A former neighbor contacted me recently. He wanted to see me because he had a “great opportunity” to present to me. Suspicious, but curious (and above all polite), I agreed to meet with him to talk to him. He was not alone on the day of the meeting. This gentleman introduced me to him as his partner who was responsible for explaining to me in detail what "activities" are. I have heard this and understood a number of things about network marketing.
Network Marketing or Ponzi Scheme?
The Ponzi scheme was first introduced in 1920 by the church registrar as an effective method for scam investors. It is "a fraudulent financial system where clients' investments are largely provided with funds provided by new entrants." The system ends when the pyramid rises and collapses "when the amount provided by new entrants is no longer enough to pay the clients".
Network marketing is a completely different thing. It is a sales system that "resellers (or distributors) can sponsor new salespeople and then get a partial remuneration of the commission determined as a percentage of the hiring commission". This is not a scam in the case of a Ponzi scheme. Rather it is a system that allows each customer to be a distributor on a rotating basis and thus finds out whether other customers who become and sell distributors will receive a commission.
"One on the left, one on the right"
From what they told me, every element of the network should have its own network of two people, no more. Each of these individuals has the task of creating a network by employing two people, one "on the left" and one "on the right".
Integration into the network is conditional on the purchase of one or more products, the price of which varies depending on the company. The marketing argument is that we only buy products that are useful to us, but we also have the potential to bring people back into the business to make money. Each recruit is placed to the left or to the right of his / her employer. So to form a pyramid (or a triangle) at the top of which the recruiter and the base are two recruits (one on the left, one on the right).
The thing that worries me is that the total amount of products purchased for it must be 1000 or more equal to 1000 BV (business value) related to 400,000 FCFA.
The system starts to become profitable at the moment the employer sets the price at 3,000 BV on the left and 3,000 BV on the right. Thus he began to receive commissions on the purchases of his recruits and all subsequent recruits.
It can work, but there is a "but" …
One thing I realized when I heard about the benefits of their system from neighboring partners. As he explained to me network marketing can actually make money. This is a very well thought out system and I have no doubt that there are still people today who want to seek refuge and can thank you for this system.
But - of course, there is always a but - when you observe closely, the system is not without its disadvantages. In fact, I think that in the background of this system, their networks are interested in "pulling" each other's feelings.
It starts with choosing the right person for the job. Usually, they are counted among friends or family. Because of the relationship between the two, these people have full confidence in those who want to hire them and those who are interested in the risk of throwing their money into the business. If many do not follow through on the promised resources, it can quickly become the focus of controversy.
Other suspicious elements of this business express concern about the products offered for sale. The catalogs of the products that were presented to me were unusual, to say the least. Pendants are stored away from bad pendants and pendants to purify the blood. Water filters that charge water with this energy, bracelets that do this or that, and more. It felt like jokes and joke shops. The only product that seemed interesting to me was learning distance in specific areas like project management and marketing.
Obviously, the price of these products makes me jump. Because buying a water filter whose real effects are unknown (since they are not sold elsewhere) is as risky as investing. And this creates another problem: many people take out loans to join the network in the hope of recovering in a short time. 400,000 FCFA is much more than my monthly salary despite having already 10 years of service in my public service.
Network Marketing or Slavery
This is where I come to the end: Network marketing enslaves people. When a person owes 400,000 to the FCFA for a product with uncertified assets, he finds himself in a precarious situation: you have to repay the loan and you have to hire people for it. At all costs. Thus friends, colleagues, ex-neighbors, and family members are harassed on a daily basis because they are pressured to join the network as soon as possible.
I had very little peace after the first meeting between the employer and me: phone calls and unannounced visits were repeated. They wanted to know where I was looking for money to buy products and start a business. It was annoying but I understood them. And I sympathize.
Then one very important thing to keep in mind: to start monetizing you had to buy 3,000 BV on the left and 3,000 BV on the right. This means that if one or two of the "kids" aren't aggressive enough to hire two, his parents still haven't received any benefits from the commission, even if the other's network is very wide. In this case, the parents forced themselves to look for other employers, eventually putting one of their children on the network to start “eating money”. After all, when someone is engaged in marketing, there is very little peace.
Caution should be exercised
Personally, I tell people around me to be careful about joining this type of network, where after a few years of activity they are promised about ten million incomes. After all, if you are not sure about finding people who will join the network without engaging with you, do not fall into debt. And if one relies on network-related revenue to pay this representative, it will avoid being committed. More importantly, avoid this type of business if you do not have the time you expect.
In the end, you have to be more specific with the help you render toward other people. It is very easy to confuse network marketing and pyramid sales which is a "scam that does not come from sales activities as a declaration of profit, but the recruitment of new members ".