The following article is from the Downline News Magazine, December/January 1994 Issue:

Network Marketing Ethics & Etiquette Focus on Cross Sponsoring

By Art Robbins 1993(c)

What is Network Marketing?

Network Marketing is a modern business approach that allows individuals to represent a company whose products and services they use and endorse. Individual "distributors" who actively represent a company help to expand the market. Network Marketing is a modern answer to the ancient question: "Who should profit from the promotion and exchange of goods and services?" Network Marketing provides a unique alternative to the conventional distribution and sales structure. When products are delivered directly to consumers, traditional intermediaries are bypassed and profit margins are freed up. In Network Marketing these funds become available to distributors as acknowledgment for the important promotional role they play.

How are Networks Formed?

As an active Network Marketing distributor, you not only use and promote products, but you also sponsor individuals into a network. Taking personal responsibility for their training and support. Properly managed networks can grow to incredible depth and size, however, the process always begins when an active distributor enrolls individuals on her or his first level. First level distributors are those who have been personally sponsored into your network - directly under you, the active distributor. As you continue to recruit other first level distributors, who in turn recruit their own first level, the network expands. This process is designed to create maximal support with minimal conflict. Success and harmony are the end results.
Harmonious networks have a friendly atmosphere that enables everyone to work and excel in a mutually supportive environment. Networking Guideline # 1: Cultivating and maintaining harmonious relationships is the primary goal of network marketing professionals. Successful Network Marketing depends on quality relationships and quality relationships depend on ethical behavior. If Network Marketing is to set a positive example, ethical business conduct must be encouraged wherever possible. Unfortunately not all distributors understand or appreciate the immediate importance and long term value of good business ethics and etiquette.

Pirates on the Prowl.

When distributors from one company strategically invade another company's downline, they are known as raiders or pirates. Pirates are considered the scourge of our industry. Ethical Consideration # 1: Network raiding is predatory, parasitic and unethical. It gives a bad name to MLM as a whole and sets a precedent that is highly destabilizing. What goes around comes around. Sooner or later the raiders business will be raided in turn. No one is safe in a general atmosphere of plundering and profiteering. On a much smaller scale, to be fair, individual distributors who join a company network often arrive, rather innocently, from another company. This is a normal part of the give and take of the network business and is generally accepted. Purposeful strategic raiding, however, is a serious and ugly matter, made even more unpleasant, as we shall see when it originates from within the distributor ranks of a company's own network.

What is Cross-Sponsoring?

Cross-sponsoring is a form of raiding that takes place within the confines of a single company network. Simply put - it is the recruitment of company distributors, other than those on ones own first level, into another business venture. When a distributor in your network decides to become active with a different venture he or she may hope to lure away distributors from your original company. Perhaps this sounds simple, but mixing one venture with another easily creates conflict - and conflict of interest usually leads to questionable or unethical business behavior. To avoid this problem, some companies simply do not allow their distributors to participate concurrently in other MLM opportunities.

Ethical Consideration # 2: The distributor application you sign when entering a Network Marketing company is a legally binding document containing your company's distributor bylaws. These rules guarantee specific rights which are designed to protect the company and the distributor. Most companies reserve the right to modify or change their contract regulations at any time. It is a good idea to contact your company directly for current policy information. Network Marketing rules and regulations vary, but all ethical companies strongly discourage, and most disallow, cross-sponsoring. Most companies will terminate the distributorship of anyone who willfully engages in, or encourages, cross-sponsoring activity.

What's Wrong with Cross-Sponsoring?

Let's say that Howard is a distributor with your company who has become involved in an outside MLM opportunity. Having spent several years with your company, Howard has had the opportunity to gather information and develop relationships with people throughout the company network as at large. Many of these contacts are in downlines other than his own. In the initial excitement of starting this new venture he calls one of your key distributors, Mary, with whom he has developed rapport. "Hello Mary, it's Howard. Wow - have you heard about this hot new MLM company? Their products are fantastic! ... “Knowing your company quite well Howard uses his position to help convince Mary that this new deal is bigger, better, shinier, more lucrative. Howard is persuasive. His enthusiasm is contagious and Mary soon finds herself involved with two companies at the same time.

