At the close of Part II, I made a WILD statement:
The only true pyramid is within a corporate structure where the people at the top ALWAYS make more money than the people at the bottom!
I can hear you scream, “What?!? A corporation is a pyramid? I thought the only true pyramid was a Ponzi scheme or multi-level marketing?!?” I went on to substantiate my statement by establishing that the CEO of any corporation earns off of or leverages on every single employee whether that CEO personally hired and trained the employee or someone else did; showing that the CEO, and only the CEO, earns on multiple levels of his or her company… just like a productive associate in a Relationship Marketing business – the Ideal Economic Business Model!
I concluded by showing that any associate in a Relationship Marketing (RM) organization is given the same opportunity as the CEO in a corporation, to earn off of multiple levels of coworker productivity and even EXCEED the CEO’s earnings if he or she is more productive than the CEO, due to compensation being strictly based on hard work and personal effort.
I went on to make another outlandish statement:
There is no more level playing field than Relationship Marketing (RM) and nothing more akin to the good old-fashion American dream, where a worker gets paid strictly based on hard work and personal effort!
Still not convinced? I understand. It really just takes an open mind and a slight change of mindset, especially because, since birth, you’ve been raised to believe a traditional brick and mortar business or corporation is the only honest business structure to be involved with. So, please stay with me because this is solely for YOUR benefit, not for mine. On the other hand, if you’ve obtained everything you ever wanted out of life, or you already work with a company that offers you the same opportunity as the CEO, click away and never return. I congratulate you. Well done!
If not, it would behoove you to continue reading because this article is the proverbial seed that could blossom and provide you with a king’s harvest if it indeed accomplishes its task, opens your mind and then inspires you to take the necessary steps to nurture its growth.
Okay. Let’s say you’re interested in getting a job, going into business for yourself or supplementing your current income. So, let me ask you this. Is it better to be hired by a private company or corporation, or be sponsored by a network marketing business? Well, let’s contrast the two.
Let’s suppose I start-up a new sportswear apparel company and I hire you to manage my sales reps and I offer you $40k per year for your managerial position. How did I come up with the number of $40k per year?
- Is that what you’re truly worth?
- Is that just my opinion of your worth?
- Isn’t it true that I’m going to pay you just enough money to keep you there?
- Isn’t it true that in turn you’re just going to work hard enough to earn the $40k and keep your job?
This reminds me of the old adage, “We’ll pretend to pay you if you pretend to work.”
The real question you should ask me is can I offer you the same or better opportunity employed at my traditional brick and mortar company than I have being the owner or CEO? Well, does my sportswear apparel business have a business model where everyone has the same amount to gain? No way! What traditional or corporate structure does? I’m afraid to say that the laws of economics today in the corporate world are this:
The business owner must maximize his or her benefits by minimizing the employees’ benefits.
However, in a Relationship Marketing (RM) organization I CAN offer you not only the same, but a better opportunity than I have. How’s that? Because I’ll be helping you build your company every step of the way. My actions will mirror your actions. It’s in my and your best interest to help you build your company. RM is the most ethical business structure I’ve ever experienced in my life because if I sponsor you, my success and your success are forever intertwined and dependent on one another. That will never change, and I can’t fire you and nor would I want to. Therefore, I believe that it’s far better to be sponsored into a relationship marketing company than to be hired by a corporation.
I realize that I might have created a question in your mind: If a RM company pays you on multiple levels of coworker productivity, doesn’t that drive-up the cost of the products to pay all those people? It sure does, in theory! But not in actuality. Let’s examine why.
In theory, if you have increased overhead (employee wages or product material costs) those expenses must be passed on to the end-consumer by increasing the product sale price. But in relationship marketing, although you’re paying more and more levels of people, it doesn’t mean that the products that go to the end-consumer are going to be more expensive. In fact, often times the products are LESS expensive than retail products of equal quality and value because, although the RM company adds costs to pay all those levels of people, they can afford to do so by the vast amount of money saved bypassing traditional distribution and advertising costs.
Brick & Mortar vs. Relationship Marketing Distribution Costs
Now, let me show you how the distribution of relationship marketing really works with a soda-pop example.
In a traditional method of distribution, the raw materials for soda-pop cost about $0.06 for the liquid and the aluminum can. Then approximately 6 mark-ups occur along 6 channels of distribution:
- The manufacturer marks-up the soft drink
- The national distributor marks-up the soft drink
- The regional distributor marks-up the soft drink
- The local wholesaler marks-up the soft drink
- The advertising budget is added to soft drink mark-up, and finally
- The retailer or restaurant marks the soft drink up and sells it for $2.00 = $1.94 total mark-up ($2 – 0.6)
Let’s assume the mark-up is the same across all distribution channels, that is, $1.94 ÷ 6 = $0.32 that gets allocated to each one of 6 channels. For traditional retail products, about 85% of the cost of the product is in distribution costs in order to get the product to the consumer, and 15% is the cost to manufacture the product.
