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Network marketing in a recession

If network marketing forum posts on this subject are to believed, now’s the best time to be getting into network marketing (that’s the impression one gets there at any time, to be honest!), business is booming (which it probably is, for some) and network marketing as an “industry” always does particularly well in recessionary times (hey, let’s not have history or the facts get in the way of a positive attitude).

What’s the reality?

There are, indeed, more people around at the moment who are looking for a home-based business opportunity. And looking at it only very superficially, one could be forgiven for thinking that that must be a good thing. In reality, however, it’s not necessarily so clever. Let’s see why …

The reason there are more people looking for a home-based business opportunity at the moment is that there are more people looking for additional income-sources, and some of them, very reasonably, look at home-based businesses (usually among other things). So there are certainly more prospective business associates at whom one can target one’s advertising/promotion.

Unfortunately, however, the number of people for whom setting up, running and building their own business is really appropriate and beneficial, in the long term, hasn’t actually increased at all. This means that the “prospectors” are necessarily doing one of two things: either they’re doing more “sorting/qualifying work” for the same returns, in terms of pro rata growth-rate (as we are), or they’re sponsoring people they shouldn’t really be sponsoring (as many are). And the effect of the latter is alarming: not only is their time being taken up by recruiting many people who will end up not duplicating the business profitably, get disillusioned and drop out, but that’s also time they can’t use by spending it with the people they actually need, to grow their business in a lasting way, for the future.

There’s also the little matter that many home-based, network marketing, MLM and party-plan companies, just like many other businesses, inevitably go under in a recession. (We’re already seeing this now: there've been quite a few - the latest victim to close its doors, only the other day, was Body Shop At Home.)

People under great financial pressures may not, overall, make the most promising distributors for our businesses.

What can we learn from all this, and what can we do about it? I suggest two things for two different groups of people.

Those of us with already-secure, growing businesses should be going the extra mile to “qualify” our prospective associates, and make quite sure they really do have the necessary business-owner mindset as well as adequate start-up capital available (and however small the amount they need, it’s considerably more than the company’s “sign-up fee/distributor-kit cost”).

And anyone looking around for a company to join should quickly and firmly cross off their list (among others) any new companies, any “pre-launches”, any “ground-floor opportunities” and any companies without demonstrable and growing sales volumes. These companies, statistically, are a million miles away from being safe to join even in the healthiest of economies (the proportion of them that survive 3 years is frighteningly tiny, wherever you get your figures from!), and right now we’re far from dealing with that sort of financial climate.

Branding yourself: good, bad or indifferent?

Network marketing is a duplication business. How well people do has a close correlation with how well they can apply, teach and have duplicated a simple, proven, business-building method. To appeal to as high a proportion of people as possible, and even more importantly to be duplicable by as high a proportion of people as possible, your system should, in general, be designed to make people think “I can do that”. More specifically, it should avoid people thinking “I can see that this person’s an expert, and even if I could learn to do some of what she does, I’d never be able to teach others how to do it, let alone how to teach it to their groups”. This is the point, sadly for so many people in our industry, over which a wheel comes off, because they make the mistake of trying to “brand themselves”, to look like a leader, an expert, a coach, a guru, whatever else you want to call it.

Branding yourself - a fairly recent corruption of network marketing, often inappropriately derived from the precepts of internet marketing - is really a huge red herring, and not a very palatable one. This isn’t what most people want to do, and if they try to duplicate it, they can very easily lose more than they gain, overall, sometimes even without quite realising it.

This is all simple, logical, self-evident stuff, really, if you think about it: branding is a way of distinguishing something, attempting to portray it as being different from (impliedly, in this context, “superior to”) anything/anyone else. If everyone branded themselves, they wouldn't really be different at all, would they? Our business model in network marketing is about duplicability, isn't it? People want to follow leadership, to some extent, but there’s still a very obvious conflict between branding and duplication. As someone very successful in my downline put it recently: I think my difficulty with this relates mostly to the apparent conflict between saying, by inference, "I'm the expert; I'm the leader; I'm different from (better than?) everyone else" and saying, in effect, "This is a simple, duplicable business in which all you have to do is the same as what I do: be the same as me and you can succeed".

