Network Marketing Business Journal Industry Trends

The Network Marketing Business Journal founded by Dr. Keith B Laggos observed the following trends in the network marketing industry.

“By Dr. Keith B. Laggos

As the founder and publisher of Network Marketing Business Journal (NMBJ); the direct sales and network marketing industry trade publication for a quarter century, I can observe what transpires in the direct sales and network marketing industry. I have noticed the following few trends developing in the industry.

1. Juice wars

Products and product categories have product life cycles. Some product life cycles last less than a year, while some product cycles last centuries.

At the end of last century, exotic nutritional juices exploded into the network marketing scene. Since then over a hundred direct sales companies offer an exotic nutrition juice.

Each new fruit seems to spout another explosive billion-dollar network marketing company. The newest such fruit is the maqui berry. Copycat companies often pop up quickly. The juice companies with combinations using that new juice then occurs. That is followed later by cheap imitations in the retail market.

The latest trend is that the original billion-dollar exotic juice companies are diversifying by introducing additional products. This could be an indication that we are entering the saturation stage of the product life cycle of exotic juices. The major, well-funded, established companies that are diversifying may continue to fare well. New start-ups may find they’re in a saturated market and have difficulty in obtaining market share.

2. Binary Plans

More companies are entering the direct sales or network marketing industry using the binary commission structure. Some established companies are converting to a binary plan.

Many leaders prefer binary plans. They are able to achieve the qualifications to earn maximum payouts. Leaders’ incomes can grow large fast as they earn on all the volume down their weak leg without limits on levels or depth. Leaders can earn even more income in multiple generations of matching bonuses than the binary commissions. However, the trend is that companies prorate these matching bonuses first and more than the binary commissions, which are often individually capped. This can lead to diminishing returns for continuous building in mature companies using the binary structures. This could lead to a shortened company life cycle.

However, the trends for beginners and smaller distributors in binary compensation structures are not as rewarding as for leaders. It takes longer in all binary plans to earn a commission override. Far fewer distributors earn a check each month in a binary structure than in a uni-level and other compensation structures.

The popularity of binaries is still growing, but this trend may be reaching a pivotal point. But binary plans will remain popular.

3. Sales and recruiting trends

With the economy struggling and unemployment exceeding 10 percent, you would expect recruiting in direct sales and network marketing to be up. Recruiting is up, but so is attrition. People and families need more income on one hand, but must also cut expenses. Some expenses such as mortgage, utilities and food costs are difficult to cut. However, many direct sales products can be cut back. Many direct sales companies are experiencing a reduction in autoship orders. The average orders are on a downward trend. More distributors are ordering less frequently.

Price and value has become an important consideration. Companies with higher priced products or higher qualifications tend to find a higher rate of attrition from those not in profit than before.

The amount distributors are spending on marketing has also gone down. They are trying to cut these marketing expenses. This is a Catch 22 situation. Because they are spending less in marketing, more are not getting into profit causing the high attrition.

Companies with low entry cost or that have marketing systems or compensation plans to help new distributors to get into profit fast or have great momentum that helps distributors to get into profit faster will tend to have lower attrition and fare well in these struggling economic times. The time period for distributors to break even has decreased from 90 days to 45 days, on average.”

This article was taken from the Network Marketing Business Journal and I do not take credit for it in any form.