Okay, I’m sure anyone who has ever been in a network marketing company has heard the answer, “Is this some kind of pyramid scheme?” Although this question is annoying and somewhat insulting, stay friendly and don’t respond with a smug comment.
When faced with this question, I first ask you to tell me what a pyramid scheme is in your own words. Most of the time he or she is dead wrong and frankly has no idea what answer he or she is looking to receive. In other words, they are clueless about network marketing and the power of the business model.
Your goal in this situation is not to convince them to join your company or to tell them how wonderful your products are. Rather, you want to educate them on what a pyramid scheme is and encourage them to do some research on their own. The reason you don’t want this person in your organization is because he is already giving off a negative vibe and will probably complain about everything along the way.
No one wants to drag someone who is just kicking up dust and isn’t really there to accomplish anything. I promise you, you will thank me later after I have spent several weeks, even months, tirelessly coaching this person on how to run a successful business. However, this person will not grow his or their business because he does not want to sweat to achieve success.
So some of you reading this blog post may not know what a pyramid scheme is and that’s perfectly fine. I am here to enlighten you. For those of you who do, good for you!!! Simply put, a pyramid scheme is an illegal money game, where money is exchanged and no product or service is delivered.
For example, most pyramid schemes are based on a strategy where people are recruited to make payments to others above them and then expect to receive payments from people recruited below them. Ultimately, the number of new recruits fails to sustain the pay structure and the scheme collapses and most people lose the money they paid.
This sounds very similar to a network marketing company. Well, it is based on the same principle. However, there are 3 main differences between network marketing and pyramid schemes which are listed below:
1.) Distributors can be paid solely by selling the product, not just recruiting.
2.) The compensation plan is limited to a limited number. In other words, there are restrictions that the company puts in its compensation plan that limits the number of people that can be paid for a sale. This control makes the business model sustainable and erases the theory that you have to enter from above. With this structure, it doesn’t matter where you come from, up or down, so to speak, as everyone has an equal opportunity to make money.
3.) The company has been around for several years and has a proven track record. Yes, there will be new start-up network marketing companies that will be legitimate and not pyramid schemes despite lacking an established sales history. For a new company, do a lot of research and study the compensation plan. If you’re not familiar with compensation plans, ask someone you know to review the plan for you.
Another angle I use to deflect from the negative connotation behind network marketing and the pyramid scheme is to advertise the real pyramid scheme that CEOs and shareholders cover up by giving it a clever name: The Corporate Ladder. The structure of a network marketing company is similar to a corporate structure with the CEO at the top and the general workers at the bottom.
However, the biggest difference between the two is that you, in your own network marketing company, can be the CEO of your business and expand your business downwards. General workers do not have the authority to act as CEOs of the companies they work for nor do they have the ability to earn more or even as much money as the people above them in the company’s hierarchical structure.
It takes many years of dedication and education to climb the corporate ladder, but it takes much less time to build a successful network marketing company, especially with the explosion of social media. I am puzzled by this paradox and irritated that we are the ones who call us crazy for thinking of a better box to live our lives!!!