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Introduction by John Milton
Fogg of Upline Magazine and
"Greatest Networker in the world" fame The Coming NETWORK
MARKETING Boom! - by Leonard
Clements Why Network Marketing is about to
EXPLODE....
Network Marketing is
EXPLODING all around the world! Fortune 500 companies are
going Network Marketing... More millionaires will be
made in Network Marketing than any other business.... Network Marketing is
reaching Critical Mass! Network Marketing is
achieving Momentum - Now! Network Marketing is the
Wave Of The Future - you better get in Today!
Are You Ready for the
"Coming Network Marketing Boom"...? From the sound of
all that amazing enthusiasm, you'd better be or you'll be missing out
Big Time.... Or is all of that
just the Network Marketing choir singing hopefully and hysterically to
itself. Just more of the same old Network Marketer's hype and hustle,
even outright lies...? In my dozen-plus
years as a author and editor in Network Marketing, I've heard these
rallying cries thousands of times. And I sure would love to believe
them.... But I don't... or, I didn't - until now... Whenever I want the
TRUTH about Network Marketing in capital letters, I ask Leonard
Clements. Len is the founder of the highly regarded "watchdog"
organization MarketWave, and in my opinion, he is THE most honest and
knowledgeable Network Marketing industry expert we have. I ask Len
because I KNOW he does his homework. He's a devil's advocate and he only
believes what he sees in black and white. Len had an idea for
an expose that would literally "tear apart" those excited remarks you
just heard [read] with the facts. He was on a mission to expose them as
gross exaggerations, distortions and fabrications. Why? Because Len
loves this industry and it's people, and he is convinced that
lies like that will destroy us - if lies they are. So Len dived in to
set the record straight. And you'll never guess what happened?
He changed his mind
- 180 degrees! Not only did he establish the proof of the truth of those
"Network Marketing is going to Explode!" claims, his rock-solid research
dug up more and better reasons than ever before to show that Network
Marketers are in for the ride of their lives! Is this like buying
Gold at $43 an ounce...? Just listen to Len
and judge for yourself... - John Milton Fogg
The Coming Network Marketing
Boom!
For the first time
in history there are solid, logical, verifiable, explanations for you to
believe in an upcoming Network Marketing boom. In fact, there are eight
reasons, any one of which could result in a significant expansion of
Network Marketing in the U.S. alone over the next few years. And these
eight factors will soon be coming together creating a "perfect storm"-
the convergence of several powerful economic, demographic and
psychological factors all hitting at the exact same time and place.
Finally, you and I can honestly make the claim there really is an
upcoming Network Marketing Explosion. It absolutely will happen, and
here's why: Eight Solid Reasons
You Can Believe in The Coming Network Marketing Boom! Reason Number
One - The Economy. Reason Number
Two - Demographics. Reason Three -
Wall Street. Number Four -
Supply and Demand. Number Five -
New Blood. Reason Number
Six - Positive Media Exposure. Number Seven -
Federal Regulation. Last, and certainly
not least; Interesting...?
Exciting...? You bet! Let's look at each
of these Eight Solid Reasons in specific detail, starting with...
Reason Number
One - The Economy. I've always had the
belief the U.S. economy did influence Network Marketing, but not
significantly. I mean, was there ever an economy where people didn't
want more money and free time? But when I began to do some digging to
support my contrarian position, I soon discovered I was wrong. That one
of the strongest growth phases in Network Marketing history occurred
between 1990 to '92 and coincided with the last economic recession
should have been a clue. And there was so much more. When we compare the
popularity trends of Network Marketing to unemployment rates, on a
semi-decade basis, there are some very exciting revelations.
Although Network
Marketing was born in the 1930s - in the midst of The Great Depression -
it began in earnest in the 1950s. Network Marketing was far more popular
in the second half of the 50's than the first. Not a single company of
consequence launched from 1950 to 1955. However industry giants Shaklee,
NeoLife, and Amway all started between 1956 to 1959. The unemployment
rate the first half of the decade averaged 4%, and was the second lowest
in U.S. history in 1953 at 2.9%. However, it averaged 5.3% the second
half of the decade reaching its highest level since the Great Depression
in 1958 at 6.8%. Translated into today's numbers that would mean almost
6 million more people became unemployed between 1953 to '58.