There’s very clearly a way in which the more you brand yourself, the more remote, unattainable and off-putting you make what you're doing appear to people who want to copy you.

In this regard, as in so many others - some very apparent and others exactly the opposite - the paths to success of internet marketing and network marketing could hardly be more diametrically opposed. This is one of the factors that makes so readily understandable the enormously high drop-out rate of people trying to build their network marketing business primarily online.

In network marketing, the people who are most successful are typically the ones who achieve the most duplication. Not necessarily duplication of themselves, of course, but of their proven system. People aren't exactly duplicable but simple, proven systems can be, and the more simple they are and the less individuation they involve, the more successfully they tend to work. Duplication, in this context, doesn't mean becoming someone else, having a personality change, or anything so dramatic. It means learning to copy a simple system (and not one that requires advanced technological skills) that has worked successfully for others who were willing to use it, and teaching that same system to others. There's nothing particularly clever or difficult about it, and that's how ordinary people who are not trying to brand themselves can become so very highly successful in our industry (usually without needing to have their egos massaged by being seen as experts!).
 
For most kinds of internet marketing, doing all of this is very useful - maybe even essential. But to become hugely successful in network marketing, not only is it unnecessary, but it’s typically even counterproductive: anything and everything you do to present yourself as an expert, to brand yourself, to make yourself stand out, to look like a leader, can serve to increase the proportion of prospective business associates who will think “I could never do that”, and look elsewhere. And “internet leads” look elsewhere very quickly indeed: they’ve usually seen it all before, and 100 things like it. It’s really very difficult for many people to envisage themselves as “branded experts” and it’s certainly not something to which they have any aspirations. And in any case, who wants to limit their business to internet users?

Overcoming objections and resistance

When you're talking to prospective business associates, what are the most common objections you get and how do you overcome them?

Does it sound as if I’ve suddenly turned into a 1950’s used car salesman? Relax: the question above is ironic!

“Objections” are something caused by the person eliciting them from the respondent, and I would never try to “overcome” any reservations or observations someone might have, when I’m showing them my business opportunity: I don't get “objections” at all, and my potential business associates don't say anything that I have to “overcome”. These terms don't begin to describe anything I do, would be willing to do, or would be willing to teach others to do. They are part of the techniques that rightly and understandably (albeit very unfortunately for the rest of us) contribute toward to our whole industry's shady reputation.

Objections are actually caused by the person talking/presenting to a prospective associate, if they proceed manipulatively, from a perspective of leading the conversation oppressively, by trying to “close a sale”. These old-fashioned, heavy-handed, disrespectful, manipulative sales tactics, brilliantly discussed and explained in Jacques Werth's High Probability Selling, of which the first chapters can be read online free of charge, have absolutely no place in modern network marketing at all. The way we talk to people, present our business opportunity to them and answer their questions does not give rise to any “objections” either; nor do we wish to “overcome” anything people say.

I would not be comfortable at all  looking at this process in those terms - and I don't think it's just being semantic or pedantic, either: I think that the terms in which you look at it (and the words you use to describe it and to think about it) are very significant indeed to the outcome and especially to the duplication of your work. People who see themselves as needing to overcome objections are going to have some real difficulties in our line of business.

If you show your business opportunity only to people who are already looking for a business opportunity (and people who don’t do that are often among the majority who drop out of our “industry”), you’ll normally find that they know what you’re talking about - at least to some extent - before you talk, and if they don't like it they would have declined or disqualified themselves already (if not, it’s an indication that your screening process, whether it’s online or offline, isn’t doing its job and you might want to re-think it).

This isn’t really about having lots of experience, or being good at it: even a new distributor can easily do this after only a modicum of tuition.

If you encounter “resistance”, you’re talking to the wrong people.

These points don’t really relate to our skill-level or experience-level at talking to prospective associates at all: it’s something even more fundamental than that.

