According to a respected journalist, Richard Poe, in his book “Wave4 –
Network Marketing in the 21st Century,” network marketing is responsible for moving over a whopping $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 points I would recommend you consider when choosing your opportunity. (To find out what company I recommend, see the chapter in this book titled “The 1 Hour Business”).
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 network marketing companies fail within their first three years, you don’t want your income stream to suddenly dry up! You don't want to waste your time building and marketing your business only to have the company close down because one of those essential elements was missing.
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CHAPTER 2 Choosing a Network Marketing Company
There is a prevalent myth that the best time to join a company is at start-up—the so called ‘ground floor opportunity’—, but if the truth is, a company is just as likely to fold, leaving you empty handed.
This does not mean that you should wait for five years to see if a company does well, because logically, this would mean that no network marketing company would 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.
The fact is, in over 60 years of network marketing history and after tens of thousands of network marketing 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 don't want to join a company that is depending too much on the distributors for survival. A network marketing company takes time to build momentum by the very nature of the business - word of mouth advertising, people telling people, etc. Before it reaches full 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 distributors feel neglected then they will simply not stick around, especially in today’s market where there are thousands of network marketing companies available. The distributors are the consumers and salespeople, and to neglect them is to commit certain suicide.
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CHAPTER 2 Choosing a Network Marketing Company
A sad reality of the network marketing 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 naive.
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, network marketing companies are able to produce higher quality products simply because they don’t have to pay outrageous prices for advertising. With the Internet and viral marketing on the Internet, it's very easy to market without spending any money at all.
The advantage here is that like affiliate programs, the distributors or affiliates do all of the advertising, as well as the testing and tracking to find out what works. They are also able to take the products into markets that the product owners might not have considered.
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. Services are also a great way to do this. New to this mix are travel services and the travel services industry is huge.
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CHAPTER 2 Choosing a Network Marketing Company
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 down line.
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.
3. A compensation plan that is fair to both full-time and part-time distributors alike with leadership bonuses for those who build large and productive teams.
We have already mentioned that a successful network marketing 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 math to see how many sales or distributors you need in your organization in order to be in profit. Most people don’t take 6
CHAPTER 2 Choosing a Network Marketing Company
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:
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(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 front line associates. When the front line associates reach a certain predetermined volume they can “break away”from their up line and form their own organization. In this break away plan the leaders are paid on all their front line 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.
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(b)The Multi 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 front line 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.
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(c)The Matrix Plan. In this plan you are limited to the number of recruits you could have on your front line. 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.7
CHAPTER 2 Choosing a Network Marketing Company
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 up line. 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. One prime example is SOLOBIS.
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(d)The Binary Plan. This plan is a special case of the matrix where you can only have two on your front line, 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 ‘power leg’—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.
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CHAPTER 2 Choosing a Network Marketing Company
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 down line 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 up line 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 also 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 up line 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 9
CHAPTER 2 Choosing a Network Marketing Company
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.
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CHAPTER 3 Network Marketer’s Survival
Guide
In the network marketing industry attrition rate can run as high as over 70%. This means that the majority of people who try a network marketing company don’t survive the first few months!
The upside of this is that 9 out of 10 of those who survive through ten years become very wealthy. This industry has produced more self-made millionaires than any other single industry in America. What a recommendation for network marketing!
So if this industry has produced so many self-made millionaires, how is it that more people aren’t staying for the long haul? First we would look at some of the major reasons for failure and then some tips to help you escape these traps.
5 Main Reasons Network Marketers Fail
Human beings are complex creatures and so it is always a little risky to make general statements. Over time, however, a pattern emerges and we can get a very good idea why so many people start this business and then drop out.
1. Mishandling of rejection from close family members and their warm market.
When someone is first introduced to the concept of network marketing they become very motivated—mainly by the income possibilities—to start recruiting right away. Most companies will teach you to start with a list of your warm market and work from there.
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CHAPTER 3 Network Marketer’s Survival Guide
Even though this is a logical route, rejection from this group can be very discouraging and most people stop there. This means that the majority of recruits will give up after speaking with their spouses for example.
