Book Excerpt

Chapter 1: Introduction to Network Marketing

The purpose of this book is to convey to you the reader, through illustrations and examples, just what network marketing is and what it is not. We will also show you how you can eff ectively—I repeat, effectively—explain network marketing to others.

This book should be treated as a training manual. It is intended to be used as a tool to help you train the people in your organization. Include it in their initial “kit” of information about your program.

I have developed the “Napkin Presentations” upon which this book is based over the last several years, since about 1973. I have been involved in network marketing to one degree or another since 1969. This book will cover the ten presentations developed thus far.

Before going into the details of the ten Napkin Presentations, allow me to answer one of the most frequently asked and probably the most basic of all the questions: “What is network marketing?”

First, you must understand that network marketing is the modern term used for multi-level marketing (MLM). So, in order to understand network marketing, you must understand multi-level marketing. Let’s break it down. Marketing simply means "moving a product or service from the manufacturer or provider to the consumer." Multi-level refers to the system of compensation provided to those persons who are causing the product to move or the service to be provided. Multi means "more than one." Level refers to what may better be termed as "generation." It could be called “multi-generation marketing.” We shall stay with "multi-level" since that is what is most common. It is so common, in fact, that many illegal pyramids and chain distribution schemes or chain letters have tried to pass themselves off as being a multi-level program. This has created such a stigma, although unjustified, that many of the newer multi-level marketing companies are using other names for their type of marketing. Some of the names you will hear are “uni-level marketing,” “co-op mass marketing,” and the more popular “network marketing.”

There are really only three basic methods of moving products. (Hold up three fingers as you demonstrate this point.)

A fourth type of marketing that is sometimes added to the list (hold up the fourth finger) is mail order. Mail order can be a network marketing type but most generally is included in the direct sales category.

A fifth type, often confused with network marketing, is pyramid sales. (Hold out your thumb for illustration.) The fact is, pyramids are illegal! One of the main reasons they are illegal is their failure to move a product or to provide a valid service. If a product doesn’t move, how can you even call it “marketing,” let alone “network marketing”? Pyramids may include networking—but MARKETING THEY ARE NOT!

Most objections that people have about getting into network marketing are due to their not realizing the differences between network marketing and the direct sales method of marketing. Th is confusion is understandable because most reputable network marketing companies belong to the Direct Selling Association.

You have been conditioned, perhaps, to think of them as door-todoor direct sales programs because your first encounter with them was when a distributor knocked on your door to sell you something.

However, there are some features that diff erentiate network marketing from retail and direct sales companies. One very significant difference is that in network marketing you are in business for yourself but not by yourself.

By being in business for yourself, whether or not but especially if you are operating out of your home, you may be entitled to some substantial tax breaks. We won’t get into tax advantages in this book. Most people can get that information from their accountant or from the many books that have been written on the subject. However, you should be aware of this benefit.

Being in business for yourself, you are buying the products wholesale from the company you are representing. This means that you can (and should) use these items for your own consumption. Many people get involved in a company at first for this reason alone, to buy wholesale. And many of those will get “serious.”

Since you are buying your products wholesale, you can, if you wish to, sell those products at retail and make a profit. The most common misunderstanding about network marketing is the notion that you have to sell retail to be successful. There is a lot to be said for selling retail and it should not be ignored. Some programs even require that a retail quota be met in order to qualify for a bonus. You may sell if you want to or have to due to your particular program’s requirements, but in regard to making the larger sums of income, the real success is in building the organization.

Important point: Let your sales come as the natural result of building the organization. More people fail than succeed by trying to do it the other way around—they try to build the organization by emphasizing selling. As you read through the Napkin Presentations that follow, you will see this concept unfold before you.

The word “selling” triggers negative thoughts in the minds of about 95 percent of the people. In network marketing, you don’t need to “sell” the products in the traditional sense of the word. However, product does have to move or nobody gets paid. I define selling as “calling on strangers trying to sell them something they may neither need nor want.” Again, PRODUCT HAS TO MOVE OR NOBODY GETS PAID!

When you build an organization, you are actually building a network through which to channel your products. Retailing is the foundation of network marketing. Sales in network marketing come from distributors sharing with their friends, neighbors, and relatives. They never have to talk to strangers.

To build a large successful business, you need a BALANCE. You need to sponsor and teach network marketing, and in the process of doing this, you can build a customer base by retailing to your friends, neighbors, and relatives.

Don’t try to sell the world on your program yourself. Remember that network marketing is building an organization in which a lot of distributors all retail a little. Th is is far better than a few trying to do it all.

With virtually all the network marketing companies, the need to spend large sums of money on advertising is non-existent. Advertising is done almost exclusively by word of mouth. For this reason, they have more money to put into product development. As a result, they usually have a higher quality product than their counterpart found in retail stores. You can share with friends a high-quality product of a type that they are already using. You’re simply replacing their old brand with something that you have discovered through your own experience to be better.

So you see, it’s not going door to door every day calling on strangers. All network marketing programs that I know of teach that if you simply SHARE the quality of their products or services with friends, that is all the “selling” that is involved. (We prefer to call it “sharing,” because that’s what it is!)

Another thing that differentiates network marketing from direct sales is the SPONSORING of other distributors. In direct sales and even in some network marketing companies, it’s called “recruiting.” However, “sponsoring” and “recruiting” are definitely not the same thing. You sponsor someone then teach him how to do what you are doing—building a business of his own.

We emphasize that there is a big diff erence between sponsoring someone and just “signing him up.” When you sponsor someone, you are making a COMMITMENT to him. If you are not willing to make that commitment, then you are doing him a disservice by signing him up.

At this point, all you need to be is willing to help someone build a business of his own. This book will be an invaluable tool in showing you how to do just that.

It is a responsibility of sponsors to teach the people they bring into a business all they know about that business—things such as ordering products, keeping records, how to get started, how to build and train their organization, etc. Th is book will go a long way toward making you able to meet that responsibility.

Sponsoring is what makes a network marketing business grow. As your organization grows, you are building toward becoming an independent, successful businessperson. You are your own boss!

With direct selling companies, you work for the company. If you decide to quit that company and move to another area, you end up having to start all over again. In almost all of the network marketing programs that I am aware of, you can move to another area of the country and sponsor people without losing the volume generated by the group you left behind.

In network marketing programs, you can make a lot of money. It takes a little longer with some companies than it does with others, but making a lot of money comes from building an organization, not by just selling the product. To be sure, you can make a good living in some programs by just selling the product—but you can make a fortune by building an organization as your primary function.

People will get started in a network marketing business with the idea of making $50, $100, or even $200 per month, and suddenly they will realize that if they want to get serious about the business, they could be making $1,000 or $2,000 per month—or more. Again, remember that a person doesn’t make that kind of money by just selling the products...he makes that kind of money by building an organization.

That is the purpose of this book: to teach you the things you need to know to be able to build an organization quickly and to develop certain and proper attitudes about network marketing.