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Network Marketing: the Most Powerful Business Force of the 21st Century
FEATURE Richard Poe Intro by John Milton Fogg: By the time you read this, the premiere issue of our new Network Marketing LIFESTYLES will be out and about. (Probably sold out and about the only way you can get a copy is to phone in your one, two or three year subscription.) Lots of Upline readers have asked me-- confidentially, honestly John, just between you-an'-me-- "How good is the magazine, really?" Well, this being Network Marketing, I thought we'd show and tell you just how "good" it is. To tell you: Network Marketing LIFESTYLES is absolutely incredible! The articles, the pictures, the people we've profiled-- truly incredible! Duncan Anderson and his staff have done an extraordinary job on the first issue and promise to make the next one and the next even better! You cannot afford to miss a single issue-- ever-- of your magazine. Yes, it is that good!
director of China's State Administration for Industry and Commerce.To show you: Here's Wave Four by Richard Poe. But something was different this time. cheap access to markets. the ban threatened their deepest hopes and dreams. and Laura and Richard Kall of NuSkin/Big Planet. Wave Four will shake our economy to its roots." The crisis aroused little interest in the foreign press. "since it has begun to hurt social stability and economic development. reprinted with generous permission from the first issue of Network Marketing LIFESTYLES. in just a few weeks. and Ray Gebauer of Mannatech. Dave and Coli Butler of FreeLife. Chinese officials would discover. 2|Page . to a government ban on Network Marketing and all other forms of direct selling. it's the best third-party credibility article I've ever read (and wish I'd written). and Kim Klaver.order your subscription today! Call Poe's piece an appetizer. and Robert Allen of USANA. Chew well and enjoy. Friend Poe is the best writer in the business-. and Brilliant Compensation. at some time.. and MLM and the Law. None! If you like Poe's piece.and Nikken's Team Diamond. Flat out. George and Deedee Shaw of Shaklee. and. and all the other people and pieces in this jam-packed first issue-. and reading about The Young Networkers-. It will leave this world a freer and more prosperous place. --JMF Blood was running in the streets. ten people lay dead and more than a hundred injured. But for millions of Chinese. Was this a scene from the Boxer Rebellion? Chairman Mao's Cultural Revolution? The massacre at Tienanmen Square? No. and you think you'd be interested in seeing Stephen Covey on The Seven Habits of Highly Effective Network Marketers. smashed windows. Somewhere. So what else is new? Network Marketers and government regulators have been locking horns in every corner of the globe for 50 years. And it will transform Network Marketing into one of the most potent business forces of the new millennium. just last April. drawing momentum from man's natural yearning for liberty. propelled further by the corporate drive for quick. "It's necessary to stop the operation of pyramid sales. Violence raged through several cities across China. Angry mobs toppled cars. This gentle ripple we call Network Marketing had grown to a storm surge. most successful multilevel marketing companies have been condemned as "pyramid schemes. that they had picked a fight they could never hope to win. and learning about Your Money. seized hostages and stormed government offices. and Tom "Big Al" Schreiter..and there is no greater champion of Network Marketing on the planet. When it ended. a new era had dawned in Network Marketing.Generation-X superstars-." In the years ahead." said Wang Zhongfu. an age of unprecedented power for the industry. This wave was set in motion by technological advances. and. It was the Chinese people's reaction." Cynics could easily dismiss the Chinese ban as but one more example-albeit an extreme one-of Network Marketing's familiar regulatory woes. They had stumbled directly into the path of an onrushing tidal wave. an irresistible maelstrom of freedom and enterprise that I call "Wave Four.and I have the right to that opinion-. Unknown to China's Marxist rulers.
