Network marketing gained popularity several decades ago. This is a multi-level structure with many distributors (distributors).
Typically, network marketing is associated with the distribution of various products according to the "from producer to consumer" scheme.
Consider the advantages and disadvantages of network marketing.
Network Marketing - Cons and Pros
Advantages of network marketing:
- Chance to earn unlimited money. If a person is purposeful and diligent, then you can come to an abundant life in a similar way. The more people you attract, the more you earn.
- Financial independence. You are given a chance to earn money without investments, and if you try, you can gain this very independence.
- Development of own business.
- A close-knit team of like-minded people.
Cons of network marketing:
- income instability. It all depends on your diligence and on the people you adjust to suit you. One month the income can be good, another very weak.
- Moral instability. Many clients believe that they are once again trying to breed and "sell" nonsense. To dispel this myth, time may pass, and the nerves are already naughty.
- Unavoidable expenses and investments. True, the amounts are not so large, several hundred thousand rubles, but you will have to invest.
- Responsibility. Network marketing is a team effort. And the superior person is responsible for the subordinate employee and his success.
World business stars about network marketing
Network marketing welcomes energetic, optimistic, active, sociable people to his team. And the more these qualities are developed, the higher your chances.
Network business loves leaders and grow them with pleasure. The main plus in network marketing is constant communication with people. Every business requires patience and work.
How to start a network marketing business?
You need to choose a company in which you want to work, study products, find a strong team and start acting!
We can offer you a company that has already won many hearts. And is one of the leaders among the construction of MLM business. The company has its own values and its own culture that is passed on to our newcomers and changes their lives.
A large and friendly Oriflame family is waiting for you. Become part of our successful team. Today is your earnings tomorrow.
Surely the vast majority of us have an idea of what MLM business is or, as it is commonly called, network marketing. So much false data and opinions of people who have absolutely nothing to do with it have been piled up around this concept that we decided to clarify this issue, because. network marketing is a relatively new phenomenon (especially for Russia), with incredible speed, has already managed to win its rather impressive segment in the business market.
Here we will consider all the advantages and disadvantages of this type of private business, as well as what prevents it from developing more rapidly, although in its growth dynamics it is many times greater than the growth of other classical models of our business.
1. This is an opportunity to combine work on creating your own network without leaving your main place of work. It is difficult for a person to immediately abandon the main source of income, but, as it turned out, there is no need for this. Most of the network millionaires before the start of "independent swimming" had a main place of work and parted with it already when the level of income of their business exceeded the salary level at the main place.
2. Network business is a very high level of freedom. Moreover, freedom in everything: in the choice of work schedule, in the choice of business partners, in the choice of distributed products or services, in the choice of methods for promoting the product ... I cannot list everything. Network business is a perfect opportunity for revealing your business and creative potential. Perhaps this is the biggest plus of this business, because the most important thing in our society is the person himself and the disclosure of all potential opportunities. Only with independent, self-sufficient, capable individuals can our society flourish, and it is network marketing that "makes" such individuals.
3. This is the unlimitedness of your income. That's where there is no "ceiling of earnings", so it is in the network business. Here only you can limit your income - no one else. Only you can limit the growth of your team and your personal growth.
4. The absence of "bosses" and, consequently, the directive method of leadership. Well, tell me, who among us has not suffered from the tyranny and arbitrariness of narrow-minded and self-satisfied individuals? There is no such. In the online business, things are different. Having harmed his partner, the networker limits himself in his growth. Here the success of everyone depends on the success of the whole team and the achievements of the whole team are directly reflected in everyone. Among other things, there is no linear model of subordination in the network business, and therefore, we repeat, there are no bosses and subordinates here, but just partners in a common business.
5. Very small size start-up capital to start your own business - the fifth undoubted advantage of network marketing. According to the research of our statisticians, today it takes from 600,000 rubles ($20,000) to start a business, and whether it will then generate income is a big question. It takes between $20 and $50 (average) to get started in network marketing. For example, to start working with one of the world's largest network companies 4life Research, you will need only 750 rubles, and even then this money will "go" to complete your own information package in order to train you and familiarize yourself with the company's products.
6. You won't find another business that does this. great amount most different connections. A huge number of people of various professions work in the network business, these are teachers, builders, doctors, lawyers, and people creative professions, and the military, and managers of various directions and levels - all those who want independence and financial freedom. And they are all on the same team. Would you like to work in such a team?
