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Introduction
by John Milton Fogg of
Upline Magazine and "Greatest Networker in the world" fame The
Coming MLM Boom! - by Leonard
Clements Why Network Marketing is
about to EXPLODE.... Network
Marketing is EXPLODING all around the world! Fortune
500 companies are going MLM... More
millionaires will be made in MLM 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 MLM 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 MLM 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 MLM 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 "MLM 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 MLM 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 MLM 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
MLM 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 MLM "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 MLM 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 MLM 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 MLM 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 MLM 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 MLM 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 MLM 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 MLM 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 MLM 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 MLM 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, MLM 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 MLM companies the
last half of the 90's, we had a deep industry slump. Based on
a survey of MLM company software suppliers over 4,900 MLM 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 MLM 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 MLM 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 MLM
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 MLM 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 MLMers 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 MLM, 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 MLM 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 MLM 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
MLM, 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 MLM
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
MLMers 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 MLM 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 MLM
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
MLM 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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