MLM TRENDS

Current trends in MLM 

There are always fads and fashions in any industry, profession, trade or business system where there’s intense competition. Network Marketing is no exception – it’s just that competition in MLM is less about products and customers and more about attracting and keeping distributors.
Fads come and go constantly. Trends, on the other hand, develop over a period of time and are linked to underlying causes that reflect the changing needs of human society as a whole.
There have been three major trends developing over recent years in MLM, each of which has had a profound impact on the way we do business – and the results we get. Sometimes, those results can turn out to be less than desirable.

Trend 1 – Technology

Technological progress in two specific areas has transformed MLM over the past decade, and will continue to do so in the foreseeable future.

• Computer technology
• Telecommunications technology

The impact of computers – hardware, software and networking – have revolutionised the nature and operation of network marketing. Automated record keeping, reward calculation and processing (including electronic funds transfer), desktop publishing, database creation and maintenance, mailing and more have made the four essential components of successful networking more accessible, affordable and more effective. Those four components are…

• communicating with your distributors
• training your distributors
• recognising your distributors
• supporting and encouraging your distributors

Traditionally, there have been three serious obstacles to these…

• time
• distance
• cost

Computer and telecommunications technology have all but eliminated these three obstacles. Nowhere has this been more evident than the Internet.
All the developments in telecommunications – voice mail, fax, fax on demand, conference calls, e-mail, autoresponders, etc – have changed the nature and speed of evolution of network marketing, and the rate of change is accelerating.
Technology by itself is neither good nor bad. It depends on what we do with it, and why and how we do it. Just as there have been major benefits for us all from these technological changes, there are major risks as well.
The main one, from the standpoint of network marketing, is that we risk losing the personal touch so vital to creating and maintaining personal relationships. Automation is fine for improving efficiency. But efficiency is not the same thing as effectiveness. We need to be aware of this risk, and avoid the tendency that often develops in connection with technology… impersonal “processing” rather than personal interaction.
Like most tools, technology is a brilliant servant, but a disastrous master.
This trend has been well-documented in Richard Poe’s popular book “Wave Three” (Prima Publishing). In fact, the book has accelerated the trend markedly.

Trend 2 – Appeasement

This trend has been at the heart of most developments in reward plans over nearly two decades. What it boils down to is this… companies (that is, the people who own and run MLM companies) have figured that if they make rewards easier to obtain, they’ll attract more distributors.
There’s a certain logic to this argument, but it overlooks some important realities of human behaviour.

• If you make it easier for people to do nothing, that’s precisely what they’ll tend to do.
   
• If your main appeal is to greed, laziness, fear of loss or gullibility, that’s the kind of people you’ll tend to attract.

The results of this trend are easy to recognise.

Larger networks producing lower leverage results

Most people dislike the idea of “selling”. So part of the trend has been to appease this dislike by telling people they don’t have to sell – just buy.
The result is huge networks of consumers – single customers who buy only for themselves at wholesale prices. This has led to confusion in the marketplace. Some companies claim they have bigger, faster-growing networks than their competitors, yet those competitors who encourage retailing may have a true customer base many times that of the consumption-based, wholesale buyer networks. They just don’t have all their customers registered as distributors.

The illusion of progess through controlled group structure

Most network marketers find it harder to get new distributors than new customers. So, having “solved” that problem by simply recruiting customers, some companies add to the “smoke and mirrors” strategy by artificially creating an illusion of achievement and progress through the use of contrived network structures.

The automatrix (or forced matrix) is such a device. By structuring the reward plan so that only a limited number of people can fit onto each level, you create the illusion that rapid network growth – and, therefore, income growth – is being achieved through features such as “spillover”. This is what occurs when, say, the matrix limits you to only 3 people on your first level, 9 on your second level, 27 on your third, 81 on your fourth and so on. If you sponsor six people, only three will fit onto your first level – the others will “spill over” to places further downline. This gives rise to claims that the system builds your downline for you.
In a sense, it does. But what many people fail to recognise is that the reward plan cuts out after so many levels. The width and depth of your network are fixed – so your potential income is also fixed.
This has led to enhancements such as “infinity bonuses”, which are, in reality, nothing remotely like infinite, and “re-entry certificates”, which allow you to sponsor yourself downline when your matrix is full – a nice idea, provided that the products aren’t overpriced, so that you compound your losses each time you re-enter your downline. This is precisely what happened with many of the gold bullion, coin and jewellery companies that sprang up in the mid-1990s.

Trend 3 – Workplace Restructuring

Fundamental changes in business, brought about largely by technological advances and, to a lesser extent, by greed (on the part of stockholders and senior corporate managements), are imposing serious changes on how we live.
No longer is there any illusion of job security, seniority or loyalty in the work place. Disillusionment is the true hallmark of all these changes.
Consequently, there is a growing groundswell of people — well-educated, skilled and experienced — discarded by traditional, First and Second Generation business systems, who are increasingly willing to consider network marketing as a viable option for them. Many, if not most, of these professionals would rarely have contemplated involvement in MLM until now.
Once they adapt their existing expertise to the unique nature of the only Fourth Generation business system yet to evolve — MLM — they generally build their business faster than ever. They thrive in the dynamic, co-operative, synergistic, interdependant, relationship-based environment of this most enlightened, egalitarian form of free enterprise. These are the people now shaping the future of network marketing for the twenty-first century.

Their most serious threat lies in not understanding the essential differences between First, Second, Third and Fourth Generation systems.