The first half of
the 1960's all types of direct sales continued to flourish. Mary Kay
Cosmetics started in 1963, and Avon, Fuller Brush and Tupperware all
achieved momentum. Although the industry continued to grow from '65 to
'69, it was not nearly at the same pace. The unemployment rate the first
half of the decade was significantly higher than the second half when
2.5 million unemployed people went back to work. Jumping ahead to
the 1980's, Network Marketing was thriving the first half of the 80's
while unemployment continued to rise. In fact, in 1982 unemployment was
at its highest level in 40 years at 9.7%. During the second half Network
Marketing "slump" unemployment dropped considerably, and by the end of
the decade the number of those out of work was almost half of what it
was at the beginning of the decade. The 1990's saw
perhaps the clearest distinction between halves of any decade with more
major company launches and more companies going into momentum than any
other time in history. There was also more wealth being created by way
of Network Marketing from 1990 to 1994 than any other 5-year period. The
second half wasn't exactly the best of times for Network Marketing. If
there ever was such a thing as an Network Marketing recession, we had
one from 1996 through 1999. Why? The very high unemployment rate from
1990 to '94 and the sharp drop during the second half of the decade
where it hit a 30-year low at 4.2% in 1999. The only exception
to this half-century long pattern is the 1970's, but that was an
exceptional decade. Remember the last
half of the 60's industry growth slowed as unemployment dropped to a
post-war low. During the first half of the 70's Network Marketing
started rocking as unemployment rates jumped. Unfortunately, all that
started rocking some boats, and the result was over five times as many
Network Marketing related law suits from 1970 to 1974 than all of the
50's and 60's combined, and in 1975, there was a federal action, which
essentially questioned the legality of Network Marketing itself.
Fortunately, one
company, Amway, had the financial ability to defend themselves and the
entire multilevel marketing industry. This case lasted until late 1979
when the court ruled in favor of Amway. As a result there was, for the
first time, a clear delineation between illegal pyramids and legitimate
Network Marketing companies. There was a pretty dark cloud hanging over
the industry the last half of the 70's and there wasn't a lot of
expansion in spite of the even higher unemployment rate. The last and
arguably greatest Network Marketing growth phase began in 1990, the same
year the U.S. went into our last economic recession. 1980 to '84 were
boom years for Network Marketing and we experienced recessions in 1980,
part of '81 and most of '82. 1970 to '74 were
also boom years, and our economy was in recession almost all of 1970,
and 1974. Remember how the
last half of the 50's and into the early 60's were years of great
Network Marketing expansion? We were in recession from '57 to '58 and
most of 1960. Now, most
recessions last 12 to18 months, but the end of a recession doesn't mean
that's the end of a slumping economy or high unemployment rates. We've
had eight recessions in the last 50 years, and during the 12 months
immediately after the "end" of the recession the unemployment rate went
up! Every time. Strong evidence.
And we're only on Reason Number One. Let's talk about an even more
powerful justification to believe in a coming Network Marketing
explosion. Reason Number
Two - Demographics. There were about 76
million babies born between 1946 and 1964, which at the time accounted
for almost one-third of the entire U.S. population. Since then, it has
been glaringly obvious exactly where this giant bubble in the population
is at any moment in time by simply looking at what products are most
popular. And when in comes to charting the market size for what most
Network Marketing companies offer, we're not even half way up the curve
yet! The market for products that will make us look and feel younger is
going to continue to expand most dramatically over the next 5 to 10
years as the boomers reach their 50s and 60s. But this baby boom
is exciting for another completely different reason. Virtually all
Network Marketing companies require distributors to be at least 18 years
old. Well, guess what happened about 25 years after the baby boom? Those
76 million boomers had about 75 million babies. And about 41 million of
them will turn 18 over the next 7 years. At no other time in history,
other than the original baby boom itself, have this many people been
added to the body of eligible Network Marketing prospects in this short
a period of time. Of course, the
people eligible to join are not as important as the number who actually
are joining. The Direct Selling
Association (DSA) conducts an Annual Survey of salespeople in the
industry. (Keep in mind two-thirds of these direct sellers are Network
