Have you ever been asked by your friends and prospects, “why do you do network marketing?” or worse, “why do you do that pyramid thing?”. Well, I’m going to list here 10 reasons why network marketing is so attractive and what the Harvard Business School has to say about Network Marketing. This is what you tell ’em!
10 Reasons Why Network Marketing Is So Attractive
- Tax Benefits
- Proven System – The franchise model has an 80% success rate vs an 80% failure rate to start your own.
- No Employees
- Less Overhead – You don’t have to increase your overhead to increase your income.
- Immediate ROI – You earn while you learn.
- Startup Cost – Low startup cost vs traditional business (a) typical MLM $500 to join (b) average cost to start a traditional business is around $30,000.
- Part-Time – You can work part-time or any time from the comfort of home or Roam.
- Global – With an online presence your potential reach is global
- Popular – Perfect business model to capitalize on the explosion and rising popularity of social media.
- Total Control – You can typically will your business, sell it, or transfer it.
Now Let’s See What The Harvard School of Business Had To Say
Network Marketing is being taught at more than 200 colleges, including Harvard Business School. After extensive research into the network marketing industry, Harvard Business School developed 3 criteria that a network marketing company must have in order to make it the most desirable opportunity. I call it “The Sweet Spot!”.
- The company must be at least 18 months old.
- The company must have a product that is highly consumable.
Having a product that is highly consumable means repeated sales, thereby guaranteeing customer loyalty versus a one-time sale and having to source new customers.
- It needs to be a “ground floor opportunity”.
Harvard Business School suggests that in order for the opportunity to qualify as a ground floor opportunity, the number of existing reps must be less than 1% of the population of the country where the company is operating. In the United States, this figure is equal to 1.5 million people.
If the company has less than 100,000 distributors, the Harvard Business School considers it to be a ONCE-IN-A-LIFETIME opportunity. In addition, the Harvard Business School states there are four distinct stages of growth in a network marketing company.
- Formulation – This usually lasts about six months, the period when a company develops its product and marketing plan.
- Concentration – This period lasts approximately 2 to 4 years from when the distributor network is started.
- Momentum – This period also lasts approximately 2 to 4 years. This is when the company will experience phenomenal growth distributorships’ businesses explode. It is during this period that the company virtually sweeps the nation. When a company’s sales reach 50 million, it reaches what is called critical mass.
Example: When Herbalife reached $50 million, sales jumped to $151 million in only 12 months and they added over 800,000 new distributors to their organization.
Let’s put this in perspective, say that an organization was producing a bonus check in the amount of $1000 per month for many of its distributors. When the company reached critical mass, distributors automatically experienced a 10-fold increase in their earnings. In other words, a $1000.00 check per month becomes a $10,000.00 check per month. This is the reason for getting involved on the ground floor, so you will experience the benefits of explosive growth.
- Stabilization – This is the period that lasts for the life of the company. A network marketing company that is dedicated to the success of its distributors will experience longevity, thereby ensuring that an active distributorship will realize continued earnings and growth.
If you are considering a network marketing opportunity, don’t wait too long if it is in The Sweet Spot! Being in the right place at the right time is critical to your success. I have been fortunate to be involved in a network marketing opportunity that is still in The Sweet Spot. Feel free to check it out!
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