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People often ask about MLM/direct selling’s history with the government. It’s a long history. At times it’s been bad, and then it has been good. Then it has been bad. Then good. It’s been somewhat reciprocal. Multilevel marketing, and the industry, basically began in the 1950s with Mary Kay, Shaklee and Amway. Imposters came along in the 1960s, operating pyramid schemes, namely the Dare To Be Great program in which people were recruited to get people to seminars where they would pay large sums of money. In turn those people would recruit others and get them to pay money. This caused the Federal Trade Commission (FTC) to take a look at our industry.
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Giant corporations have marketed some of their own products and services through network marketing. For many corporations who observed some of the earlier successes of this alternative channel of distribution, a number of conclusions were reached.
1. It was a great way to introduce brand new products.
2. It seemed to work well for products that needed demonstration or testimonial.
3. It was a great way to reward the consumer for sharing excitement about products.
4. This method could result in rapid penetration of the market.
5. In that commissions were only paid on the movement of product, and massive and costly advertising campaigns could be avoided, it seemed efficient and economical.
6. In recent years, corporations expanded offerings far beyond home and personal care products to offer consumer services such as telecommunications, prepaid legal representation, financial products and consumer member benefits packages that offer customers significant savings across the board.
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Picture this – one sales call from you triggers sales presentations to 10,000 customers. Can it happen? Yes. How?
Network marketers should not overlook a golden opportunity to promote sales through nonprofit or charitable organizations. The distributor makes money and so does the organization.
The network marketing industry has become attracted to nonprofit organizations (NPO), their members and friends as a vast potential source of distributors. Handled correctly, the benefits of a networker’s involvement with an NPO are mutual and substantial. The tax-exempt organization receives a source of funds that are necessary to carry out its functions and to support the causes that are deemed worthy enough for tax-exempt status. The network marketing company gains access to a potentially large and motivated customer base.
In recent years, nonprofit organizations have played a growing role in network marketing sales. Overnight, the membership of a charitable organization may become an instant sales organization of hundreds of thousands. The charitable organization raises these funds for worthy causes and a network marketing company finds a new market for its products, all in all, a very sound match.
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Picture this – one sales call from you triggers sales presentations to 10,000 customers. Can it happen? Yes. But how?
Network marketers should not overlook a golden opportunity to promote sales through nonprofit or charitable organizations. The distributor makes money and so does the organization.
The network marketing industry has become attracted to nonprofit organizations (NPO), their members and friends as a vast potential source of distributors. Handled correctly, the benefits of a networker’s involvement with an NPO are mutual and substantial. The tax-exempt organization receives a source of funds that are necessary to carry out its functions and to support the causes that are deemed worthy enough for tax-exempt status. The network marketing company gains access to a potentially large and motivated customer base.
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(Read Part One of this post here.) One leading business journal lists seven more red flags the IRS focuses on when looking to audit taxpayers:
1) Comparative size of deductions to each other. An item that is large in proportion to other deductions will draw more scrutiny.
2) Absolute size. A huge deduction, regardless of the accompanying deductions or the income shown on the return, will draw more scrutiny.
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