. . to make the most of their own lives and. Former International Business Machines salesman Don Held experienced first-hand the rigors of networking during Wave One and Wave Two. this was the industry's frontier period. 1994). was as primitive as a Model-T. composed mostly of Network Marketing companies. the Federal Trade Commission ruled that Amway-. The 900-square-foot house he shared with his wife and six children was transformed into a warehouse. Companies grew with reckless abandon. But government regulators targeted them with equal recklessness. not just by striving for your own success. by implication. The DSA is a trade organization based in Washington. Starting his Amway business in 1969. The chaos of Wave One came to an end only in 1979. . the whole family would pile into a 30-foot motor home and travel the country like gypsies. Not only did he have to recruit and train new distributors. in those days. you know that you've become one of the Big Dogs. But during Wave Two. management professor at the University of California (Davis). not a pyramid scheme. . Every bulk order from his downline had to be processed. on a feisty day? Neither. According to Nicole Woolsey Biggart. after all. to me. but he had to hand-write their commission checks every month. the industry entered what I've called Wave Two. This inaugurated what I call "Wave One.was a legitimate business. following an acrimonious investigation. Network Marketing in general-." the Wild West phase of Network Marketing." The man who spoke those words was President of the United States at the time. The process has been unfolding for more than 50 years. building the business as they went. Encouraged by the friendlier legal climate. the average person still faced fearsome obstacles in building a distributor organization. When even big-government Democrats have to reach over and toss you a bone. In the years ahead. packaged and shipped by hand. that's the heart of the American Dream. He went on: "I've followed your industry's growth for years now . Wave 3 (Prima.the Choice of Presidents "You strengthen our country and our economy. The 1980s saw unprecedented growth in the sheer number of startups. Held built his downline the hard way." Could it be Ronald Reagan. when Held's children were out of school. In future years. It was a videotaped statement specially prepared for sales representatives of Direct Selling Association (DSA) member companies." Held recalls. the 90s will be remembered as the decade when Network Marketing became a 3|Page . but by offering opportunity to others .and. "Network Marketing. It will leave this world a freer and more prosperous place. Network Marketing did not attain such power overnight. As described in my book. the first multilevel compensation plan was introduced by Nutrilite (now a division of Amway) in 1945. During the summers. when. singing the praises of free enterprise and individual initiative? George Bush. Your industry gives people a chance. often making up the rules as they went along. That was William Jefferson Clinton. Wave Four will shake our economy to its roots. D. Breakthroughs in computer technology let entrepreneurs run companies from their desktops. Not bad for an industry that was nearly abolished by the Federal Trade Commission only 20 years ago..C.Network Marketing-.
Compensation plans have larger commissions flowing to distributors for less work. "I've got people in my organization who are making. 1995. the 90s will be remembered as the decade when Network Marketing became a serious industry. or to draw commissions from the sales of recruits. Ten years ago. Held points to a couple in his downline. Dedicated voice mail systems have streamlined communications within downlines. Wave Three had begun. A Decade of Growth In future years. He became a millionaire within five years. with some 27 million Networkers participating around the world. "It's a whole lot easier for those fellows now. teleconferences and satellite TV broadcasts have largely automated the recruiting process. Three-way phone calls let raw recruits listen while their more experienced sponsors close new prospects.Held was blessed. Network Marketing also has transformed the direct selling industry. all but 22. in their second year. Prospecting videos.7 percent are full-fledged Network Marketing companies." Held muses. Like other multilevel companies. The number of full-time distributors doubled between 1993 and 1994 alone. audiotapes. In 1990. 75 percent of the Direct Selling Association's member companies used such non-multi-level compensation plans. A weighted measure of publicly traded MLM stocks called the Upline Index outperformed the Dow Jones Industrial Average and the S&P 500 by nearly 80 percent in 1995. Fax-on-demand services have freed upline leaders from having to answer repetitive questions. Avon Products. Joe and Doris Shaw. Nine years later. Network Marketing today is a $90 billion-dollar global business. according to the Direct Selling Association. to succeed in the face of every obstacle. He had the drive and persistence serious industry. Amway revolutionized its methods in the 1990s. who became Executive Diamonds-earning the same commission level as Held-after only three years in the business. and today collects hundreds of thousands annually. Customers now order products from an 800 number and receive shipments directly from the company." Held says. according to DSA president Neil Offen. what I made in my tenth year. But he often wonders how much more quickly he might have achieved his dreams had he started out today. issued each month from a company computer. They were not allowed to recruit others to sell. All a distributor has to do is collect his commission check. the total number of Network Marketers in the US increased 34 percent between 1990 and 1994. article in The Wall Street Journal. One of the most important converts to Network Marketing has been the multi-billion-dollar direct sales giant. 4|Page . According to a June 23. most direct sellers worked on straight commission.