7.
And the last. What are we all living for? For the sake of being happy, for our children, parents, relatives and friends to be happy. Man, by nature, should simply be happy. The reality of today is that one of constituent parts our happiness is financial independence. We are not saying that money should become an end in itself for you, but a capable and happy person should be financially independent. What does network marketing give us in this matter? A few numbers:
- more than 50 people working in network companies around the world become dollar millionaires every day;
- Only in the USA today there are more than 400 thousand millionaires in the field of network marketing;
- the annual turnover of the network business in the world is increasing by 20-30% and today is more than 200 billion dollars.
- every day in the world more than 60,000 people become independent distributors;
- in Russia, about 2.7 million people are employed in the network business, and today our country ranks first in the world in terms of network sales growth - 540% per year (!).
The history of the development of network marketing can be conditionally divided into two stages.
The first direct selling system appeared in the United States in 1868.
A Southwestern company began selling bibles from house to house.
In the same year 1868 David McConnell founds a company called California Perfume Company, and is based on the distribution of products by direct sales from hand to hand. The company continues its activities to this day and its products are known in many countries of the world, including the CIS countries. And today we know this company called Avon.
We discussed the relationship of multi-level marketing with direct sales in the article “Direct Sales and Network Marketing”.
1934 A new company appears in the USA Vitamin Products Company, founded by Carl Rehnborg. During its existence this company renamed twice. First time at California Vitamins and then NUTRILITE Products.
It was in this company that they first began to use a single-level reward system. That is, distributors invited other distributors to the company, and for this the company paid them a certain percentage of sales.
And again the USA, 1945. Company Mytinger & Casselberry (M&C), which is the sole distributor of the company NUTRILITE, completely changes the established system of rewards.
In order to better motivate distributors, Li's employees Meitinger and William Casselberry created a bonus scale, and they also came up with a 2% reward for attracting and training new distributors.
Some time later, M&C became part of NUTRILITE.
1959 is the final year of the 1st stage of development of network marketing. Jay Van Andel and Rich De Vos, distributors of NUTRILITE Products, found new company American Way Corp.. In doing so, they completely change the rewards marketing plan, and today this plan is considered a classic.
American Way Corporation (Amway) successfully develops and already in 1972 it absorbs NUTRILITE Products and, accordingly, the title of the founder of multi-level marketing passes to it.
The second stage of the history of network marketing.
It falls on the 1960s-1970s, USA.
During this period, the development of network marketing was under threat. As the network business developed successfully, many scammers began to use it. They create a lot of companies that disguised as MLM and arrange a real boom in trade and financial pyramids. Since the problem has reached a large scale, the American Government was forced to intervene, starting the fight against financial pyramids. It just so happened that Amway was also among those accused of financial fraud.
The legal proceedings against Amway lasted for four years. And in 1979, the court dropped all charges against the company. Then, multi-level marketing has been recognized at the level of law, and the distribution system of goods and the payment of rewards are legal.
The recognition of multi-level marketing as legal, served to the fact that he began to gain more and more popularity in the United States, and after a while, spread throughout the world.
In the early nineties of the twentieth century, network marketing appears in Russia. But, unfortunately, as in America, in Russia, along with conscientious MLM companies, fraudulent companies also appear. And just like in America, there were thousands of people deceived by fraudulent financial pyramids.
It just so happened that at the same time there was agitation of networkers and advertising companies of financial pyramids. And in the minds of many people, MLM was associated with a pyramid scheme. Unfortunately, some people still hold this opinion.
In 1995, the first network company was created "Eltab" which still works.
The nineties of the twentieth century can be called the era of the "wild" development of network marketing in Russia. During these years, the work had the character of disorder, in network marketing "everything that moves was attracted."
Although the era of wild MLM development in the 2000s years has ended, today you can still meet old-style networkers.
Although, today's new marketing is gradually replacing the "old" networkers.
Wild methods were slowly but surely replaced by methods of civilized work. The system of searching for people and their training, as well as working with clients, became more and more correct.
Today network marketing is popular in many countries. Every day its ranks are replenished with new people who want to make money with the help of MLM.
Now the best companies use for their development modern technologies. Now it is not necessary to arrange live meetings and presentations. MLM business can be conducted using the Internet and automated systems that companies provide for their distributors.
