Network Marketing History – How It Got Started and What It Is Today

network-marketing-historyNetwork Marketing  history started in the 1940’s by a small California-based vitamin company called California Vitamins.

Here is where the  trend of selling to friends and family started because they discovered that most of their sales were created by the reps’ friends and family. They fan the fire and created an industry that was destined to grow really  big worldwide.

Eventually the company changed the name to Nutrilite, which was eventually purchased by Amway. Today Nutrilite is the best selling vitamin system the world at $6B in annual sale.

It was quiet a rise for the industry. It has grown to over 4,000 active companies, over 120 million independent distributors worldwide and an industry sales volume of over $187 billion per year.

Until recent years network marketing suffered of many misunderstandings. Never because of product value, but there were always issues contrarian to the industry.

It was mistaken for a get rich scheme or a pyramid model attracting abuse and hype. Today this issues is gone for the most part and network marketing has gained mass acceptance.

The “cashflow father” Mr.Robert Kiyosaki educates beginner network marketers how to invest 5 years into the business, then reinvest the money and retire rich.

Although pyramids  do exist, very seldom you find them in companies with legitimate products. Today the MLM watch dogs, blogs and the market itself  are very quick at identifying and exposing schemes. They die quickly, almost instantly.

Network marketing history taught us a few things:

Product quality is excellent.

If you compare products in  traditional retail sales versus product sold through network marketing, you will experience a “day & night” difference.

Retail products are not created to produce results, but huge profits for major corporations. For example, One a Day and Slim Fast are huge sellers consumed by over 20 million people, but are cheap products with high margins and hyped with huge advertising budgets.

Network marketing products are created to compete and create results.  Because the competition  is fierce, this industry has produced some of the best science in the world when it come to health product, personal care, skin care and household goods.

Network marketing has always been accused of high attrition and failure rate.

This is overhyped. 7.8% of network marketers make a full time living. 22% make a part-time living. What’s wrong with that?

The last 60 years has shown that network marketing  produces more income stability than real estate, insurance, stocks brokerage and general direct sales.

This business is highly entrepreneurial, which often attracts many “dreamers” who are waiting for a huge downline to fall from the sky without any work. Because this is a very visible industry made of million of people, the failure rate get as much exposure as the success. This phenomenon does not exists in other industries. No one is blogging about  the  failure of sales people in real estate or insurance or whatever, do they?

Let’s face it, 90% are not wired to succeed at anything. Network marketing is no different.  It’s just gets more fuss and exposure.

Confusing  and abusive compensation plans have also contribute a great deal of failing in network marketing.

They key to compensation plans is simplicity, high payout and  easy qualification. So many companies just don’t get it! Today more than ever companies need to be clever on how to balance  a beefy fast start bonus and the overrides. People are impatient. They need to make money now, as they build the business, as well as building long-lasting residual income.

A respectable Fast Start Bonus should be  $50-$300 for every distributor you personally enroll. If you enroll 10 people this month and your making $100 per enrollment you just earned $1,000 upfront. This kind of money can help a family pay bills, make a mortgage payment, car payment, college tuition, cell phone payment etc. The real reward comes after 2-3 years of consistent work.

What bugs me is that so many people over hype the speed at which network marketing can be built. Some people are faster than others. Heavy hitters always build quick. But, the “average Joe” needs 2-3 years.

I hear an epidemic amount of complaints in this industry about training and support.

The majority of the 20 million distributors involved in the US  have joined through a friend or family member who knew nothing about the business or had experienced any type of success in their life. Connecting with a willing, supportive and knowledgeable upline is a major key to success in this business. Unfortunately, good uplines (those how answer the phone and really help people) are rare. I only had a good upline in my first company I joined, but never after that.

That’s why I have written books and created state-of-the-art training  for new and seasoned distributors. Network marketing history tells us that recruiting only stretches so far in this business. They only way to make a downline produce is to train them right and be available.

When you search online you read all kinds of opinion about network marketing. Those that succeed talk good about it and those who don’t talk bad about it. I can live with that.

What bothers me the most are the top-tier or cash gifting bamboozlers or affiliate marketers that milk this niche through surrogates models, yet talk bad about it trying to lure good networkers into their worthless scams. They should invent a medication for them.

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Riccardo Ferrari

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riccardo ferrari

Riccardo Ferrari is a former naval engineer. For years worked in the maritime industry as an officer on cruise ships. He is in direct marketing full time since 28 years and become the #1 income earner in five major direct marketing companies and top earner in several internet ventures. Along the way, worked as VP and senior consultant for several companies. Some were owned by billionaires, doctors and celebrities.