and awarded certificates to top achievers. "Multilevel marketing. called the Leadership program. Fortune 500 executives have observed the Wave Three phenomenon from afar. Through distribution deals.Many rank-and-file sales reps opposed Avon's first experiments with Network Marketing. She made frequent visits to downline leaders in other states. "In the future. Network Marketing sales forces are. Wilber finally gave in and joined Leadership." Wave Four: The Tsunami Avon's conversion is but one example of a movement now sweeping corporate America.she was earning $137. According to Bracero. Wilber's success. The first year. Network Marketing. head of Avon's Network Marketing program. most of her $12. and that of other Leadership pioneers. in the new millennium. Avon offered little training or support for the fledgling program. Wilber was forced to build her own. back then. That's one heck of a lot of lipstick. being integrated into the global strategies of the largest and most powerful corporations. Wilber's fourth year in Leadership-.000 in earnings had to be reinvested in the business. "Even at the top earning level of 50 percent. Mrs.000 per year. Avon threw its weight behind Network Marketing. Rattled by all the MLM exposés she had seen in the press. and offered training seminars. "in order to earn $100.000-to-$15." With no corporate infrastructure to rely on. Avon is making its Network Marketing program "one of our key priorities for 1999. Mrs. "I'm not going to do it. She started a newsletter for her downline. To make matters worse. "So what we did was we played it low key. She sent chocolates to her people on their birthdays and postcards to remind them of key events. but some estimate it at 10 percent of the company's domestic direct selling force of 500. you had to sell $200. By 1997-. The company will not disclose how many on its sales force are now MLM distributors.000 worth of product.000. was viewed just as a pyramid scheme. will no longer be the exclusive preserve of entrepreneurial mavericks." 5|Page ." Mrs. "we'll be looking at Network Marketing the way we look at regular marketing. Emboldened by Network Marketing's growing respectability. mergers and acquisitions. she was working 80 hours per week and earning only $10.Mrs." remembers Walter Bracero." she says. Wilber told her district manager. For years.000 per year. they are finally starting to cash in on it themselves. strategic alliances. and didn't push it very hard. "What if Avon gets a bad name over it?" Avon lady Lisa Wilber asked herself at the time. Avon executives had begun to take notice. She also started a "thousandaire" club for people selling more than $1000 per month." says marketing consultant Faith Popcorn." But after a year and a half selling full-time in Avon's non-multilevel program. Spurred by Mrs. even now. Bracero admits that MLM's poor public image contributed to Avon's lukewarm support. filled with tips and inspirational stories.000.