Annual sales through network marketing is over $110 billion, and this is not the limit, every year the volumes increase.
Video showing the essence of network marketing.
Network marketing gained popularity several decades ago. This is a multi-level structure with many distributors (distributors).
Typically, network marketing is associated with the distribution of various products according to the "from producer to consumer" scheme.
Consider the advantages and disadvantages of network marketing.
Network Marketing - Pros and Cons
Advantages of network marketing:
- Chance to earn unlimited money. If a person is purposeful and diligent, then you can come to an abundant life in a similar way. The more people you attract, the more you earn.
- Financial independence. You are given a chance to earn money without investments, and if you try, you can gain this very independence.
- Development of own business.
- A close-knit team of like-minded people.
Cons of network marketing:
- income instability. It all depends on your diligence and on the people you adjust to suit you. One month the income can be good, another very weak.
- Moral instability. Many clients believe that they are once again trying to breed and "sell" nonsense. To dispel this myth, time may pass, and the nerves are already naughty.
- Unavoidable expenses and investments. True, the amounts are not so large, several hundred thousand rubles, but you will have to invest.
- Responsibility. Network marketing is a team effort. And the superior person is responsible for the subordinate employee and his success.
World business stars about network marketing
Network marketing welcomes energetic, optimistic, active, sociable people to his team. And the more these qualities are developed, the higher your chances.
Network business loves leaders and grow them with pleasure. The main plus in network marketing is constant communication with people. Every business requires patience and work.
How to start a network marketing business?
You need to choose a company in which you want to work, study products, find a strong team and start acting!
We can offer you a company that has already won many hearts.
And is one of the leaders among the construction of MLM business. The company has its own values and its own culture that is passed on to our newcomers and changes their lives.
A large and friendly Oriflame family is waiting for you. Become part of our successful team. registration on the site today is your earnings tomorrow.
Now I propose to understand such concepts as direct sales and network marketing. A lot of people involved in marketing quite often confuse the two. So what is the difference between direct selling and network marketing.
2 comments on ““Direct Selling and Network Marketing.””
How to open an MLM company
To begin with, let's look at why starting a network marketing company (or MLM company) is fundamentally different from organizing a company that operates within a traditional distribution system.
If you decide to start a network business, then instead of a sales network on a salary (regional managers, sales agents), you will work with a large network of agents on a voluntary basis. You do not pay a salary, but a certain percentage of each sale Money distribute among the participants of the distribution network.
The algorithm for distributing funds is recorded in the form of a document and is called the "Marketing Plan".
A marketing plan is the most important document that sets the very strategy for building a network. Read more about the marketing plan Here .
The above is the key difference between an MLM company and any other trading company, therefore, if you wondered how to create and build a profitable network marketing, you have the following three tasks that fundamentally distinguish the internal structure of such companies from other companies on the market, regardless of the type of product being promoted:
- Accounting system
In the computer program, it is necessary to keep a complete record of agents, relationships between agents, purchases, accrue earned funds, and also take into account the issuance of funds. In the early days of MLM companies, all of this could be done in Excel. Today it becomes practically impossible due to the complexity of the calculation algorithm.
Good accounting system (such as SystemRitos ) fully automates the company's activities - this includes inventory control with support for regional warehouses, and " workplace merchant", and integration with external payment systems, and the possibility of manual / automated payments, and personal accounts each agent to work with his personal network, and many other features.
- Building a network and working with a network
The network consists of agents to whom the company does not pay wages, in connection with this, a large amount of tasks arise to create a system for attracting and retaining agents. Among all the tasks of working with the network, the formation of the company's ideology is paramount.
We have specialists with serious experience in building and maintaining an agent network, as well as in the formation of an ideology.
Work on building and reformatting the network is an individual work with each company.
- Financial and legal support
When creating an MLM company, it is worth remembering that the concept of "MLM" today is outside the legal field of the Russian Federation in the sense that the existing mechanisms for paying cash to individuals involve high taxation. Under the condition of such payments, the company itself becomes uncompetitive in the market. As a result, for full-fledged work, it is necessary to develop the correct financial and legal scheme, optimized for a specific company.
One of the popular formats for organizing network marketing companies can be called consumer societies. There are options for working with foreign companies.
