so many
levels. The width and depth of your network are fixed – so your potential income
is also fixed.
This has led to enhancements
such as “infinity bonuses”, which are, in reality, nothing remotely like infinite,
and “re-entry certificates”, which allow you to sponsor yourself downline when your
matrix is full – a nice idea, provided that the products aren’t overpriced, so that
you compound your losses each time you re-enter your downline. This is precisely
what happened with many of the gold bullion, coin and jewellery companies that sprang
up in the mid-1990s.
Trend 3 – Workplace
Restructuring
Fundamental changes in business,
brought about largely by technological advances and, to a lesser extent, by greed
(on the part of stockholders and senior corporate managements), are imposing serious
changes on how we live.
No longer is there any illusion
of job security, seniority or loyalty in the work place. Disillusionment is the true
hallmark of all these changes.
Consequently, there is a
growing groundswell of people — well-educated, skilled and experienced — discarded
by traditional, First and Second Generation business systems, who are increasingly
willing to consider network marketing as a viable option for them. Many, if not most,
of these professionals would rarely have contemplated involvement in MLM until now.
Once they adapt their existing
expertise to the unique nature of the only Fourth Generation business system yet
to evolve — MLM — they generally build their business faster than ever. They thrive
in the dynamic, co-operative, synergistic, interdependant, relationship-based environment
of this most enlightened, egalitarian form of free enterprise. These are the people
now shaping the future of network marketing for the twenty-first century.
Their most serious
threat lies in not understanding the essential differences between First,
Second, Third and Fourth Generation systems. You can learn more about
this critically important subject in the section entitled “Advanced
Concepts”.
These are the major trends
in recent times. Other so-called trends are usually nothing more than manifestations
of these two, or combinations of the two.
Check out John Counsel's award-winning Top 50 MLM blog
