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Your
Time Is Now - Network marketing soared in the 90's... and the
best is yet to come
by Jeffrey Babener
Corporate America has been downsizing and job security has faded
into dimly remembered history.
Statistics
show that most new jobs now come from small business.
Home-based
business has become a reality for millions of Americans - inspiring
millions more to dream about opening one.
The
term "networking" has become a buzzword in the business
press, as more people realize the crucial role of referrals in
the economy.
The
Internal Revenue Service has adapted its rules (somewhat) to the
new home-based economy by recognizing independent contractor status
and publishing specific tax- preparation guidelines for "direct
sellers."
In
Tune with the Times
There
are a number of reasons why the network marketing industry reached
maturity and respect in the 1990s.
As
millions of Americans launched home-based businesses and entrepreneurial
ventures of every kind, they created a climate in which network
marketing could flourish. For instance, it was not so strange
anymore for an attorney to leave his practice in order to run
a new company of some kind out of his den. Most people have come
to know someone who dropped out of the 9-to-5 world and turned
entrepreneurial. Hourly and salaried employees have become intrigued
with the idea of financial freedom and economic autonomy. Suddenly,
they are much more open to change - and better prospects for network
marketing.
Another
change that favors the networking industry has to do with sex.
In the past, most direct sellers were women. As a result, this
was often seen as a woman's business, which tended to discourage
male recruits. But as opportunities in the industry have increased,
more men have been attracted to it; in turn, the all-female perception
has faded, increasing the industry's ability to attract men.
The
sheer number of network marketers also has exploded. By the end
of the 1990s, more than 10 million people were involved in the
industry here in the U.S., racking up more than $20 billion in
yearly sales. Worldwide, the number of distributors has topped
30 million, generating more than $80 billion in annual sales.
When
an industry gets that big, even corporate bureaucrats begin to
notice. Major multinational corporations are taking account of
the networking phenomenon, building it into their own plans for
distributing products and services. Here are a few of the marketing
partnerships that have been formed: Avon-Mattel; Tupperware-Disney;
Amway-Rubbermaid; DuPont /ConAgra-Legacy.
The
new "virtual networking" company will outsource almost
all its activities: manufacturing, customer service - even accounting.
One
of the world's largest banks, Citigroup - formed of the merger
between Citibank and Traveler's Group - has a network marketing
division, Primerica Financial Services (formerly the A.L. Williams
Company) that is one of the most profitable distribution channels
for the corporation's many financial products. These range from
insurance policies to checking accounts.
Corporate
America has validated the success of the industry by embracing
public offerings of network marketing companies on Wall Street.
Excel Telecommunications, Amway Asia- Pacific, and Nu Skin all
successfully launched initial public stock offerings on major
exchanges. Herbalife, Mannatech, Market America, Nature's Sunshine,
Pre-Paid Legal, and Rexall, to name a few, are also publicly traded.
In
the 1990s, high-tech and financial companies became enamored of
the networking industry, as network marketing companies broadened
their lines to include services as well as consumer products.
Soon, it seemed every high-tech company was looking to networking
as a means of guerrilla distribution in competitive markets. Companies
in telecommunications, paging, Internet service, satellite TV,
financial, and travel services were the chief beneficiaries of
alliances with networking companies. Today, even electric power
is being sold by network marketing.
Why
did conventional corporations cast their lot with the wild and
woolly entrepreneurs of the network marketing industry?
Because
they could see that it works. Specifically, network marketing
distribution has several distinct advantages:
It is a powerful technique for introducing brand-new products
- especially items that require demonstration or testimonials.
It generates strong "word of mouth," by directly rewarding
consumers for sharing their excitement about a company's products
or services.
Network marketing techniques can penetrate new markets quickly.
Since commissions are only paid on actual sales and since word-of-mouth
replaces costly advertising campaigns, network distribution is
an efficient and economical way to market a product or service.
Going Global
As
it entered whole new business categories in the 1990s, the network
industry also planted its flag in dozens of new markets around
the world. Amway and Nu Skin had singular successes in Japan,
which proved to be as amenable to network marketing as the industry's
birthplace, the U.S.A. Nu Skin pioneered global seamless sponsoring,
which allows a distributor to sponsor people living anywhere in
the world into one down-line organization - as long as the corporation
does business in the country where the recruit lives. For many
of the largest networking companies, sales outside the U.S. proved
to be the majority. The Internet, global communication, and satellite
TV provided the tools for global expansion.
It
wasn't just Yankees who have been on the march during this decade.
Many foreign-based networking companies set up shop in the U.S.
One of the major success stories of the 1990s - health products
giant Nikken - came to the U.S. from Fukuoka, Japan, at the beginning
of the decade with virtually no American customer base. Nikken
posted annual U.S. sales in the hundreds of millions by the end
of the decade and established its new worldwide headquarters in
California.
Read
All About It
Finally,
the decade just ending has seen a sea-change in media and public
perceptions of the network marketing industry. In the 1980s, the
press acknowledged the existence of network marketing - but the
attention was often negative. Stories had names like "The
mess called MLM" and "Here come the scam artists."
Some of the abuses cited were real, but good companies were usually
lumped together with bad - effectively misinforming the public
about a major industry.
In
recent years, this trend has begun to turn around. Positive stories
on network marketing have appeared in The Wall Street Journal,
Inc., Success, Entrepreneur, Wealth Building, Business Startups
and Home Office Computing. Articles continued to treat the industry
to its dose of honest criticism, but they also began to include
the positive side: the fact that millions of Americans were finding
opportunity where they had never expected to see it - among their
relatives, friends, neighbors, and colleagues.
Unless
you have been living in a cave, you can't have missed experts'
predictions that the Internet will be one of the most powerful
business forces in the 21st Century. As available bandwidth increases,
ever more information - and more money - will be exchanged over
the Net. As a future- oriented industry, network marketing will
respond, adopting the new technology enthusiastically.
The
Internet will become the prime means of communication, training,
and ordering for network marketing distributors. Sales kits and
videos may become obsolete as sophisticated multimedia demonstrations
on laptops (and over e-mail) become the main recruiting tool,
and cyberspace becomes the chief venue for training. The Internet
will encourage rapid expansion on a global scale with instantaneous
communication between network marketing corporate headquarters
and the distributor force.
Documentation,
sales kits, distributor agreements, and policies and procedures
will reside primarily on Web sites, where new prospects can download
them. (Courts already recognize electronic signatures as binding.)
Distributors will order directly from the Net, reducing the need
for call centers and human operators.
Companies
will pay commissions by direct deposit to bank accounts or credit
card accounts. The new, "virtual networking" company
will out-source almost all its activities: private-label manufacturing,
customer service, fulfillment, graphics - even genealogy and account
processing. The technology revolution will level the playing field.
But
don't let all this technological razzle-dazzle distract you from
the basics. Regardless of what gadgets they adopt, the network
marketing companies that succeed will always be those that maintain
their respect for personal relationships. Get as virtual as you
like - you will always need to get out there and press the flesh.
About the Author: Jeffrey A. Babener is the long-time publisher
of "Upline Magazine" and "Network Marketing Lifestyles."
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