How to Choose the right Network Marketing Company to Join?

Majority of people choose a network marketing opportunity without any research. This is because you are approached by a family or friend about a business opportunity and you joined because of your love and trust in the relationship. In 99% of the cases, the person who is sponsoring you has done no due diligence regarding the company. It is like blind pushing the blind. The result is invariably a catastrophe.

Remember what you are getting into, is a business. It is about money. It is about your time, effort and sweat. It is about your future and the future of your loved ones. It depends upon the quality of your decision. So, please choose carefully and intelligently.

THE MLM COMPANY YOU CHOOSE MUST HAVE THE MANAGEMENT WITH RIGHT EXPERIENCE AND INTEGRITY

This is very important. The reason why Warren Buffet is the most successful investor is because when he buys stocks of a company he looks at the men behind the company. It is always people behind the company who are the wealth creators. If the management is weak or lacks integrity, the business will fail. So when you decide to join a network marketing company, do some research first on the people behind the company.

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It is the distributors who are the real stars of the company. If the distributors are not present the company will have no sales. Yet, there are companies who look to compensation plans that increase the company profits at the expense of the distributors. They look to create breaks in the compensation plan so that they can stop paying distributors if they become too successful.

People join network marketing companies to create residual income. However, when they wish to retire, some companies feel like ‘why should we continue paying them if they are doing no work?’ So they look for ways and means to terminate the contract. They insert clauses in the fine print of terms and conditions (which nobody reads at the time of becoming a distributor) that the company has the right to terminate the contract if there is no ongoing sales or sponsoring, or if the person does not attend the company sponsored meetings. Sometimes, they reserve the right to terminate the contract without assigning any reasons at all.

Companies also add a clause that you can’t be a part of class action lawsuit. In other words, you can’t even sue them if they terminate your contract. This is like someone taking away the income that you’ve achieved through a lifetime of work. It is an outright stealing. Such actions speak of very low integrity. Never become part of such a company. Read the fine print in terms and conditions before signing up to become a distributor.

The management must have the experience to take the company to a new level as the business grows. They must have the ability to guide the company during hard times. If the company fails to adapt and survive the changing times and economic conditions, so are you. If the company performs, well then your business will grow exponentially.

Integrity and experience of management is very important to your success, and you should never compromise this aspect when selecting a company to join. 

TIMING IN JOINING A MLM BUSINESS IS OF GREAT ESSENCE. YOU CAN EITHER RIDE THE WAVE TO SUCCESS OR BE DROWNED BY IT

Right timing consists of two separate factors and these should not be confused. First, is the right timing in the industry. Second factor is the right timing in the company. We will discuss them in details. If you get one right and the other wrong, then you will not get great results. If you get both the timings right, then you will ride the wave of success.

TIMING IN THE INDUSTRY

Each industry has a cycle. Some product cycles are very long while other product cycles are very short. For instance, few years back, there was great excitement regarding video emails. Some network marketing companies called it the wave of the future and started enrolling distributors. Today, video emailing is free on the internet. What happened to the profit margins of these companies? Obviously, they never survived. What happened to all the effort by the distributors? ZERO outcome. They lost their time, effort and money in promoting a product that has just a life span of two to three years only.

This doesn’t mean that you should avoid technology companies. Many internet companies have the technological edge and can give you a very high residual cash flow within a very short frame of time.

High technology products have very high returns but relatively short window of opportunity. So when you join a technology/ internet company, you have to access the life of the products and enter the business at the right time.

To succeed in network marketing is to be in an industry that preferably has a long product cycle that will not go out of fashion or become redundant with technological change. The most successful products in the network marketing business have been those related to the health and wellness industry. These products are timeless, as the need to live longer, look younger and be healthier will always remain. It is the basic human need. It will never go out of style.

The timing for health products is also perfect with baby boomers coming of age in their late fifties and sixties. For the last six decades, baby boomers had determined the industry trends. In the next two decades, the main concern of the baby boomers will be their health. Health, which is a $20 billion dollar industry today, is expected to explode to trillion dollars in sales on the wave of the baby boomers by 2010. Timing, therefore determines when to join network marketing companies promoting health products. The big wave is set to go into motion, and we should ride this ‘health’ wave or we will miss a great opportunity in history.