We are ready to help organize the right financial and legal scheme for a new company or help reorganize an existing model.
What is network marketing - a path to success or a mythical way to make money? Historical facts about MLM + pros and cons + TOP-5 companies in the Russian Federation.
What is network marketing?
Most people agree that these are some kind of fraudulent schemes that allow only happy few people to earn money.
Such thoughts are connected with the main problem of MLM - these are extremely high promises to customers.
Today, after reading the article, you will learn what the essence of network marketing operations is.
And, of course, you will get an answer to the question: is it possible to get real income using such a business scheme.
What is network marketing: historical background
Network marketing (MLM) in its current form was not a separate business development model. It appeared as a manifestation of the need to sell goods.
Who was the first to discover such a scheme and become the founder of a network business?
The founder of the first network sales scheme is Karl Rehnborg.
If the thought occurred to you that this person built his policy for decades before starting a business, this is not so.
All complex things started with a banal approach.
Carl Rehnborg grew alfalfa on his property. At that moment, an idea hit his bright head:
“But what if all the beneficial substances from alfalfa can be converted into an edible form for humans, so that its intake can increase the vitamin tone of the body?”
Undoubtedly, Karl had a good purpose.
Later, he opened his own line of healthy food and began to offer it to friends and work colleagues, explaining the usefulness of the new product.
It is interesting that, out of the kindness of his heart (no other reason can explain this), Karl distributed goods just like that, without demanding any money in return.
What do you think was the effect of promoting free useful products?
No. Nobody believed Carl. Everyone was very embarrassed that a person can simply give away a useful, worthwhile product.
Karl Rehnborg came to an unexpected conclusion: if a nutritional supplement is sold at the average market price, and not just distributed to friends, demand will appear.
And hit right on the spot!
Karl began to use this business scheme, thus giving rise to one of the main postulates of MLM - mutual assistance and team support.
Rehnborg's friends started buying his merchandise. It no longer seemed to them that this was a cheap hoax for one simple reason - it ceased to be cheap.
Then Karl began to look for new ways to expand the network of buyers. And again came to the correct conclusion!
They consisted of a percentage of the sale of nutritional supplements. Now you know the scheme of work of a standard network company? That's how it all started.
The result of the work of Carl Rehnborg:
- 1934 - Carl founds California Vitamins, thereby expanding the range of products sold.
In 1934, Rehnborg renamed the company Nutrilite Products.
The principle of operation remains the same.
A whole network of distributors of products, the so-called partners, was formed.
Each partner attracted new employees by offering a percentage of product sales and dividends for quality organizational performance.
Karl Rehnborg is known throughout the world as the "father of the network business."
After a short historical study, it's time to turn to the realities of the modern MLM business.
What is modern network marketing: terms and definitions
Network marketing- this is one of the types of retail sales of products, based on the direct, direct interaction of sellers with consumers.
A feature of network marketing is the ability of each client to become an implementer.
It would be most correct to compare the network business with a multi-level dealership. MLM also consists of several levels.
No wonder such organizations are often called financial pyramids!
Let's take a look at the main components.
The first step of the pyramid: manufacturer - distributor
The first stage of activity under the MLM scheme is that the manufacturing company provides its products to a partner.Partner is individual, which concludes a cooperation agreement with the supplier.
On the territory of the CIS, this contract is not included in the labor format, i.e. does not provide you social guarantees, has a special form of taxation.
The terms of the contract have similar clauses in any area of the network business:
- obligatory use of the manufacturer's products by the partner;
- attracting new partners to the organization;
- work according to a clear scheme defined by the organizers;
- unquestioning observance of the moral principles and policies of the company;
- minimum monthly sales.
Subject to the execution of each clause of the contract, according to MLM, you get access to unlimited earnings. 
Second Stage: Second Tier Partners
From the second order, the whole essence of the scheme of MLM activity begins.
Each partner who was invited by a higher-level participant (Stage 1) performs all the same functions as his curator.
The only difference is that part of the sales income remains in the pocket of the superior curator.
Each participant, as a result, seeks to form his own structure, as this brings real income in the form of dividends from his own sales and the activities of "subordinates".
P.S. The word "subordinates" is deliberately put in quotation marks: in the structure of network marketing there is no concept of line management.
All relationships between colleagues at various levels are based on mutual assistance - this is simply beneficial for all partners.
