How To Choose A Good MLM Company
by Willie Crawford
According to the respected journalist, Richard Poe, in his book Wave4 – Network Marketing in the 21st Century, Internet Marketing is responsible for moving over $100 billion of goods and services yearly on the global front. It is therefore very likely that you have already come in contact with some type of Network Marketing product or service. The concept of moving goods through an army of independent distributors has earned its place in the marketing world despite the negative publicity suffered by the industry. Network Marketing is here to stay; the question that remains is, “How do I choose a company?”
Here are some very important pointers that would guide you in the right direction. Any company that you can find passing these criteria will be a great company to line up with.
1. A company that has been in business for at least 5 years and has great financial backing, excellent management and a ‘distributor first’ philosophy. The company should also have a long-term development goal and not just be out for the quick cash.
This may be a pretty tall order to reach but considering that the great majority of start-up MLM companies fail within their first three years you don’t want your income stream to suddenly dry up! It’s no picnic to discover that after you’ve spent time, effort and money to build a solid organization the company closes down because one of those essential elements was missing.
There is the prevalent myth that the best time to join a company is at start-up—the so called ‘ground floor opportunity’—, but if the truth be told, the ground often caves in leaving many people very unhappy. This does not mean that you should wait for five years to see if a company would do well, because logically, this would mean that no MLM company will ever get started. The point here is that you should assess your risk and know that the chance of losing your money is higher with a new company than with a company having a proven track record.
You know the saying that the proof of the pudding is in the eating; just so the proof of the stability of a Network Marketing company is in the duration of survival. In fact, in over 60 years of MLM history and after tens of thousands of MLM start up companies, only around 42 companies have made it to their 5th birthday.
Any business owner would admit that the first years are the toughest. This is the period when the company is just establishing a footing and income is most likely low. If the company does not have the proper financial backing it is not likely to survive these years. You would not want to join a company that is depending too much on the distributors for survival. A MLM company takes time to build momentum by the very nature of the business - word of mouth advertising, people telling people. Before it reaches top momentum it must have the financial backing to survive the early hurdles.
Customer support for the distributors is also a critical part of the company. If their distributors feel neglected then they will simply not stick around. Especially in today’s market where there are thousands of MLM companies beckoning. The distributors are the consumers and salespeople, and to neglect them is to commit certain suicide.
A sad reality of the MLM industry is that there are many scam artists that come along just for the quick cash just before they close shop and disappear. This would require that you do your due diligence such as checking consumer alert websites as FTC.gov and WorldWideScam.com among others. These scam artists will normally emphasize the compensation plan over the actual product—if there really is a product—and apply high pressure sales tactics to persuade you to join the “ground-floor opportunity”. These criminals prey on human greed and have little sympathy for the naïve.
2. High quality (unique if possible), reasonably priced products or services that should be, ideally, consumable so users will have to buy over and over again.
Traditionally, MLM companies are able to produce higher quality products simply because they don’t have to pay outrageous prices for advertisement. Just think about the millions of dollar paid per year by companies such as Nike to sports stars for a 30 second commercial. This money, if Nike followed the MLM model, could go into developing better quality products and paying their workers better salaries. Because a large part of a normal company’s budget goes towards advertising, Network Marketing companies will deliver a higher quality product, all things being equal, per dollar spent.
Also remember that you want to be paid continually so you need a product or service that is consumable so the customer has to keep refilling his supply. Nutritional and telecommunication companies fit this requirement very well.
Apart from being consumable, another important factor is how ‘needed’ this product or service is. The negative side of pushing nutritional products is that most people are only concerned about their health after it is already failing! (You’ll do well recruiting at the local hospital). If you are marketing a service such as web hosting, medical coverage or legal services you are more likely to have less attrition in your downline.
If the company is selling a product that you can pick up at your local department store, then you’re not likely to do very well. A unique or proprietary product will do better since you’ll have less competition—you learn very early that there is no such thing as zero competition although some companies will want to make this claim.
The “acid test” question to apply to the price of the product or service is, “Would I purchase at this price if there wasn’t a compensation plan attached to it?” If your answer is “No,” then you are looking at a potential pyramid scheme where a product is just attached to the compensation plan to make the opportunity appear legitimate. In these cases you will always find that the compensation plan becomes the selling point and the product or service rarely mentioned. (Here is an informational article on the subject of recognizing and avoiding such schemes: http://www.ftc.gov/bcp/conline/pubs/invest/mlm.htm.)
