As you can tell by the bottom page that contains the copy write, this article first appeared in 1987 and was rewritten, because of the Internet, in 2004. Although many things remain the same since the founding of our industry in 1932, there are some interesting changes that need to be addressed today, as never before.
In those thirty plus years since this was first written, we have become very global in our profession and in our thinking. And, although many others have written articles with almost the same title, they do not necessarily agree with the things that I had first written. At the time when I first wrote the following, then as now, what you get here will be the truth as I see it. I’m not trying to recruit anyone nor am I involved with any company. My goal has always been that each person entering into our profession gets the straight scoop.
With many new company startups every year, particularly with the many Internet companies that look so good because they have built a good web site, our professional (hereafter when I write Multi-Level Marketing, MLM or Network Marketing or Direct Sales, I mean them all unless otherwise stated) Industry is experiencing a period of unprecedented growth around the world, especially over the Internet.
As of this writing, there are over 175,000,000 plus Distributors world wide, with about 10,000 companies.
Thousands of people who never before considered Network Marketing are seeking answers to questions like, “What product or service should I represent?” or “How do I choose a company that can help me achieve financial success?” “Can People really make that kind of money?”
Even Distributors with years of experience (especially those who have been involved with companies that have failed or merged with another company) and who want to continue their Network Marketing careers are looking for direction. My advice is, don’t be misled by hype and attempt to market a product or service that you haven’t checked out (which I’ll keep warning you about). Like any industry in the world, our industries have a small percentage (about 1%) of the rape, pillage and plunder guys (and some dolls) without any integrity. They’re very good at telling a fantastic story that we want to believe, but shouldn’t, creating what appears to be very legitimate programs with lots of excitement but actually is a careful thought out plan to separate you from your money. Hopefully when you read this material you will be better informed and know how to spot them and recognize the good guys…and there are lots of them (about 98%) around.
Many of these people and companies (as they have since 1985) are turning to the Multi-Level Marketing International Association (MLMIA), which recently changed it’s name to Social Networking Association (SNA), a non-profit trade organization, serving the MLM/Network Marketing/Direct Sales (party plan) industry for answers to their questions.
The following is based on information gathered from experience as a Distributor, Field Manager, Corporate Staff Member, Company Founder and Supplier to the industry as well as input from hundreds of MLMIA/SNA members during the almost thirty-five years that I have headed that Association. Those Members include Corporate Executives, Distributors from a broad range of companies, manufacturers, attorneys, consultants, data processors and increasing numbers of people and companies involved with Internet technology (IT).
No matter how a company operates, conventional or over the Internet, the rules for choosing the right company are basically the same.
TO DISTRIBUTORS:
Many Distributors get involved into the business based on a whim. They spend more time deciding on which couch or automobile to buy rather than think about what type of business they might like to go into. AND, don’t be misled,
MLM is a business. It does in excess of 100 billion dollars (United States currency) around the world
with more than 175,000,000 representatives selling product and recruiting other representatives. Just think of the numbers we’ll have when China opens up and India gets going full blast. It takes time and effort to build the business and to make money. The fact that it can be very profitable and doesn’t take a bundle of money to get into this exciting profession doesn’t make it a game. It does take some thought process.
First…Find a product or service you love, one that you can represent with pride and confidence. Without a strong belief in the product or service, it is doubtful you will ever be able to sell it or recruit others to do likewise.
And when people tell you they haven’t made any money in this business you’ll begin to understand why. They didn’t sell and they didn’t recruit
(or they got involved with one of the rapes, pillage and plunder people mentioned earlier). You must be able to sell the product and you must be able to recruit others to sell the product for anyone to make money.
Any product or service you represent should have the following characteristics:
1) It must fulfill a “real world” need in today’s marketplace.
2) It must be offered at a fair and competitive price.
Be aware of monthly service fees or high costs to join; a $50.00 a month rate comes to $600.00 a year.
3) Distributors must be able to purchase the product or service at wholesale, or at a substantial discount from prices of similar products found in retail stores. You don’t want to find the same product in a discount store at a lesser cost.
