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posted on:
6/2/2012 11:12:25 PM EST
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Evaluating the Network Marketing Industry Part 2
network marketing, mlm, multi level marketing, multi-level marketing, Brian Carruthers, industry, me
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By: Brian Carruthers
Cont.
So how do you decide on what company within the industry to hitch your wagon to? After all, choosing the wrong one often leads to wasted years of opportunity, time, wasted money, strain on your relationships, and a loss of your credibility (for getting into a business that causes your contacts to wonder what you were thinking). We all know people who have experiences, good and bad, in networking businesses. Likely more bad than good, due to the sheer numbers of inexperienced people jumping into the first business their cousin or co-worker exposes them to. And they were told to learn how to succeed in that business by following the guidance of someone not even making any money in the business themselves.
Here's a good place to start evaluating. Take a sheet of paper, and across the top write the headings of each different industry with in the MLM industry. So put up the vitamins, juices, skin care, travel, home care, telecom, energy, web malls, air and water filters, legal services, dental, insurances, etc. Next, list the companies that exist in the industry in each category. If you find there are many companies in that space, that is a good sign that there will be major competition- a strong headwind blowing against you from day one. And if there are multiple companies, that means that it is not hard to start up new ones. Thus, if you are in that space and ever get any real growth momentum, it will be easily derailed by competitors jumping into the space and stealing away your customers or distributors. We call this acid-test the "Me-Too" test. Can other companies easily come along and say "we offer the same product too"? If it is copy-able, t will be copied-bank on it. You must find a "Non-Me-Too" product, with a huge barrier of entry into the space.
Another product factor is whether it is a "stand-alone" product. This means you would want to own or use the product yourself WITHOUT there being a business or opportunity attached to it. What you will find (if you look) is that many people in network marketing were attracted to the company more so due to the financial opportunity than the true appeal of the product. They are willing to be a consumer of the product as long as they are making money selling it. But, the day they stop selling it, they most often stop using the product too. This means they never really believed in the product themselves, they only pretended in order to make money. You must find a "stand-alone product".
Another criteria or filter would be the strength and life expectancy of the company. Since about 60% of the networking companies fail inside of the first 5 years, and 95% within the first 10 years, it would make sense o find a blue chip company that will NOT be like going to the casino to gamble on pricing a new company that you THINK will withstand the test of time. The most common myth here is that to make it be, you must "get in at the ground floor" with a start-up company. That is something you should NOT do. Most start-ups will not have their act together in the first 2 years, and the business you build will be hard to hold together. If they make it that long, the odds will still be stacked against it that it will make it to the 5 year mark. If it does you have succeeded this far. But now comes back the issue- here comes the competition realizing there is a viable market and the wars begin. You start losing your downline to the new companies that pop up, luring them away with special deals and twists to the product or comp plans. Back to the point... find a company that has been around for at least 10 years and is still showing an upward growth trend, with still low market penetration. This is crucial. Just because the company has been around for 10+ years does not warrant your decision to jump in. The company must be still growing, with most of its market potential still in front of it.
Let's look at the compensation plan. There are many kinds that exist-some are fair some are lopsided, some are far too complicated, and some will frustrate you and cause you to quit. The true magic only occurs in this business model when the average distributor can truly make "meaningful income" right away. We define this "meaningful income" as earning at least $1000 in their first month. If people earn less than this, they are often determining that the income is just not worth the energy and effort, thus they quit. This is why the industry has such a high churn rate. A good company knows that the new people need to earn money quickly to keep them excited about their business, and about their future potential. But, the comp plan must be balanced and planned. The middle level people must be able to see income increases as their business grows. The top 10% must be able to earn the kind of income that causes the masses to dream and work hard towards that goal. In reality, if you take well enough care of the beginners and they are earning meaningful money on the outset, they will stick around and keep building, and the up-lines will be will be seeing massive rewards. *Another caveat that you MUST review regarding comp plans is whether the model of the company is legal. Some plans generate a majority of the distributors by charging high buy in fees (often 100’s or more), and a minority percentage comes from the actual sale of a product to a stand-alone end user or consumer (who is not in the business itself). This is a major red flag to the Attorney’s General , and should be. If the company’s focus is on recruiting, and most of your income comes from recruiting, do not join the company…inevitably it will be shut down. Recruiting is good, but not generating an income from it. The income must come from having true retail customers. A reasonable ratio of retail customers to reps is 3-to-1, or 4-to-1 is better. To be cont.
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 | | Very good info thanks for sharing!!
Jimmy |
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