Marketers.) According to their analysis, there was a net gain of 400,000
direct sellers from 1997 to 98. A 600,000 net gain from '98 to '99, and
a 700,000 distributor gain from '99 to 2000. Not only is the number of
people increasing, but the increase in the increase is
increasing! If we do nothing
more to extend this current figure forward for another 10 years, we end
up with 4.7 million additional network marketers. To put that in
perspective: It took Network Marketing over 50 years to grow to 7.5
million, and we're conservatively projecting adding another 4.7 million
in just the next 10 years! (By the way, that means the average
networking organization will be 37% larger!) And as far as
demographic reasons for believing in an upcoming Network Marketing boom,
we haven't even discussed the very best one! According to Gallup
Polls, the average age of all Americans when they first decide to invest
in a residual income-producing vehicle, such as stocks, bonds, real
estate, or perhaps in a business venture, is 42. The average age when we
invest the most into such devices is 47. If we were to graph the number
of 42 to 47 year olds in the U.S. we'd find that starting about 1988 the
line begins to point upward at almost a 45º angle as the boomers started
turning 42 - and that line continues to rise at a level never before
seen in history all the way to the year 2009. We are barely past
the halfway point of that dramatic upward curve! Does this really
benefit us as network marketers? Are 40-somethings more open to Network
Marketing opportunities? Well, the average
American is 36 years old. According to a MarketWave survey of over 6,000
network marketers from 1990 to 2000, the average network marketer is
38.6, and that number has consistently risen over the years. An
exceptional number of those over 40 do participate in Network Marketing,
and this segment of the population which is most ready, willing and able
to invest in a residual income business venture is going to continue to
increase dramatically for another seven years! Reason Number
Three - Wall Street. Professional
investors are a pretty savvy group of people. Based on their due
diligence they eventually invest their funds in companies whose growth
(and profits) they expect to go up. So, what do they see when they turn
their magnifying glass on Network Marketing companies? There are over 20
publicly traded Network Marketing companies, but the bottom third are so
small I'll focus on the top 12 well established companies. If you were
to chart their stock price over the last 5 years, starting with December
1996, in almost every case you'd see a line that looks a lot like the
path of an airplane - coming in for a landing. With few
exceptions, Network Marketing company stock values flattened at their
all time lows and stayed there for about two to three years. Clearly,
Wall Street wasn't impressed with Network Marketing's growth potential
the last half of the 90's. What do they see
now? Well, the benchmark
S&P 500 reached its peak in September of 2000, but by mid-December
2001, it was down by 23%. Over the exact same period our index of the
top 12 Network Marketing companies was up by 8.2%! And all of a sudden,
in the last 12 months, these Network Marketing companies are
outperforming the overall stock market by over thirty percent.... That
level of performance really gets investors attention! Number Four -
Supply and Demand. Anyone who got even
a C in Economics 101 could tell you about Supply and Demand: An industry
booms when demand dramatically increases. When there is a tremendous
increase in supply, it results in a down-turn. And sure enough, during
the massive proliferation of Network Marketing companies the last half
of the 90's, we had a deep industry slump. Based on a survey
of Network Marketing company software suppliers over 4,900 Network
Marketing companies opened from 1994 to 1997, and there is anecdotal
evidence to show that there were about 3,600 start ups in 1998 and 1999
alone. What's even more troubling is that perhaps half of all Network
Marketing start-ups don't go to the major software houses, but rather
hire in-house programmers. Therefore, it's possible that the actual
number of start-ups could have been double these figures. As many as 13,000
Network Marketing companies may have launched from 1994 through 1999.
There were at very least 8,000 - but we only had a net gain of
about 600 companies, from 900 to 1,500. Have you ever heard the claim
that 95% of all Network Marketing companies fail in their first two
years? I thought that was just a scare tactic spread by older companies,
but these surveys say that's true! Now, during this
same time period the number of network marketers in the U.S. increased
from only about 5 million to 7.5 million. That means the number of
distributors went up about 50%, but the number of companies increased by
three times that much! If you do the math,
you'll learn this means the average networking downline shrunk by 40%.