Nor do people have resistance because they’re unfamiliar with network marketing. They may have misunderstandings about what it is (which ought to have been dealt with by your screening materials, before you even speak to them). Don’t forget that newcomers to network marketing are traditionally the ones who do best. They’re not full of sales-orientated perceptions and they don't know enough to give themselves these problems of “objections” and “resistance”.

Resistance is something you cause yourself when you try to impose something on someone, to manipulate someone, to dominate the conversation by steering them toward a certain conclusion. For successful network marketers, that isn't what network marketing is about at all. I don’t encounter resistance because I'm not imposing anything on anyone for them to resist. The newer people are to this process, and the less they know about it (apart from perhaps the occasional person from a professional sales background, and they don't do nearly so well in MLM anyway, in my experience), the less likely they are to be able to have problems with this.

I didn't ever try to “close sales” because I knew right from the start that that skill would never be duplicable anyway, even in the extremely unlikely event of my being both able and willing to do it myself. So I never acquired the behavioural patterns that produce resistance in people. These things, “objections” and “resistance”, are really encountered only by people trying to persuade others who were not already interested in a business opportunity to become interested in a business opportunity. And that’s inevitably the path to disappointment, frustration and disillusionment.

What’s needed is to develop the appropriate lead-generation skills so that you're talking only to people who've already decided that they need a home business. Once you do that, you'll rarely encounter objections or resistance again. Your opportunity may not be the right one for everyone, of course, but when that's so for someone, you don't want them anyway because they'll use up your time and effort and never produce income for you. You can only ever lose by trying to persuade people.

Talking with the right people turns the process from persuasion into informing. Informing doesn't cause objections or resistance. This is an almost overwhelming concept. Once you really get it, and drop the manipulative persuading thinking and the language that inevitably accompanies it, it changes your life and your business forever, and in a really good way. And it duplicates well, too, because there are far more people around who can learn to inform people than people who can learn to travel back in time to the 1950's and sell used cars!

“Funded Proposals” - and why network marketers should keep away from them

A funded proposal, in our context, is (designed as) a way of generating your own leads for your network marketing business without spending money, overall, on doing so. The idea is that you build a list by selling something really low-priced which is of value to its purchasers, and by doing so you build a list of potential “leads” for your main business, the one you actually want to promote. So you offer an e-book, typically, about something relevant and interesting, and you make it look really attractive and good value so that it more or less “sells itself” (allegedly), and this way you end up with a list, and as all the internet marketing people will tell you, “the money is in the list”. But the $3 or whatever you charge for the e-book pays for all your marketing, thus netting you the list “without paying for it”. That's the basic idea, anyway.

This is all well and good (perhaps) if you’re an internet marketer, but if you’re trying to build a network marketing business, it's really a hugely flawed idea and in my opinion something to run a mile away from rather than considering at all.

These are among the reasons why I would never dream of touching one, myself:-

(i) It's a huge distraction from your “real business”

(ii) It means that you're effectively running two businesses instead of one (this is an under-appreciated and actually monumental problem about which I‘ll say a lot more in later posts, so perhaps enough said, for the moment)

(iii) It doesn't duplicate well at all (the people promoting funded proposals claim that it can do, and they're wrong)

(iv) It's basically a “bait and switch” approach. What you're really doing is “baiting” people with one thing (the little e-book or whatever) and then trying eventually to “switch” a proportion of the resulting “leads” over to your main business (which wasn‘t what they were looking for, and that's why they're not really leads, of course). So the reality is that you’re trying to persuade. This in itself is a dreadfully bad idea for a whole number of other reasons. Among them, the key point is perhaps that when you're promoting a business opportunity you should be promoting it only to people who are looking for a business opportunity of that kind (of whom there are an enormous number, especially at the moment), because anything else is really making life difficult for yourself

