The potential of network marketing in the CIS countries. How to deal with bad heredity

The global network marketing market grows by 20-25% annually, with over 100 million people involved. Compared to the development of the global MLM segment, the potential of the industry in the CIS countries is practically untapped. In this article, we will explain why this has happened and describe the reasons why businesses should pay attention to direct selling methods.

Global Network Marketing Statistics

Overall, the network marketing industry is one of the fastest-growing economic systems in the world. Currently, the average annual volume of the global MLM market is around $200 billion.

Based on research from 2020, we have answered popular questions about MLM:

- In which countries is network marketing most developed? The leading positions in the industry are held by USA - 53% of all network companies are registered there. By the way, more than 20% of American companies recorded positive revenue growth in 2020. Next are Chinese organizations - they make up 12% of MLM industry representatives. Japan is in third place - accounting for 5% of the market.

- What percentage of MLM companies are successful? 23% of all network companies show steady growth year after year. Among projects created after the year 2000, 32% have become successful.

- What marketing plans are more common? In most product companies, a linear (single-level) compensation plan is implemented; the next in popularity is the binary marketing. You can see a comparison of them in our

- What is the most popular category of products? 61% of companies occupy the niche of beauty and health products. However, networkers offer a variety of products - from travel vouchers and insurance policies to cars and agricultural machinery.

- Which category of products/services showed the highest growth? The highest growth rate is in cryptocurrencies - 88%. To delve deeper into this topic, read our forecast of the future of the crypto industry in the 2020s.

Is Network Marketing Popular in the Russian-Speaking Society?

The Russian market is valued by WFDSA at $2.48 billion, ranking 14th in the world. Only one Russian company, Faberlic, made it to the TOP 100 MLM leaders (according to the DSN Global-100 ranking), with an annual turnover of $563 million.

In our blog, we have discussed the history of MLM development in Russia and compiled the TOP local network companies.

Russia, like other CIS countries, has huge untapped development potential in this niche. Analyst at "Freedom Finance," Alexander Osin, suggests that the annual turnover of the Russian MLM segment could reach at least $4.4–5.8 billion per year. One of the most significant reasons for the low popularity of network marketing is the population's distrust towards this sales method.

Reasons for the ambiguous reputation of MLM in CIS countries

Russian-speaking society has a somewhat ambiguous attitude towards MLM. Recognizing the effectiveness of network marketing in promoting products, some have started using its methods in fraudulent schemes. Now, comparing MLM sales system with pyramids (for example, the organization "MMM," which was popular in the 90s), there is a belief in society that any network company is a skillfully crafted scheme to deceive partners.

To learn to distinguish honest business from scammers, read the article Network Marketing VS Pyramids. Also, in our blog, we have addressed the issue of punishments for creators of such projects.

Also, the reputation of network marketing has been negatively affected by networkers themselves, who used aggressive methods of product distribution, lied about product characteristics, and made reckless statements for profit. It is precisely because of the greed and pushiness of their predecessors that modern entrepreneurs do not always promote themselves "openly."

Business has learned to modify and adapt its methods to its projects. We talked about this in the article What Network Marketing Is Disguised As

It is gratifying that in recent years society's attitude towards network marketing has become more positive. The reputation of network marketing is gradually being brightened, and transparent and honest companies towards their partners are entering the market.

How to Combat a Bad Reputation

Essentially, active protection of network marketing is already underway. It is noteworthy that more and more young people are starting their businesses with MLM companies and are proud of it. Continuing to "brighten" the reputation of network marketing can be done in the following ways:

- Physically. First and foremost, the product range of companies is critically important. The product must be uniquely, licensed, and impeccable in terms of quality. Otherwise, no one will recommend it to friends, and this is the main principle of direct sales.

Secondly, the company must have real registration in the country where the business is conducted. Here, CIS countries should study the legal experience of Asian countries, such as Vietnam and China.

Thirdly, payments to partners should be made honestly, transparently, and clearly. For this, it is important to develop a clear marketing plan for partners

- Morally. Objectively, network marketing is closed and not understood by the mass external audience. To fix this, companies need to be as honest and open as possible to people: provide contacts of real leaders and newcomers with truthful reviews about the work; not be afraid to declare themselves in the media and other open sources of information; conduct presentations and other mass events, inviting journalists, etc.

Network business depends primarily on the loyalty of consumers to the product and partners to the company. Earlier, in our blog, we already published material in which we talked about ways to increase people's loyalty to the brand.

- Technologically. If you can make the company more innovative - do it. Apply new technological solutions in your work and don't forget to update the functionality of websites and accounts in line with current trends. 

For example, add new payment systems that are more advantageous and easier for your distributors.

Why Multi-Level Marketing Methods Are Essential for Business

Network marketing is one of the most effective business promotion systems. By integrating MLM methods into your company's business processes, you gain new opportunities:

1. Activate a new sales channel. This way, you will attract new customers, increase sales volumes, and consequently, revenue.

2. Create a network of loyal consumers and product distributors. Partners act as seller-consultants, engage in marketing the company, selling products, and recruiting.

3. Build a culture of consuming your products. Gradually, if partners are satisfied with the collaboration and product quality, a complete culture of consuming your products will be formed.

A good impression = a satisfied loyal consumer.

4. Increases the profitability of the enterprise. At the very least, overhead costs for distribution and warehouse storage of goods will decrease.

5. Gather "brand advocates" around you. Your consumers and partners will actively advocate for the company's interests at all levels - from web conferences and public statements in the media to friendly conversations and comments on social networks.

6. Achieve high conversion rates across all promotion channels. Since brand popularization is always in the interests of the structure's partners, distributors will help and support the effectiveness of the project's marketing promotion channels.

7. Can you guarantee the quality of the products. Due to the transparency of supplies and the absence of intermediaries, consumers will receive high-quality goods directly from the manufacturer.

8. Can you quickly and practically distribute information about the structure. To inform each partner of news (for example, a press release announcing a new product line or an important change in business processes), it is enough to communicate it once through the feedback channels embedded in the system.

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As you can see, network marketing is an honest and highly effective way of promoting businesses, used by companies worldwide. Even well-known companies like Booking.com, Airbnb, Uber, and others use MLM methods. If you want to give a new boost to the development of your organization or scale up an already launched project, it's time to consider implementing MLM into your business processes.

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Team FlawlessMLM will help you integrate network marketing methods into your business or launch an MLM project from scratch. Contact our manager in the website chat (flawlessmlm.com) and get a free consultation on solutions for you.