Difference Between Network Marketing And Pyramid/Ponzi Scheme
For so many years since the establishment of the network marketing industry, the ever growing industry has continued to expand and grow beyond borders, and more people are beginning to accept the business as a source of livelihood since then. In Africa, over the past two decades the knowledge of the industry has grown as well and it has successfully raised more multimillionaires than any other industry within the same period. In fact during my conversation with one of the distributors of a network marketing companies here in Nigeria, he simply described the industry as “A gift from God to eradicate poverty from the continent”.
However as good as the business has been over the year, it has suffered a lots of setbacks. Just like every other good thing we enjoy in life, there are people that will always abuse them. In the case of the network marketing industry, it’s evil clone takes the form of what we call a PYRAMID/PONZI SCHEME. And over the years many people have been misled to believe network marketing (MLM) and Ponzi/pyramid schemes all but the same. No, they aren’t . They are different! And I’m going to be trying my best to explain the difference between the two.
NETWORK MARKETING (MLM): it’s a type of marketing strategy that is designed to promote the products of a company through individuals also known as distributors or partners by word of mouth and direct sales. It gives people the opportunity to plug into and already existing system and make some money distributing its products/ recruiting other individuals to do the same. All network marketing companies have one main ideology, which is to reward its distributors for selling their products and exponential increase is their sales force or network. Distributors also earn from the income generated by the people they recruited into the business( a.k.a Downlines)
PYRAMID/PONZI SCHEMES: This however is an illegal scheme designed to take the form of network marketing in order to make money off people. Just like Network marketing, pyramid schemes depends on the recruiting of other people to become a distributor. One of the major strategy used here is to promise people outrageous amounts of money as returns for depositing some money into an account then sit back and watch over a short period of time, and get other people to do the same.. Does that sound familiar?
So what is the different between the two you may ask right?
The major difference between the two is that;
Network marketing is structured to move products and services through the expanding chains of distributors. The larger the network of distributors the faster and better the company would be able to sell its products.
Pyramid schemes on the other hand thrives by just collecting your money, and then use you to get other peoples money. Simple! They don’t have a real product that is sold. They make money by only recruiting people into their program. Only the few people who are involved in starting the scheme make money, and when no new individual can be recruited, the scheme crashes and most promoters loose their money except those at the top .
Tips to help you identify a pyramid scheme
- Check how long the company has been existing
- Check if the company has a genuine product
- Check if the company has a good track record
- You can also check if the company has been sued for deceptive business practices
- Check if they are focusing 95% on recruiting and 5% on products
- Lastly, you can ask other people familiar with the company about their operations
To all distributors irrespective of the company you represent, be careful about what you say to prospects when trying to present your opportunity to them. Try to be realistic, choosing to hype your company’s compensation plan is a very wrong idea that may make your company’s model look like a pyramid scheme.
To the prospects, make sure you do a thorough research about the company you are about to join. To be forewarned is to be fore-armed.
I hope this was helpful, feel free to hit the share buttons below and save your friends from falling into any of these pyramid schemes. See you at the top!
ABOUT Adie Cyprian:
Hello! Its my privilege to meet you. I'm Adie Cyprian, but my friends call me Cypriano, I hope you do the same. I live in Abuja (Nigeria) from where I'm currently running my network marketing business globally.
What I love most about this industry is helping others, the level of personal development it brings, the ability to be your own boss and call your own shots, working f...Continue Reading
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