(v) So, the underlying idea of using a funded proposal is that you're trying to persuade people to look at your business opportunity because it's you who's asking. In other words, you gradually “establish credibility” with them by “building a relationship with them”. That's usually a euphemism for bombarding them with autoresponder email spam until a few of them eventually succumb and are willing to look at your main business just because they feel they “know and trust you”, and as we know, “people do business with people they know and trust”. There is actually something in this last point, but not as I‘ve quoted it here at all, and it‘s a hugely misunderstood and widely misused idea when - as here - it’s used to try to explain away something that was never actually true in the first place. The real point is that only people who have already decided they wanted to do business, do business that lasts: people who join you because you persuaded them are very unlikely, collectively, to be a success. Stable, successful, growing and duplicating downlines are ones in which the majority of distributors understand this point and pass it on

(vi) It's all rather deceptive, and in the early stages (which can last for a year or so) people can actually imagine that it's “really working” because they do get some “leads” this way, and more to the point, they actually manage to sponsor some of them into their main business. This is the point that proponents of funded proposals always make: they weren't sponsoring without using one, and now they're using one and they're “suddenly sponsoring people”. All well and good, you might think? Ah, but no - sadly, this is also wrong. What they usually haven't worked out yet, when they say that, is that most of the people they're sponsoring, who were not really looking for that business opportunity until someone persuaded them, will eventually drop out - it can take two years to learn this!

(vii) So the reality is that all the people who started a year ago, whose sponsor started a year before that, are actually unknowingly copying failure, and they really don't know what they're talking about. You can even see this for yourself if you look around the forum archives of all the online forums where network marketing people discuss and promote their businesses. There are loads of threads with titles like “Funded Proposals Really Work” (a real triumph of hope over experience, this title!). These forum posters, all of whom have either a financial or an emotional investment in getting across their point of view, are not still there 3 years later: they have copied failure and dropped out of the business. They are not among the successful few who have actually worked on one business successfully and consistently and built it up into a highly profitable and ever-expanding source of making a great living.

They all started off thinking they would be, of course, because they had “expert coaching” from a “top mentor”, but strangely enough, the one thing they almost all have in common a couple of years later is that it didn’t work out for them, and they ended up becoming statistics. Of course, understandably enough, you can't tell them this at the time, because they're simply doing what their sponsor (who knew no better) advised them to do. And you can’t tell them later either, because they’re not usually there.

The problem is that the learning-curve with funded proposals is long and most of the self-styled “experts” doing the teaching are not yet even half-way along it.

Funded proposals are, in short, one of the reasons why the overall failure-rate is so high in network marketing: they fool people into believing that they're working for long enough for people to duplicate and promote them. In the long run they achieve almost nothing.

Unfortunately, however, they're really masterfully promoted online by internet marketers who make a fortune out of network marketers and build their own lists in this way. As we all know, it's easier to make some fast money selling a perceived service to network marketers by being an “expert” or a “consultant” or a “guru” or a “mentor” or a “coach” (all people to keep well away from, if that's how they have to describe themselves to do any business!) than it is to make your fortune in network marketing, and some of these people are really good self-promoters, too. So the appearance of the whole thing is terribly deceptive.

As in any other sort of endeavour, people have an enormous emotional investment in “not having screwed up with what they're doing”. So I was really surprised when I posted sentiments very similar to the above in two different internet forums recently and actually found a large succession of people agreeing with me and almost nobody dissenting at all. Perhaps a bit cynically, I’d been expecting a succession of posts saying “No, Yuliya, you've got it all wrong: I built my whole business with a funded proposal” (offered, of course, by people conveniently not mentioning that they've been doing it for two years already and they're only earning $500 or $800 per month, i.e. not even making a living yet). Well, I didn’t really expect that at The Network Marketing Forum, because a high proportion of our members there are among the more successful representatives of network marketing, who obviously know better, but I expected it elsewhere, and I was wrong.

If you ask only people who are truly successful in network marketing (if indeed you can identify them to start with) you'll get a very different impression of this whole subject from the one you’d form just from seeing the “Funded Proposals Really Work” forum posts (usually of recent members).