Step Three: Entry Level Partners
Lower-level partners differ from the founders only in that they have a lower income. Wherein functional responsibilities, as units of MLM, are unchanged.
Work at the first or second level involves the manifestation of maximum activity not in the sale of products, but in the promotion and formation of one's own structure.
An intermediate conclusion should be drawn:
The scheme of interaction of network sales involves the development of the structures of each employee.
The explanation of this process is very simple - each subsequent implementer receives a percentage of sales + dividends from the entire network organized by him, as a percentage of the profits of "new" participants.
Network marketing - is it that simple?
The concept of network business and MLM structures has negative associations, especially in the CIS, where people have been taught by the bitter experience of financial pyramids.This section provides the reader with a comprehensive overview of how network marketing works - an unbiased assessment of the income opportunity.
Benefits of network marketing
Lack of a linear system of leadership.
You work for yourself, which is very similar to entrepreneurship.
Close-knit team.
Each partner is interested in supporting "junior colleagues", as it brings him financial benefits.
There will always be a person who will help organize your network activities in the right direction.
Curating is the backbone of network business.
Opportunity for continuous growth.
Another positive aspect of MLM.
It all depends on your abilities, including earnings.
A lot of experience in interacting with people.
This is a useful skill for everyday life and the development of your own entrepreneurial project.
Network business can be considered as a platform for further implementation of one's own business.
Flexible schedule.
Representatives of MLM structures can work from 10 to 30 hours a week, thereby combining it with work or study.
You must understand that network business cannot replace the main source of income.
At least in the early stages of activity.
Negative aspects of network marketing
Possible destabilization of the network structure at any time.
This process may be triggered by the activities of individual partners, which will not meet the company's standards.
You must consider the possibility of the collapse of the entire structure, as many years of experience of MLM participants proves such a possibility.
Undefined payment standards.
An example is American company Starcom, whose representatives promised high payouts to each participant.
As a result, partners took out loans, pledged property, and the company paid less than 25% of the announced amount.
It's not hard to guess what material damage clients received.
Opportunity to get into the financial pyramid.
Imagine a situation in which you invested in an MLM structure by purchasing an initial package of products.
Several months pass, the structure of clients expands, they also make deposits, buy products.
Another month passes, you have not yet been able to cover even your own expenses, since the goods are not in demand.
The company is closing...
In this situation, approximately 50% of the participants remain without profit.
They were unable to sell the product, but made a significant investment.
If you have never dealt with entrepreneurship, it will be very difficult to “resist” in the MLM mode of operation.
The specificity of the activity lies in the constant moral tension, since you are responsible for your sales and the entire organized structure.
After analyzing the pros and cons of network marketing, you can assess the degree of risk of such a business activity as quite high.
A feature of working on a network scheme is the constant responsibility for one's work + training and control of lower-level partners.
You already know what network marketing is and you can independently assess the prospects for development in this direction.
If you are confident in your organizational talent, as well as the abilities of a manager and financier, it's time to move on to choosing an employer.
Network Marketing: Choosing an Employer
From right choice employer depends on your network income and confidence in the stability.
To begin with, it is necessary to consider possible options for the Russian business space.
Top 5 Russian MLM market
| Network company name | MLM market share (%) | Description of activity |
|---|---|---|
| ~30 | Sale of cosmetics, pricing policy - acceptable for the middle class. Get ready to meet a huge female team and find your place in it. Network activities in AVON are more suitable for girls. |
 | ~30 | Marketing area - cosmetics, souvenirs, healthy eating. One of the leaders of the Swedish MLM market. The advantages include increased loyalty to their employees. Working in this network company will allow you to have a small but stable income. |
 | 8 | Stability is the most appropriate word to describe the activities of AMVAY. Marketing sphere - from household utensils to dietary supplements. Unlike the companies mentioned above, it provides equal chances for development, regardless of the gender of the employee. This fact is derived from the wide range of products on offer. |
 | 5 | A company that only accepts women. Specialization - cosmetics, products for the care of appearance. One of the most experienced network organizations, but not yet widely used in Russian market. |
 | 4.5 | Leading manufacturer of natural cosmetics. It is one of the most progressive companies on the Russian market, it has a strong base for network marketing. |
The main criterion for choosing an MLM company is experience in the market. This is explained very simply: you will get the expected result, verified by others.
