A few years ago I was convinced to join a “network marketing” company. It lasted a few months, and I resigned.
Fast forward to now, every few months a distant friend messages me inviting me to their house for a party, introduction to a new product they’re selling, and appetizers. Oh boy. Here’s a few reasons to run and hide the next time someone invites you to one of these.
If you’re a personal trainer, network marketers are relentless, and will bother you to no end.
1. The Product Is Too Expensive
A similar meal replacement, multivitamin, energy enhancing supplement, etc. exists in the local supplement shop for half the cost of what you’re selling. It’s essentially the same ingredients with a different sticker on the bottle, for double the cash. Often times the network marketing company uses cheaper ingredients to increase profit margins.
2. Low Sales Commission
The network marketing company I worked for offered an average of 20% commission on product sales. You’d have to sell $200k a year in products to make $40k gross profit.
To put things in perspective, the three GNC stores I used to work at weren’t even million dollar stores. That’s a business with a STORE FRONT compared to your word of mouth and online portal.
So knowing this, it’s obviously the *residual income* you’re promised when you sign up that will make you your first million, right? About that…
3. Residual income A.K.A. Being Annoying
You’ll attend a seminar that will encourage you to host a party, invite your friends and family and introduce them to your product. This way if you like the product (and the ridiculous health claims that tend to go with them), you can make some “extra money on the side” with your “team”.
Since there isn’t any money in selling the product yourself, you’ll need to build a team of people to sell the product with you. This is why network marketing companies are often referred to as pyramid schemes. The only way to make a decent living with these business structures is to have a TON of people selling the product for you.
4. You have to buy a certain amount of your own products.
Sunken cost fallacy and confirmation bias at their finest. In order to keep you in the game, your network marketing company will require you to purchase a certain amount of the product yourself. This keeps you using their products, and constantly keeps the pressure on you to sell (if you don’t sell, you’ll actually lose money from buying the products).
It’s kind of like getting an email from prince what’s his face from Nigeria, who wants you to wire him $100 to earn his family fortune. Before long you’ve send him $1500 and he’s asking for more.
Read the BBB’s report on the nigerian prince scam
5. You are a social robot!
Within an hour of meeting someone new, you’ve already introduced your product to them and attempted to close a deal.
Screw it, right? If they’re not going to buy your product, they’ll probably waste their money on something else like a competitor’s more affordable (and usually higher quality) option. Or worse: pizza.
6. The American Dream
According to your sales mentor (the guy from high school that sent you a facebook message), the only way to make it big and have luxury and royalties is to run your own business.
This I kind of agree with. I’ve never been much of a fan for working for other people (this is part of the reason I started Tone Body Fitness), but this doesn’t mean network marketing is your only option. Any start up business will require a hustle. If you’re going to do it, why not earn 100% of the profit instead of 20% with some lame pyramid scheme?
7. It isn’t really your own business
You file a 1099 for taxes, and have no say in the development of the company you work *for*.
Falling for a pyramid scheme was just one of the mistakes I made early in my career. Now, I focus on things that actually work; like online coaching.