For years. he started distributing his CD-ROMs through Amway. not in building better mousetraps. except one-. For the next few years. retail stores and schools.Network Marketing. such as direct mail. as a sideline to conventional marketing methods." Pilzer became a Network Marketing celebrity overnight. a vice president at Citibank. "As a result of advancing technology." she says. that is. "the actual production cost of an item has fallen to where it typically represents less than 20 percent of the retail price. A few years ago. "They would say. Paul Zane Pilzer learned to respect the industry's power-the hard way. Pilzer explained that the big money in the 1990s was to be found." says Pilzer. poured $25 million into marketing. now account for 80 percent of an item's price. he was promoting his book Unlimited Wealth through TV talk shows and other media. Zane Publishing. But every distribution channel lost money.Popcorn has observed this trend in her New York-based BrainReserve consulting practice. he had never heard of Network Marketing. N. back in the 1960s. Pilzer had been a professor of Economics.'" Popcorn recalls Then sales conducted over the Internet quadrupled in the past two years. based in Dallas. the big opportunity now lies in finding ways to distribute products more cheaply. when the best money was to be made in finding ways to reduce the cost of manufacturing-by making objects from plastic instead of metal." There's not much room anymore to push production costs down. Pilzer was introduced to the industry in 1991. for instance. we show clients who their most worrisome competitors are likely to be. I felt I was with my students. Pilzer related. In 1996. a single word of career advice: "Plastics. American Express and Eastman Kodak. he spoke at scores of Amway and other Network Marketing conventions. would be competition from the Internet. and an economic advisor to Presidents Reagan and Bush.A. "They got very serious. I said. "When I heard that. she told them. Distribution costs." That was good advice. All. Popcorn recalls. leaping from $2 to $8 billion. are turning out to be Network Marketing companies." 6|Page . everybody took out a pad and paper and started taking notes. was thunderstruck." Held remembers. More and more. His company. But Amway distributor Don Held." said Pilzer. a well-meaning businessman offers Dustin Hoffman's character. ´My God. But this was no longer true. Ben. that's what Network Marketing is!'" Held tracked down the famous economist and retained him to speak at an upcoming Amway rally. In the movie The Graduate. but in finding better ways to distribute those mousetraps. "But I didn't. "I wish I could tell you I saw Network Marketing as the opportunity from the very beginning.. which serves blue-chip clients such as IBM. For that reason. said Pilzer. the competitors who arouse her clients' greatest fears. `Oh. "Now when we do our futurescapes. she observes." Pilzer recalls. "He was saying that the big money now was in distribution. listening to the Robbins-Pilzer tape. we're not worried about the Internet. prepping for a final. he attempted to sell his educational CD-ROMs through conventional channels.two key facets of which. "When I got onstage. on the other hand. On an audiotape he made with Tony Robbins called Powertalk. BrainReserve clients routinely dismissed her urgent warnings to prepare for the Information Age-.
offers the personal touch. Pilzer's sales through Amway increased each year. In the 21st century. smart entrepreneurs invented better mousetraps and used Network Marketing to carry them to market. Chrysler and Ford. Internetworking The fast lane of the Distribution Freeway will be the Internet. MLM companies will no longer need to invent new products. Network Marketing will emerge as the most powerful way to reach consumers. They hardly even noticed Pilzer's displays." says Held." The Distribution Freeway Why did Pilzer's product sell so brilliantly through Network Marketing? The industry. reorganizing his company to distribute exclusively through Amway.' MLM is about networking. "We have failed at retail.As his other income streams dwindled to nothing. Their business will be selling everyone else's "mousetraps." he admits. Amway sells cars for GM.com. It is a sign of our times that the Sears catalog in fact no longer exists. with Avon. Avon's Walter Bracero agrees. But Amway distributors use the CD-ROMs to help their own children succeed in school. Shrewd observers of the high-tech scene noticed years ago that Network Marketers were leading the way in commercial applications of the World Wide Web. appliances for Hotpoint and Whirlpool. Their personal testimonies to friends and family arouse interest in the products. Just last client corporations will move their wares. says Pilzer. in the years to come. but the Amway catalog does. a Network Marketing subsidiary that sells proprietary nutritional products. But. "We have failed at direct mail. "Our catalog today looks like a small version of the classic Sears catalog. Pilzer bowed to the inevitable. IBM is selling Internet training programs through Big Planet. in that direction. named the number-one retail website of 1998 by Computer World. Customers browsing through a Barnes & Noble or Blockbuster store are looking for books and videos." Wave Four Network Marketers will provide a Distribution Freeway through which thousands of client corporations will move their wares. Network Marketing distributors were building downlines through website promotion and e-mail blasting. and long-distance service for MCI. But we have succeeded beyond any of our expectations Network Marketing. and close sales. Transnational behemoths Dupont and Conagra have teamed up to launch Legacy USA. year. not educational CD-ROMs." says Faith Popcorn. and there's probably no quicker way to establish a network than through the Internet today. At a time when corporate America dismissed the Net as all hype and no substance. In the old days. Hundreds of prominent companies now distribute through multilevel firms. "Network Marketers look at every edgy opportunity. 7|Page . "`Internet' is short for `internetworking. a division of Nu Skin International. Wave Four Network Marketers will provide a until Network Marketing distribution accounted for Distribution Freeway through which thousands of every penny of his $8 million revenues." Avon has already made a good start. We are looking at leveraging the Internet very heavily.
