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MLM Business Tips – How To Crush It In MLM Even If You Just Got Started
Multi-Level Marketing (aka Network Marketing) is perhaps the most misunderstood business model ever. It has been called everything from “The road to wealth or riches” to “Pyramid Scheme” or “Scam.” So what is the truth? This article will attempt to get at the truth, and show how to separate the legitimate business opportunity from pyramid scheme or scam.
Very simply, MLM is a business model that involves direct selling of products or services by Independent Representatives (sometimes called Independent Business Owners) of the company that produces the product or service. In return for selling those products or services you receive a commission. You are also able (usually strongly encouraged) to recruit other Independent Representatives to sell the product or service under you (your “downline”) and you receive a (usually smaller) commission on any product they sell, and in some cases, a signing bonus for recruiting the new Independent Representative.
It is the last sentence of the paragraph above (go back and read it again) that can cause this otherwise legitimate business model to become an illegal “Pyramid Scheme”. If there is more emphasis on recruiting than there is on selling product in the company’s marketing plan or compensation program, it can cross the line and become a “Pyramid Scheme”, at which time the company will find themselves in trouble with the Attorney General of any state from which a complaint arises.
Why? The truth is that of every ten new Representatives you recruit, only about three will ever sell any product or recruit other Representatives. The other seven will not make any money or possibly even lose money if they invest in marketing or training material. This, of course will vary depending on company training and support systems – and more importantly, on how good YOU are at training and providing support to those people YOU recruit. Contrast that with the way many companies market recruiting (and thereby set expectations) by saying “You recruit two people and those two people each recruit two people, who in turn recruit two people, and now you have 14 people selling product on which you receive a commission. See how easy it will be to earn 5 figures a month after just a short time.”
Truth is, as I pointed out in the prior paragraph, very few of the people you – or your downline – recruit will ever sell anything or recruit anyone. Now having said that, if the people who never sell or recruit are satisfied that they received a product that they needed and wanted, at a good value, you can sleep nights, otherwise – shame on you.
So the KEY is having a product that people need and want, priced at a good value (not something that can be bought a half price online or at a local store). Lou Abbott, of MLM The Whole Truth, (a good read by the way) said it best – “The Bottom Line is we have to go back to the “reality test” – unless a company has real customers – buying products they really want, really use, and consider to be real values, you will never be able to build a real, reliable, long-term, residual income.” Working backwards on that – my opinion? – You CAN build a reliable, long term, leveraged, residual income working from home using the Multi-Level Marketing (or Network Marketing) model – IF – you can find an honest company, with a decent compensation plan, that has a product or service that people want, will use and reorder, at a price point that is a good value.
In my next article on Home Business, I’ll explore ways to find Multi-Level Marketing opportunities that are worth considering – and talk about the typical recruiting process that may help you from getting caught up in something that you might regret later.