Most people dislike network marketing because of its negative reputation, but there are many things they don’t actually know about in the first place.
In this video, I’ll address the common misconceptions about multilevel marketing mentioned in Tonight with John Oliver (HBO), so you can further understand what this industry is really like!
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On tonight with John Oliver, he talked about multi-level marketing.
In it he brought up these questions:
- Is it true that most people don’t get a check?
- Is it true that only the people at the top make money?
- Is it true that there’s all these reps that are just saddled with all of this product?
Why You Should Even Take My Advice
I was one of those suckers that bought into the multi-level marketing dream. I joined it when I was dead broke but went on to become the number one income earner of that company making millions of dollars.
So, I want to share with you some of the things that I learned and why John Oliver is wrong.
John Oliver talked about it on the Tonight show how Network Marketing was how it’s all built around hype but like there’s no meat on the bones.
The reason that this can be difficult to kind of wrap your mind around is that there’s no comparison. Well, network marketing is no different than any sales. It is a sales job, right,
and not a job but it is sales, right? You are in sales and so like anything in sales, it has to do with one thing and that is how many people are you getting in front of your product. To help you understand this, I’m gonna share with you some actual data from a good friend of mine Tim Sales. I want to give him a shout-out because he did a lot of work to figure out this data and so there are in the year 2019, there were 700,000 people that got started toward becoming a realtor.
A hundred and thirteen thousand of them attempted to pass the exam, okay, so follow me here so seven hundred thousand bought the materials to become a realtor, you got that?
Now might someone buy the materials to be a realtor and they just want to learn real estate, I’d argue no because they’re overpriced and it’s kind of weird. It’s about contracts and it’s about legalese and it’s things that it’s not like how to sell real estate, they actually don’t talk a lot about that it’s mainly about how to cover your butt, legalese, contracts. You buy the real estate study course because you want to become a realtor, okay? So out of 700,000 people that paid money to start that path, 113,000 of them attempted to pass the exam. 50,000 of them passed the exam. Of those 50,000, 37,500 sold at least one home, that’s good news, right? So check out these statistics here, so out of 50,000 passes the exam 37.5 sold a home, hey that’s not too bad.
Now when you sell a home, the average commission is five grand, right, not breaking the bank but you made a sale. How’d they made a sale? Well, they made a sale because they found a lead, right, either through marketing or prospecting, they went to networking, meeting exchange, business cards, got some follow-up with them, right? So they found a lead either through marketing, through magazine advertising, very expensive, right, or billboard, more expensive or met him you know by prospecting, followed up with them. Either gotta got them to show a home, they showed him a house or they went and visited them at their house and got the listing or they invited him to an open house and then there was a sale, that’s called a pipeline. It’s the same kind of pipeline in network marketing. So when people say hey, only a few make any kind of money,
Well, that’s the pipeline. If a few only made a little bit of money, it’s a few only did the pipeline and how many of the 700,000. So we know 600 and whatever that comes out to 660,000 people who had the intention of becoming a realtor, didn’t do the pipeline, didn’t make money.
So wait, maybe realtors are a scam. No, I’m not saying that. What I’m saying is I want you to understand why something in sales works and why something in sales doesn’t.
If I start a drug store out in the middle of a desert and there are no roads, right, and I’m like no one’s buying anything, this doesn’t work.
Is It A Scam?
Is it a scam? No, it’s I have no pipeline. There’s no one walking in the door. I’m not somehow getting people to parachute in and purchase things,
Any kind of sales comes down to the pipeline. Now, you may bring up and say well what about this recruiting nonsense? They recruit people and tell them you know things.
I admit the greatest strength of network marketing is also a weakness and that is a low barrier to entry.
Why did 700,000 people buy the study materials but only 113,000 even took the exam and only 50,000 passed the exam? I do want to point out the study materials are expensive, the test is expensive, the study materials are I think 57 or 60 hours. My wife’s actually doing it right now, right?
So I’m not bashing realtors, I’m just giving you a comparison, I’m giving you a perspective. Okay, why did all of those people intend to purchase, pay money into and then not make any money? They didn’t do the pipeline but they had a barrier to entry so there was a drop-off.
With network marketing, there’s a very extremely low buried entry.
It’s usually a couple of hundred bucks, no test, no exam. Now I might argue that there should be, they should buy some study materials, they should get educated. Most of the time the person entering network marketing is you know hairstylist is you know someone that’s doing this on the side, that’s not their primary intention. I don’t know the intention of the 700,000 you know people have started the path, I don’t know that, I can’t tell that and neither can you and that’s the mistake that’s made when John Oliver and others bash network marketing for some you know low percentage of people making money. You don’t know their intention and hey by the way at least they got something, they got some product, right? Usually, you’re getting some kind of product that you can you know ingest or use or whatever but it’s intention and pipeline and when you combine an understanding of intention pipeline with a low barrier to entry, you’re going to have a high number of people that it doesn’t look good statistically.
Now if you boiled it down to okay, how many of the network marketers that joined actually went on to attend an event? That wouldn’t be the same percentage as far as realtors because they had to take 60 hours of a thing, they had to pass an exam, right, wouldn’t be the same but at least would be closer. And so when you hear a small percentage of the people make money, well that’s true of anything in regards to sales and it only relates not to the opportunity, it relates to the pipeline. How many people did they follow up with? How many people did they reach out to? How many people did they get checking out the product? How many people did they get to the open house? How many people did they you know get to the chiropractic office, whatever sales it is. When it comes to recruiting, think more like an HR director. Does the human resources person, are they looking for talent, right, and the difference is they’re paying for time hoping that it works out and sales, they’re paying for pipeline, they’re paying for performance. Very, very different scenario.
