In the past year, I have been invited and attended two network marketing events. For those unfamiliar with network marketing, it is often referred to as a “pyramid scheme” or “multi-level marketing.” Most recently, I heard it described as “empire building.” Regardless of what you call it, here are the things I’ve identified from it (having not read the full Wiki entry):
1. It’s purported as a way to gain financial independence.
2. It’s usually put on by older people who have been in the business for a long time and have now achieved a high level within the network.
3. There are more and more people showing up to these events since the economy is in a downturn.
4. It’s often described as, “work when you want, where you want.”
I’m not going to go into the process of elaborating on any of these topics, or disputing them. What I would like to talk about is how it plays on a type of marketing which is now becoming a very hot topic, word of mouth (WOM) marketing. WOM is often considered the best form of marketing. This is because it has the most trust, highest purchase percentage, etc. If you can get people to advertise to their friends, you pretty much sold your product. This has come to a swell because of… well… because of the groundswell. Don’t worry about reading that page too deeply. I’ll go into more depth about that book later (I love it!). The point is that Web 2.0 has made everyone realize the value of WOM and how it creates and sustains social networks. So now that network marketing has seen this trend, they are wrapping what they do around this idea. I think the truth is that network marketing has always been about WOM. It’s about creating relationships and getting people to work for you. WOM is about getting friends to buy things (not for your benefit) because you have their trust.