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What Can We Learn from Network Marketing?
Fast Company: “Network marketing, or multi-level marketing, is one of the fastest-growing business models of the past few decades. Between 1993 and 2003, total direct selling revenues grew by 7.1% annually, dramatically above the rate of growth of the economy — and of total retail sales (according to the Direct Selling Association)… Any business model that has achieved this kind of success probably has lessons that all business people can learn from… even those who really dislike network marketing and network marketers.”
via David Teten.
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Chuck on May 18th, 2005 8:39 am
Every corporation is a hierarchy.
Lee Iacocca made money from every car sold… not as much per car as the sales person, but still he derived benefit from everything sold in his “orgnanization”.
MLM is no different… except when MLM is criticized it’s for corporate or distributor chicanery.
To date, unlike Chrysler, no MLM company has been bailed out at the corporate level.
So corporate chicanery is much more refined.
People get into MLM and expect miracles. Like anyother business they must be able to calculate the lifetime value of a customer, the cost of acquiring customers, the lifetime value of a distributor and the cost for acquiring distributors.
The secret reason most MLM’s fail is because they do not have real end-user customers who pay a fair price without dreams of distributor riches.
Too many mlm’s are built on sales to distributors who stop buying once the dream dies. So was the product really any good? Or was it all about a baseless dream. It remains to be seen.
The secret is to have a product that can be sold profitably without ever having a downline.
If it can be sold profitably without a downline, then the odds of recruiting a profitable downline skyrocket… because they too can survive without descending into hypo mania to line up suckers! What an odd paradox!
daffy on August 9th, 2007 12:30 am
uVme scam warning
Classic.
I did laugh when they announced that they are doing tournament gaming as a product. It does not work in MLM!
I researched this ‘online gaming’ model in depth when I was brought in to rescue a telecoms MLM company called Seven in Scandinavia in 2004. They had created a new division called GamePox. http://www.gamepox.com. I was fortunate to have a leading games person working for me so got to truly understand the business.
There had also been massive online pyramids called World Games and 5% Community in the market before this.
As for adding chat, etc. who cares? You can get this free everywhere.
A Ludbrook analysis of uVme….
Online tournament gaming has been around for years.
All the BIG numbers you hear in gaming is NOT from tournaments, it is from big online expensive playing games like World of Warcraft, etc.
The gaming tournaments are either controlled by big game developers, established tournaments who love new players [suckers] to build the rake or small low cost very low rake operations [fun games].
If uVme say they will develop big games, they are delusional. These games cost more than $100mil to develop! More than blockbuster movies.
If they think they will develop big cash tournaments then fine yet this is not for the masses so how can you network this?
If they are in small low cost very low rake operations, which means there will not be enough rake per networker for 99% of people to either become active or make a profit. This is very different from the poker or casino world YET this has already been tried and failed in MLM by 888, one of the largest poker companies in the world.
POINT – For networkers to earn a profit from customers with this rake business model, people will have to have 100+ customers [not networkers] EACH over a year. This will NEVER happen.
REALITY – the customer model does not work in MLM so it’s a recruiting model. Therefore the earnings must be nearly completely from the 200 initial investment and 65 monthly. This is what is a ‘zero-sum’ game so people earn 99% from sponsoring. Under the UK 1992 Pyramid Selling Regulations [that I advised on], the ‘inducement to join’ uVme is ‘to earn money from recruiting new members’, ie it is likely to be judged by a court as a pyramid in the UK.
IS THIS BAD?
An interesting question?
Is it bad to be involved in a money game? What is the loss if some losses a few hundred?
Its better than the old few thousand days in the 1990s!
Its better than the money scammed in the pension deals, etc of the 1980’s, 1990’s.
AND its great fun for people. A bit of excitement in life. And you can do it on the internet so lazy.
The problem is just they that portray themselves as credible when any idiot can see they are not.
That’s all.
Actually most people cannot see it, they get blinded by greed. Delusional.
The other issue is the defocus it creates for other networks.
They are like a virus in life. It just slows you up for a while and wastes your time.
This is why people have to be warned.
So what happens?…
1. Big boom for a few months then they always collapse within 12-24 months. The reason is that, after a few months, most people struggle to get enough people to make money so recruiting slows so it eventually fizzles and dies. The initial leaders make great money for a few months, then struggle.
2. The leaders do one of the following: jump onto next money scam, leave or get real and join a proper company with customers.
1. The owners normally either: run off with the cash leaving vast unpaid commissions [the smart ones], start a new deal, get put in jail or wonder how they could be so stupid.
What about the claim of ‘the money does not get paid out until active?’
The issue here are:
1. How hard is being active? Getting GBP20 player revenue will probably be very difficult because it is rake thus you can have 1000 people yet paid on just 100! Then your cash stays there! Millions of people have lost their money when the company collapses [or owners run off or are jailed].
2. OR EVEN WORST…the first GBP20 is easy [or they make it easy] so cash released, then its very hard to make any more money! So pay 200, get back 20 then pay 65 per month for a couple of months until you realize no more money is coming!
My advice is to do following:
1. Be very wary of anyone involved with this. They are either corrupt or being silly. People get dazzled by the hype and don’t think. Let anyone be stupid once!
2. Inform Kleeneze to ensure that anyone involved should be terminated from Kleeneze. They defocus people, introduce the virus into a clean company.
3. Inform DSA to ensure that all other DSA organisations terminate anyone involved. The DSA is being more proactive these days.
4. Inform the DTI so they take legal action against the UK HQ of this company, I suspect the owners will have already moved the assets and cash offshore. They NEVER fight actions as any credible lawyer will tell them they will never win an action.
5. Get photos and names of all top leaders. Then supply the facts and photos to a leading national newspaper. They will print a ‘watch out’ article. The photos and names makes it so much more interesting! Name and shame. It’s a classic, they did this in Norway. Front page news AND it ended up on TV. The top leaders suddenly realized what they were involved with and ran for the hills. Some left the country.
6. Don’t worry about Don and Nancy Failla. I love those guys yet they are well-known for joining/promoting this sort of programme. Also for recruiting people out of networks they have spoken to or use their books. By defocusing these people with these ‘easy’ networks for a few months, people lose income in Kleeneze and quit so they lose in uVme AND Kleeneze!
You cannot stamp out these sorts of programmes. They will always exist. The mail-order money-scheme junkies are now its ‘online’ money-scheme junkies – Don must be the high priest!
The Shakeout!
This is all part of the Shakeout vision of Network Marketing I explain in my new Shakeout book and cover in my new 100% Success Newsletter on my website http://www.ludbrook.com.
The future is about a few strong companies with powerful customer opportunities and professional network practices based on my 100% Success Basics approach of learning skills first.
Good luck
Edward
Fred Burgess on September 8th, 2007 3:24 am
I have no idea who Daffy is but I assume he is Mr Duck. I do not wish to elaborate on this totally mis-information other than to say this; ‘Dogs don’t bark at parked cars’.
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