When the timing is right, NON-network marketers will take your product to the marketplace. The timing means NOW. Not 4 years earlier, not 4 years later. Timing will make your work ten times easier. Millionaires were made in network marketing because of timing alone. Learn to ride the wave!

One warning though about the health industry before you rush to join. The retention rate in this industry is around 6% to 8%. It may be slightly higher if you have a very strong training program in place. This is because profit margins when compared to internet-based opportunities are much lower. It also takes far greater effort to build a network in a non-digital product company.

In some of the internet-based companies that I am involved with, my retention rate of affiliates is 100%. This is because my affiliates make money from day one of joining the business.

Nothing is permanent in life. Each and every product has a life cycle. You have to weigh the product life cycle, profitability and retention rates of affiliates before deciding on which company to join.

TIMING IN THE COMPANY

Once you have selected the industry, then you have to look for a company within the industry whose timing is right for you to join. How can you gauge the timing in a company? It is difficult, but below are some tips:

  1. Most companies fail in the first year or two of their operations. You’ll waste a lot of time, money & energy if you get in too early.
  2. You’ll waste a lot of time, money & energy if you get in too late. Momentum growth period of these companies occurred years ago. These companies are household names maybe with products using out dated technology. They are like dinosaurs facing extinction. You’re will fight a real uphill financial battle to sponsor people into these companies.

The best time to join a company is around 3-5 years for physical products and 1-3 years for internet-based companies upon their start up. By the time, it has proven its staying power and about go into momentum growth.

If you can get the timing of the industry and the company right, and also the other parts of the formula correctly, then you are perfectly positioned to ride the momentum wave to wealth.

THE PRODUCT HAS TO BE REMARKABLE

If there is no EMOTIONAL attachment to the product, you will not succeed. You can never recommend a product to someone if you are not emotionally involved with it. Network marketing is a referral-based marketing. You can never transfer your enthusiasm to someone if you don’t have feelings for the product.

Network marketing works with niche quality products that have special qualities that need to be sold through transference of knowledge and enthusiasm. Network marketing does not work with ordinary products that have little or no intrinsic value.

When you promote multiple of opportunities and products, you undermine your network. If you try to appeal to everybody with your multiple streams of products & services, no one will take you seriously. This is because you have failed to create an identity in their mind. The net result is…

No trust. No loyalty. No network.

Loss Of focus = Loss Of Power. You ruin your quality perception, because to consumers, Specializing = Quality. You will struggle to market numerous unrelated services and products that you don’t know well. You lose competitiveness and efficiency, and as a result, you will get a smaller market share. You better do your research! Choose the RIGHT opportunity and product, and FOCUS ON THAT ONE!

If you are focused, you will attract the customers & associates you want. They will be excited because they feel that they are a part of something big. It will create a belief in their minds that you’ll be a big success. A specialist always knows more and so as better quality product always wins over hundreds of mediocre products and services. You will win if you remain focused in a quality niche market.

The product has to be so remarkable that people should be willing to buy it even if there is no compensation plan involved. The product has to be priced right. If you start explaining why the product is so expensive, then you will become a salesperson rather than a network marketer.

In any network marketing organization, there will be around 80% of the people who are users only of the product and will never build the business. If the product is not remarkable or priced correctly, then these people will stop using the product. The business simply cannot succeed if people do not find a great value in the product.

The product should not be readily available in the super markets and neighborhood stores. It does not make sense for someone to buy a product that can be bought cheaper from a store next door. The product has to be unique and remarkable. The product has to be difficult to replicate. If everyone starts replicating the product then the price starts to go down, and the margins get squeezed out. The company will go out of business and so are you.

Most importantly, the product should be a consumable type that people use it every day and they need to buy it every week or month. In this case, if there are no volumes in product sales/consumption, then there will be no income.

THE COMPENSATION PLAN MUST BE EQUITABLE, JUST AND WORK WITH NUMBERS

The most important thing about a compensation plan is that it should work with numbers. If it works for only 5% of the people and not for the other 95%, then the compensation plan will not succeed.

The business plan has to be equitable and just. Newly sponsored people will remain in the network, only if they see the plan working for them. They should not only breakeven but be in profit within the shortest possible time.

You can lead people, only if you can take them one step closer to their dreams. You have to show them small successes before they are prepared to take the long march with you. You are doomed from the very start if the plan does not work with numbers. The plan has to work for average or ordinary people. This is because most people who join your business are in the average and ordinary level.

