• John Pluck

Network Marketing's Social Media Wave

Network marketing is a fascinating and dynamic business. A business ahead of its time - originally focused purely on selling products to the market face to face - through a network of distributors who recommended them to friends and family. That made it hard for distributors to develop a large customer network and so business growth was usually slow.

To expand your network you needed to do lots of that face to face networking which, outside of large towns and cities, was not easy. Beyond that there was the telephone, which was very expensive, and post. Still many people created successful and long-standing businesses. For those network marketing veterans, the first big move forward was the fax machine.

No network marketer in their wildest dreams could have imagined how the internet would change everything! Social media is a gift, but it needs to be used wisely.

Two things have happened over the last few years.

Firstly, social media has made it incredibly simple to connect with thousands of people at virtually no cost which means network marketers can develop a business ten or a hundred times faster than used to be the case.

And secondly it has given a huge boost to the industry and made it the number one choice for younger generations to create flexible businesses around their aspirations. So the average age of network marketers is getting younger.

Looking at the figures for the UK, being the market I know best, it’s fascinating what they reveal! These figures are extracted from statistics provided by the European and World direct selling associations.

Network marketing has been growing steadily, even though the financial crisis.

The UK is particularly interesting because distributors here were some of the earliest adopters of social media. This seemed to kick off in 2014 and continued through 2015 creating an astounding growth in distributor numbers – from 420k to 625k in two years.

The young pioneers behind this trend were generally new to the industry and lots of these distributors were attracted to join direct marketing companies, because they thought it was an easy way to make money. It isn't of course so many of these distributors quickly dropped out creating the UK’s first social media wave of distributors. You see the same pattern in other European countries and the US but with the benefit of experience they are not likely to see the same drop off that was seen in the UK.

I am concerned that good companies prosper by giving new distributors realistic expectations, but this should happen as prospective social network marketers become more savvy and steer away from companies that over promise.

It seems that the correction in distributor numbers has completed and growth will pick up again from 2018 at a more sustainable rate. But, almost unmoved by this wave, the actual sales of products in the UK via network marketing, have continued to increase at a uniform rate from £2b in 2012 to £2.87b in 2017.

The figures were certainly given a small boost by the increase in distributor numbers, through social media, but it’s likely that the distributors who dropped out of the business quickly generally did so because they never seriously embraced the business. In 2017 the growth of network marketing throughout Europe was 3.5%.

Throughout this period in this graph the UK the ratio of women to men in direct sales has remained at 75% to 25% apart from 2015 when it shifted to 77% / 23%, which is because a lot of this social media growth was focused on skin care and makeup.

The market has quickly stabilised and I believe the future is very positive because the Network Marketing model is a robust and ideally suited to new trends in home and flexible working.

It’s been around a long time but now it’s entering a potential golden era.

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