A BRIEF HISTORY OF NETWORK MARKETING
By Jeffrey A. Babener
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Cycle 7. The 1980's: America Discovers Network Marketing
In the 1980's, Network Marketing came into its own. The stage was set for MLM, also referred to as Network Marketing, to become the dominant style of direct selling. Most new startup companies used MLM formats. Companies that had previously utilized pure direct sales or party plan approaches built MLM elements into their programs. Even Avon, the flagship of the direct sales industry, would find itself adding sales organization override bonus incentives. A number of factors epitomized the turn to Network Marketing.
The term "network marketing" was first utilized by MLM companies in the 1980's. Some felt that the term "direct selling" was old fashioned. Others felt that the term "multilevel marketing" had developed a stigma after the Turner days. The term "network marketing" was embraced in a decade when "networking" became a buzzword for a positive way to engage in social and business relationships.
The industry had learned valuable lessons from the 1970's. First networkers had learned ethics parameters on how to do business from the mistakes of the Turner-type programs. Second, the success in the Amway FTC litigation removed a heavy cloud over this method of marketing, and "all systems" were "go" for MLM and network marketing.
Technology changed the industry forever.
Advances in computer technology for managing genealogical downline information meant that, unlike Amway and Shaklee, distributors in new MLM companies would all order directly from the company rather than from direct distributors. The technology was now available and cost affordable, for even small companies to track and supervise large downline organizations.
Next day and second day delivery of the sort ushered in by Federal Express and UPS again eliminated the need for direct stocking distributors because inventory could be delivered fast and efficiently direct from the company to each distributor.
Low cost corporate and sponsoring videos became a mainstay and facilitated long distance sponsoring. While there has never developed a substitute in the recruiting process for "meetings" or "pressing the flesh," the use of video and audiocassettes became great vehicles for recruiting and getting out the message.
Although Shaklee had already led the way in vitamins and Amway in environmental products, in the 1980's MLM companies emerged as trendsetters in many areas. Cambridge helped introduce America to the meal replacement liquid drink. (Probably, Slimfast became the ultimate beneficiary to the weight loss market.) Prepaid Legal Services pioneered the concept of prepaid legal services for the mass market. A.L Williams led the insurance industry for sales of term insurance using this method. NSA introduced America to water filters. Network 2000 penetrated the residential customer market for U.S. Sprint, signing on over 3 million customers, and paving the way for the later success of Excel and American Communications Network to open residential markets for major carriers. Herbalife and Sunrider moved the boundaries of public interest beyond vitamins to herbal health care products.
Network Marketing seemed to fit with the times in the 1980's.
Corporate America was downsizing and job security was no longer.
Statistics showed that most new jobs were coming from small business.
The era of "home-based" business had begun, and suddenly there were millions of home-based businesses.
The term "networking" was a buzzword in every newspaper and magazine.
Everyone wanted to be an entrepreneur and get in on the "entrepreneurial revolution."
Even the IRS was recognizing this area, having specifically recognized independent contractor status and publishing specific publications for "direct sellers."
For individuals in the 1980's, this avenue seemed to be attractive:
It allowed individuals to "get in on the action."
Individuals could participate with a virtual zero cost investment.
In an impersonal corporate world, the individual had more control over his or her environment.
MLM seemed to allow for social networking.
The business seemed to accord some needed self-esteem and recognition.
For many, networking provided extra income.
For many, there appeared to be very real tax benefits.
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