Those of you who know me, know that I have a good size network marketing business. Those of you who know how true network marketing works, also know that it’s about building organizations, building leaders, and it’s not an easy overnight process.
I have a growing business in 5+ countries. The reason I share my experience isn’t because I want to impress you, but to tell you that I have spent years in this industry and I know what it takes to build a business that can pass the test of time.
The Process People Follow To Build A Network Marketing Business
Let me state a few facts to provide a starting point based on a fair understanding of the network marketing business model.
- Network Marketing is just like any other business which needs new prospects/customers (I don’t know a business that doesn’t need prospects, leads, and customers.)
- Network Marketing companies provide products and services that their independent distributors (network marketers) can use,endorse and sell.
- The basic process of building a network marketing business follows the same cycle that any other business follows:
- Build your list of prospects
- Approach your prospects with your proposition and book an appointment to begin the process.
- Discuss the deal and let them make a decision. If they want some time to make a decision, book a follow up.
- Follow up to close the deal. If they say ‘Yes’, congratulations. If they said, ‘No’ move on to the next prospect.
I don’t see how this is different for any other business. I have dealt with insurance agents, real estate people and even in my online social media or web development business. I see that, more or less, we follow the same process.
In fact, we found my elder son’s first Montessori school because the owner was doing the same thing which any person-to-person marketing requires. She approached my wife in an Indian grocery store when we were shopping there.
I am thankful to that lady for doing that because that one interaction triggered the sequence of events that got my son started with his schooling.
Ramit Sethi Hates Indian Network Marketers
In a blog post , Ramit Sethi, who claims, “I will teach you to be rich,” says he hates Indian network marketers. You can find his detailed post here : http://www.iwillteachyoutoberich.com/blog/i-hate-indian-network-marketers-so-much/
To a new person who doesn’t know much about network marketing or the sales process in general, he makes a very impressive argument. He mocks the sales process and some of the network marketers who tried to show him an opportunity or two.
If you don’t know much about network marketing, Ramit’s post is good enough to easily get you scared about the industry. He successfully paints a really awful picture of this multi-billion global industry.
He claims that he is disgusted by all network marketers. Meanwhile, he wants people to buy into his products and services online. He entices people by claiming that his online courses people take can generate thousands of additional dollars on the side.
Being a person of Indian origin, and having built a solid network marketing business in the US and internationally, I decided to research and post my findings about this – since he makes mention of Indian network marketers in his post.
According to Ramit, there are many things wrong with the Network Marketing industry itself. So, I am mainly addressing four things that he is very “hot under the collar” about:
- These programs are a scam on your time and your relationships.
- You’re not creating any lasting value or building personal skill sets.
- Have you seen how friends treat you if you try to turn your friendship into a sales relationship?
- Engaging in these stupid “opportunities” distracts you from real entrepreneurship and your goals.
Let’s talk about each of them one by one.
1. About The Network Marketing Industry Being A SCAM
I don’t need to introduce Warren Buffett to you. If you know anything about investments, you know his name. One share of his company, Berkshire Hathaway, trades at NYSE at around$192,345.00 as of the writing of this post.
In 2000, Mr. Buffett acquired The Pampered Chef, a network marketing company which operates globally today with millions of dollars in revenues every year.
Now, I find it hard to imagine that a multi-billionaire and a man with such an outstanding reputation would knowingly participate in a scam.
I also feel certain the entire legal department of Berkshire Hathaway did their “due diligence” well enough to figure out that network marketing is not a scam. What do you think?
If that is not good enough, how about Apple, Best Buy, DELL, Bank Of America, Barnes & Nobles, Office Depot, AT&T and like companies who decided to partner with Amway (the largest network marketing company in the world) and participate in this business model?
Did they all decide to violate federal laws and participate in illegal pyramids to make money now?
