Network Marketing, there's good news, and there's bad news - and the great news
is that, for you, they're both good news.
In good economic times, people are less interested in career
alternatives but they can easily afford to buy more consumer
goods. In bad times, they crave new business opportunities. Today, we
could soon be facing global recession - and tremendous worldwide
opportunities for you.
U.S. and worldwide, people are beginning to worry. Once they start worrying,
they quit spending money. This "psychology of fear" fuels bigger recessions.
I'm not saying there is going to be a depression, which is much worse
than a recession. What I am predicting, based on surveys conducted by
our company (which have proved exceedingly accurate over the past 20
years), is higher unemployment and underemployment - good people forced to
work for less money than their qualifications would warrant. Translated:
pushed to work for trashcan wages.
General economic theory holds that there tends to be a recession
about every eight years. The entire history of the modern United States
reflects this boom-and-bust cycle. Consistently, Network Marketing has
grown during the "down" periods.
PER CNBC CURRENT VIDEO click
In the chart below note that during the depth of the recession
indicated by the blue dotted line retail sales by major retail
outlets took a dive. Direct sales (90% are MLM) shown by the solid
yellow line jumped as store front retailing dropped like a rock!
Today history repeats itself!
Source: DSA and MLM
When recession hits,
those with any intelligence are going to scramble to find alternative
sources of income. In their frantic searches, they are going to find
that the best of all alternatives is Network Marketing.
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relationship between low-cost entrepreneurship and economics is
important. During the past few years, the world economic boom has made
people complacent. In the U.S., the jobless rate dropped to all-time
lows of less than five percent. People had to be sick, lame, or lazy not
to get a job. Hamburger flippers got higher-paying jobs, such as
assembling computers, and their incomes rose. Rather than looking for an
alternative to a job or seeking extra income, these folks sat around and
When recession hits, those with any intelligence are going to
scramble to find alternative sources of income. In their frantic
searches, they are going to find that the best alternative is MLM also
Another factor that fueling the growth in
Network Marketing is that
many Baby Boomers have put their life savings into the stock market.
With the market's shaky up and down spirals, many Baby Boomers are
slowing their high-flying, fast-spending ways due to meager savings except for
stocks. With the inevitable, cyclical decline of the stock market, they
will see their retirement plan funds lose 25 to 50 percent in value.
Will panic will follow? We hope not! But, Baby Boomers with
good sense will be looking for secondary
ways to build a secondary residual retirement income. A common
phrase today is, "multiple streams of income."
Grab your hat and prepare for the next boom in Network Marketing. If you
are a newcomer, study the industry closely (and quickly). If you are an
old-timer, get out your contact lists for the last two to ten years. In a recession, they will be solid gold! All
you have to do is get out there and help people out of their economic
Now is the best time to grow your Network
Marketing individual business or start your
you are a veteran or a beginning network marketer, the future is bright.
Soon consumers will be looking for the best quality at the best prices.
Where do they find it? In the quality products offered by your Network
Marketing company .
Recession causes people to open their minds to gaining alternative
sources of income. If they are still employed, they are worrying about
the possibility of losing their jobs or having them downgraded. If they
are unemployed, they are seeking ways to build their income without
spending large amounts of money to start another business.
Rod Cook B.s., M.A., M.B.A.:
is recognized as THE major researcher in the MLM - Network
Marketing world on economics and MLM Compensation pay plans. His majors include many hours in
mathematics giving him research tools no others in the MLM have.
Rod keeps a list of over 1500 U.S. MLM companies (plus over 100
foreign companies operating in the U.S.) on his MLM Company
World Directory (see www.mlmwatchdog.com) this alone is a research tool
no one else has as far as what MLM compensation pay plans survive.
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MLM & BAD ECONOMY
HISTORICAL PERSPECTIVE FROM 2002
RECESSION = MLM BOOM
By Len Clements
REASON #1 THE ECONOMY
I have always had the belief that the condition of the U.S. economy did
influence the condition of network marketing, somewhat, but not
significantly. I based that belief on the simple conclusion that there
was never an economy where people didn't want more money and more free
time. In fact, a few months ago I set out to write an article debunking
this age old assumption that bad economic conditions favor network
marketing. I began to really do some digging to find as much evidence as
I could to support my contrarian position. And what I soon discovered
was, I was wrong. The fact that one of the strongest growth phases in
network marketing history, which occurred between 1990 to '92, also
coincided with the last economic recession should have been a clue. But
there was so much more.
First, an analysis of unemployment rates over the decades is key here.
After all, the want for network marketing is created by the desire for
alternative sources of income, and income sources that we have control
over. And when we compare the popularity trends of network marketing to
unemployment rates, on a semi-decade basis, there are some intriguing
and very exciting revelations.
Although multilevel marketing existed as far back as 1936, for all
intents and purposed MLM really began in earnest in the 1950s. So let's
start there. Now, tracking MLM popularity trends is somewhat subjective,
but surely there would be no argument that network marketing was far
more popular in the second half of the 50's than the first. Not a single
company of consequence launched from 1950 to 1955, however industry
giants Shaklee, NeoLife, and Amway all came into existence from 1956 to
1959. The unemployment rate the first have of the decade averaged 4%,
and was the second lowest in U.S. history in 1953 at 2.9% (only
during WWII was it ever lower). However, it averaged 5.3% the second
half of the decade reaching it's highest level since the Great
Depression in 1958 at 6.8% (Rod Cook note the Amway launched - the
second time). Although the difference may seem small from a
statistical standpoint, translated into today's numbers that would mean
almost 6 million more people becoming unemployed between 1953 to '58.