There is no question that the supply of Network Marketing opportunities
far exceeded demand the last half of the 90's. So, what's the good
news? Well, some very
encouraging things began to happen in the year 2000. It's very clear
that the number of start up companies has declined significantly since
the beginning of 2000. This, along with the increasing number of company
mergers and acquisitions, will only make the industry stronger. As more
and more companies entered the market the available distributor base was
spread thinner and thinner. The result was smaller downline
organizations, higher attrition, and generally far fewer success
stories. But think about it: if there were just as many distributors,
but half as many companies, the average downline would be twice as big -
yes? I'm not suggesting
the number of companies will contract to half, but any reduction in
supply will certainly help increase demand, which will then expand the
number of those men and women getting into profit and reaching their
income goals. The more success stories we have, the more motivation and
less resistance we have to building our organizations even larger - and
the cycle continues upward, rather than down or flat as it has in the
past. Reason Number
Five - New Blood. Almost every
Network Marketing company today would like to think they are about to go
into momentum. Momentum, as it applies to Network Marketing, is the
stage in a company's growth cycle where sales volume begins to increase
geometrically and the company doubles, triples, and perhaps even
quadruples in size in a very short period of time. Most momentum phases
last about 6 to 24 months. Much like buying a
stock right before it goes up in price, most networkers want to attach
themselves to a company right before it explodes. Thus, practically
every distributor will try to make a case that their company is "about
to go into momentum." How do they know? They don't. No one
knows exactly when the momentum phase will kick in, but much like stock
picking, we can look for clues - historical trends and patterns to help
us make better guesses. An analysis of all
the successful major Network Marketing companies shows that every
momentum phase in Network Marketing corporate history was facilitated by
massive numbers of people moving into the opportunity - either as reps
or customers - who have never been involved in Network Marketing
before. Momentum is never the result of people moving from one
company to another. Momentum is ONLY caused by a massive injection of
new blood. Where is this new
blood going to come from? There are a little
more than 7 million people participating in Network Marketing in the
United States. That means there are about 270 million who are not
involved! And that also means that there are literally tens of
thousands of success stories just waiting to be written. So, how are we
going to expose those massive numbers of people to our products and
opportunities that we've never been able to reach in the past? (How many
of you saw this coming...?) The Internet.
You may be
thinking, yeah, yeah... but the Internet's been around for years. Well,
the Internet may have been around in 1990, but it didn't come
into it's own until after 1995. By 1998 the number of people on the Net
had almost tripled. Today over 60% of adults are on-line and many
predict that virtually all Americans will be using the Internet in some
capacity by the year 2010. And it wasn't until
around 1997 or so that the Network Marketing industry really began to
use - or a better term might be "abuse" - the Internet. There are
exceptions, but for the most part Network Marketingers got a little over
zealous with this amazing new technology. Rather that use the Net to
help us build our downlines and sell our products, it was used in a
magical-mystical attempt to have it build our networks for us. The
result was big recruiting numbers, but very little sales volume and
overwhelming attrition... The Internet was
also abused in other ways. Like so many other
dot.coms there were a lot of failures. Some were ugly. There were
numerous legal abuses resulting in several well-publicized closures. The
Network Marketing industry painfully cut its Internet teeth from about
1997 to early 2000. And now, as the smoke clears, what is beginning to
emerge are the remaining responsible, visionary companies that knew all
along the awesome power of the Internet was not in having it do all the
work for us, but rather having it help us present our products and
opportunities faster, less expensively, and to far, far greater numbers
of people. New people, who've never been exposed to Network Marketing
before. The Internet is a
sales, training and prospecting tool with unimaginable potential. And
it's an industry that itself looks to expand by 100 million users
domestically over the next 10 years. As this happens, Network Marketing
will soon go into momentum the same way everyone of it's post-momentum
companies did- by a mountainous wave of new blood. They say a rising
tide raises all boats, and this Internet tidal wave could even cause an
unprecedented event in Network Marketing history - the "secondary
momentum phase," where large, post-momentum companies actually achieve
momentum again! But the Internet
isn't the only reason I believe we're on the verge of massive "outer
circle" recognition. Another fact that's hugely compelling is...
Reason Number
Six - Positive Media Exposure. Radio, television,
magazines and newspapers all exist primarily on advertising dollars. But
Network Marketing is an industry that doesn't advertise in the
mainstream media. After all, we're the "word of mouth" business. Not
only has the media had no financial incentive to promote Network
Marketing, it actually has a financial incentive not to...
