In my recent 5 fatal flaws in network marketing post, I mentioned behavior saturation:
5. Timing - Two places you do not want to be involved with in a company's history. The ground floor and the ceiling. A company that is less than 5 years old is still a baby and they will go through growing pains (if they survive). Companies that hit the ceiling will be very difficult to build, not because their product is saturated, but because their behavior may be saturated.
A reader asked the following question:
What do you mean by their behavior is saturated?
Product saturation in Network Marketing has never happened. New people still buy vitamins, make-up and phone service every day. Frankly, there has never been any proof of product saturation in the history of Network Marketing.
However, information and reputation saturation seems very possible.
What do you think about when you hear "Amway"?
Most people think about the bad behavior of someone who was involved.
Do a Google search for Amway or it's web replacement, Quixtar and you will find pages and pages of negative information. In my opinion most of the information is true and well deserved, making it very difficult to build a Quixtar business.
Amway and Quixtar suffer from information saturation as a result of their (and their high level leaders) bad behavior. In the last 10 years, Amway has not really shown any growth, but Direct Selling as an industry as doubled in volume to nearly $30 Billion!
If Amway/Quixtar change their behavior, (and a few other things), I think you would see them grow in pace with the industry.
Ty, I doubt whether Amway will be able to rectify its situation.
You need three things for a good NM company
1. A huge expanding market. If every year the use of your product declines, you are gonna have to work harder and harder to make more money
2. A unique consumable product. If it is unique then people must come to you. If it isn't unique then you compete on price and convenience
3. Timing. You need to know about something before anyone else does.
Let's use the buzz marketing principle here, I believe NM goes through a similar process. At the start there is a couple of people in the know, they spread the buzz and all of a sudden there is exponential growth. After that exponential growth starts a decline. There will still be people clicking through to the buzz, but a large/exponential growth will never be there again. And then after a while they take the website down. Has anyone got an example of where the buzz has re-occurred? I'm sure there must be 1 or 2 exceptions.
In the 70s it was cosmetics and housewares, in the 80s it was herbal remedies and vitamins, in the 90s it was long distance and legal services.
It's not about whether people still buy cosmetics and vitamins and housewares. They always will. But it's about the trend.
As a NMer ideally you want to find a company that has the next big trend and then you want to cash in on that.
If you are not in with the first when a company starts you will always find it harder to shift product and you will always find it harder to get distributors on board, because the buzz is dying down. There is so much frustration in NM just because of that. And that's when distributors begin to get manipulative and NM gets a bad reputation ...
Posted by: Tom De Nert | June 12, 2006 10:46 AM | Permalink to Comment