Behind the hype of network marketing and ‘rapid success’

People with bachelor's degrees comprise the largest population of 76.5 percent, followed by Master’s Degrees (11 percent), MBA (7.5 percent), Associate’s Degrees (4 percent), and PhD (1 percent).

Social media platforms, especially Instagram, are overflowing with memes or jokes about how network marketing professionals become honchos at the age of 18 with a matriculation certificate.

Network marketing professionals themselves put up videos showcasing their “rapid success” of owning a car and sometimes even a house, spending comparatively less time than other jobs.

However, it's not as simple as that.

According to data gathered by specialist staffing company Xpheno for Moneycontrol, the compensation range starts from under Rs 3 lakh per annum (LPA) and goes up to Rs 25 LPA for experienced senior talent. The average salary is about Rs 10 LPA -12 LPA for professionals with 6 to 10 experience.

However, there’s a catch. In network marketing, a company sells products or services through a network of distributors or representatives. Distributors earn commissions not only for their sales but also for recruiting new distributors into their downline. To be sure, the network marketing professionals are still predominantly self-employed or do this as side-gigs.

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Hence, putting “success stories” on social media acts as a reach-out mechanism for these professionals.

“We believe the upside potential of earning is in the form of success-based variable earnings for conversion and revenue contributions. As fixed packages, the standard salary levels seem to apply for the roles,” Prasadh M S, Workforce Research & Communication Specialist at Xpheno told Moneycontrol.

The gig

To join a network marketing company, individuals usually need to register and purchase a starter kit or products. Distributors are often required to meet minimum purchase requirements to remain active and qualify for commissions.

One of the distinctive features of network marketing is the emphasis on recruiting new members. Distributors earn commissions not only on their sales but also on the sales made by those they recruit and the recruits further down the line.

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What differentiates such firms from genuine ones is the focus on recruitment rather than the product. Emphasising recruitment over product sales may indicate that the company is operating more like a pyramid scheme, where the primary source of income is derived from recruiting new members rather than selling legitimate products.

“Many times, false advertisements and higher pay promises are made by certain organisations to pull network marketers. To build a network that allows a person to earn more than Rs 1 lakh in addition to incentives or income per month takes quite some time to build,” said R P Yadav, CMD of Genius Consultants, an HR consultancy firm.

Although Yadav agrees that a person may crack the right code and earn lakhs immediately after starting, he observed that many profiles on social media today falsely announce such lucrative income opportunities to attract the youth.

What does the market say?

Individuals often take on roles such as independent distributors, representatives, or consultants. The specific job profiles can vary depending on the company and its product or service offerings.

For example, even candidates who have passed the matriculation examinations, housewives, retired professionals, and students, are very active in selling insurance products. For selling products such as mutual funds, graduates, postgraduates, or people having entrepreneurship abilities are very active in network marketing schemes.

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According to Xpheno data, there are more than 12,000 network marketing professionals experiencing a churn of 12 percent in the last 12 months. The talent pool size has been nearly stagnant over the last 24 months but has 3,000 active jobs.

People with bachelor's degrees comprise the largest population of 76.5 percent, followed by Master’s Degrees (11 percent), MBA (7.5 percent), Associate’s Degrees (4 percent), and PhD (1 percent).

“People with matric certificates or 12th pass are usually less in number. We use certain cases to showcase how successful a candidate with a bachelor's degree can become if he/she compares with 12th pass,” said a network marketing professional who is a Team Lead with eight years of experience.

“Days are sometimes hard but manageable since you never know how much sales will be made at the end of the week. It all depends on your network, mainly families, and of course the skill of putting up a sale,” he added.