Well, that too is
changing. The mainstream media is just now discovering how to cash in on
Network Marketing. The first big step
in this direction was back in 1994 when Success magazine published a
front cover focusing on Network Marketing and a lengthy and extremely
positive feature article about our industry and its people. Sure, the
companies that knew they were going to be mentioned ran big ads, but
that's not where Success made the most money. The people of this
credibility starved industry sold out the entire run of that issue and
Success magazine broke their all time single issue sales record by
almost double! The result was a lot more positive portrayals of Network
Marketing companies in future issues. But even this isn't where the
greatest promise lies in terms of positive media exposure. Let's say, instead
of paying for an advertisement, a network marketer worked out an
arrangement where he sponsored the publication itself, got the ad for
free and the resulting sales volume and downline commissions that were
generated from the ad went to the magazine? They could potentially make
far more income from overrides than from ad fees, even long after the
ads stop running. It's more than just a win-win scenario- we get the
positive press and the media gets even more money than if they charged
us for the ads. But would this work? It already is.
Slowly, quietly, such a movement is taking place. I know for a fact that
there are currently over 100 radio stations in the U.S. attempting this,
and some are succeeding, big time. Yet, virtually the entire Network
Marketing industry is oblivious to the fact this is even happening. It's
simply a matter of time until the media grapevine picks up on this
phenomenal ad revenue resource. And let's not
overlook the public image boost we're getting from the various athletes,
celebrities, political figures and medical authorities Network Marketing
is attracting like never before. And not all are paid endorsers. Many of
them have careers that are based on their reputation and positive image
and they've openly and willingly attached their good names to Network
Marketing. We've also got well-respected mainstream authors and keynote
speakers such as Richard Poe, Paul Zane Pilzer, Mark Victor Hansen,
Brian Tracy and Robert Kiyosaki, Dr. Dennis Waitley, extolling the
virtues of Network Marketing. This kind of powerful, third party
validation has never happened before. It's just starting, and it's
growing fast! And finally, in the
recessionary wake of the dot com disasters with high-techs at all time
lows and the fears of finding yet another Enron- or three or four-do you
think the media can continue to ignore all those corporate and
individual Network Marketing success stories? They can't. And they
aren't! Number Seven -
Federal Regulation. Earlier I showed
you that in the first half of every decade Network Marketing
outperformed the second half- and that's been the case for the last 40
years. But there were more than just economic reasons for this. The
regulatory climate has also effected the performance of the industry.
The most obvious example being the previously mentioned federal actions
back in the 70's.Legal attacks by state or federal authorities on high
profile Network Marketing companies do occur from time to time.
Curiously, they seem to peak in pre-election years (but that could just
be a coincidence:-). Most of those larger companies, by the way, not
only survived the attack, but also are considered today models of
legality whose policies and enforcement systems are emulated by younger
companies. Yes, there have
been many situations where pyramid schemes have been shut down, and
typically the action is described as "the Network Marketing company was
shut down because it was an illegal pyramid scheme." It drives me nuts
when I hear someone make a statement like that. It's like saying, "A
really honest man was exposed as a liar." Well, then he wasn't an honest
man was he? Either you're an illegal pyramid scheme, or you're a Network
Marketing company. You can't be both. I want to make this
very clear before we go any further: Illegal pyramid schemes often try
to disguise themselves as Network Marketing companies, because
they want to appear legal. Unfortunately, when the press reports
on illegal pyramid schemes, we all suffer guilt by association. And that
does have an effect on our ability to retain good people and acquire new
ones, at least temporarily. The good news is
that the last few years we've seen really no significant legal attacks
on Network Marketing companies, and several closures of illegal schemes.
Not only does this make the industry stronger due to a smaller, higher
quality pool of legal opportunities, but it also increase our ability to
build businesses because we don't have the negative public stigmas
creating greater resistance toward the industry and its opportunities.
It also demonstrates a greater ability among regulators to delineate
between pyramids and legitimate Network Marketing programs. This is
especially encouraging and comforting to those networkers who've built
substantial incomes in "high profile" opportunities, or those who intend
to. Once again, I've
saved the best news for last. There is active,
professional lobbying going on right now by the Direct Selling
Association (the DSA) and others, to enact legislation that will create
federal regulation of Network Marketing. As it is now, operating a
Network Marketing company in the United States is kind of like trying to
do business in 50 different countries. Each state has it's own set of
laws pertaining to business opportunities, some specifically about
Network Marketing, and all have statutes pertaining to pyramid schemes.