I wonder what Ramit knows that escaped the the best legal minds these organizations have available…
2. About Not Building Any Lasting Value Or Skill Set
This type of claim makes me wonder if those who say such things even took the time to understand the true power of business education available through a reputable network marketing organization.
Do they even have a scintilla of knowledge concerning what they are talking about? Do they just use the same broad brush to paint anything they do not understand?
Solid education from the starting point of Business 101, and an incredible training program about the process, is what makes reputable Network Marketing such an incredibly powerful concept.
It is the power of real life and practical business education that helps the Network Marketing Industry not just survive all the negativity of people (who don’t understand this business) and tight scrutiny based on prejudices by many governments.
Education is the backbone, because of which the Network Marketing flourishes each and every day in more than 80 countries.
My Testimonial Of Growth
I come from an engineering education background. No one in my entire ancestry ever owned a business. On top of that, I would never say “hello” to anybody first. I had a big ego. Basically, I was very good at losing friends and intimidating people (I am still a work-in-progress in correcting that personality defect).
I was afraid of rejection and that is why I would never apply for a job. All the jobs I got, came to me through a referral. I never went to apply for a job because I would rather not have a job than to face rejection.
The education and support I received through the network marketing business has provided me with the dream that I can ask more of life, the confidence to face the world, the ability to handle objections and rejections, and to go out there and make it happen for me and my family.
Imagine the support and power of somebody who is where you want to be in life, willing to walk the walk with you – not just talk the talk. Here are my thoughts about education through Network Marketing:
- The habit of reading books for personal growth was ingrained in me because of the atmosphere of personal growth the network marketing business opportunity provided me.
- The confidence that I could walk into a mall and say “Hello” to somebody to strike-up a conversation is a tremendous life skill. Do you know it requires guts to say “Hello” to a perfect stranger? Do you think it’s easy? Try it sometime!
- Running a business is a lot more complex than having a job. To succeed, you need to have a great attitude. Your ability to do the basics consistently for an extended period of time, to persevere in the face of disappointments and challenges, largely determines how far you are going to go in your own business.
I did not learn this principle through my decades of work experience in the IT industry. I didn’t have a mentor in the IT industry. I did not have a coach who would tell me what I should and what I shouldn’t do if I were going to succeed.
I learned these success principles through my association with people who possess tremendous values. I think my life changed because I decided to go against the many general prejudices made by average people. I feel proud of the education and mentoring I have received and continue to receive as my businesses continue to grow.
3. About Chasing Friends & Family Away
This is a very common misconception among people who don’t understand relationships. Think about it for a minute. Will true friends start running away because they decided I became a bad person because I started a business which they don’t like/understand?
Should I question the business opportunity or the kind of people with which I have developed friendships in my life so far?
For further discussion let’s take some real life examples here:
Example 1 – My Dad Owns An Electronic Store
If I want to buy a camera and let’s say my parents own an electronic store. Ethically speaking, shouldn’t I check with my dad if he has that camera in his store before heading towards BestBuy or Amazon?
Whether or not I will find a good fit can only be figured out after I consider the options. But, shouldn’t I have the basic courtesy to check with the family members if they have something in their store that fits my needs? If I couldn’t be with my Dad and help him with his daily dealings, I believe this is the least I could do to support a family business.
If there is unity in a family then this shouldn’t even be a question. At least those are the values I grew up with. I am proud of those values, although such things are becoming more rare with time.
Example 2 – I Own A Distribution Business(Network Marketing/Direct Sales)
Let’s say I became a distributor for a Network Marketing company that allows me to sell Home Care, Vitamins, Skin Care and Personal Care type products.
The deal is the same. I distribute products and I am paid based on the revenues I generate through my business. Is it any different than my father distributing electronic gear through his own electronics shop?
First of all, it’s my responsibility to let my family and friends know that I have a business. My attempt to call them all one by one and trying to educate them about my business, my products and the opportunity should be taken seriously by my friends and family, whether or not they decide to join hands with me.
