Why do people think that network marketing is a pyramid scheme? When its not?

Because it's close enough to one.

The people at the top rake it in, and those at the bottom usually peter out.

I bet you you'll peter out.

Pyramid means that the further up the chain you go the more money people are making. In MLMs this is usually true. The people at the top have lots of people below them all contributing to their revenue. While the people at the bottom don't have anyone contributing to their income. There for the flow of revenue creates a pyramid structure.
MLMs are not an old school pyramid where the bottom makes absolutely nothing (just paying the people up from them). That's illegal.
In an MLM you can make money just buy selling products but you'll make a lot more if you get people working under you passively adding to your revenue.
The main reason why MLMs get a bad reputation is that most of them require you to pay money to join (for training or inventory). Then the first thing you are expected to do is try to convince all your family and friends to join or buy your products. This is pretty shady. What legitimate jobs can you think of where you're expected to pay money and try to get your family/friends to pay money also?
For some people that are not able to work at a normal job (because of health, or family etc) this may be the best option for making money. But you should think hard before getting involved in something like this. You aren't gonna get rich quick (that's a ploy they use to get you to join). At best you'll make a smallish decent living from it. At worst you'll waste a lot of time (and maybe money) figuring out it doesn't work. If you are able to pursue a normal career you are WAY better off. If you want to be a sales person (the primary duty in an MLM) why not go work for a car dealership or become a real estate agent? You'll make more and have more job security and a much better resume.

Because they don't understand the difference. Here is an article on the differences:

http://wahmscam1.blogspot.com/2006/03/what-are-mlm-companies.html

If you are going to get involved in MLM it is SO important to remember to focus MORE on selling the product and LESS on building a downline. The people who usually fail are those who think they are just going to recruit like crazy and sit back and watch the money roll in. You MUST work your business and sell your products if you want to make a decent income.

Because you do not know how to explain it as or like a "spider web"...lol.....

Shame on you!

Put your peter back in!

The short answer is people always want to believe the worst gossip. The best way to handle this objection is by saying, "pyramid scheme, what do you mean by that?" This will accomplish a couple important things. First, they'll have to stop and think. Secondly, you'll be able to answer their real objection.

By the way, pyramid schemes are illegal in all 50 states (and most foreign countries, so they are really asking if your business is credible. Tell them no business could operate a pyramid scheme without being shut down by the government.

Thanks for asking,

Rod

Learn how to get all the referrals you can handle in just 17 minutes or less... http://www.sendoutcards.com/Rod_The_Card_Man

They haven't thought it through very well and may be a bit close minded. In a pyramid scheme, the people at the bottom normally don't do as well as the people on the top but network marketing doesn't have this kind of structure.

If its not a pyramid scheme, then why are you here asking this question instead of network marketing and getting rich?

A lot of systems in our society (social security etc.) are structured as pyramids...heck even on the back of a dollar bill there is a pyramid.

It all comes down to whether you treat the business like a business or a hobby. Treat it like you're the CEO of a company and you'll make CEO money. Below are some insights that will assist you should you decide to go down the network marketing path...

A successful network marketing business takes commitment and consistency on a daily basis. Based on my experience you need to be a good learner first and learn how to market effectively.

The old networking model is no longer effective- make a list of your top100 friends (warm market) and approach them first about your business. The sale funnel is way too short...call someone up, make your pitch, if they say no then that's it...done. The new model employs a blend of technology and leadership skills. It's very important to make deals with people not computers though. Use technology (auto responders, phone dialers etc.) to extend your sales funnel weeks and months into the future through effective follow up. It's not uncommon for a successful network marketer to have someone that contacted them anywhere from 1month to 12 months in the past joining their business. Effective networkers know how to market and extend the sales funnel. Think AOL, Walmart etc.

Learn from the big guns at the top of the food chain. They all control the content and build systems for their down lines which often times makes them more money than the business itself. Too many network marketing companies take away power instead of give power. What I mean by that is they don't teach people how to be business owners and earn off the entire sales funnel that is available to all networkers. Meaning, as a business owner you should be able to earn off of the sales of leads, autoresponders and training products. The guys at the top normally keep all of the power to themselves. The ability to transfer power to those you work with is essential. Once you become successful don't sugar coat the truth to those you work with. Let them know the whole story.

I also recommend a generic mastermind community to get involved with that you can plug into and learn cutting edge marketing techniques. Brand yourself first, be a self-promoter, sell people on YOU, inc. People want to partner with leaders that have a high emotional IQ. Having a great product is important, but it is more important to know how to brand yourself and learn how to get people to know, like and trust you.

Additionally, take the time to be a resource for people - be a business coach. As a business coach/trainer other people don't see you as competition and will instead see you as a resource that is offering empowering information to help them build their business. Offer training products and leads on the front end and later on back end people into your primary networking business. This not only builds strong relationships (through your retail training products), it lets you see who the leaders are going to be that you can potentially partner with.

Also study successful people and become good friends with them. One day with an uncommon mentor can take away a thousand days of pain and frustration. Make a point to read empowering literature (on marketing, personal development etc.) a little every day to maintain focus and keep your mindset strong.

I hope this helps!

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