Although, for the most part, each state's definition of an illegal
pyramid is consistent with the other 49, the interpretation and
implementation of those laws has been somewhat haphazard and arbitrary
over the years. It's true that there was a significant legal precedent
created by the federal court's decision in the Amway case in 1979, but
still, enforcement actions have been inconsistent not only between state
and federal precedent, but from state to state, and sometimes even from
case to case within the same state. Many of these cases
involve judicial opinions as to whether distributor's personally
consumed products by should be recognized as legally commissionable
sales. This the focus of the federal legislation currently being
proposed and several states, including Texas and California, have
already recognized such volume as bona fide. Not only will
unified federal regulation create a clear, consistent path for all
Network Marketing companies and state regulators, to follow, but also,
much like the federal regulation of franchising back in the 60's, it
will eventually require true and full disclosure. If this does come to
pass, and many believe it will, it would absolutely be a good thing -
very good. Not only will it tremendously strengthen the industry by
weeding out the bad apples; it will cause the massive turnover rate
among start up companies to drop to a fraction of the current level.
They won't start up in the first place. And the ones that do launch will
have to be serious players with solid backing. So not only will more
distributors be involved in fewer companies, but those businesses will
be only the highest quality opportunities. Federal regulation will also
greatly increase the respect and credibility of our industry. This will
create a tremendous boost to all established U.S. based Network
Marketing companies. There are some
people who are still apprehensive about the prospect of federal
regulation. They fear regulators may throw their entrepreneurial baby
out with the legal bath-water. Not a chance. Not only are there over
1,500 Network Marketing companies in this country, employing tens of
thousands of tax payers, and generating literally billions in sales and
corporate tax revenue, there are about 5 million Network Marketingers
who are also registered voters. That may not be a big percentage, but as
the 2000 presidential election clearly demonstrated, it's enough to make
a huge difference in who has the political power in this country. I've
heard the argument made that back in 1963, congress came within 11 votes
of outlawing franchising. Not only didn't they, but the post regulatory
era of franchising created an industry that now moves over one-third of
all the goods and services in this country! Federal regulation was the
catalyst to the biggest boom in entrepreneurial history. Not only do I not
fear the concept of federal regulation, I find the vision of this new
era of Network Marketing to be absolutely exhilarating!
Last, and certainly
not least; Reason Number
Eight - the
current, positive and powerful Growth Trends of the Network Marketing
Industry itself. Since the top
twelve publicly traded Network Marketing companies provide the most
reliable information, and they make up the majority of the largest, most
well established companies, I'm again directing my analysis towards
them. (Although an informal survey of un-audited data provided by
private Network Marketing companies reinforced these results.)
From 1990 to 1995
annual industry sales growth averaged about 16%, and some years was as
high as 30%. However, if we track the growth of these public companies -
based on U.S. revenue only - the average annual sales growth from 1996
to 2000 was 8.7%, with a low of just over 6% from 1999 to 2000. And the
entire direct selling industry's growth rate dropped to a 10-year low of
4.5% around this same time. Based on this
information it would seem that industry growth was about to come to a
grinding halt - yes? But instead, the
growth rate of these companies from 2000 to 2001 was 14.6 percent - more
than double the previous year's rate! Without question,
the slowing trend has reversed. This is by far the strongest signal of
impending momentum, when there is not only an increase in growth, but
the rate of growth is also accelerating dramatically. Now, one year of
doubling growth rates certainly does not guarantee a boom, however, one
thing is certain - every company momentum phase throughout Network
Marketing history began with that first exciting period of doubling
growth rates. What do you think the chances are the same phenomenon
holds true for the entire industry, as well...? There you have it
folks. Not one.... Not two.... But eight solid, powerful, verifiable
reasons for finally believing in an upcoming Network Marketing
explosion. No one knows exactly when it will happen; it could be next
month.... It could be next year.... It could be anytime in the first
half of this decade, before 2005. All I know for sure
is, if you get involved now, and stay involved, you will be there when
it happens. Gold at $43 an ounce. So hop on, strap yourself in, and get
ready for the ride of your life. It's gonna' be a blast!
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