It is dangerous to work for the "newbies" of the MLM market, because you cannot be 100% sure that all obligations are true.
You can learn about the many benefits of network marketing from the video:
What is network marketing? After reading the article, you are already able to independently determine the meaning of this term.
Network marketing evokes a subjective attitude in every reader.
With 100% certainty, only one thing can be said - making money working in the MLM system is possible and cannot be argued with.
A completely different question - will it be possible for you to do this?
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How to distinguish a network company
Many companies that are now appearing on the market position themselves as MLM companies (Multi-Level Marketing). You need to know that any company providing services is not a network company. network company provides a physical product, sales are person-to-person, and has no retail space.
Is Network Marketing Worth It?
The article is based on real stories of network marketing consultants. It expresses the opinions of several cosmetic sellers, from different marketing companies that have developed over a long period.
Hello dear readers! I want to tell you that, like many others, I also take eau de toilette, shampoos, shaving and aftershave products, and much more from consultants from various marketing companies. At the same time, I talked a lot with them, about whether such an occupation is profitable or not.
They told me that every person, throughout his life, strives to achieve financial success. Most get a job and work for a salary, while, if there is a chance, they do not refuse extra income. My interlocutors chose network marketing selling cosmetics as an additional income, explaining their choice by the fact that:
- At any enterprise, cosmetics are used by everyone without exception! Both women and men! With the right approach, it is quite possible to find yourself regular customers.
- Word of mouth will quickly spread the word about you, and you will have individual buyers outside of your organization.
Network marketing is the same job in which you need to take a course in addition to sales. With a skillful approach, network marketing can bring additional income and increase the family budget well, the main thing is to delve into the very essence of such work, while not being afraid to get down to business.
Before proceeding to active sales you need to understand that selling cosmetics is not just a job, but in fact is a hard and responsible job. The difficulty of such work lies in the fact that you need to constantly monitor the news and updates of the catalogs of the selected products. Tell your customers about them.
The responsibility lies in the fact that each customer is special and each needs an individual approach. For example, you need to know which cream and which type of skin is best suited, and there are many more similar nuances that my interlocutors told me about.
They believe that their occupation can also be called the sale of cosmetics at home, since people come home to buy cosmetics. A big plus in this is that, without looking up from everyday affairs, you get additional income and spend time in communication.
However, you should not take the network business as your own business. If you leave the company, then the business will not suffer from your absence, because it has its own owner and its own structure, independent of you. This business is more like a hired job where you work for the result.
Also, don't rely on passive income from such a business. The owner is interested in you working constantly. You will have to spend a lot of time searching regular customers, recruiting your team, etc. Unlike freelancers, you won't meet networkers on long journeys. Also, your work is very dependent on which leader you get, what he can teach you and whether he will provide real help and support.
In addition, you have to be very sociable, because you have to talk a lot. Add to this an excellent product knowledge as well. only competent advice contributes to the return of the buyer.
Don't forget about respectful attitude to people. Buyers are different, some are very meticulous, and before buying they try to find out as much information about the product as possible. Therefore, you need to be patient and kindly explain everything and, of course, be well versed not only in products, but also in promotions and discounts of the company.
That's what all those women beauty sales consultants from different marketing companies told me who have been distributing cosmetics for several years and are not thinking of quitting.
What else is important to know
They will tell you that you don’t need to do anything, you don’t need any investments, you don’t need to work. Beautiful stories will be told that someone earns millions in the company and constantly travels. The truth is that in order to receive any money, you need to make a large turnover, you need to work even more than for normal work, and there is no guarantee that your team will not fall apart and you will earn at least something.
Pros and Cons of Network Marketing
Network Marketing: Pros
The pros are that network marketing is best school sales.
Here you will learn:
- sell;
- negotiate;
- organize events and events;
- build relationships with people;
- painlessly hearing the word “no” to your sentences;
- work in a team.
You can also add a free schedule and constant access to your favorite products to the pluses.
Cons of network marketing
- it is not your own business;
- in real life, you should not count on passive income;
- team turnover;
- there is no official employment and social package;
- no guaranteed income;
- takes a lot of time and effort;
- Often, spam is used to attract customers and recruit teams, which causes irritation and negativity.
See real review of a person, is it worth doing network marketing:
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