7 Network Marketing Myths and Truths

The Real Deal on Networking Marketing for Home Business

Network Marketing Direct Sales Party
Don't let misinformation keep you from considering a direct sales home business. Credit: Steve Debenport | Getty Images

No work-at-home scheme is more misunderstood and demonized than network marketing.  At it’s best, network marketing is seen as unimportant mommy-businesses or something strange uncle Bob does to find his fortune. At it’s worst, network marketing is perceived as being full of greedy snake oil salesmen and shysters. But once you get past the old attitudes and misconceptions, network marketing is a viable way to start a part-time home-based business.

The first step to success is to decipher the myths from the truth.

Myth 1: Network Marketing is an illegal pyramid.

Truth: In the illegal pyramid test, the shape of an organization does not determine legality. If it did, most businesses and organizations, including the government would be illegal because all have a pyramid structure.

An illegal pyramid scheme provides no products or services, and pays according to the number of recruits. Legal network marketing programs offer quality products or services that are sold to consumers. Recruiting new members allows for increased income based on the volume of sales, with team sales volume, not the number of recruits, being the important factor in calculating income. Other laws legitimate network marketing companies adhere to include publishing average income statistics, no inventory requirements, and refund options.

Myth 2: Only the guy at the top makes money.

Truth: This argument more accurately describes a “job.” How often does a minimum wage worker become the CEO?

In fact, many quality employees never get the advancement and financial rewards their quality of work deserves.

This arguement suggests that only the people who get in early make money, which isn't true. Many ground-floor members make nothing while many who come in years later make a fortunate. The truth is, in good network marketing companies, members can make any amount regardless of where they are in the organization.

Income is related to effort not position. 

Further, while members of MLM companies can earn greater and income and rewards based on their effort, they don't actually change position unless people above them leave the organization. That means, no matter when you join or where you are in the organization, you have equal chance as anyone else to do well if you do the work.

Myth 3: Network marketing uses people.

Truth:  Many people who complain about network marketing say they don't like the idea of "using" their friends and family to make money. However, network marketing doesn't reward people for using others. Success in network marketing comes from helping others reach their goals. A person cannot earn income off the efforts of their recruits without investing time in helping them earn income, as well. Admittedly, some network marketers see potential recruits as dollar signs, but those people are not as successful as those who are genuine in their effort to help their recruits do well.

Myth 4: Eventually the program will get saturated.

Truth: Saturation is impossible because there isn't a finite number of people. Everyday new people are born or turn 18, thereby adding new potential network marketers to the pool of prospects.

Tim Sales, in Zig Ziglar’s book, Network Marketing for Dummies, offers the best argument against the saturation myth. He asks, “Do you know anyone who doesn’t have a refrigerator? No? That doesn’t stop GE from selling more of them.”

Myth 5: Network marketing doesn’t work.

Truth: According to the Direct Selling Association, in 2015 the direct sales industry, of which network marketing is a part of, grossed $36.12 billion in retail sales in the United States. Further, over 20 million people in the U.S. are involved in direct sales. These numbers indicate that network marketing can work. Success or failure has less to do with network marketing itself, and instead, is determined by the amount effort one puts into their business. Many bloggers, eBayers and other home business owners don't do well or quit too, but you don't hear people saying blogging and eBay don't work.

Myth 6: No one really gets rich in network marketing.

Truth: It's true that not everyone succeeds in network marketing. The 2-10% of network marketers earning big money are the same 2-10% who work consistently on their businesses. But getting rich shouldn't be how network marketing is judged. If getting rich is the measure of success, then many other home and small business owners, and the majority of employees in traditional jobs are big failures.  Instead, network marketing should be measured by the number of people who reach their goals. Many people in network marketing find success when they earn enough to stay home with the kids or pay off debt.  

Myth 7: Network marketing is a cult.

Truth: There are a few fanatical network marketers, but fanatics exist everywhere. Network marketing companies don’t require fanaticism, and in fact, most work hard to keep its representatives grounded in facts and figures.

Network marketing has it's issues, but much of them hinge around false and misleading information. Financial Gurus, such as David Bach and Robert G. Allen both recommend network marketing and direct selling in their books, which suggests that network marketing is gaining some respectability in the mainstream business world. Nevertheless, misconceptions and myths persist. Don’t let these false beliefs stop you from considering a network marketing business. You can achieve success in a network marketing venture if avoid common MLM mistakes, gain a solid understanding of the industry, choose a company carefully, find a quality sponsor, and commit time and effort to your business.