there are only one or two million homes." Johnson says. company announcements and opportunity meetings-.Michael later this year." -." Now their latest book. This online Network Marketing newsroom gets more than 100. whose company." says Wennerholm. the whole activity through its Network Marketing message economic structure of work is becoming different boards. I really think that's where the industry is going.comMLM. major corporations such as AT&T have eliminated all permanent job categories. 8|Page . "Back in 1996." The change from permanent jobs to temporary ones will traumatize many people unused to fending for themselves. some Network Marketing companies and distributors are taking it to the next level. Avon ladies and Amway dealers.programming they can now get only through pricey satellite broadcasts." they point out. forecasts nothing less than the "death of jobs. That's going to grow substantially over the next two years. economic forecasters James Dale Davidson and Lord William Rees-Mogg predicted Wave Three. or even to notify people of upcoming events. It has become an interactive business tool to process orders and new applications. Amway plans to launch a "virtual mall" from anything it's ever been before. launched in 1997 by Craig Wennerholm and his partners. Rees-Mogg and Davidson predict that "jobs" in the Information Age will once again refer to specific and temporary tasks. out of 100 million." they observe. VideoPlus in Lake Dallas. that have that technology.000 hits per month. The Sovereign Individual.America Online has become a hotbed of recruiting "With the downsizing of big companies. "permanent employment was almost unknown. No one expected lifetime employment." Network Marketers of the future will use the Internet to receive real-time corporate videos of training sessions. Now we're seeing more and more companies utilizing e-commerce capabilities.com has already broken even through ad sales. sells communications products and services to Network Marketing companies. One of the hottest sites in the Gerber business is MLM.com. Right now. Texas. "Already." "Before the industrial era. after only a year and-unlike much-touted Net-based companies such as Amazon.never a permanent position. "All that's needed is more bandwidth. to query databases for customer information. pegging the 1990s "a decade of Tupperware parties. "which is going to come from cable modems and higher speed DSL telephone connections. to tell their story. That's the prediction of Stuart Johnson. And now that mainstream business has begun to catch on to the basic use of the Internet and World Wide Web. much less a pension or gold watch. "MLM'ers were using web pages mainly as an electronic brochure. "Positions in that large firm are now contingent." The word "job" used to mean a one-time task that you were hired to do-." The Death of Jobs In their 1991 book The Great Reckoning.
"Most people aren't self-motivated.cut its workforce by six percent. . People are going to have to have a system. a framework. . Citigroup personifies the Wave Four transformation. "Technology makes companies more and more efficient-. He describes it in the clinical but wonderstruck terms of a lepidopterist encountering a new species of butterfly. Network Marketing recruiting goes up. Taylor's mission in life is to spread prosperity among his fellow black Americans. People in this industry have long observed that when overall unemployment rises. very low-cost .000 . yet the agents bear many attributes of a controlled system. author of The E-Myth and president of the EMyth Academy. kept on growing. to be its primary competitive strength . Network Marketing recruiting goes up. That process will continue to accelerate. . . a small business consultancy." says a 1997 S&P report." Gerber predicts that "turnkey" businesses such as franchising and multilevel marketing will provide the support structure necessary for easing the transition from evanescent "jobs" to enduring self-employment. "The most profitable companies are the ones doing the most downsizing. A Turnkey System Last year. that is." says Pilzer. . People in this industry have long observed that when overall unemployment rises. . . Taylor has built a considerable degree of financial independence for himself.000 last year from his downline. "My downline is 98 percent African-American. Many veteran networkers insist that hard times are really the best times for the industry. My passion is to produce financially independent people in my community.400 people." says Don Held."With the downsizing of big companies. Agent compensation is enhanced by a multi-tiered system of commissions that promotes new agent recruitment and allows each agent to build an organization for himself. "But it's not going to be six billion people out on the streets selling pencils. what other 9|Page . in which "jobs" fade. "The system is ." Opportunities such as Network Marketing." In the process. because it frees up quality people for new opportunities elsewhere. But downsizing is positive.with fewer and fewer people. . During a recession.the world's largest financial services company-." says Michael Gerber. `Wait a minute. Hard Times = Good Times Experts agree that the Information Age will bring hard times to many people. people who have been procrastinating say. Citigroup-. "They really don't do anything until they absolutely have to." says Taylor. Reared on the mean streets of Detroit. a context. the analyst who wrote that passage had never heard of Network Marketing before. "Standard & Poor's views Primerica's agency force of over 110." Primerica representative Tyrone Taylor uses that "multi-tiered" system to fight a one-man crusade against poverty. laying off 10. He earned over $425. the whole economic structure of work is becoming different from anything it's ever been before. "The only thing that separates a poor person from a rich person is knowledge. Evidently. Primerica. while turnkey self-employment opportunities grow. But its Network Marketing subsidiary.