The first half of the 1960's all types of direct sales continued to
flourish with the launch of Mary Kay Cosmetics in 1963, and companies
such as Avon, Fuller Brush and Tupperware all achieving momentum.
Although the industry continued to grow from '65 to '69, it was not
nearly at the same pace with no new major company launches taking place.
The unemployment rate the first half of the decade was significantly
higher than the second half when 2-and-a-half million unemployed people
went back to work.
Let's jump ahead to the 1980's. Again, few MLM veterans would disagree
that the first half of this decade definitely outperformed the second.
Although there were about as many company launches in each half of the
decade, there are actually more companies that launched during the first
half that are still in business today than during the second. While
network marketing flourished from 1980 to '85, the rest of the decade
saw some of the worst fiasco in network marketing history. Also, another
indicator of MLM economic conditions is the number of legal actions.
During industry slumps companies and distributors tend to be more
aggressive and take greater risks. The number of law suits almost
doubled during the second half of the 80's compared to the first. And,
while network marketing was thriving the first half of the 80's,
unemployment continued to rise. In fact, in 1982 it was at it's
highest level in 40 years at 9.7%. During the second half MLM slump
unemployment dropped considerably, and by the end of the decade the
number of those out of work was almost half of what it was at the
beginning of the decade.
The 1990's saw perhaps the clearest distinction between halves of any
decade with more major company launches and more companies going into
momentum than any other time in history. There was also more wealth
being created by way of MLM from 1990 to 1994 than any other 5 year
period in network marketing history. The second half, as many of you
probably still remember, wasn't exactly the best of times for network
marketing. In fact, if there ever was such thing as an MLM recession,
we had one from about 1996 through 1999. Why? One reason may have been
the very high unemployment rate from 1990 to '94, and the sharp drop
during the second half of the decade where it hit a 30 year low at 4.2%
The only exception to this half-century long pattern is the 1970's, but
that was an exceptional decade. Remember, the last half of the 60's
industry growth slowed as unemployment dropped to a post-war low. During
the first half of the 70's network marketing started rocking again as
unemployment rates jumped. Unfortunately, all that rocking started
rocking some boats, and the result was over five times as many MLM
related law suits from 1970 to 1974 than all of the 50's and 60's
combined. These included landmark cases involving Koscot, Bestline,
Holiday Magic, Culture Farms, and others, and in 1975, there was a
federal action which essentially questioned the legality of network
marketing in general. Fortunately, one company, Amway, had the financial
ability to defend themselves, and in essence, the entire multilevel
marketing industry. This case lasted until late 1979 when the court
eventually ruled in favor of Amway and as a result there was, for the
first time, a clear delineation between illegal pyramids and legitimate
network marketing companies. So, obviously, there was a pretty dark
cloud hanging over the industry the last half of the 70's and there
wasn't a lot of expansion in spite of the even higher unemployment rate.
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The last, and arguably greatest MLM growth phase began in 1990, the same
year we went into our last economic recession. And, again, from 1980 to
'84 were boom years for network marketing and we experienced recessions
in 1980, part of '81 and most of '82. Nineteen-seventy to '74 were also
boom years, and our economy was in recession almost all of 1970, and
1974. Remember how the last half of the 50's and into the early 60's
were years of great MLM expansion? We were in recession from '57 to '58
and most of 1960. In deed, every severe economic downturn in the last 50
years has been during, or immediately preceded every period of network
We're not done yet. According to figures supplied by the Direct Selling
Association, not all, but most of which is made up of network marketing
companies, U.S. sales increased from 1990 to 1992 by an annual average
of 9.25 percent. That was during our last recession. From 1997 to
2000, at the peak of our last economic boom, annual sales within the
direct selling industry increased by a little more than half as much.
Clearly, the condition of our national economy absolutely does effect
the condition of the network marketing industry.
So where does this lead us? Well, as I write this it's early 2002 and
we are in a recession, and have been for several months. Most
recessions last around 12-18 months, but that doesn't mean that when a
recession is over, so is a slumping economy, or high unemployment rates.
And again, it's rising unemployment rates that are most closely tied to
rising interest in network marketing. Here's a rather remarkable fact -
we've had eight recessions in the last 50 years, and during the 12
months immediately after the end of the recession the unemployment rate
went up! Every time. What's more, most economic experts today are
predicting a much slower recovery than that which followed previous
downturns, followed by volatile economic swings for the next several
Leonard Clements has concentrated his
full-time efforts over the last twelve years on researching and
analyzing all aspects of Network Marketing. He is a professional speaker
and trainer, and currently conducts "Inside Network Marketing" seminars
throughout the world. Len is the author of the controversial book
"Inside Network Marketing" (Random House) and the best selling cassette
tapes "Case Closed! The Whole Truth About Network Marketing" and "The
Coming Network Marketing Boom." To receive additional information about
MarketWave and its products, please call 1-800-688-4766, or write to
MarketWave, Inc., 2406 Canberra Ave., Henderson, NV 89052
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