The network marketing industry, also known as multi-level marketing (MLM), traces its roots back to the mid-20th century. In 1945, a company called California Vitamin Company, later renamed Nutrilite, was founded by Carl Rehnborg.
Nutrilite marketed dietary supplements through a direct selling model, where independent distributors sold the products directly to consumers and recruited other distributors to join the salesforce.
In the 1950s, another company called Amway was founded by Jay Van Andel and Rich DeVos, who were distributors of Nutrilite.
Amway adopted a similar direct selling model and used a multi-level compensation plan, where distributors earned commissions not only from their own sales but also from the sales of the distributors they recruited into the business.
Since then, many other MLM companies have emerged, selling a wide variety of products ranging from health supplements to beauty products to kitchenware.
The industry has faced criticism and controversy over the years but it continues to thrive and generate billions of dollars in revenue.
Early network marketers relied almost solely on word-of-mouth sales. They were quite rigid in their structure and the variety of products from company to company was limited. Most companies focused on health and wellness and recruiting was the best way to make a fortune in the industry.
The modern network marketing company looks different from its predecessors. The industry has made room for updated methods of distribution and more diverse product lines.
The phrase “the product is an excuse for a business model” is often used to describe companies that prioritize recruitment over the sale of products. Companies like these that have made their way through this industry are too many to count.
In order to be successful, the modern MLM business must put focus on products of value that fill a hole in the marketplace.
Product variety and diversity have significantly improved in network marketing over the last 70 years. Today, they offer a wide range of products and services, including beauty products, home goods, clothing, food, and even travel services.
One reason for this expansion is the increasing consumer demand for a diverse range of products.
Network marketing companies have recognized this trend and responded by offering a broader selection of products to meet the needs and preferences of their customers.
This variety has changed the way many companies do business.
The FTC has also played a role in network marketing companies putting more focus on their product offerings.
The FTC is a government agency that is responsible for protecting consumers from fraudulent, deceptive, and unfair business practices, including those employed by MLM companies.
In the past, the FTC has taken action against MLM companies that were primarily focused on recruitment and had inadequate product sales to non-participants. In such cases, the FTC has required MLM companies to make changes to their business practices, such as increasing their focus on product sales to non-participants, implementing stricter guidelines for distributor recruitment, and providing more transparency in their compensation plans.
In 1979, the FTC released a landmark ruling in the case of Amway Corporation which set the legal standard for distinguishing between legitimate MLM companies and pyramid schemes. The ruling required that MLM companies have a substantial number of product sales to non-participants to avoid being considered a pyramid scheme.
Since then, the FTC has continued to monitor the MLM industry and has taken action against companies that violate consumer protection laws.
As a result, many MLM companies have shifted their focus to product sales and have implemented stricter guidelines for distributor recruitment to comply with FTC regulations.
Whereas traditional network marketing companies were full of expert recruiters because recruiting was the name of the game, the new age of network marketing has introduced us to affiliate marketers whose sole interest is using social media to sell the product.
Successful companies not only make room for these affiliate marketers but they reward them handsomely. The better the product the more successful these affiliates will be.
Products and services, which might have previously only been an afterthought when coming up with a network marketing concept, have taken center stage in the industry.
Today, many MLM companies have adopted affiliate marketing programs as a way to expand their reach and increase sales.
By allowing affiliates to promote their products and earn a commission on sales, MLM companies can tap into the power of referral-based marketing without requiring affiliates to build and manage their own downline.
Affiliate marketers have not only put a renewed focus on product value in network marketing but they have also played a significant role in introducing technology to network marketing by leveraging digital tools to promote products and expand their reach.
This has been a double-edged sword for the industry in many ways.
The belief that the tools of an affiliate marketer can be used exactly as they are by recruiters in the industry is a fallacy and has led many down a fruitless path. But at the same time, technology must necessarily play a role in any successful network marketing company.
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The modern network marketing company has identified the limitations of traditional digital marketing strategies and implements technology that embraces the one-to-one connections that are the hallmark of successful recruiting in the industry.
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RapidFunnel is a mobile application that provides network marketers with a suite of tools to help them build their business by giving them a simple and convenient way to share their opportunity.
By providing tools like RapidFunnel, the most successful network marketing companies are providing their teams with a simple way to combine the best of technology with the strategies that made this industry successful in the beginning.
For more information on how Authentic Sharing Technology and specifically the RapidFunnel App can help your organization, schedule a demo today.