The business plan has to work for average part-time workers who make the numbers. If the plan does not work with numbers, then simply walk away.

Network marketing statistics show that an average distributor sponsors 2.7 persons into their home business. This means that any compensation plan that requires more than 3 persons in their frontline will struggle to survive. Binary plans that require only two persons to be put in the front line have proved to be most successful in the industry.

Any successful network marketer will tell you that the main source of his income in network marketing comes from two to three people in his team. If this be the case, then compensation plans that are too wide just do not work. Binary plans cause spillovers that support the effort of the new members in the team.

The new members feel great when their upline places someone below them in their team. This helps build relationships that are essential in network marketing. Always choose a plan that does not force you to go wide and rewards you to work deep. Working in depth helps create a relationship with your team members.

Any compensation plan that rewards recruiting into the system is illegal. Most likely, such plans are illegal pyramids with no tangible product in the offing. In illegal pyramids, the moment you stop recruiting, your income will stop. Such companies camouflage their intentions by selling products that have little or no value. Sooner or later, authorities will close down these companies for illegal practices. You should never become part of such scams and lose your hard earned money and effort.

For a network marketing company to be ethical and legal, the money in the compensation plan has to flow out from the sale of products. The joining fee for such companies is normally very low because there is no money to be made from sponsoring people. This helps in sponsoring new people into the business because the startup cost is very low. Ethical companies succeed on the basis of a strong product that people want to buy and use.

A good business plan should be backed by a generous contribution from the company for the efforts put in by the distributors. A method to check if the compensation by the company is really generous is to check how many people need to be in your network to generate an income of $10,000 per month. If the figure runs into thousands of distributors, then it will take a long time for you to generate any decent income. There are companies who only give back 15% to 25% of the turnover to the distributors. You will put in twice the amount of effort to build your business compared to a company that pays out 40% to 50% of the sales turnover.

Another important feature of a compensation plan is that the points are non-flushing. As long as you are active in the business, your group volume points should never be lost and will carry forward week to week until such time you qualify for commissions. This is a big advantage compared to many compensation plans wherein your points get flushed out at the end of the month if you don’t qualify for commissions.

Publicly- traded companies have the advantage as the details of their finances are available for public scrutiny. On the other hand, they suffer the disadvantage of high operating costs when compared to privately-held companies. These costs get added to the price of the product, and as a result, the compensation paid to the distributors gets squeezed out.

Privately-held companies operate with much lower overheads and can take business decisions more quickly. This makes them more profitable. However, you will find it difficult to learn about the state of their finances as these companies are not obliged to go public with this information.

 

CHOOSE AN OPPOPTUNITY WITH SYSTEMS FOR DUPLICATION

Why most businesses fail, is because they do not have systems in place. On the other hand, businesses with mediocre products but with great business systems always succeed. Take the example of McDonald’s. They do not make the best burger in the business. Even your mom will make a better burger. McDonald’s is the largest burger chain in the world simply because it has the best business system.

This is also true for network marketing companies. Check the business systems of a company before you decide to join them. Go for a system that respects people and attracts like-minded individuals.

To succeed in this business, you need a proven and tested duplication system. The system has to be very simple, or it will not be duplicated by ordinary members of your team. Everyone that you sponsor and those they sponsor need a step-by-step system to get their business off to a fast start. These systems can be online, offline, one-on-one, or in cold market, warm market, retailing, recruiting or becoming a mentor to their personally-sponsored people.

The system must also help to develop the individual members and build leadership. A person does not need all the techniques to be successful but the system should make these available to choose from that is best suited for his style of business.

To the best of my knowledge, there is no company in network marketing that provides a comprehensive, realistic and affordable system to help you build your business. This is because it is the job of the network marketer to build his own business that is best suited to his style. The company provides you the backup system so that stocking, distribution and customer complaints/queries are taken care of. They pay you generously to spread the word and bring in new customers.

Every company has individual groups of entrepreneurial reps who put in place a system to help you build your business. You cannot succeed without the help of these people and the support systems they provide. If you want to leverage your time and effort you have to join one of these groups to succeed. They help not only you but the people you sponsor into the business. Don’t join a group unless they have such a system in place. 

There is a book I have written on this important subject of ‘How to Find a Network Marketing Goldmine: Researching and Evaluating MLM Opportunities’ that you might like to read.

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