Only lately has network marketing become recognized as a viable and respected profession although many are still quick to cry, “Oh! You mean a pyramid scheme”. This comes because of the negative press that many famous companies have received and the general misunderstanding of the public.
The best way to avoid this is to not bother with trying to recruit those who won't be interested in your opportunity anyway. There are plenty of people on the Internet who are looking to start a business. This traffic is more targeted. The Internet can save you a lot of time in qualifying your potential recruits.
This type of marketing is called attraction marketing. To learn more about attraction marketing, make sure you visit the resources section in this book.
2. False expectations for too early results with too little effort.
Depending on the way in which the business is presented, one can get the impression that there is not much effort involved. I mean, just get two who get two, and you can become rich.
When early recruits realize that considerable networking and marketing is involved in network marketing, disappointment quickly sets in. There is work involved, and any business that presents a plan to you and says that you don’t have to do anything is telling you a lie. All successful network marketers are successful because they were willing to put in the effort it takes to become successful.
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CHAPTER 3 Network Marketer’s Survival Guide
Many marketers do not factor into their planning the cost of advertising their business. This cost can eat up a good chunk of your investment especially when you are just launching. The idea here is that you have to regard this as a normal business and not just a trial run venture.
The way to avoid this is to learn how to market using free Internet marketing techniques. Blogging, article writing, search engine optimization, linking, free classified advertising, video marketing and social marketing are all viable ways of marketing.
Although they will take a little time, the marketing builds on itself.
Eventually you will have to do very little marketing at all because your business will basically market itself.
3. Lack of focus.
Network marketers have gained a reputation for jumping around and changing companies like they change clothing. At least this applies to those who flirt with success but never reach it.
As I mentioned before, those who survive the early years normally go on to do very well. However, there are many people who are looking for the
‘next big thing’ and keep jumping from opportunity to opportunity. This normally describes the behavior of those in search of the ever evasive
‘ground-floor opportunity’.
The rule of thumb here is that you should establish yourself in one solid company before venturing off into other companies. And if you do work more than one opportunity, make them complementary to each other.
(The company I will share with you in this book solves this problem as you'll be able to generate multiple streams of income from this one business).
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CHAPTER 3 Network Marketer’s Survival Guide
4. Failure to work an easy to duplicate recruiting plan.
With the advent of the Internet and all the new ways to connect with others that it affords, network marketing has come a long way from the home meetings and house to house presentations. Doing these presentations was very intimidating to many people and so the recruiting chain often broke along the way.
The key here is that if the recruiting machine does not have a system that anyone can comfortably do, it will come to a screeching halt. Good trainers know that a simple system must be in place or the trainer’s efforts will not be properly duplicated. If the impression is given that a recruit must be turned into an instant public speaker, giving motivational speeches at the local Hilton, they can be easily scared off.
At the same time, you must take the time to learn the system and become familiar enough with the products that you can tell a friend about its benefits. As a user yourself, this should not be difficult. A caution here is to work the system that has been field tested, rather than trying to invent your own methods. This doesn’t mean that you shouldn’t be innovative, but there is no use to reinvent the wheel either, so be teachable.
5. Baby-sitting of down line members.
Teaching is surely a part of the game of building a strong team. Some marketers make the mistake of doing too much for their down line members thinking that if they didn’t their recruits will leave.
This often backfires, however, because the down line members become comfortable and depend too heavily on their up line and never grow strong enough to build their own teams. There is only so much you can 14
CHAPTER 3 Network Marketer’s Survival Guide
do for someone and no more. These spoiled over-dependent down line members can become a liability instead of an asset to your team. So avoid the temptation to micromanage your team; you’ll get burnt out.
Teach your team members to fish instead of fishing for them.
The way to solve this problem is to do the same thing you do in step 4: create a system that is easy to duplicate and then explain to your team members how to do it. Make it clear that if you don't work, you don't eat, but show them what they must do to be successful.