who made the issue one of five priority items on the agenda for his June 1998 China visit. we gained a glimpse of the power MLM will wield in the future: No sooner had the Chinese outlawed direct selling than they began to feel its backlash. confirms that Network Marketing has resumed in China. work and commerce will never be the same. In last year's Chinese crisis. "Even after the recession petered out. When it does. Direct Selling Association president Neil Offen discussed the ban in a personal meeting with the President. our own government questioned the very right of this industry to exist. He is also co-author. companies. they took off like a rocket. indeed legitimately invested. their growth rates remained higher than before. Negotiations continue over certain issues. decided to test this folk wisdom by looking up some statistics from 20 years ago on three major Network Marketing companies. insurance. because people need the money." Speaking on behalf of American corporations such as Amway. This is the roar of Wave Four. "when a government simply bans the activities of legitimate. "These companies have invested over $120 million in China and provide income to over two million Chinese. thundering like a distant but fast-approaching tsunami. at a news conference in Beijing. MLM will no longer require defenders. Obviously. and I've seen all the cycles." warned Business Week magazine. But today. California." In remarkable show of corporate solidarity. Win Wenger. the Chinese had already repealed most of the ban. the world's greatest superpower champions Network Marketing across the globe. with Dr. consumer products..choice do I have?' I've been with Amway 30 years." said US Trade Representative Charlene Barshefsky. of Antioch. that tidal wave will strike. Dictatorships crumble before its onslaught. and the parties involved are close-mouthed on the details. "The ban could spark a US-China trade dispute on the eve of President Clinton's state visit in June. Amway grows unbelievably during rough times. only three days after the ban was announced. Cook found a 50 percent growth spike during the 1973-75 recession. His most recent book is Black Spark. with the government's tacit approval. RICHARD POE wrote the best-sellers Wave Three and The Wave Three Way to Building Your Downline. according to Richard Holwill. But Chin-ning Chu. Amway's Director of International Affairs. electronics and even airline companies expressed support for Amway and other direct-selling companies hurt by the ban. Barshefsky continued. Avon and Mary Kay Cosmetics. Someday soon. of The Einstein Factor. Major corporations flock to MLM. "It is a serious matter. editor of MLM Insider." Rod Cook. "When the recession came. They recognized that an attack on direct selling was an attack on all legitimate businesses in China. The massive power of its corporate clientele will be the only calling card it will need. president of Asian Marketing Consultants Inc. Only 20 years ago." The Juggernaut The industry's defenders have argued for years that Network Marketing was an idea whose time had come. By the time the US delegation arrived." he says. But. in the Wave Four era. the goal here is to reestablish these companies' operations as soon as possible. 10 | P a g e .
Poe is based in New York City-. will appear from Prima Publishing Inc. 11 | P a g e .you can visit his website at http://members.White Fire. If you have any questions about Wave Four Network Marketing please contact us.aol. Mr.com/richardpoe. later this year. The forthcoming Wave 4.
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