4) It must be of high quality.
5) It must be accompanied by a consumer satisfaction guarantee.
6) It probably should not be a “fad” item.
In addition, if you are going to consume the product or use the service, it should be something you would purchase regardless of your participation in the company.
In most, but not all instances, give preference to products or services consumed regularly. Repeat sales will help build your sales volume and repeat customers make the very best recruits for your Network Marketing business. Your ultimate success in this business is based upon the product that you pick getting from you to the other person, the ultimate consumer. That is the person who actually uses it and hopefully wants more. Other people (hopefully lots of them) must want to use your products and be willing to pay the retail price for it.
Once you have decided on a product then you will want to check out the company.
Be very leery of companies promising “instantaneous” or “overnight” success, or who state, “We do all the work for you.” Remember when starting out in any business venture, even Network Marketing, your earnings in the initial months may be modest and it takes time and consistent effort to truly become a “BIG” success.
There is no rule that says that you must accept the first person that introduces you to the product or service as your sponsor. Find a sponsor who CAN inspire and learn with you, and who WILL take the time to provide you with on-going training and support.
And, please, don’t join a company just because you like the person who would be your sponsor. Everyone should exercise due diligence by checking out the company, the products and the compensation plan first. There are exceptions…always… and if you are presented with a business opportunity by someone you have known and someone you know you can trust and they would like to sponsor you and are committed to work with you then there is a good deal of safety and peace in that scenario. It really isn’t necessary for you to take the time and exert the effort to discover the over one thousand companies in our industry (just in the United States with over 10,000 in the world and growing) and rack them up against each other. You could spend years and years on researching them all and waste a lot of time when you could be making money with a good company and a good sponsor.
If you are in the Networking Profession on a part time basis, distributing for several companies at the same time could damage your credibility and hurt your chances for success. However, there is a big difference today than there was in years gone by. I still feel that as a new beginner (less than three years in the business) you are better off with representing just one company. Learn the business. For those that are really experienced in the business, and are spending full time at it, you might want to look at more than one company, as long as the products are not competing and you do not break the rules of the company that you are building in primarily. Before you try to represent more than one company please read all of your policies and procedures again and again and then check with an attorney if you see anything that triggers your questioning.
For those representing more than one company, particularly the newcomers, you could end up losing money because commission percentages increase with volume. This means you will probably make more money selling 1,000 items for one company than by selling 250 items for each of four different companies or 500 items for just two companies. Most people agree that the majority of people who make it BIG in MLM work at it and represent only one company at a time. Splitting your time between two or more Network Marketing companies could significantly reduce your income. Rarely has anyone (there are always “rare” exceptions to the rule) been able to work for more than one company successfully. If you are going to operate more than one MLM business, keep the companies separate. Don’t recruit (or attempt to recruit) the same people into several companies.
BEWARE LARGE START-UP FEES
Make sure the company guarantees its product or service and that it will buy back at least 90% of all unsold inventory, sales kits and materials that are in good enough condition to be resold. And in this case, you are expected to pay the shipping cost. Be prepared to invest the time and effort required to become a successful network marketer. With the right company and the right products, you’ll have every opportunity to succeed. Anyone can become successful, even financially independent, if they take the time to understand and consistently apply the principals of MLM.
There are only three things you need to produce the kind of income that will truly make your Network Marketing business a financial success:
1) Set and achieve your sales goals every week by retailing some product.
2) Sponsor at least one new Distributor every month.
3) Duplicate your self; train your downline Distributors to sell, sponsor and train others.