At first Howard tries to paint a picture of non-competition. "This new venture will actually stimulate your original business," he explains. "Both of your businesses will grow faster - bigger. The two companies are not really competitors; in fact the products (or services) are compatible and complementary!" Let's assume that Howard is well intentioned - he honestly believes this to be so. Unfortunately history and experience have proven that it is rarely the case. Very few people are able to divide their attention successfully between two MLM ventures at the same time. Just managing one business at a time is already a handful! Keeping up with two companies, two compensation plans, two product lines, two sets of regulations, maintaining enthusiasm for two different opportunities and organizing two sets of meetings simultaneously is, at least, four times harder.

Networking Guideline # 2: Conventional wisdom concludes that if you want to succeed in Network Marketing, choose the company with the products, services, corporate atmosphere, vision and compensation plan you prefer, and stick to it until you succeed. This principle has been universally observed by virtually all successful Network Marketers. Success attracts more success. Stick with your goals until you have created a model for others to follow. This is the winner's way, the proven path to MLM success.

Now back to Howard and Mary ... As the process develops, Mary and her fellow crossers find that they are dividing their time and attention between two companies and without realizing it, have reduced their chances for succeeding in either venture. They may become confused by self-serving representations made by Howard and thereby become even less effective. Eventually they may cease to retail, wholesale or sponsor new distributors with your company. For all practical purposes they have dropped out of your business. In fact, they will probably duplicate Howard's strategy (downlines tend to follow in their sponsors footsteps) and cross over into other groups throughout the original company network with equally damaging results.

The problem with this picture is that Howard has just invaded and disrupted a business network that was built, and nurtured not by him, but by you, your upline, your company and an intricate web of many committed individuals. In a very real sense he is stealing your business with no regard to your welfare or the company network of which he is still a part. Howard has successfully recruited a fellow company distributor who was neither in his upline, nor his downline. This is known as "side crossing" and is an all too common form of cross-sponsoring.

Ethical Consideration # 3: As distributors within the same company we share special contacts, restricted privileges, access to confidential information and a certain commonality that cannot be abused without violating the integrity of the network as a whole. Ethically speaking, we enter into a tacit agreement to "above all else do no harm". Due to the complex nature of network structures, when you attempt to recruit a distributor from a previously established network, you are by definition soliciting someone else's downline business. Cross sponsoring inevitably hurts others and creates very hard feelings.

In the effort to avoid the resulting quagmire, would-be cross-sponsorers often "down-cross." restricting their crossing to their own network. After all, there they can do exactly what they like; it's their own downline, right? Well ... is it?

Whose Network is it Anyway?

This question is at the heart of an even more delicate cross-sponsoring issue. Most distributors who cross-sponsor into their own network make the innocent mistake of believing that their downline is "theirs." But it's my downline, I have the right to do what I want with it, don't I? Although it's true that network builders co-create independent business structures (which can sometimes even be bought and sold), the actual "ownership" of the network is intertwined and complex.

Sally sponsors Jim on her first level. Jim sponsors Joanne, Mark and Greg. Eventually Jim's downline expands to include 300 distributors who, in all represent, say, 25% of Sally's total network. Question: Does Jim own his 300 person downline? Answer: Yes and no! Of course Jim's downline is his downline, but it is also Sally's downline. In fact, parts are co-owned by Joanne, Mark and Greg. Furthermore Sally's sponsor is also involved. This complexity of ownership extends downline to each and every distributor in the group and upline to every distributor above. Ethical Consideration # 4: Networks are built by the effort of many individuals, and are co-owned proportionally by everyone involved. No one has exclusive ownership of an entire network.

Network Marketing and the Golden Rule

While downline raiding is considered unethical, and must be actively discouraged, cross-sponsoring is even worse. The distinction is one of relationship and agreement. While our principle allegiances are to our immediate downline "children" and our immediate upline "parents ", an understanding also exists that we will not willfully harm the networks of our brothers, sisters, cousins, aunts, uncles, grandparents or grandchildren distributors. Disregarding this principle leads to network anarchy - no one is safe and nothing is sacred. Cross sponsoring damages the networks of other distributors within our own company. Today's cross-sponsoring -winner is tomorrow's victim. The solution is simple: Don't cross sponsor!

Ethical Consideration # 5: Cross sponsoring violates one of the most time honored and fundamental principles of human conduct - the Golden Rule. If you treat the distributors in your company with respect, consideration will be shown to you as well. The Golden Rule is a formula for long term business harmony and sustained ethical success. Remember: As you sow, so shall you reap.

Sneaky Crossing: False Names, Siblings, & Insignificant Other!!