3. A Compensation Plan that is fair to both fulltime and part-time distributors alike with leadership bonuses for those who build large and productive teams.
We have already mentioned that a successful MLM company will have a “distributor first” philosophy. In no other place should this be exhibited more than in the compensation plan. It takes only some simple arithmetic to see how many sales or distributors you need in your organization in order to be in profit. Most people don’t take the time to do the math and sometimes are “deceived” by the fancy potential income charts that are put out by the company.
The point here is that you need to read between the lines and the fine print to be sure what you are paid for your effort. Most people will skim this section because it may read like a tax code and who likes to do their taxes? That’s why we hire accountants.
Compensation plans fall into basically four types:
(a) The Break Away Plan. This is the oldest and most traditional plan and allows distributors to build and be paid on an unlimited number of frontline associates. When the frontline associates reach a certain predetermined volume they can “break away” from their upline and form their own organization. In this break away plan the leaders are paid on all their frontline and also certain levels down in their break away groups. In this model if you don’t work you don’t eat. You have to recruit in order to be compensated.
(b) The Unilevel Plan. Here you are only paid on a certain number of levels determined by the company. In this case there are no ‘break away’ groups. The larger your frontline the larger will be your total group size. The lower levels would therefore be much larger than the upper ones. Again if you don’t recruit you don’t get a check.
(c) The Matrix Plan. In this plan you are limited to the number of recruits you could have on your frontline. So in a 3 X 5 matrix you’ll have 3 on your front line then 9 on the second level, then 27 on the next and so on. Compared to the two other plans we’ve looked at the matrix plan limits your success to a certain level. What’s so appealing about this plan though is that recruits are told they only need to get 3 and are even promised “spill-over” from a “heavy hitter” in their upline. The results are that everyone joins looking for spillover and never makes any personal effort. Results? Certain failure. A matrix, though limited, can work but the distributors must depend on their personal efforts and allow the spillover (if any) to be just an added bonus.
(d) The Binary Plan. This plan is a special case of the matrix where you can only have two on your frontline, hence ‘binary’. The only caveat here is that many such plans require you to balance both sides of your organization before you can get paid. This is really a trick so that the company can keep your money as long as possible and sometimes forever. Some dishonest companies will start off by opening only one side of the binary—called a ‘powerleg’—as there is no possibility of you getting paid until the other side is opened. By the time the other side is opened many people may have left the company leaving their commission checks behind as well. You are forever left, not only with recruiting, but trying to balance the sides of your team. Beware of such plans!
There are variations of these plans that have come along such as the straight line plan where you are paid on every one that comes in after you.
Companies that follow these plans don’t seem to survive very long since most people just join and stand by waiting on their checks. There is no real incentive to work the plan.
Warning: You should always be particularly suspicious of compensation plans that pay out over 60%. This normally means that the product is overpriced, qualification quotas or volumes are almost unreachable or the breakaway structure can rob you of your investment and hard work. If the company uses the breakaway plan you may find your downline disappearing just as you are about to hit the big numbers. If a company intends to be deceptive it will be in the compensation plan; so study it well!
4. Training and solid upline support for your team.
Many companies provide training and promotional materials for their distributors but it is often difficult to strike a balance between product promotion and distributor training. And distributor training normally takes a backseat. You should be wary of companies that charge exorbitant prices for their promotional materials. You are investing your advertising dollars so the company should not seek to make a profit from you here—although many do.
You should seek to align yourself with an experienced leader and learn as much as possible from his or her recruiting methods. Be sure to investigate your upline because that can be the one factor that determines success or failure for you. Study the company literature to see who the ‘big hitters’ are and join their group. It is said that misery loves company; so does success.
5. A wide and even global market if possible.
You may find a company with all the great characteristics that we have looked at so far and then discover that it is not available in your area—ouch! With the advent of the Internet you find that many more companies are going global. This means that your market reach will be wider and chances of building a solid team greatly improved.
Apart from the sheer geography of the company’s market reach, is the potential customer base as well. For example, many American nutritional companies are aiming for the ‘baby boomers’ who are now in their midlife years and make up a good percentage of the buying public—in means and numbers. This demographic of customers want to look younger and are very health conscious. Any product that caters to their needs will most likely have a ready market.
