www.timesleader.com News Sports Weather Obituaries Features Business People Opinion Video Contact Us Classifieds

EARNING BASKETS OF MONEY
NETWORK MARKETING INDUSTRY IS WOVEN OF FRIENDSHIPS AND CONTACTS

By BRIAN MALINA; Times Leader Staff Writer

Sunday, March 29, 1998     Page: 1D

Six years ago Barbara Graaf attended a friend's Longaberger basket party. It was similar to an old-fashioned Tupperware party, except these containers don't burp when you seal them.
    She bought one basket, and was hooked. She wanted more.
    A Longaberger sales person saw her enthusiasm and, a few baskets later, offered her a position as an independent sales consultant. Now she not only buys baskets, she sells them- about $35,000 worth last year.
    Graaf is part of the growing industry of direct selling or network marketing, a technique in which companies use independent contractors to sell their products and encourage them to recruit others into the fold.
    The industry, which has national sales of $20 billion in 1996, is praised by those who have used the technique to build profitable businesses and despised by others who don't believe it works.
    In most direct marketing companies, consultants earn a commission on any products they sell. They also earn additional commissions on products sold by consultants they recruit.
    Randy Gage, a Florida network marketing consultant and author of "How to Build a Multi-Level Money Machine," said the lure of being your own boss and setting your own hours- and the promise of big financial rewards- are the prime reasons people become independent consultants.
    That's what attracted Lois Krommes, a retired school teacher and Berwick resident, to join Longaberger six years ago. "What's nice about it is you can make your own hours. You can spend as much time as you want."
    Krommes started with Longaberger as an independent sales consultant and has since been promoted to a "branch adviser." She earned the position by recruiting seven new independent consultants to work under her.
    Krommes said she spends about 25 hours a week selling baskets and talking with consultants. She earns between $10,000 to $12,000 a year, plus basket discounts.
    Buy before you sell
    Krommes and Graaf possess a quality vital to the success of direct sales- enthusiasm for the product.
    "You have to find a product you believe in. Look for a product or service that you would buy anyway, even if you weren't selling it," Gage said. "Then ask yourself if you would buy the product at that price. If the answer is no to either, move on."
    Gage also insists that people working part-time in direct marketing are only scratching the surface. Gage said she believes with hard work anyone who gets involved with direct marketing could strike it rich.
    "There is unlimited income potential," said Gage. "This is the last bastion left for someone without money to become incredibly wealthy."
    Jonathan Berskey, a professor at the University of San Francisco's McClaris School of Business, disagrees. "Network marketing is a dream come true for those who own the company."
    "It makes sense (for companies) to do (direct marketing)," said Berskey. "Companies don't rent space or pay into pensions, disability or health benefits."
    Numbers provided by the Direct Selling Association, a trade organization that represents 140 direct selling companies, show that more than 85 percent of those working in direct marketing do not choose to make it a full-time career.
    Babs DiFrank, a Lancaster-based sales director for Discovery Toys, said she started as direct sales consultant 15 years ago with the goal of earning an extra $3,000 a year.
    "I had been home one year with my first child," she said. "I needed something for me but I still wanted to be a stay at home mom."
    After three months with the company, DiFrank said, she realized that she could make a lot more. At the end of her first year she earned about $6,000.
    Since then, her salary from Discover Toys has grown to more than $50,000 a year. Now most of her money comes from commissions made on the sales of other consultants she trained. She has 435 consultants under her.
    But it's not the monetary gain that was most important to her, said DiFrank. "I wanted to be a stay-at-home mom. This allowed me to be home when my children went to school and when they got off the bus."
    Doreen Pavinski, of West Wyoming, said she also started her career as a direct sales consultant for Mary Kay Cosmetics to raise extra money while raising a family.
    "I'm in my 20th year," said Pavinski. "It started out part-time, while raising four children ages 2 to 7."
    Pavinski is one of three senior sales directors in the Wilkes-Barre area. She did not want to disclose her salary but said most Mary Kay senior sales directors earn more than $50,000 a year.
    Avoid pyramid pitfalls
    Although direct marketing has strong support among those within the industry, detractors say that the marketer's goal to convert friends to customers can rupture relationships.
    Mary Labowitz, president and founder of the Women Entrepreneurs in Business, in Calif., is a supporter of network marketing but acknowledges that it can strain friendships.
    She recalls when a close friend peddled gift videos to their mutual friends. People who bought the video could pick any item it featured and order. Labowitz had apprehensions, but bought the video and recommended it to other women.
    Things went well at first, but soon after her friend's business got off the ground, the company went under. Several of Labowitz's friends lost money.
    "You want to help your friends," she said, "but if something bad happens, there are only so many times you can burn your friends."
    Most people interviewed said that some family and friends were not initially supportive of their business venture.
    "I had some friends who thought I was crazy," said Gage. "They still do. But it doesn't bother me, I grew into a higher consciousness."
    Gage said many of the suspicions stem from well-publicized problems within the industry.
    "Unfortunately scams do exist," said Cindy Anderson, of Envion International, a New Hampshire-based vitamin and wellness company that uses network marketing.
    To avoid scams, Anderson cautioned potential sellers against working with firms that pay based on recruiting people and not on products. "That's a pyramid scheme and it's illegal," Anderson said.
    In legitimate network marketing company, representatives are paid the money made from the sale of products, not in recruitment.
    Gage also cautioned potential entrepreneurs from buying into anything that seems to good to be true. "Anything that promises instant riches, $10,000 in your first month is a scam. It's a business if you work hard you'll succeed."
    TIMES LEADER PHOTOS/CHRIS ABRAHAM
    Independent sales consultant Barbara Graaf unpacks a new shipment of Longaberger baskets. Graaf says she sold more than $35,000 worth of the collectible baskets last year.
    A collector and sales consultant of Longaberger baskets, Barbara Graaf displays more than 125 of the collectible baskets in her Plains Township apartment.
   
The Weekender Go Lackawanna Timesleader The Dallas Post Tunkhannock Times Impressions Media The Abington Journal Hazelton Times Five Mountain Times El Mensajero Pittston Sunday Dispatch Creative Circle Media Image Map