Distributors who get involved concurrently with other opportunities will often go to great lengths to disguise their cross-sponsoring tactics. One way to attempt to get around the rule is to do business under another name: through a wife, husband, sibling, neighbor, company or puppet distributor. "But they're not actually under me” is a coward's attempt to disguise the worst type of cross-sponsoring piracy.

A variation of sneaky cross-sponsoring is done by double cowards who instruct others to do the dirty work for them, while they plead innocent to any wrong doing. When a distributor enrolls only their first level, but helps or encourages the new downline to cross-sponsor throughout the original network, the results are equally sordid and unsavory. Cross-sponsoring and cross-sponsoring encouragement is unethical and destructive. Sneaky cross-sponsoring is no better than the it’s overt counterpart - in fact, it's worse.

Crossing-Up

In his book "Financially Free", Dennis Windsor explains one of the keys to Network Marketing success: "recruiting-up". Recruiting-up refers to enrolling distributors with talent and ability, ones with the qualities and reputations you admire, people of integrity - people you look up to. The drive to find such quality distributors is itself one of the hallmarks of the true Network Marketing professional. Recruiting-up or sponsoring-up works because it builds powerful networks with talent and energy. It takes guts to sponsor- up, and the very act of attempting to do so builds character and leadership. How sad then, that some cross-sponsorers confound this wholesome dynamic with profiteering and so, try to cross-sponsor - their upline!

Ethical Consideration # 6: "Crossing-up” or approaching your upline as targets for other Network Marketing ventures is just another type of cross-sponsoring. Once again, as with sneaky crossing, this is an attack on someone else's business network, their upline's network. It is insensitive and is often felt to be insulting, wounding or threatening to upline sponsors who do their best to provide quality support to their business network The basic mistake these would-be upward cross-sponsorers make is to approach Network Marketing like a quick money scam instead of the relationship business that it is. When "who can I get?" becomes more important than how I do it, from where or whom they have come, and who have I stepped on along the way, then integrity has taken a back seat to greed When this happens something very precious and irreplaceable is at risk

Your Reputation: the Key to Your Continued Success

Networking Guideline # 3: In Network Marketing, as in all people businesses, reputation is everything. Your reputation is virtually the key to your success. Trust and rapport are built up very gradually and must be handled with great respect and care. Often times, your best distributors are those with whom you have been cultivating quality long term relationships. If your friends and acquaintances are willing to follow your lead, it is probably because of the relationship and trust you have so carefully established

Ethical Consideration # 7: Distributors who attempt to cross-sponsor or appear to create conflict of interest within the network damage their own reputation. They lose the respect and trust of their upline and any distributors whose networks they have invaded or harmed. Although they may be without malicious intent, their honesty, integrity and trustworthiness will quickly come into question. Even their own distributors may come to doubt their ability to provide consistent and faithful support - in either venture!

According to Venus Andrecht, successful Network Marketing businesswoman and author of MLM Magic - How an Ordinary Person Can Build an Extra-Ordinary Networking Business from Scratch, "Stealing isn't worth it. Don't do it. ... MLM is much more than it appears. It's a chance to build your character. How clear and clean will you build it?"... "Greed is probably the main reason for stealing other people's people. MLM is a test, we're in a game ... that builds character ... and exposes it."

"When you're tempted to do something a little wormy because there's money in it, stop and ask yourself, 'Will $10,000 gained be enough to paper over that klunky feeling that lurks in my stomach from what I did?' The $10,000 may disappear, but will that feeling? That thought? That sour reputation you brought?

Although cross-sponsorers may have some success at first, they can rarely sustain the pressures of living a double business identity. Quite often their credibility crumbles as their income plummets. Before they know it, they may have done irrevocable damage to precious friendships and valuable business relationships. With their reputation damaged or destroyed, many disappear from the MLM scene altogether. When pirating and cross-sponsoring are spawned by greed, the strategy usually backfires. It is regrettable that this predatory dysfunction persists within a context of an otherwise limitless opportunity for all.

Hopscotch Marketing

Sooner or later everyone in MLM is contacted by pirates, raiders and cross-sponsorers. It's a part of the business landscape. High level distributors in Network Marketing companies can expect to receive numerous calls and packages every week This constant flow of information serves the beneficial role of keeping everyone abreast of recent developments. But the fact is that raiders and cross sponsors rarely get the distributors they're actually after... the stable ones. Sticktoitness is one of the foremost qualities of successful Network Marketers.