ABOUT THE COMPANY
Don’t rush in to becoming a Distributor with any company too quickly. Read the company’s product brochures and marketing materials, Distributor agreements, and their compensation plan first. The company that you decide to join will play a big role in your chances for success, as will your sponsor. You need to do enough due diligence on both to select a good sponsor and good company. In last month’s article there were some questions to ask both the potential sponsor and potential company. Researching a company’s background and track record could make all the difference in the world, especially if they have had a history of complaints. Everyone can check the SNA web site at www.socialnetworkingassociation.com to see if the company you are considering representing is already a member. If not, why not? (Information about SNA, a non-profit professional trade organization, is also available on the same web site.) MEMBERS can request additional information about members or nonmembers (Membership Applications are also available on web site) and SNA accepts members from any part of the world
If SNA does not have enough information for you to make an informed decision, they’ll try to find it for you (and usually can). There isn’t any charge to members for this service if the information you are looking for is on file. If SNA has to do extensive research on your behalf there will be a nominal fee based on the amount of time it takes to research the company. If you are not a member there is a minimal fee, again based on time.
- Do the company’s executives have BOTH MLM AND business experience?
- If so, how much experience?
- Is the company, or have the executives been, successful in previous business ventures?
- Is the company established and respected within the industry?
- Does the company have the financial resources to hire experienced, professional MLM Consultants that include an Attorney, a Marketing Director and Data Systems personnel (IT), etc?
- Bottom line: Are the executives capable of guiding the company successfully?
To ensure that Distributors will be paid as promised, try to determine if the company has sufficient operating capital for day-to-day operating expenses such as rent, manufacturing costs for goods, telephone and data processing, legal fees, etc. Distributor commissions and bonus are NEVER to be used to pay the company’s bills or a new car or new home.
COMPENSATION PLANS & DISTRIBUTOR AGREEMENTS
The company’s compensation plan should be easily understood as well as highly motivational from your point of view. Carefully review the company’s sales aids and marketing pieces for quality and professionalism, and ask yourself, “Can they effectively sell the product and do they clearly explain the company and compensation plan?” As a general rule, the content of sales and marketing materials should be more important than color, but the design must be appealing and call prospects to action. The materials should appeal to all ethnic groups by picturing more than one group.
Last, but by no means less important, what is the company’s guiding principles, ethics and core values, and can you adhere to them?
IS THE PROGRAM A LEGITIMATE MLM OPPORTUNITY?
The basic rules for a legitimate MLM program are:
- Earnings (compensation, bonuses, etc.) representations should not be made by the company until it has established a verifiable track record of average earnings for Distributors in any given geographic area. Obviously, in a “start-up” company this is not possible.
- Legally, companies (and the sponsor) are prohibited from making profits from Distributor sign up fees.
- The only cash outlay required to become a Distributor should be for the company sales kit (sales aids and demonstration materials) that must be offered at the company’s actual cost (no salaries or typing or copying). Watch out for companies that charge large sign up fees, pay bonuses for “headhunting” or whose emphasis is on recruiting rather than selling its products or services.
- Distributors – by any other name – are NOT to be paid for recruiting – by any name.
Legitimate MLM (Network, Direct Sales, Party Plan, Person to Person) programs do not require a minimum purchase volume or inventory maintenance requirement to become, or remain a Distributor. They may require a minimum per month in volume for you to receive a Bonus (the commission earned on the sales of those in your downline). “Front Loading”, also known as “Inventory Loading”, is illegal in the industry as is the mandatory purchase of peripheral accessories, products and/or other services. The single most important focus of a legitimate MLM marketing program should be to promote the retail sales of its products and services to consumers, not just to its Distributors.
The future of Network Marketing is in YOUR hands.
Insuring that illegal pyramid schemes or money games have no place in our industry and that ethical MLM practices are faithfully carried out, requires the cooperation of everyone; the companies (Corporate), the Distributors (IBO, Consultant, Dealer or any other name for the Independent Contractors) and the suppliers (that we call Support).
YOU are the Network Marketing industry’s “insurance policy” and YOU are the ones that will make the biggest difference.
I encourage you to join SNA where you can help create a brighter, more profitable future for everyone. http://www.socialnetworkingassociation.com/
Copy writes 1987 – 2004 – 2007 – 2014 – 2020
George Madiou Had the opportunity to do The Network Marketing Magazine Radio Show last month with Doris Wood and Jim Lupkin at the SNA headquarters in southern California. Enjoy the show!
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