A
quick summary of things to look for in an MLM
Company
Before getting into the details and specifics of choosing
which Multi-Level Marketing (MLM) or Network Marketing
business you should consider, it's important to understand
the reality of succeeding in any MLM program. Sure,
financial independence is possible
with your own MLM business, but the reality of it is
that
it will take several years
to build it to that point. Since we know it will take
several years, then your program should still be a great
opportunity in 3-5 years for your new people who are just
getting started 5 years in the future. You want continued
income from your business after this time as well, so you
must choose your company carefully. You can also
completely
ignore the cries of many would-be sponsors who say, "Get in
NOW - it's the GROUND FLOOR!"
If you try building your business with "ground floor"
companies, you will be starting from scratch many times by
trying to profit from "flash-in-the-pan" opportunities.
(see "The Company" below) And again, what about those who
join your group months and years from now when it's no
longer "ground floor?"
If
you want to build a stable business that you will still be
profiting from many years from now, evaluate your potential
companies carefully. There are
four things to consider
when evaluating an MLM program -
the Product Line, the Company, the Marketing Plan, and
the Upline support
-
in that order.
If you aren't personally sold on the products, the rest
doesn't matter. And if you like the products, but the
company is in trouble, then the marketing plan or upline
support doesn't matter.
The Products
The product line is, by far, the most important aspect of
any MLM program. First, you need to look at it from a
consumer standpoint. Are the products high in quality and
is the price competitive with similar products on the
market? If you were not earning anything because of the MLM
aspect of the program,
would you still purchase the company's products at the
retail price?
If not, then forget it. While some people are successful at
building a downline organization, most people who get
involved will never sponsor anyone. Will they continue to
earn you money by purchasing and selling the products month
after month if they aren't receiving any bonus from their
downline? If they won't, even if you are able to sponsor
lots of people, many of them will quit and it will
eventually destroy your network of representatives.
Now
look at the product line from the representative's
viewpoint.
Are the products consumable?
If not, you will have to constantly work to find more and
more customers. If they are consumable, you can continue
to
sell these products month after month to the same loyal
customers.
Additionally, you will want to consider what the true
market of the product line is. If the products are very
high quality with an associated high price, how big is the
market for this level of quality? The same goes for unique,
one-of-a-kind products. How many people would actually buy
the product? Always keep in mind that if the product line
is unique to the company, it won't be unique for long if it
really is successful. If there truly is demand for the
product, then copy-cat products will hit the traditional
stores and what was once a unique niche in the marketplace
will become a highly competitive market where your products
are likely very over-priced.
The
last thing to consider regarding the product line is how
you are able to sell them. Are they presented in a catalog
or brochure? Can it be mailed? How much do the catalogs or
other sales aids cost? Some companies have overpriced
catalogs and sales material. Will the company ship directly
to your customers? Do you have to handle inventory?
Can the products be sold at fairs, flea markets, or
through fundraising, party plan, or to commercial
accounts?
Make sure you weigh your retailing options here. If the
company is weak in support in this area,
you must seriously question their commitment to their
products
and their salability.
The Company
Probably most important is the philosophy of the
company.
Is the company risking their and your livelihood by
allowing unsubstantiated product claims or "get rich quick"
testimonials?
Does the marketing plan encourage the illegal practice of
"buying in" at higher levels to build higher sales? A
company must be completely on top of all advertising being
done in the field as well as all claims being used.
The Attorney Generals in various states are cracking down
hard on many companies who "look the other way" when their
representatives are violating the law by making ridiculous
income and product claims.
Once
you are comfortable with representing the product line, the
next step is to take a close look at the company, its
management, and their philosophy. Like any other industry,
the failure rate for new MLM companies in very high.
Probably 90% or more of the new start-up companies don't
make it past 18 months. They may be severely under-financed
or over-financed or have poor management who can't handle
the sporadic growth of a new MLM company.
If you have committed to a new company and they fail after
18 months, that means that you have wasted all of your
effort and commitment, and must now start over again with
another company.
Find
out how long the company has been in business and if it is
currently growing.
If it is less than 3 years old, it is considered very risky
to join.
