Network Marketing: It's a new day!

Home based businesses grow faster today than any other segment of the United States economy, and the recession does not appear to adversely affect them.

Additionally, the network marketing segment of the Direct Selling industry continues growing rapidly, with about 15 million representatives in the United States who accounted for about $30 billion in annual retail sales. Those are 2007 statistics. Those numbers sound fine until you do the math and realize that $30 billion divided by 15 million sales professionals equals an average of just $2,000 in annual retail sales per person. Now, of course, some professional network marketers earn huge sums in sales commissions, and this business system probably produces more millionaires per capita than any other economic segment.

But most home based business owners with a network marketing contract are not earning much, if any, business revenue. Most, in fact, go bankrupt, long before they achieve a profit.

Nevertheless, both network marketing and home based business operations continue their rapid growth.

To get a look at the rapidly growing size of these businesses, consider an observation from the American Association of Home Based Businesses: "Fifteen years ago, going to work meant traveling from home to a plant or office. Today, many people do some or all of their work at home. A private marketing research firm estimates that as many as 13 million people squeeze extra hours into their workweek by taking work home from their full-time jobs, and that 9 million people are independent home-workers who work exclusively at home. "(Emphasis Mine throughout).

Many people find working at home is the "ideal work arrangement" and decide to formally set up businesses in their homes. SBA (Small Business Administration) estimates that more than 3 million of these home-based businesses are now operating throughout the country. "

That statistic reveals part of the problem in network marketing. Our segment of the direct selling industry includes more than 15 million sales professionals, but most of us are not considered to be home based business owners, according to the Small Business Administration perspective. I will discuss this challenge in a future report on this blog. Please return soon.

"Every day, people are striking out and achieving economic and creative independence by turning their skills into dollars. Garages, basements and attics are being transformed into the corporate headquarters of the newest entrepreneurs -- the home-based business person. And with today's rising demand for "service-oriented" businesses and recent technological advances, the opportunities seem to be endless. "

So why aren't more network marketing professionals earning more money?

The answer: old school network marketing strategies do not work today. Old school methods, those touted for years by successful network marketing leaders work something like this:

1. You join a network marketing opportunity, which, in real world language, means you buy a set of marketing information and tools, along with a few products or a contract for the company's services. The price: from $29 to $499, depending on the so-called opportunity.


2. You attend weekly meetings, use the products and/or services, usually on what the industry refers to as "autoship." Basically, this means, you inherit a continuing costs, unsupported by sales or capital investment. I will show you in a future report on this blog, how to finance autoship, without taking the money out of your family's income. The weekly meetings, persumably training sessions, are designed to enhance your excitement, enthusiasm and energy. Very few of these meetings focus on the principles of operating a successful business.


3. You work with your so-called "warm market" and attact a minimum number of customers to buy products and/or services from you.


4. You recruit and sponsor others, teaching them to do what you are doing.


5. Leaders assure you that this works if you work it. For example, if you sponsor three who sponsor three, who sponsor three and so forth, you will have:


6. Three "downliners" on your first level, nine on your second level, 27 on your third level 81 on your fourth level, 243 on our fifth level, 729 on our sixth level and a whooping 2,187 downliners on your seventh level. Build that system, and, according to the speaking leaders, you will have a monthly "income" sufficient to finance more time with your family, extensive vacations, and all the other material dreams you've speculated about.


7. The caveat says, however: "It almost never happens exactly this way where three who get three, who get three and so forth, but if it did, on your seventh level, you will earn a whooping $________________" [the amount depends on the compensation plan].
   

That's old school, and it worked for from two to maybe 10 percent of the millions of network marketing professionals who've tried this strategy during the past 64 years. That strategy has reached "forced retirement." It works no longer, even for its most avid advocates.

It's time to learn and implement a new school strategy that is features-rich, customer focused strategy empowers you to control the success of your network marketing contract.

It's important to note that you must see and understand the difference between your home based business operation (HBBO) and your networking marketing contract(s).

You see, that was one the explosively destructive flaws in the old school strategy: you, the business owner, considered your business and your contract to be one and the same. Another destructive flow in the old school strategy prevented you from having control of your business revenue.

Consider this. In the old school model, you personally had 10, 20, maybe even 100 customers who bought their products and/or services through you. The old school strategy encouraged to recruit and sponsor three who would recruit and sponsor three, etc. Your training would also teach them to gather their minimum number of customers, also. Let's use the number 20 customers. In the old school, you were taught that if you did what you were taught to do, you customer based would look like this:

1. 60 customers
2. 180 customers
3. 540 customers
4. 1,620 customers
5. 4,860 customers
6. 14,580 customers
7. 43,740 customers

Total: 65,580 customers

But wait! Remember the leader's caveat! The strategy almost never works so that three get three who get three, etc. If that's true, then you also have no consistent customer base. To be fair, and to reveal at least one more old school flaw, what would happen if just five percent of these customers actually bought products and/or services each month? That would total 3,280 sales. Now, let's estimate each sale at $50 retail. That's $164,000 in monthly retail sales.

Remember, though, you organization never developed according to the 3x3x3x3 illustration. Therefore, you customer base never developed according to the 20x20x20 idea either. Consequently, you have no control over the monthly revenue of this contract.

These explosively destructive flaws, not in the network marketing system, but in how we undertand the system, destroys our efforts to create wealth.

You see, network marketing functions exclusively as a products and/or services distribution system. It is not, as erroneously advertised for more than 60 years, a business model.

Professional network marketers use this system to move products and services from a manufacturer to an end user, without adding costs that decrease value to the end user. Consider this example:

1. A company manufactures an ounce of designer fragrance with a value of $65 (manufacturing costs, manufacturer profit and other business operations expenses factored into this monetary value).

2. The traditional distribution system, moving the ounce of fragrance through a jobber, a wholesaler and a retail outlet will probably increase the consumer costs to as much as $150 or more for that ounce of designer fragrance. However, the product's value to the customer remains at $65. Those additional costs include handling, transporting warehousing, maintaining a retail outlet, and, of course, advertising for customers. Bottom line: customers pay $150 or more for $65 in product value entirely because of the distribution system.

3. Network marketing, on the other hand, moves that same ounce of fragrance from the manufacturer to the customer for $65. Therefore, in reality, networking marketing is a value protection distribution system. Network marketers deliver quality products and/or services to end-users without decreasing value due to increased prices.

That's the network marketer's customer development message, the heart of the new school approach to network marketing success. This new school strategy includes the following seven steps:

1. Organize your home based business operations on a solid structural and financial foundation.


2. Partner with a manufacturing company that produces top quality products and/or services, priced with a customer value philosophy.


3. Develop a factual, transparent customer services message that touts product value and the value protection benefits of your distribution system.


4. Target a segment or segments of a mass market


5. Use cost-controlled marketing tools.


6. Implement a quality-based customer retention strategy.


7. Teach and train your business partners (formerly called your downline) how to use the new school strategy.
   

I will discuss details of each step in this strategy in future reports on this blog. You can also hear more about this new school strategy and what it means to you on my weekly program--D'essense Delivers--broadcast at 11pm Tuesdays on http://www.blogtalkradio.com/

Please click here to visit my main program planning page at blogtalkradio.

You can listen to each program live, either on your computer or on the telephone. You can also call in to participate in the program. The call-in number is (347) 202-0833.

Please join me here and there because in network marketing, it's a new day!