We’ve all heard MLM & pyramid scheme horror stories. We’ve seen the late night TV ads flashing piles of gold coins and money. All the visuals seem to have Palm Beach mansions, yachts, expensive cars, and pretty girls. Somehow, with all the wealth, they forget to mention the product! Sleaze balls like that (you know who you are, Bernie Madoff) ruin it for the rest of us.
On the other hand, reputable businesses like Avon (NYSE:AVP), Mary Kay, Tastefully Simple, and The Pampered Chef, Usborne Books & More, and nearly 3,000 others have operated honestly and successfully since the end of World War II. Women went to work when most men were away fighting. When the boys came home, the direct sales model was created by women who wanted to continue to work despite the need (desired or imposed) to return to mid-twentieth century traditional gender roles.
All these reputable companies make unique, high-quality products consumers want and need to buy. Their distribution model is the only aspect that structurally sets them apart from other consumer product companies. Instead of selling to wholesalers who sell to retailers; or instead of hiring tens of thousands of employees to sell directly to consumers; these companies encourage small business people to sell their products.
Network Marketing has proven itself tremendously efficient at structuring a large direct sales team. There’s a key difference between Network Marketing/Direct Sales & MLM:• MLM – Distributors buy from the company and sell to other Distributors • Network Marketing – Sales people get paid commission for consumers buying products directly from the company.
As you can see, Network Marketing is really no different than a traditional outside sales organization except that the network marketing sales force typically is composed of independent contractors.
Network marketing teams usually have no more layers than a traditional employee sales force. In fact, network marketing teams are more efficient because their incentive structure encourages the sales team to build, train, and maintain themselves. Contractors earn additional commission for recruiting and training other contractors. If the recruits are successful, the contractor makes more money. If not, he or she doesn’t.I’ve seen a lot of traditional sales organizations in my career in the software industry. The layers and numbers of people are about the same. The biggest difference is that with employee sales people, it can take six months to a year to figure out whether they’re going to be any good or whether they’re “dead wood.” (Sales folks B.S. for a living and are notoriously hard to hire successfully).With network marketing, there’s little cost in bringing a new sales person. They get paid only when they or their team are producing. When it stops, the company stops paying them. The downside to a network marketing company for a product company, is that the company has less control over how the sales people work and there can be high turnover, especially if the product is complicated. On the other hand, a independent, direct sales force can produce tremendous growth at a relatively low cost.
So, finally, to answer the question in this article’s title: No. This is not a scam. Man Cave has real, high-quality products that customers love. Advisors make good money when they help move lots of product through the efforts of their team and their own efforts.
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