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Relationships and Multi-Level Marketing

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Is it possible to have relationships in business? The word “relationship” is thrown out in broad sweeping motions all around the business community: relationship marketing, business-to-business relationships, customer relationship management, brand relationship. What is this relationship so many people are attempting to capitalize on in our lives?

Relationships are what make us human! Without relationships, an infant will wither and die. We are born into a set of relationships, and we often die surrounded by those relationships. By definition, each relationship is unique. A true relationship involves adaptation, trust by both parties, mutual knowledge, and an expectation that we will interact in the future.

So what is a business relationship? Gutek and Welsh (2000) discuss four types of business connections: relationships versus pseudo-relationships and enhanced encounters versus encounters.

An encounter is the connection one has with a business. If I always buy a particular brand of vitamin, my connection is with the company who manufactures it, not with the cashier who sells me the product. I don’t expect the Vitamin Inc. Company to adapt to me as one individual. In return for a lower level of connection, I expect consistency and efficiency.

In an enhanced encounter, the company knows me well enough to make adaptations for me. They track my sales and know that I like specific products. The provider with whom I interact has the information and power to help me with my specific concern. I do not expect that I will get to know an individual provider in a personal relationship manner. I do expect that they know my personal history with the company and can help me navigate the rules and processes.

A pseudo-relationship pretends that we have a relationship, when in fact we just met at the front door over a cleaning product. Few of us are pleased to be treated as if we have a relationship with a particular airline or credit card company or network marketer, when we clearly are not being treated uniquely.

Relationships get more efficient over time. However, in general, a relationship takes more time than an encounter. If I always buy my laundry soap from the same distributor, then she will soon learn where I live and how much soap I buy, and most likely, also why I buy this product and what other products I might be interested in.

A research study by Gutek (1997) found that we prefer business relationships. However, we also like the availability and efficiency of encounters. So if we prefer relationships and have so few, what does this imply? We can handle only a limited number of relationships because they are, by definition, time consuming. In direct sales and MLM, some relationships need to be encounters, and encounters can be enhanced by allowing frontline company representatives the power to make decisions within a range of acceptable terms. Distributors need to remember that relationship people recognize that we are connected in an ever-widening circle. What touches our relationship may in turn ripple out to the industry and society.

One drawback to relationships as a basis for developing a business is the potential harm that can come to an existing relationship. Every new phase or step in a relationship changes what we had before. If the new relationship bases its connection on money, rather than a preexisting value of helping, then those in the relationship may be disappointed. The openness and flexibility of relationships also may lead to an inability to set boundaries on what can be expected. How a relationship starts (over business, family, and friend) effects how people will feel about business transactions. The greater the risk, the greater the potential harm.

Yes, it is possible to have relationships in business. Relationships are what make MLM fun. However, we can’t possibly have a relationship with everyone in out downline. In those cases we should work to develop enhanced encounters. Each type of relationship comes with benefits and risks.

Relationship: Unique—people adapt, mutual knowledge, trust and expect to interact again.

Encounter: One time interaction. Treated consistently and fairly.

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Gutek, B. A., & Welsh, T. (2001) The brave new service strategy: Aligning customer relationships, market strategies, and business structures. San Francisco : American Management Association.

 

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