Networking Guideline # 4: Only MLM junkies jump at the next and greatest opportunity that comes along, and there's always another-better opportunity on the horizon. Distributors that easily jump ship, easily jump again. As Leonard Clements, the publisher of MarketWave(tm) magazine explains, these pirates are "lousy mentors". Eventually their networks will follow their example and betray their own renegade captains in turn. In the words of Mr. Clements, "Pirating breeds more pirating". If you want to really succeed in Network Marketing, choose a good company that has what you want and stick with it, stay with it, and find your path to success with it. You may need to overcome obstacles along the road, but by all means don't give up. Winners never quit and quitters never win.

When Pirates Call

What can you say to pirates and cross-sponsorers that come a calling? The first question should always be "How did you get my name and number". If they are cagey or unwilling to answer simple questions like this, you know something fishy is afloat. Another important question is whether or not they are distributors in your current company. If so, their call probably falls into the category of cross-sponsoring. Either way, you should clearly indicate your position and understanding of the situation. More often than not, your would-be recruiter is unaware of the unethical nature of the cross-sponsoring that they propose. Many do not even realize that they may be risking expulsion from the parent company by violating the contract they originally signed. As the industry grows and matures, we are all becoming savvier and hip to the tricks of the trade and the rules of the road. It is up to us each of us to help spread the word that Network Marketing is an ethical haven from the cut-throat mayhem of destructive business piracy, corruption and cannibalism.

Keeping Your Boat Afloat

Well supported and informed networks are solid and invulnerable. Networking Guideline # 5: By far, the best strategy to avoid the plague of downline raiders and cross-sponsoring profiteers is to insure maximal support to your downline. Remember to be of service and contribution. Are your distributors getting the training, coaching, tools and support they need to put their enthusiasm to the test?

When downlines fail, lack of consistent support is usually cited as the number one culprit. Strengthening your relationships and providing ongoing support to your network is the best business insurance you can buy. Positive attitude is another important factor. A steadfast attitude of pro activity and resourcefulness in the face of obstacles and challenges can propel you to, and keep you at the top. Without sustained determination you will probably not succeed in any networking opportunity. With it you can move mountains. After all, it's your business - treat it with professionalism and pride and let the results speak for themselves.

Ethical Alternatives

Confine your business activities to just one MLM company at a time. This will avoid conflict and heighten your chances for success. Of course you may avail yourself of goods and services from different Networking Marketing companies. Just being an "inactive distributor" of another company is harmless and may be instructive.

To obtain products from other Network Marketing companies while avoiding any cross-sponsoring involvement, get the company's address and phone number, and contact them for the name and number of a local distributor who is not a member of your original company. You are under no obligation to sign on with a friend or associate from your original company simply because they "told you about it first ". In fact, you may be doing them an unexpected disservice if you allow them to cross-sponsor you. By carefully avoiding any cross-sponsoring conflict, you can enjoy products from other MLM companies without concern. However, if you have made the decision to become an active network builder in another company, you must observe the following guidelines very carefully.

Thoroughly review your original company's policies regarding multiple involvements and cross-sponsoring. Either or both may not be allowed. It is also a good idea to contact the company directly in case there have been any updates or changes to the policy since you first entered the business. If you are allowed active participation in more than one company concurrently, nevertheless, proceed with great caution.

Consult your upline and let them know of your intentions. They will appreciate your honesty and may have useful suggestions or information.

By all means do not engage in a covert strategy of deception. When it is found out your relationships will suffer for it. Openness and honesty is still the best policy - especially among friends and business partners.

If you do choose to get involved with two companies at once, it is wise to keep the two networks absolutely separate. Avoid overlapping different ventures by enrolling only new or different contacts into your new business. This strategy minimizes poten¬tial conflict and network damage.

Should distributors from your original company find their way to your new opportunity, categorically refuse to sponsor anyone beyond or besides your own original first level. This advice will help you to avoid unintentional raiding of, or stealing from, someone else’s group. The only exception to this is if they possess written permission from the original company and their entire original upline.

If you do have the right, and wish to be active in two companies at the same time, be extremely careful not to promote one company by discrediting, slandering, bad mouthing or denouncing the other. Unfavorable comparisons are equally inappropriate. It is said that there are two ways to own the tallest building in town: You can build it yourself, or you can tear down all the others. No company condones network cannibalism within its own ranks. Double agents are always discovered and the ensuing mess often ends in disaster for all.

