Direct Network Marketing – Is Direct Network Marketing Just Pyramid Selling?

Direct network marketing, also known as network marketing or multi level marketing (MLM), has had a huge rise in popularity in the past decade. It has been endorsed by major business heavyweights from Donald Trump to Robert Kiyosaki. But, what is it and why has it traditionally had such a bad name?

Let’s look at what a legitimate network marketing business involves. Essentially the company is structured in such a way that distributors (also referred to as associates, consultants, independent business owners etc) are compensated in two ways:

#1 – Commissions From Product Sales

Distributors make a percentage commission based on the company products or services they sell

#2 – From Recruiting Others Into the Company

Distributors make a proportion of the sales from other associates that they have introduced into the company. This is what is referred to as a distributor’s ‘downline’

As more people are recruited the bottom layers grow and it is this that people refer to as the ‘pyramid’. An illegal pyramid scheme is a non-sustainable business model where money is exchanged in return for enrolling other people into the scheme. There is usually no genuine, stand alone retail product or service being provided and eventually the pyramid collapses with the bottom layers losing their money.

Unfortunately it is these illegal pyramid schemes that have given genuine network marketing businesses a bad name. The key issue is whether the commissions paid to all associates is generated primarily from the products the company sells ie: #1 or from recruiting other networkers into the business ie: #2.

Direct network marketing isn’t pyramid selling and can be an incredible business opportunity if you do your research thoroughly. Not all companies are created equal and it pays to take your time to find one that has a range of products you genuinely believe in and can see yourself being proud to represent.

Email Marketing Law

The thought of their company’s name being dragged through the courts and, even worse, newspapers puts some people off opting for email marketing. However, and rather unusually, the law is clear, simple to understand and sensible. The main legislation, the Privacy and Electronic Communications Regulations, shortened understandable to PECR, has just seven main principles.

1/ It applies when contacting individual customers using email or SMS text messages.
This is the one aspect which is certain to change as time goes by. As new form of electronic communication develop so they will be hauled into the fold of the PECR.

2/ Customers must have opted-in to receive such communication.
This is permission based marketing. The recipient must have agreed proactively to accept email marketing from you. Merely failing to untick a box is not sufficient.

3/ There must be an opt out mechanism on all communications.
Every marketing email must present a facility whereby the recipient may unsubscribe or opt out of receiving such emails.

4/ The sender must provide complete contact details.
The recipient must have sufficient information on each email to contact the company sending the email.

5/ The From box must be clear as to origin.
A trick of those who send spam emails is to disguise themselves by using a false name in the From box. A clear source would be good practice for genuine email marketing companies as the email is more likely to be opened.

6/ Applies to direct marketing emails and SMS texts.
This means that ‘domestic’ emails, such as invoices, are not included. To what degree you can pepper such emails with advertising is difficult to say.

7/ Limits the use of cookies.
Companies are obliged to clarify if cookies are used and for what purpose.

Despite this being a very brief summery of the PECR it can be seen that it is reasonable, logical and easy to adhere to. Even when you start going into more depth you will realise that the law continues in this enlightened mode. There is no excuse for non-adherence and not taking part.

7 Marketing Mistakes Small Business Owners Make and How to Avoid Them

As small business owners we need to market our business to get new customers, keep current customers happy and bring back past customers. We are not just owners of a business that concentrates in one field of interest whether it is technical, retail, consumer-oriented or business-to-business, we are the chief marketers of that business. Without marketing we shrivel up and die so it is imperative that we do it right! Here are seven mistakes commonly made by business owners (entrepreneurs) when conducting their marketing and how they can be avoided.

1. Being an advertising victim

It’s really easy to be an advertising victim. Some advertising sales rep or agency comes by and tells you that you need to advertise…because you need to advertise. And they want to sell you “institutional” advertising instead of “direct response” advertising. The difference is obvious. In fact, it’s right in the name. Institutional advertising is advertising like Coca-Cola, McDonald’s, IBM, and Nike. This is advertising where results are not measured, there is no control over who sees it and you get nothing directly from it. This is also known as “branding”. It is an attempt to make their name so ingrained in your mind that when you need their product or service, you will automatically call them or walk into one of their stores. If you fall victim to this – YOU’LL GO BROKE! These companies spend – and have – millions of dollars to spend on this kind of advertising – YOU DON’T!

