Before we dive into the nitty-gritty details, let’s address something that I find utterly frustrating, and I believe it’s essential to debunk a common misconception. It revolves around the attempt to draw a clear line of distinction between “Network Marketing” (NWM), “Multi-Level Marketing” (MLM), and even “Direct Sales.”

Many individuals operating within this realm often contend that these are separate entities, with MLM playing only a minor role within the broader Network Marketing model, specifically concerning the payment of sales commissions through a multi-level structure. Meanwhile, Direct Sales is viewed as the straightforward process of marketing and retailing products or services.

In this construct, Network Marketing encompasses these elements into a comprehensive system:

1. Build and expand a retail customer base with qualified customers.
2. Seek to recruit qualified customers who also wish to become distributors.

In this way, Network Marketers can not only cultivate their customer base but also establish their own sales force of fellow distributors. They are responsible for training, motivating, and managing their recruits, effectively taking on the role of a Sales Manager. Through this structure, they collect commissions via a multi-level or multi-tiered compensation plan, derived from the products or services sold within their continuously expanding downline.

On the surface, this may appear as a reasonable explanation and relatively straightforward for those interested in this business model. It does sound quite enticing, especially for individuals who envision a self-sustaining business that generates recurring commissions with minimal effort. Who wouldn’t be drawn to such an opportunity?

However, one could argue that this description essentially describes the foundation of any legally accepted MLM model, making it, in essence, a rebranding effort to avoid using the term “MLM.” In doing so, many individuals venture to great lengths to circumvent the use of this simple acronym, raising the question of why such avoidance is necessary.

One justification for this avoidance tactic is the perceived stigma associated with MLM. It’s true that this particular industry has been tarnished by a historical reputation, one that many within it find disconcerting. The perception of MLM as an unsavoury business practice has led to the creation of various terminologies and euphemisms to distance the industry from the term itself.

However, it is crucial to acknowledge that the existence of this stigma is due to the inherent flaws within the recruitment systems that characterise these marketing and distribution models. Yes, it’s true. The fundamental issue lies in the structure of these systems.

Yep… I’m afraid so.

Let me explain why I believe this to be the case, drawing from personal experience and time spent in the trenches.

The challenge with the points mentioned above, which emphasizes the development of a retail customer base, is that this approach, in most network marketing ventures, yields minimal financial return due to the commission structure and profit distribution among upline distributors. Thus, the prospects of generating a substantial and sustainable income exclusively from retail sales alone are considerably slim. This reality creates a disincentive for distributors to invest their time, energy, and effort in retailing products or services, especially when the products are often priced significantly higher than comparable offerings available through other retail channels. The difficulty of selling these products becomes a harsh reality for many enthusiastic NWM newcomers.

Statements such as “go for no” or “embrace the no’s to get to the yes” are often recited to encourage and motivate distributors to persevere in the face of challenging odds. Unfortunately, such motivational catchphrases serve to maintain the enthusiasm and commitment of individuals playing a game where the odds of success are dishearteningly low.

Upline distributors might, with good intentions, encourage their recruits to “go out and build up a retail customer base,” creating the impression that this is a simple task. They might suggest that, once a few new customers are acquired, they will remain loyal, placing regular monthly orders like clockwork. However, this rarely aligns with reality.

Life happens, circumstances change, customers grow weary of the product, or they discover alternatives, rendering them less likely to commit financially to the product. This phenomenon, known as attrition, is prevalent in the network marketing industry, resulting in high dropout rates.

Thus, the focus on constant recruitment is adopted to counter the inevitable attrition rates that distributors will face in their downline. The numbers simply don’t add up, as the relentless need for recruitment leads to market saturation, compounded attrition, and a perpetual struggle to fill a proverbial leaky bucket.

In the world of network marketing, various factors contribute to these challenges, from an existing stigma to the realities of managing customers, marketing constraints, product supply issues, shifting company policies and structures, exorbitant pricing, and more.

It’s essential to grasp that those who embark on a network marketing venture essentially operate as commission-based sales representatives, often functioning as self-employed contractors competing in over-saturated markets. Alternatively, they act as sales managers or leaders, responsible for collecting sales commissions and team-building bonuses within their represented organisation.

It’s crucial to understand that becoming an “Independent Distributor” in network marketing does not equate to running one’s own small business. As someone who has operated several small businesses across various industries and even sold a few of them, I can assert that they are fundamentally different from network marketing ventures.

However, it’s worth noting that many network marketing leaders often integrate the network marketing model into their own legitimate businesses, which they control through established entities. This clever approach allows them to earn money on both the front end and back end, mitigating risk and increasing their income potential.

Therefore, “just going out and building up a retail customer base” stands as one of the most challenging aspects for most network marketers. This is particularly true for those who lack experience in sales, marketing, or business in general. The numbers, as revealed in many income disclosure statements, underscore the complexity of this task.

This is also why I have an issue with the constant emphasis on recruitment and team building because it deceivingly appears to be the easier way and path of least resistance.