Now, if my parents/brothers/sisters/friends do not appreciate my involvement in a network marketing business for any reason, they should prove it to me that it is a bad idea (just like they stopped me in getting along with the bad guys when I was young) and get me out of it. That is what a true friend will do.
How Should Friends & Family React?
Instead of talking to me and clarifying their stand, if they start running away from me, I should be questioning the strength of my friendship – not the opportunity.
If my family members should stop talking to me because I started to brush my teeth with a different tooth paste than they have been brushing their teeth with, what kind of bond do we share in my home? How much can I rely on those family members in times of crisis?
Properly addressing a business opportunity should be done based on its economic value, not on emotional baggage. Network marketing/direct selling like any other business activity can have unsavory characters involved just like there are crooked bankers, stock brokers and lawyers.
Just because a few people who might or might not have followed the best practices for their business, doesn’t make throwing mud on the entire industry acceptable. It is inappropriate for a reasonable person.
4. About Distracting You From Real Entrepreneurship & Your Goals
Well, let’s talk about goals first because, as far as I remember, I didn’t have any goals in my life before starting my network marketing business.
After getting an average education and then getting a job in one of the top IT companies of India, that in itself was an over-achievement for the level of self-image I carried.
On top of that, getting an opportunity to come to America and working here for a fortune 500 company was not even a dream in my wildest imagination. However, it happened and I really felt I had arrived. I thought that my mission in life was accomplished.
It was not until I met some incredible human beings and great friends, through the Network Marketing business opportunity I got involved in, that I began to dream.
Now, I was as skeptical as I could be while getting started because I also thought that it wasn’t for me. However, I liked the people, their success, their personalities and I wanted to be like them one day – confident and charismatic. I decided to give it a shot since there wasn’t much to lose anyway.
As I attended the business meetings, listened to the CDs and read books like “Magic of Thinking Big”, “Think And Grow Rich” and “Rich Dad, Poor Dad” etc. I started to fall in love with the people and the concept.
For the first time in my life I began to set goals.
Before starting into network marketing business, I didn’t even set goals in my life. How could I fail to achieve a goal I had never set for myself?
Speaking of real entrepreneurship, what does that really mean? According to Wikipedia:
Entrepreneurship is the process of identifying and starting a new business venture, sourcing and organizing the required resources, while taking both the risks and rewards associated with the venture.
Where does that give any indication that network marketing is not real entrepreneurship?
I wasn’t a fool and I realized all the highly educated doctors, scientists, CEOs, book authors and people with many patents to their name that I was associating with couldn’t all get sucked into something which wasn’t a real entrepreneurship deal.
I couldn’t imagine that people who were managing companies couldn’t understand what real entrepreneurship means and so they started a network marketing business on the side. Not just one person, but many such people! They all had a dream!
As far as I know, education is supposed to make us smart. Education is supposed to help us think better, understand the world better so we can make smart decisions. So how is it smart to tie yourself down with a job where someone else makes all the decisions about your future and your goals?
When was the last time a scammer wanted you to get as well educated as possible? When was the last time a scammer wanted you to get as smart, as confident and self-reliant as you could be so they could scam you even more?
When I Looked Into His Own Business Prospecting Methods
Ramit got my attention with his headline so I decided to sign up to his mailing list to find out how he does his marketing. This allowed me to gain insights about the processes he follows for his business.
This is what happened since then:
- I signed up to his mailing list
- I received his first email asking me to watch a 30 minute long video with a promise to teach me some great strategies to make money.
- 6 days later, I get the first email talking about what I am going to receive with a few tips.
- For the next 7 days, I got one email each day with a few tips and promotion of his Earn1K program.
- The next day, I receive a very compelling sales email promoting how great Earn1K program is and it is time sensitive. I must act NOW.
- The next day, I receive two emails. One to remind me the Earn1K program is only open for a limited time and the second one after a few hours providing me 6 more reasons to join this program.