Check the financial status of the company and find out who
the principles are behind it. Are bonus checks being sent
out on time and is product being delivered in an efficient
manner? Although you are an independent representative, you
are still at the mercy of the company when it comes to
getting products and getting paid.
The Marketing Plan
Finally, it's time to look at the marketing plan.
Percentages and payouts are meaningless unless the products
and the company are sound. Always remember this! Many plans
differ on the monthly requirements to stay "active".
There should preferably be no monthly requirements
to remain active because if the products are good, then the
representatives should want to buy them for themselves, and
you need the part-timers in your group who may not buy
regularly enough to fulfill a required purchase. Nearly all
MLM opportunities today do not require you to stock any
products or pay out any bonuses to your downline group. You
and all of your downline should be able to buy directly
from the company and the company should pay you and all of
your group's bonuses and commissions directly.
In
comparing retail commissions and bonuses, you must keep
several things in mind. First, some companies quote their
retail percentages as a mark up, while others use a
discount percentage or commission. A 50% mark up is
equivalent to a 33% discount. Second, many companies pay
out based on a bonus or point value (BV or PV) while others
pay out on the retail price. If a bottle of shampoo sells
for $10 and has a BV of $4, a 10% bonus would be 40 cents.
Another company may pay out only 4%, but on the full retail
amount, so in this case, 4% of the same $10 is still 40
cents.
You want to make sure you are comparing apples to
apples.
At least one company also pays bonuses on all sales aids,
catalogs, and other literature. The depth level for
commissions vary with each company. When comparing these,
make sure, again, that you are comparing apples to apples.
Many companies have loopholes in the payout rules so that
the percentages look very inviting, like you may have to
match volumes in different legs, or some other technicality
that may prevent you from getting paid those inviting
percentages. Legitimate companies will probably pay you
more and further in depth, the more you personally produce
by selling and building a business.
Overall,
most marketing plans are designed to make a few people
fabulously rich, while the average person makes nothing.
Some are designed to allow the average person to earn a
decent income, while making it difficult to make the
fabulously large incomes.
The best programs provide a balance between these
two.
After all, for anyone to get wealthy in Network Marketing,
it will take a lot of part-timers in their group to get
there.
It's important that the new and part-time people can make
some money too.
The Upline Support
Once you've settled on a company with products you believe
in and can stand behind, and it is a sound company that you
trust is working for the long-term, and it has a marketing
plan that is fair to all types of representatives, then it
is time to find a sponsor. Although it isn't necessary to
have a helpful sponsor and upline to succeed in Network
Marketing, it can help tremendously. When considering a
particular sponsor, ask yourself this question:
Does my future sponsor show a genuine personal interest
in my success, or do they treat me like just another number
to make them money?
It is not necessary that your sponsor be full-time, or even
successful with Network Marketing yet.
What you need is someone who cares about you, is actively
building their own group and will help you build
yours.
It is also helpful if you and your sponsor are compatible
in a personal sense. Somewhere upline to your sponsor there
should be at least one very successful person who is
involved in helping everyone in their downline.
The
next thing to consider is what your upline can supply that
will assist you in building and training your network. What
kind of welcome or training package will you and your
downline receive? Does your potential upline provide a
newsletter, advertising help, training and promotional
materials, or advertising? Do they have a proven system
that you can follow?
There is no reason to reinvent the wheel
if someone upline from you has already created material you
need. If you have done a good job of evaluating products,
companies and marketing plans, you will have a very long
relationship with those in your upline. Why not spend a
little time before making this type of long term
commitment?
Summary
In summary, if you are personally sold on the products,
feel comfortable relying on the company and management to
be around for 20 to 30 more years, feel the marketing plan
is fair, and you've found a successful and competent upline
with a sponsor who cares about you and has a system in
place that you can use, then you probably have the right
fit for you.
My suggestion is to try some of the products, and then
present the catalog or product brochure to a couple dozen
friends and acquaintances and see what they think about the
whole thing. This will give you a good idea of what you
will be dealing with as you start your business. Doing this
kind of work prior to getting involved should lead to a
long and successful career in Network Marketing!