Network marketing soared in the 90âs

By: Jeffrey A. Babener

Corporate America has been downsizing and job security has
faded into dimly remembered history.

Statistics show that most new jobs now come from small business.

Home-based business has become a reality for millions of
Americans - inspiring millions more to dream about opening one.

The term "networking" has become a buzzword in the business press,
as more people realize the crucial role of referrals in the economy.

The Internal Revenue Service has adapted its rules (somewhat) to
the new home-based economy by recognizing independent contractor
status and publishing specific tax-preparation guidelines for
"direct sellers."


In Tune with the Times

There are a number of reasons why the network marketing industry
reached maturity and respect in the 1990s.

As millions of Americans launched home-based businesses and
entrepreneurial ventures of every kind, they created a climate
in which network marketing could flourish. For instance, it was
not so strange anymore for an attorney to leave his practice in
order to run a new company of some kind out of his den. Most people
have come to know someone who dropped out of the 9-to-5 world and
turned entrepreneurial. Hourly and salaried employees have become
intrigued with the idea of financial freedom and economic autonomy.
Suddenly, they are much more open to change - and better prospects
for network marketing.

Another change that favors the networking industry has to do with
sex. In the past, most direct sellers were women. As a result, this
was often seen as a woman's business, which tended to discourage
male recruits. But as opportunities in the industry have increased,
more men have been attracted to it; in turn, the all-female
perception has faded, increasing the industry's ability to attract
men.

The sheer number of network marketers also has exploded. By the end
of the 1990s, more than 10 million people were involved in the
industry here in the U.S., racking up more than $20 billion in
yearly sales. Worldwide, the number of distributors has topped
30 million, generating more than $80 billion in annual sales.

When an industry gets that big, even corporate bureaucrats begin
to notice. Major multinational corporations are taking account of
the networking phenomenon, building it into their own plans for
distributing products and services. Here are a few of the marketing
partnerships that have been formed: Avon-Mattel; Tupperware-Disney;
Amway-Rubbermaid; DuPont /ConAgra-Legacy.


The new "virtual networking" company will outsource almost all
its activities: manufacturing, customer service - even accounting.

One of the world's largest banks, Citigroup - formed of the merger
between Citibank and Traveler's Group - has a network marketing
division, Primerica Financial Services (formerly the A.L. Williams
Company) that is one of the most profitable distribution channels
for the corporation's many financial products.

These range from
insurance policies to checking accounts.

Corporate America has validated the success of the industry by
embracing public offerings of network marketing companies on Wall
Street. Excel Telecommunications, Amway Asia-Pacific, and Nu Skin
all successfully launched initial public stock offerings on major
exchanges. Herbalife, Mannatech, Market America, Nature's Sunshine,
Pre-Paid Legal, and Rexall, to name a few, are also publicly traded.

In the 1990s, high-tech and financial companies became enamored of
the networking industry, as network marketing companies broadened
their lines to include services as well as consumer products.
Soon, it seemed every high-tech company was looking to networking
as a means of guerrilla distribution in competitive markets.
Companies in telecommunications, paging, Internet service,
satellite TV, financial, and travel services were the chief
beneficiaries of alliances with networking companies. Today,
even electric power is being sold by network marketing.

Why did conventional corporations cast their lot with the wild
and woolly entrepreneurs of the network marketing industry?

Because they could see that it works. Specifically, network
marketing distribution has several distinct advantages:

It is a powerful technique for introducing brand-new products -
especially items that require demonstration or testimonials.

It generates strong "word of mouth," by directly rewarding consumers
for sharing their excitement about a company's products or services.

Network marketing techniques can penetrate new markets quickly.

Since commissions are only paid on actual sales and since
word-of-mouth replaces costly advertising campaigns, network
distribution is an efficient and economical way to market a
product or service.

Going Global

As it entered whole new business categories in the 1990s, the
network industry also planted its flag in dozens of new markets
around the world. Amway and Nu Skin had singular successes in
Japan, which proved to be as amenable to network marketing as the
industry's birthplace, the U.S.A. Nu Skin pioneered global seamless
sponsoring, which allows a distributor to sponsor people living
anywhere in the world into one down-line organization - as long
as the corporation does business in the country where the recruit
lives. For many of the largest networking companies, sales outside
the U.S. proved to be the majority. The Internet, global
communication, and satellite TV provided the tools for global
expansion.

It wasn't just Yankees who have been on the march during this
decade. Many foreign-based networking companies set up shop in
the U.S. One of the major success stories of the 1990s - health
products giant Nikken - came to the U.S. from Fukuoka, Japan,
at the beginning of the decade with virtually no American customer
base. Nikken posted annual U.S. sales in the hundreds of millions
by the end of the decade and established its new worldwide
headquarters in California.


Read All About It

Finally, the decade just ending has seen a sea-change in media and
public perceptions of the network marketing industry. In the 1980s,
the press acknowledged the existence of network marketing - but the
attention was often negative. Stories had names like "The mess
called MLM" and "Here come the scam artists." Some of the abuses
cited were real, but good companies were usually lumped together
with bad - effectively misinforming the public about a major industry.

In recent years, this trend has begun to turn around. Positive
stories on network marketing have appeared in The Wall Street
Journal, Inc., Success, Entrepreneur, Wealth Building, Business
Startups and Home Office Computing. Articles continued to treat
the industry to its dose of honest criticism, but they also began
to include the positive side: the fact that millions of Americans
were finding opportunity where they had never expected to see
it - among their relatives, friends, neighbors, and colleagues.

Unless you have been living in a cave, you can't have missed
experts' predictions that the Internet will be one of the most
powerful business forces in the 21st Century. As available
bandwidth increases, ever more information - and more money - will
be exchanged over the Net. As a future-oriented industry, network
marketing will respond, adopting the new technology enthusiastically.

The Internet will become the prime means of communication, training,
and ordering for network marketing distributors. Sales kits and
videos may become obsolete as sophisticated multimedia demonstrations
on laptops (and over e-mail) become the main recruiting tool, and
cyberspace becomes the chief venue for training. The Internet will
encourage rapid expansion on a global scale with instantaneous
communication between network marketing corporate headquarters and
the distributor force.

Documentation, sales kits, distributor agreements, and policies and
procedures will reside primarily on Web sites, where new prospects
can download them. (Courts already recognize electronic signatures
as binding.) Distributors will order directly from the Net, reducing
the need for call centers and human operators.

Companies will pay commissions by direct deposit to bank accounts
or credit card accounts. The new, "virtual networking" company will
out-source almost all its activities: private-label manufacturing,
customer service, fulfillment, graphics - even genealogy and account
processing. The technology revolution will level the playing field.

But don't let all this technological razzle-dazzle distract you
from the basics. Regardless of what gadgets they adoptComputer Technology Articles, the network
marketing companies that succeed will always be those that maintain
their respect for personal relationships. Get as virtual as you
like - you will always need to get out there and press the flesh.

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