- The next day, I get another email in the morning titled “The Hard Sell (be very afraid…)” explaining to me that I am probably going to miss out on a great opportunity to change my life in just 6 months. The idea is to push me to sign up for this program – hard sell.
- The next day at noon: I get another email asking me what I have decided because the program was closing by midnight.
- The next day: I received another email that I could sign up for this program on at less than $100 a month for the next 12 months payment plan if I can’t pay it one shot and to act, I had another 48 hours.
I am not here to tell you that his program doesn’t add value. It might have added value to a lot of people’s lives and I congratulate them for taking those steps if they did.
But my goal is to explain that the process of building a business is the same whether you do it online or offline. You have to sell products or services and you have to deal with people. Here is how I compare Ramit’s sales process with Network Marketing:
- He got my email address just like people get phone numbers in real life.
- I received a welcome email for signing up, just like people call a couple of days later to say hello after the first meeting and number exchange. Then I got 7 other emails which probably should be considered as part of the package because the signup form did say that I was about to receive some great ideas.
- At the end of those 7 emails, Ramit launched his sales pitch of promoting his course. I didn’t ask for it. He started because he had my email address. This is similar to a Network Marketing entrepreneur calling his/her prospect to check if they are open to explore a business idea and booking an appointment for showing the business.
- If I had unsubscribed I would have stopped getting further emails from Ramit (I assume.) This is similar to the experience of the prospect saying, “No, I am not looking for any business opportunity. Thank you for the offer.” That is the end of any further discussion.
- But, I didn’t unsubscribe or mark him as a spammer just like people who don’t want to say “No” thinking that their friend in Network Marketing might feel bad if they say “No”. They keep postponing the discussion and keep getting follow up calls.
- I kept getting email after email, email after email to the point of irritation. I mean, just because you have my email address, does it license you to send me 2 promotional emails a day for multiple days? How is this process better than a desperate used car salesman chasing people?
A Few Additional Things In Contrast To Network Marketing
1. Successful Network Marketers Making Money Through Tools
The claim that I quote from Ramit’s post which he proudly calls as “illuminating” posing as if only he was able to figure this hidden truth and others (who are actually building businesses) are less cautious or knowledgeable or ignorant:
Investigations like one done by Dateline NBC in April 2003… suggested that most of the money being earned by these successful individuals was coming from the hidden “tools” business rather than through selling the company products.
Well, this kind of talk only demonstrates how much thought was given before saying so to paint a negative image of the business.
First of all it’s not true, especially since this was said in the context of Amway (now a global leader with about 12 billion dollars in yearly revenues. It is noteworthy that members of the founders family have been the chairman of the US Chamber of Commerce in the past, and again in 2013.)
If you talk to people like John Maxwell, Bob Burg, Robert Kiyosaki, Bill Clinton and people of Warren Buffett’s stature, they will tell you differently than Ramit Sethi and they talk about this industry with a lot more respect.
Why?
Because they are not talking based on third-party and media-hype news reports from those who sell news to make money. These people talk based on their own experience and investment of their time in understanding this industry.
However, for argument sake, let’s say that successful people in Network Marketing business made a lot of money through tools such as CDs, books and seminars. A sensible person (especially since we all have a choice whether or not we want to buy those tools) will see if those tools are adding value or not. If value is received, I don’t care who makes money out of these tools. If value is not received , then it’s a matter of me saying, “I don’t need these tools.”
A friend of mine got philosophical about this and asked, “Well, Kumar don’t you think it’s unfair that these extremely successful people are also making even more money because we buy those CDs?”
My answer was simple.
I said, “Did you know that somebody is making money from the clothes you are wearing? Why are you not making your own clothes or wear banana leaves so nobody will make money on your clothes? Did you know that a lot of people have made money and they continue to make money because of the house you live in? Why don’t you stay under trees in the wide open and beautiful sky? That way, you will ensure that nobody ever makes money because you lived?”