Okay before I get to my next couple points here, what are you feeling? Is this helpful? Is that helpful to understand? So many people you’ll hear say I tried it, it didn’t work and I’ll say how many people did you get in the pipeline and like it doesn’t work. You know it’s like why don’t you answer the question, right? And so it is and just so you’re clear if you’re considering joining network marketing, you’re gonna have to do the pipeline, right? You’re gonna have to talk to people, you’re gonna have to follow up with them, you’re gonna have to show them stuff.
I wouldn’t hype them, I wouldn’t pressure them, I wouldn’t try to convince them of stuff.
Would a real estate broker go to someone and say hey, you should be a realtor and you can make lots of money and you don’t have to do anything. No, they would never do that because that would be a pain to them. It’d be like I don’t want that. I want a producer. And so a lot of times people enter because of the low barrier to entry, because of the no continuing education, because of the no exam required, they come in and they just aren’t trained. They aren’t trained and so left to their own devices, they a lot of the hype. Now most network marketing companies don’t suggest that and you know any that I’ve dealt with, they don’t suggest that sometimes you have a rogue rep and that’s what happens when you have a low barrier to entry but I’d love to hear from you. And just so you know the difference, a rep is short for representatives so think of that like that’s the person, they’re not part of corporate, they’re not an executive. They’re a person that chose to join that opportunity and represent it and go out there and gather people and whether they do that or not is up to them of course because it’s the pipeline as you know now. What I would say is rogue is when they’re hyping, making promises, saying anything other than the pipeline is how you create success. And so we don’t want that, I teach very strongly against that. I remember when people would ask me well how long till I’m making big money? Well unlike all these different specials and you know what John Oliver would have you say that me as a network marketer said is I said well what if it takes you five years? And it’s like five years I’m like yeah you got a bunch of money coming? You got a hedge fund being released here?
You got you to know a rich uncle gonna pass away and you know get you rich because I wanted them to buy into the idea that this was a long-term thing, I don’t want to hype them that it was magical and easy and then I complain when they’re in my team. I want to be realistic with them and I suggest if you are a network marketer watching this, I would highly suggest you be realistic too.
Tell them. Say hey, it’s simple not easy and why do I say simple? It’s simple because your job is one thing. Hey, are you open to taking a look at what I got? Here it is. You want it? You want to try it? Here’s a video, watch it. You don’t have to do the patents, you don’t have to the trademark, you don’t have to do the supply chain management, human resources.
You don’t have to buy the warehouse, you don’t have to do any of that stuff which leads me to one more point and that is are all the reps just saddled with a bunch of products? Well, that’s optional,
right, that’s something that you decide whether you want to buy more product or not and oh by the way, that’s like a lot of companies. So I have friends that they make these really cool interchangeable sandals, right? Like swap out the straps and stuff. It’s cool, it’s a good neat thing and I remember one time when they had a shipment coming from China and it was one of those shipping containers and they had 10,000 sandals in there, right, a lot of sandals and somehow the roof of that got punctured on the way so they were all ruined,
that sucks, right, that’s you know in in business sometimes when you’re trying to get a lot of products, sometimes you know you know bad things happen. I want to point out it’s not just network marketing where you have the option of getting more. Now were they forced to buy the container?
No, they wanted a better deal, they did that so that they would have a higher profit,
that one was a lost gamble, that one you know kind of stung but it isn’t uncommon for a business to have a lot of shirts. We have a lot of journals, we have a lot of books. I order 5,000 at a time, that’s a standard business but that is not something you have to do to be in network marketing. To have that option for people that want it, hey why not? Like most businesses, you should be allowed to buy more product if you want but that should not be a requirement. I’ve never seen it be a requirement for many, many, many years so I want to point that out and that’s the the last point I want to share with you is the big one that everyone screams and that is only the people at the top make the most money. Well I’m an example of why that’s not true. See, I came in to a company, I joined and I became the number one income earner in that company. There were thousands of people in before me, how’s that possible if only the people at the top make money? How’s it possible?
Pipeline, that’s why. Because I just put more people in the pipeline than everybody else and it’s pay for performance. And so and guess what? In my first network marketing company that I was ever part of, I had two people pass me. They made more money than me you know and you know I was kind of doing it on the side and I was doing you know focused on real estate while you know real estate was going well and I had two people that were very focused. They put more people in the pipeline, they out earned me. This is pay for performance. This is not nepotism, this is not you know the supervisor makes more than the you know secretary no matter what their skills are,
right? This is not that.
This is pay for performance. The person can come in with a master’s degree, not get anyone in the pipeline, not make any money, be one of those statistics and complain about it, right, but that’s true of any sales and so I hope this was helpful to you and you know this is something I’m not someone that says network marketing is for everyone because if you feel like you can join something and just make a bunch of money and not do anything and you’re not willing to teach yourself the skills needed for pipeline and getting your stuff in front of people then you shouldn’t do network marketing. Business isn’t for you and so i don’t think it’s for everyone. Anyone can but they have to do the minimum. They have to talk to people if you want to make money. Now, I will tell you there are other benefits to network marketing and this is kind of you know on the side here but I made a lot of friends, I had a lot of fun, I went on incentive trips, I had fun at the conventions, I learned a lot you know it’s a huge self-development industry so I learned a lot, I grew myself so even though I did make a lot of money, I also got a lot of non-monetary gain. And so that’s something that you know just off to the side, that’s not my argument. My argument is always going to be pipeline, how many people did they get in front of it? They didn’t get many, they’re not going to make much money.
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