Not that I have strong feelings about this subject, of course. Just strong enough for me not knowingly to be willing to sponsor into my own business anyone who's planning to use a funded proposal to build their (and therefore my) business, because it's just not worth my while in the long run, and is far more likely to lead to time-consuming problems than to future income.

Building your business with drop-cards

I've built a lot of my business over the last 6 years using leads generated with drop-cards (some people call them “sizzle cards“), and so have many of my downline. It’s a simple, duplicable idea, and the results from this method are actually improving over time. I think that’s because so many people are trying to generate leads online, often none-too-successfully, so there’s less competition now for those of us generating real leads in the real world in preference to online opportunity-seekers who have often replied to 100 different things.

I can offer a few little observations/suggestions but they may not be fully relevant to your situation because (i) I am in Europe (well, nearly - and my business is, and the drop-cards are) and (ii) we actually use them with a phone-number (7-minute recorded message line, and not on a free-to-call 800 number) rather than with a website as some people do.

1. Think big. To get anything quantifiable back from drop-cards, you need to be monitoring them by the thousand, not by the hundred.

2. Think eye-catching. As much colour as possible and as few words as possible, to get people's attention.

3. Think up-market. For a business opportunity, try to avoid "poverty-consciousness" and seek out "aspirational thinkers". Expensive areas are better than cheap areas where you think people "need" your opportunity. Brand new BMW's (which are often not yet fully paid for) are better than old Ford Fiestas. I don't think putting them on cars is a great way to do this, actually: I'm just trying to illustrate a point.

4. Think classy and professional. No flambuoyant typefaces and fonts. Nothing that's difficult to read. No attempted jokey/witty wording (believe me: we’ve tried and it doesn't work).

5. Think interrogatory. We’ve done well with one-liners that ask a question to which the obvious answer is "yes", with affirmative thinking prompting the follow-up.

6. Think Vista (the printer, not the PC operating system: think XP for that!). I get all mine delivered to London from VistaPrint Europe in Holland, 250 in a little box, always printed free, all you pay for is postage and packaging, and you can order absolutely unlimited numbers, using their free offers as many times as you like. Two things about VistaPrint, though: they send a lot of email (about one every day, almost always with some free offers), and you need to keep a careful eye on their check-out pages and verify the amount carefully before paying the shipping costs. Some people have complained about “unauthorised credit-card charges” from VistaPrint, but these are people who haven’t paid attention to the check-out process and have bought something they didn’t intend to buy (usually address labels); a minor inconvenience to have to be so careful, but you get used to it pretty quickly, and actually it’s worth it to deal with Vista because the quality and reliability of their printing is so impressive.

7. Think “polybag”: you can buy little see-through bags with a peel-off sticky back to leave “drop-card dispensers” around so people can take one. It’s potentially a good way to multiply your drop-card distribution and start to qualify the recipients (they’ll take one only if they’re interested), but be careful with them when sticking them on others’ property: if they stay there for long enough they can damage the paint when they’re taken off!

An introduction of sorts

My dear friend Robin van der Merwe (blog; website) has encouraged me to start a blog. (Maybe partly because my posts will offend fewer people here than in a forum, or at least because those people will be less well-placed to argue here, though Robin was of course far too tactful to suggest this reason). So, here we are: my first ever post in my first ever blog.

My plan is to chat about Network Marketing (and maybe some other stuff), which is how I’ve been making my living since leaving high school - and a surprisingly good living it’s turned out to be, too. I’m not using this blog for my business at all, though: I don’t do business on the internet. So you won’t find any more than incidental, anecdotal references to my company or its products. At the moment, it’s not my intention to include any affiliate links here, either (actually I have none to include), so if you see me recommending and/or linking to anything, it’s because I think it’s relevant and useful, not because I’m earning anything from it. Nor, as you can see from the absence of a “contact me” form, am I trying to build a list.

Comments are in principle very welcome, though they’re held for approval and moderated.

For anyone wishing to contact me directly, my email address is given in my profile (and shown as a clickable button in all my posts) at The Network Marketing Forum.