Why don’t you question all sports stars who make way more money through the endorsement of products for other companies than they make through their real profession?
When you succeed, you naturally attract more money in more ways and that happens to you because you have paid the price for your success. Those people have paid their dues by working hard, going through the process when many others quit because naysayers kept ridiculing them. Now that they have succeeded, why should anybody have a problem because they are making money in more than one way?
By the way, if making money through CDs, books and seminars is such a bad thing, why did Ramit write his book? Why doesn’t he offer the book for free? Why is he selling those audio and video programs for such a high price? Will people make money because they listen to those talks? I don’t think so until they get to work!
2. Declaration Of Average Monthly Income Of Network Marketers
Then he quotes this in his post to give an impression that his post is well researched,
Amway was ordered to accompany any such statements with the actual averages per distributor, pointing out that more than half of the distributors do not make any money, with the average distributor making less than $100 per month.
Wow! What an alarming revelation, right?
There are two aspects of this and I will talk about both:
First Aspect: The Rule Of Averages Plays Everywhere
Let’s turn the table and ask the same question with regard to Ramit’s Earn1K program which he is selling so passionately. What is the percentage of people who signed up for this course and really made $1000 or more?
I know he quotes a handful of people who testify about his awesome program. I get it. However, I am talking about the total number of people who signed up vs total number of people who really made it to the magic figure.
Let’s do some math based on what we know about the rate of success in any industry which is usually less than 5%. Now, imagine 100 people signed up for Ramit’s Earn1K program investing about $1000.
Since only 5 people out of 100 will succeed making beyond $1000 mark because others will simply not act no matter how great the course is. So, let’s say total money those 5 people put together made per month was $5000
Now, let’s calculate the average income:
Average Monthly Income = Total Successful Monthly Income $5,000 / Total Investing people 100
Therefore, the average monthly income resulting from this course will be: $50 per month
Now, if Ramit calculates this percentage and starts to publish this on his website, will it hurt his signup rate? Of course it will! It’s just common sense!
A lot of people get into network marketing business only to end up doing nothing. They all add up in the denominator. A few get serious, work hard and make a lot of money. But, when the average is calculated in FTC way, the number is $100 or so. That is a credibility factor for those who understand how business works.
People who want to look good by throwing mud at the Network Marketing industry forget to note that more millionaires have been made in the network marketing/direct selling business than in any other industry.
Second Aspect – When You Are Big, You Have More Eyes On You
And as far as I can think, the only reason FTC has probably not asked Ramit to publish his averages like they do for network marketing giants is because he is small enough to fly under their radar.
Companies like Amway are so big and their revenues are so huge, they get the attention of government bodies, and obviously rules like that needs to be followed by them. Small businesses, even though their practices may be worse, do not come under such scrutiny.
3. Money Back Guarantee On Products And Services
Ramit’s Earn1K program comes with a 60-day money back guarantee. Here is the text from the email I received:
“If you’re not happy in the first 60 days, email me and show you did the work and didn’t get results and I’ll refund 100% of your money. Yes, theoretically you could take the entire course and ask for a refund, but I trust you to be cool.”
Please make note of his wise mention, “show you did the work and didn’t get results and I’ll refund 100% of your money”.
He wants you to prove that you did the work before you could ask for the money. A bit tricky and probably that is why a lot of people will feel uncomfortable asking for refund. Smart marketing technique, isn’t it?
On the other hand, the company I work with in the Network Marketing industry, offers 180 days of no-questions-asked satisfaction guarantee on all their products, including the money you pay for the registration of your business.
Now, my question is, if network marketing is deceptive, a scam and all those things that Ramit claims, why will they give you 180 days to evaluate the business and their products and their tools? Shouldn’t they be scared that 6 months is a long time for people to figure out that it’s a scam and then there will not be any money after that?