Now, let’s apply the same example above to a Relationship Marketing company. As I said earlier, a RM company cuts the distribution costs. So, first of all, it costs $0.06 to make the product and the manufacturer needs to mark-up the product $0.32 to stay in business. Next, the national distributor (the same as the RM company) marks-up the product $0.32 to stay in business and the retail mark-up goes to you. Therefore, the RM company has 3 channels of distribution they’re saving on and spreads the savings throughout the company. First, the regional distribution mark-up is given to the manufacturer in order to make a better product and more product for less. That’s why product quality of RM companies is often superior compared to traditional retail products. Next, the RM company will generally allocate the savings from the local wholesaler mark-up to create a Research & Development department to continue improving its product and/or to develop new products.
Are you beginning to see that efficiency of the distribution network is the frontline defense against high costs that can diminish a company’s profits? Since a RM organization cuts multiple channels of distribution these savings are not only available to the company, but are passed on to you as well based on your hard work and personal effort. That’s not only an ingenious reward, but a FAIR reward in your control!
After the manufacturing, packaging and pricing are complete, the RM company needs a way to distribute their product. So, the RM company begins the process of recruiting distributors by offering them an incentive to earn the profit that the wholesaler, advertiser and retailer used to enjoy, which, of course, gives the distributors the opportunity to buy the products at wholesale and sell for retail; this is called direct sales.
Next, the RM company needs more distributors. They can either find distributors by themselves or give an incentive to their current distributors to find them for the RM company. So, who would be the most qualified party to find distributors, the RM company or current distributors of the products? The current distributors, of course, because they’re the ones talking to consumers on the frontline, who already have satisfied customers, who have the referrals and inside info to leads merely by marketing and selling the products.
Let’s contrast this with a mega-company like Johnson & Johnson (J&J). Who distributes J&J products? A lot of retail companies, right? So, who found all of those distributors for J&J? J&J sales reps that J&J hired and trained. These sales reps sometimes only receive a one-time commission for each distributor found, or if they’re lucky receive a commission each time the distributor reorders, but do not receive a commission every time a customer of the distributor buys or refers a friend to the distributor who buys.
The RM company creates a monetary incentive for distributors to find other distributors by paying them what they would have paid in advertising and to hire and train sales reps to do the same. Plus, they give you ongoing commissions for product reorders from the distributors you recruited for the RM company, as well as for the distributor’s customers and the distributor’s distributors and their customers too, as an incentive to continue to find and recruit more distributors for the RM company’s products; sometimes up to 6-10 levels deep of distributors and their customers; leveraging on everyone in your organization just like a corporate CEO!
So, in this example the RM company has removed 3 of the traditional channels out of the distribution chain (the regional distributor, the local wholesaler and the advertising budget). This way, the RM company creates an opportunity for you to earn income from marketing a product and building a team of distributors while keeping the price of the products the same.
So, why is being a distributor for a RM company so appealing to so many people?
- You get to buy high quality product at wholesale
- It’s business ownership without business headaches – low start-up, little to no inventory, no employees, no manufacturing, no warehousing, no packaging, no shipping, no payroll, no printing, no accounting; the RM company handles all of those business functions and the distributors are free to just build their companies and be the marketing arm of the RM company
So, why does Relationship Marketing work so effectively? Well, who is the best person to market a product or service? A satisfied customer! This is word-of-mouth advertising not unlike when a friend of yours sees a good movie and tells you about it, has a new Smart Phone and tells you how much she likes it, or how she recently dined at a new restaurant and tells you how fabulous the food and ambiance was.
So, what is your friend doing by telling you of her experiences? Selling by word-of-mouth! But if you asked her if she was a salesperson, she would probably deny it. Yet the restaurant, movie and cell phone industries just got free advertising and perhaps a sale if you act on the new info you just received from your friend.
And doesn’t it make sense to be compensated for what you recommend? The reason why word-of-mouth advertising works better than any other form of advertising is because it’s based on relationships; and relationships have what traditional advertising will never have… TRUST!
Let’s look at a quick example. A telemarketer calls up your Aunt Alexa and tells her that she can save 20% on your high-speed Internet bill if she switches over to the XYZ company. Aunt Alexa says, “No thanks. I’m happy with the service that I have.” The telemarketer is confused why your aunt won’t switch Internet services for such incredible savings. It’s due to lack of trust, that’s why.
Now, this time, you call Aunt Alexa and say, “Hi Auntie. I’m with a new high-speed Internet company that offers 15% savings on your cable bill and if you find 6 people who could also benefit from this new Internet service, you can get your high-speed Internet for free. Plus, you would really help me out in my new business I just started, so will you switch to help me out and begin saving 15% per month with a chance to get free high-speed Internet service?”
No other form of marketing comes close to that kind of advertising power!
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(This article content was conceived from a concept by Tim Sales)
Click here–>To watch Tim Sales speak on this subject