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CHAPTER 4 Secrets of the “Heavy Hitters”
Although there are pitfalls to this type of business, there are pitfalls to any type of business. No business will ever be perfect. If you understand what the pitfalls are though, in the business you choose, you can either avoid them or overcome them. This is one of the real secrets to success in business. Also, don't quit. Those who succeed are seldom ever quitters. They stay focused and do what it takes to succeed.
Below are five things to avoid. If you already own an MLM business, and you are currently encountering any of these obstacles, I'll show you what to do to overcome them.
1. Be prepared to handle rejection.
First of all, if you are marketing your business correctly, you'll pretty much avoid all rejection. This is the real secret of attraction marketing.
Most people who market on the Internet who are encountering rejection are simply marketing to people who aren't interested in their products or services.
Here's an example: I get emails all of the time for Viagra, dates with women, and a whole host of other junk. Since I'm a woman, I don't use Viagra. I only date men, so I'm not looking to find a date overseas, and I'm certainly not interested in dating anyone online, especially a woman.
Those who sent me the emails may not know they have been rejected, but they wasted their time sending me these emails.
If you want to avoid rejection all together, don't use Internet marketing techniques that are dishonest, like SPAM. If you are sending emails to those who haven't requested to be on your list, not only is your 17
CHAPTER 4 Secrets of the “Heavy Hitters”
marketing untargeted, but it's also SPAM. You're wasting your time.
Build a list of your own. I never buy leads because they're usually useless.
I personally use search engine optimization, free classifieds, and article writing to promote my business. I get more than enough traffic, and it's all targeted. To learn how to market, simply read the chapter in this book on Internet marketing.
2. Be realistic in your expectations.
To expect too much too soon will only set you up for a possible let down.
Accept that this is a legitimate business that requires investment of time and effort and you must be prepared to sow the seeds for the harvest you expect to reap. Who builds a house without first considering the cost?
When you are quoted the salaries of the big recruiters, be sure to ask how much time and money they spent to get to that level. This information will give you a clearer picture.
Also, I've included a section in this ebook on setting up your business.
This will save you a lot of time and money. You'll also learn how to create a short term income using Squidoo. Don't discount this. You won't get rich doing what I will show you, but it will help you pay your expenses while you are working on earning bigger pay checks.
3. Once you find a reputable company be prepared to stay for the long haul.
This goes without saying but if you expect to succeed you must stay on course. If you are one of these people who jumps from opportunity to opportunity, you won't succeed. If you aren't willing to learn how to 18
CHAPTER 4 Secrets of the “Heavy Hitters”
market, build simple websites, or you don't have the tenacity to stick it out, then don't even bother to get started. Develop the skills that you need to succeed. If business were that easy, everyone would be rich.
Jumping from one opportunity to the next only shows a lack of decision and focus on your part. Teenagers are expected to fall in and out of love every few months, but married couples have committed for life. Be prepared for a marriage not a fling!
4. Do not make the business more complicated than it needs to be. Stick with what works.
There is always the temptation to improve on the methods that experienced networkers have shown to work. Go with what works, not with what should work. If you find a system that has been working, just plug into it and squeeze the last drop of success you can get from this.
This means that you must show yourself to be teachable by your up line and be willing to teach your down line members the same system.
Success normally comes from doing what works over and over again until it becomes second nature.
Another note of caution is that you should not expect from your recruits what you are not doing yourself. There a many networkers who will give advice that they are not willing to follow. In other word they get their team members to “do the dirty work” for them. This practice takes away from the real meaning of duplication—I’m doing the same thing that I’m teaching you to do.
5.Train and then let loose!
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CHAPTER 4 Secrets of the “Heavy Hitters”
The real power of network marketing is the power of leverage. Rather than using 100 percent of your own effort, you are using one percent of the effort of a hundred. If your down line members become too dependent upon you then they will be using 110 percent of your effort.
This can easily lead to rapid burnout.
So, the key here is to train your front line members, then train them to train their front line members. As you gain leadership experience in the business then you can occasionally pick up the slack for a fellow team member. The important thing here is that your team members understand that effort is required on their part or they cannot expect your support.
Here are some additional insider tips on really hitting the ground running. These ‘secrets’ are learned from the study of