How come they don’t think of this? How come more and more people are getting into this business? How come this industry is getting bigger and bigger and no government is able to catch their lie and make them accountable for their wrongdoing?
4. Don’t People Who Participate In Network Marketing Know Any Better?
Another statement from Ramit’s post I would like to quote here is this:
Network Marketing programs disproportionately target people who don’t know any better.
Again, this is the same old prejudice by people who lack knowledge of this industry. I don’t want to name people in this post for the sake of naming names. I have worked in the past and continue to work with people with diverse backgrounds. Just to name a few professionals:
- Highly successful CEOs of multimillion dollar IT companies
- High profile doctors from all over the USA who make a few million dollars a year just through their profession
- Engineers
- Business development heads of large fortune 500 companies
- City Managers
- Scientists with hundreds of patents to their names
- Professors from universities like Harvard and Cambridge
- School drop outs
- People who couldn’t speak proper English
- People who work at gas stations for survival
- Students who came to America for higher education
- Book authors
…and so on. There is no profession, religion, or culture which doesn’t have representation for being successful in the Network Marketing industry.
The claim that only a certain type of people succeed is true! Those are the people willing to work hard and follow the best processes laid out for the industry. They succeed because they want to succeed and are willing to work hard to make it happen, against all odds.
5. About Success Rate In Network Marketing
I was more disappointed to read such an article from someone who claims that he can teach others to be wealthy.
Another disappointing statement Ramit makes (which hurts his credibility as a person with knowledge) is this:
I don’t know one entrepreneur who made it big doing something like this.
If you just make a Google Search on top earners in any Network Marketing company you can think of, you will find several names of real people you can not only contact, you can meet them and ask questions if you really want to.
They are not holograms. They are human beings who travel around the world to speak to hundreds of thousands of people because their success speaks for themselves.
I have had many opportunities to meet some of them in person, get to know them at a personal level, and learn from them.
Conclusion – Be Careful Who You Listen To
What Ramit didn’t realize while writing this post is, none of the Network Marketing founders or their CEOs came to approach him in those grocery stores he is talking about.
The people he is making fun of, were average people, perhaps, with very little or no business background… in the trenches, learning, making mistakes, struggling to overcome their fears of contacting new people. They werejust trying to find out if they could learn how to build a network marketing business. Those were the people who also had the same apprehension, “What will others think when I say hello?” mixed with the fear of rejection.
As a coach who teaches how to be confident, how to negotiate and how to make more money by thinking correctly no matter what is your “idea”, I would have expected Ramit to understand their situation and if he couldn’t help them, at least he should not have made fun of those poor folks and their struggling businesses.
Based on my experience in the business world, in general, and with the incredible experience of proudly being in the Network Marketing business for several years, here is some advice I would give you:
- Do not take advice about the Network Marketing industry from people who have never built a network. Just like you should not take advice about your health from somebody who is not a doctor.
- Do not make your financial decisions based on what somebody writes on their website. You need knowledge not hear-say information. Knowledge comes from those with experience who know what they are talking about.
- The next time someone tells you that network marketing is illegal or a scam, point them towards Warren Buffett and ask if they know something which Mr. Buffett missed.
- If somebody says that nobody makes any money in Network Marketing business, ask them if they ever made a Google search on that point? And if they can justify how it is that some reputable companies in this industry have been growing for the last 50+ years if nobody makes money. Why are people not giving up?
- Next time, when another business person tells you that the success rate in the Network Marketing business is very low, ask him/her if he/she knows what is the success rate is in his/her industry.
Your Turn To Share Thoughts & Share With Your Friends
There are so many people busy spreading negative about this incredible business concept. However, I hope I was able to clarify a few things through my experience.
If you found I shed some light on network marketing industry and clarified a few misconceptions people try to spread about this powerful business concept, please share your thoughts through your comments and also share this with your friends who could benefit from this information.
Thank you kindly!