How to avoid: What you want to do and ONLY do is emotional direct response advertising. That’s advertising you plan to get more back from what you send and where every dollar is measurable and accountable.

2. No system for Customer data collection

If you don’t know who your customers are, you can’t communicate with them, you can’t create a referral program and you can’t get testimonials. You also don’t know how many times they buy from you, when they buy or what they buy. The biggest VALUE in any business if the customer base. It is 10 times easier and cheaper to get existing customers to buy from you again than get a brand new customer. Plus, returning customer will spend twice as much per visit as new customers. If all this is true why don’t businesses collect customer contact information?

How to avoid: Set up a collection system within your business that collects contact information. It could be as simple as having them fill out a form by hand or as complex as putting an email capture form on your website. HOW you collect it is not as important as getting the information somehow. Make it part of the process and soon it will be automatic.

3. No diversification in your marketing

There are a vast number of advertising media available to you yet you probably use just one or two. This does not mean that if you are not using the Yellow Pages you are wrong. The Yellow Pages may or may not be a media you should use. Do you use email? Do you use direct mail postcards; sales letters? Newsletters? Voice broadcast? FAX? “Lumpy” mailing? If you don’t, one or more of these media’s can change the effectiveness of your marketing overnight. Do you say that “this can’t work for my industry” yet it could be effective if you just tried? Diversify your marketing and the delivery methods you use to find the ones that work best for you.

How to avoid: Learn about the various advertising media available and determine whether or not it may be appropriate for your business. Determine the costs, technology, effectiveness, etc. Then try one or more and observe the results. After that tweak, try others and go with your best ones.

4. No referral program

The second easiest customer to sell is a referral, right (the first being a former customer)? Yet how many people have a system for creating referrals. If you are like most businesses, referrals just happen, and that is not good for your bottom line.

How to avoid: Explore ways to ask for referrals on a regular basis without being “pushy” or “cheesy”. Make it systematic so you can count on having referrals on a regular basis. A “Customer Rewards Referral System” gives your customers an incentive to give you referrals. It can be done in many different ways, but if you don’t have one, it won’t work.

5. Thinking you are your customer

This is a really BIG MISTAKE. Many business owners say that their customers are too sophisticated for this type of marketing or that type of advertising. That is just putting your beliefs and prejudices onto them. How do you know that one type of ad will not work – because you tried it and it failed, or because you “know” it won’t work on your customers. I’ve had a number of business owners say that “X type of marketing doesn’t work in this industry” when others like them use it to full effect in other parts of the country.

How to avoid: Chances are that just because you might not respond to a particular method, doesn’t mean that your customers won’t. Test it and find out for sure. If it works in other industries, it will work for yours, and in many cases it works in your industry just fine – you just haven’t yet experienced it.

6. Working ‘IN’ your business rather than ‘ON’ your business

You started your business because you were good at being a plumber, electrician, chiropractor, financial planner, etc. Most trade schools and college courses don’t teach you how to market your business so you have to learn it on your own or find someone who does know marketing to help you. The excuse of “I’m TOO BUSY to worry about marketing” is the worst excuse ever used. As the owner of a business one of your most important jobs is marketing that business. This is in addition to working in it as a professional. If you completely outsource, or worse still, ignore marketing, your business will stagnate and die. The real money is in the marketing of your business not in the product or service it provides.

How to avoid: Set aside time to work on marketing your business and take the time to learn proper marketing techniques and you’ll be in a position to achieve financial freedom.

7. Infrequent Contact With Current Customers

The easiest customer to sell to is a former customer. To do that you need to know who they are (see #2 above) and you need to communicate with them. Many people are afraid to send information to their customers because they don’t want to “bother” them. Study after study shows that customers do not mind hearing from you AS LONG AS YOU HAVE SOMETHING IMPORTANT TO SAY. They don’t want to hear about your latest vacation or where you had dinner last week, but they want information that can help them. In fact, DIRECT magazine reported that the proper frequency to contact your customers is every 20 days. In fact, for every month that you do not contact your customers you lose about 10% of your relationship with them, so after 10 months, you might as well be mailing to a cold list.

How to avoid: Create a newsletter, send emails, reach out with tips and advice. Your customers and prospects will

How many of these mistakes do you make? Would you like more information on the most proven, tested and successful systems assembled to GROW your business. If so, go to and look through the blog, make comments and sign up for our newsletter.