Finally, if you absolutely insist on cross-sponsoring or if you just can't help from making negative representations and unfavorable comparisons - the Networkers Code of Ethics, Etiquette and Honor behooves you to quit the original company before moving ahead. Act with the courage of your convictions. Playing both sides of the fence is a game for crooks and spies, not for honest Network Marketers.

Network Marketing in the 21st Century

Network Marketing is a contemporary approach that can be applied to all forms of commerce and trade. This unique consumer-driven marketing system holds great promise for streamlining and popularizing the way business is conducted in the later 20th and fast approaching 21st centuries. The vision is one in which everyone truly has access to financial independence and personal freedom.

Remember: When we as Network Marketers uphold ethical codes of conduct we help to strengthen our industry as a whole.

Humanity is searching for a healthier, less destructive and more equitable paradigm. Environmental sustainability, humanitarianism, non-interference and planetary contribution are the yardsticks by which businesses are now being measured. New technologies and the rapid flow of information are virtually linking us up into a global network. With the advent of the planetary community, the heralded era of cooperation is rapidly emerging.

Network Marketing can serve as a model for ethical business conduct in the 21st century and beyond its reputation tomorrow depends on our actions today. Thank you for helping to uphold and promote the cherished vision we all represent.

Focus on Cross Sponsoring - A Summary

Networking Guidelines

1. The main focus of Network Marketing is on building relationships. Successful Network Marketing depends on quality relationships and quality relationships depend on ethical behavior.

2. If you want to succeed in Network Marketing, choose the company with the products, services, corporate atmosphere, vision and compensation plan you prefer, and stick to it until you succeed.

3. In Network Marketing, as in all people businesses, reputation is everything. Your reputation is virtually the key to your success, why jeopardize it with foul play?

4. Don't jump at the next -and greatest opportunity that comes along - there's always another better opportunity on the horizon. The grass only looks greener. Leave hopscotch marketing to MLM junkies.

5. Protect yourself from downline raiders and cross-sponsoring profiteers by insuring maximal support to, and communication with, your network. Remember to be of service and contribution to your group.

Ethical Considerations

1. Network raiding is predatory, parasitic and unethical. It gives a bad name to MLM as a whole, and sets a precedent that is highly destabilizing.

2. The distributor application you sign is a legally binding document. It contains your company's distributor bylaws which guarantee specific rights designed to protect the company and the distributor.

3. As distributors within the same company we share special contacts, restricted privileges, access to confidential information and a certain commonality that can not be abused without violating the integrity of the network as a whole.

4. Networks are built by the effort of many individuals, and are co-owned proportionally by everyone involved. No one has exclusive ownership of an entire network.

5. Cross-sponsoring violates one of the most time honored and fundamental principles of human conduct - the Golden Rule. Remember: as you sow, so shall you reap.

6. Crossing-up, or approaching your up1ine as targets for other Network Marketing ventures is just another type of cross-sponsoring. Once again, as with sneaky crossing, this is an attack on someone else's business network - their upline's network.

7. Cross-sponsoring or creating conflict of interest within a network damages a distributor's reputation. Although the crossing may be done without malicious intent, the crosser's honesty and integrity quickly come into question. Respect and trust are jeopardized or destroyed. Hard feelings are engendered with any distributors whose networks have been invaded or harmed

Ethical Alternatives

1. Confine your business activities to just one MLM company at a time. You will avoid conflict and heighten your chances for success. This is our best advice and your best bet.

2. Thoroughly review your original company's policies regarding multiple involvements and cross-sponsoring. Either or both may not be allowed. Contact the company for updated information.

3. Consult your upline and let them know of your intentions.

4. Do not engage in a covert strategy of deception. When it is found out your relationships will suffer for it. Honesty is your best policy.

5. If you choose to get involved with two companies at once, keep the two networks absolutely separate.

6. Categorically refuse to sponsor anyone from the original company beyond or besides your own first level.

7. If you must be active in two companies at the same time, do not promote one company by discrediting, slandering, bad mouthing or denouncing the other. Avoid negative comparisons or representations.

8. If you absolutely insist on cross-sponsoring or if you just can't help from making negative representations and unfavorable comparisons - the Networker's Code of Ethics, Etiquette and Honor behooves you to quit your original company before moving ahead

9. Remember: When we, as Network Marketers, uphold ethical codes of conduct, we help strengthen the case for our industry as a whole.