Many people directly associate network marketing with pyramid schemes and scams. Why is this, you might ask? Honestly, it’s because many network marketing companies have been either pyramid schemes or just downright bad companies. Thankfully, Lightyear is not among them. Lightyear is a mature company and has an A+ rating with the Better Business Bureau; the highest rating any company can achieve.
People often have presuppositions about Lightyear Wireless because they’ve heard we are a direct marketing, or network marketing, company. To truly understand why Lightyear is not a pyramid scheme or a scam, but rather a legitimate and successful company with a great business model, you must first understand what a pyramid scheme really is.
According to the U.S. Securities and Exchange Commission, a pyramid scheme has the following characteristics,
In the classic "pyramid" scheme, participants attempt to make money solely by recruiting new participants into the program. The hallmark of these schemes is the promise of sky-high returns in a short period of time for doing nothing other than handing over your money and getting others to do the same.
http://www.sec.gov/answers/pyramid.htm
Although Lightyear does provide leadership bonuses for recruiting new representatives, the long term goal of every Lightyear representative is to build a large customer base. The reason for wanting to recruit customers instead of solely representatives is that we are paid residual income on our customer’s phone bills, while a leadership bonus is a one-time perk.
Lightyear pays its representatives between one and ten percent on their customers’ phone bills depending on the representative’s position in the company. Initially, being paid only a few percent of someone’s phone bill may not seem like much. For instance, say you have one customer and you are paid four percent of that person’s $60 phone bill each month – that’s only a $2.40 paycheck you would receive each month, hardly exciting. But consider if you had 1,000 customers, then you would be receiving a $2,400 monthly paycheck for as long as that customer pays their phone bill. That’s more like it!
Building a customer base of several thousand customers may seem like a daunting task and, honestly, it takes a lot time and hard work. Growing your business to the point that the residual income you’re making is by itself enough to support your lifestyle is not going to happen overnight. We not only "admit" that Lightyear is not a get-rich-quick company, but make this fact very clear to prospective representatives, thus proving that we do not conform to the second "hallmark" of a scheme as in the quote above.
However, because of the leadership bonuses, it is possible for representatives to support themselves financially while building a large customer base. Furthermore, not only do you receive a leadership bonus when you bring a business partner into the company, but when they gather a customer – even though you did not personally recruit the customer – you are paid a percentage of that customer’s phone bill! This is what makes direct marketing so attractive to many business owners – by bringing many partners into your business, you are effectively setting up a distribution network for gathering customers. Think of recruiting representatives as a short-term goal, or as setting up your distribution network, and recruiting customers as the long-term goal, since it is the residual income that makes this opportunity truly desirable.
Consider our previous example of gathering 1,000 customers, where if each customer paid a $60/month phone bill, you would receive a $2,400 paycheck each month. Let’s be optimistic – we are entrepreneurs after all – and set a goal of gathering 10,000 customers. As before, this may seem like a daunting, or even impossible, task. But now take into account that you have business partners, not only the business partners you personally sponsored, but also those that your partners sponsored. That’s a bit confusing, so instead of trying to explain it in 1,000 words, let’s look at a picture.
This picture shows the power of direct marketing. Once your business is up and running, the number of customers you have and the amount of money you make can grow exponentially.
Going back to our example about getting customers. We stated a goal of gathering 10,000 customers. By yourself, this lofty goal could be all but unreachable. But now that you and your business partners have established a distribution network, it becomes much more realistic. Suppose that you and the representatives in your downline are each able to personally gather 10 customers and sponsor three business partners.
So how many levels of representatives are needed in your business to meet this goal?
Two levels (as shown in the above diagram):
Three levels:
Four levels:
Five levels:
Six levels:
Here is a graph showing how the exponential growth is possible:
With only six levels of representatives in your business, where each representative sponsors 10 customers and three representatives, you would have 10,930 customers in your downline! Furthermore, Lightyear Wireless pays residual income on up to eight compressed levels! Clearly, direct marketing can be a very powerful business model.
How can Lightyear undercut the prices of other wireless companies?
A question often asked is how Lightyear can offer such low prices, such as the $59.99/mo unlimited text, talk & web cell phone plan. One reason lies in the fact that Lightyear doesn't advertise at all; the company relies on representatives working their businesses and word of mouth to attract new customers, neither of which costs the company a dime.
In stark contrast, other wireless companies spend up to several billion dollars a year in advertising. According to a New York Times article, in 2010 AT&T spent $2.09 billion, Verizon $1.82 billion, and Sprint Nextel $1.06 billion in advertising. The fact that Lightyear does not spend billions, or even millions, in advertising is one of the main reasons such low prices can be offered to Lightyear customers.
Be sure to check out our FAQ page for answers to more questions about Lightyear Wireless.