Another big “bubble” when looking at population demographics is the children of the baby boomers. Look at what they are spending money on!
Choosing a company that has a product or service for which there is no ready market will make it very difficult on the distributor. And in this industry one needs a lot of encouragement.
If you have an existing mailing list, tell them about your new ebook first! Offer them the best deal possible - a special offer that no one else will be getting. (You’ve gotta treat your own list the best.)
I would also offer an affiliate program to my customers so they can promote the product to others while they earn a commission.
If you don’t have your own list, the first thing you may want to do is, start sending out ‘joint venture’ offers to other businesses in your field. Offer them a nice-sized commission (at least 50%) and explain to them how they (as well as their customers) will benefit from the deal.
I would send out at least one JV letter, per day!
If all you do is work on striking joint ventures with other marketers and business owners, you will not need any other marketing strategy to pull in amazing profits! Joint ventures are the best thing out there for us writers and marketers — especially online!
You can also use highly-targeted ezine ads to get customers. (Here’s a twist to this technique: instead of targeting customers, target affiliates who will help you sell the product! This strategy can grow your business very quickly!)
Another strategy that can work well for you (if you don’t have an existing customer list) is to write short, focused articles and submit them to targeted ezines. Articles can be a great way to get viral advertising working for you.
There are hundreds of other strategies you can use. However, the ones listed above are some of the best and most effective ones around. You should always go for ‘quality’ traffic verses ‘quantity.’
What To Do When You Get Stuck
If you get stuck or lost at any point during the product creation / marketing process, don’t panic. There’s an easy solution!
Just watch what the experts in your field are doing and how they’re doing it. Then do the same thing.
Example: If you can’t think of a great title for your ebook, look at what the experts are doing. Or, go to amazon.com and do a search for books on that subject. Read the titles/headlines and you’ll get some great ideas from there.
Don’t know how to create an outline for your product? Look at how the existing books are formatted.
Having a hard time creating a killer sales letter for your product? Just look at the top sellers and see how they’re doing it. And model yours after the best sellers!
Most of the work has already been done for you. You don’t have to steal other’s work, but you can look at their stuff to get ideas… you can model after the successful ones. And of course, make yours better!
Another good point to keep in mind is… your book doesn’t have to be hundreds of pages long. I tend to create short powerful reports because they are quick and easy to produce.
That’s a great way to go, especially if you’re a new marketer and want to get your feet wet.
Best of all, short reports allow you to spread your risk. Listen, all of your projects will not become home runs. That’s just the reality - of any business - that most of us have to accept
So, if you invest a lot of time and energy into creating a monster ebook that turns out to be a dud, you would have lost all the time and energy you put into that project… with nothing to show for it.
On the other hand, if you had only spent a few weeks on creating a much shorter ebook which also turned out to be a dud, you could quickly pull that one out and replace it with another short one. Your risks are dramatically reduced and your chances of putting out a winner is increased!
See, it’s better to create 10 little ebooks per year and have 2 of them flop (which means 8 of them are bringing in the cash!) than to only create one or two big ebooks in that same year and risk having them both flop. There is also a much better chance that 1 of your products will be a hot seller if you have 10 of them out there, instead of just one or two.
That has been my strategy for the past 7+ years. And it has worked very well for me. It can work well for you too.
Make It Better!
Most importantly, keep testing and tracking everything you do!
After you have the basics down, start testing everything to make it better.
Test your headlines to see which one pulls better.
Test your offer, packaging, benefits, pricing… test everything! Don’t let anyone tell you what they “think” will work. Let your customers decide that for you.
Measure the response of everything you test to find out which is working better and producing more profits.
Don’t ever stop improving on what you have.
Each little improvement you make (after testing it out) can mean substantial additional profits for you. It’s the easiest way I know of to give yourself a raise without really doing too much extra work.
Finally, make your package unique, either through the offer, the packaging, or the product itself. Make yours stand out from the rest of the pack..
If you don’t do that, you’ll be lost among the other mediocre offers, and your customers will probably never find you.
If you can’t think of a way to make your product/offer unique, just look at how other industries are doing it. You’ll get some great ideas just by watching other businesses that are completely unrelated to your field.
Do the above and you’ll continue to get great results.
Ken Mathie
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