Top Three Problems With MLM
What Are The Top Three PROBLEMS With MLM?
MLM and Network Marketing Have Problems That You Need To Avoid Or Overcome.
The truth is that for MANY people, MLM is the WORST choice for their first attempt at home-based business.
Because of the ease of entry, many people choose network marketing as their first attempt at a home-based business.
We ALL want the FREEDOM promised by a network marketing business.
And we ALL want the RESIDUAL INCOME of network marketing.
Unfortunately, MLM is a “business” and MANY people aren’t cut out to be their own boss!!!
I had over 20 years of sales and business experience before being recruited into an MLM. I liked the CONCEPT: Just find 5, who find 5, and so on. If only it was this easy…
Ann Sieg is the author of The Attraction Marketer’s Manifesto. She writes: “Almost everything you’ve ever been taught about building a network marketing business is pure BS!”
PS. You can get your FREE copy of The Attraction Marketer’s Manifesto by clicking on the image at the left or following this link.
Ann Sieg is also the author of The Renegade Network Marketer. Here she writes: “Your average networker is told that they can jump right in, with no prior sales or business experience and make a killing within 6 months!” Wrong again!
So I want to carefully outline the problems that keep most people from making money in network marketing:
1. Network marketing REQUIRES a network.
Seems obvious, right. You earn money by leveraging the efforts of dozens, hundreds, or even thousands of others in your “team”, across the country and possibly around the world!
But, as Ann Sieg referenced, MOST of these people are ALSO inexperienced in business and marketing. She says that network marketing is the SALES BUSINESS that is usually promoted to people who have no SALES or BUSINESS experience!
On top of this, new people join with a very low investment. If they don’t start making money very quickly, they will leave for the next new “ground floor”, “prelaunch” opportunity. (And there WILL be several new MLM’s launched each and every month!)
The result: with the click of a mouse, many of your potential “leaders” will be gone and take large sections of your downline with them. As a result, many MLM’s face upwards of 75% attrition (that is, turnover of distributors) EVERY year! You must NEVER stop recruiting just to maintain the SAME income level. In fact, you will probably not be eligible for ANY commissions until you recruit a certain number of representatives. Unfortunately, MOST MLM reps never even recruit ONE other rep.
Conclusion: make sure that the MLM you join has a VERY unique product or service that stands alone outside of the business opportunity. Make sure that the product or service is SO GOOD that customers who have ZERO interest in the MLM will be happy, repeat RETAIL buyers, month after month!
2. The low entry cost also REQUIRES a large “downline” organization to generate income for you.
Networkers get paid for only TWO things: selling products and recruiting other representatives.
Most serious business people and professionals will look at the tiny commissions on product sales and can’t understand how they can create a 6-figure income at $5.00 or $10.00 per sale. For this reason, most people (mistakenly) treat MLM like a hobby. Consequently they experience limited success and are lousy testimonials!
At the same time, nearly all MLM’s require that members make monthly purchases before they qualify for commissions. Members of your downline have to be committed to purchasing the products faithfully EVERY month. If they ever get tired of buying the products they will also quit. Again, make sure your network marketing company has some very compelling and exclusive products to maximize retention of customers – retail and wholesale.
Residual income is derived from repeat purchases. But when these orders stop your residual income also stops.
Conclusion: make sure your MLM has OUTSTANDING products or services that you (and your customers) happily purchase month after month for the foreseeable future! Make sure your product or service is something you will enthusiastically use and recommend to others! If you can be tempted to substitute a generic product from WalMart or Amazon you are doomed.
If you can’t honestly be excited about your product line, you will be ineffective telling anyone else! You NEED to want to buy the products even if there was no income opportunity attached!
3. As stated, networkers get paid for TWO things: selling products and recruiting other distributors.
In truth, networkers often get paid MORE per transaction for recruiting others. If they don’t like recruiting or are unsuccessful in marketing the opportunity, their income will dwindle and they will quit.
Therefore, you need to become an effective recruiter AND trainer to build a lasting and productive downline.
Unfortunately, the majority of upline “sponsors” also have no sales and marketing experience. Both they and their recruits are left to flounder and ultimately fail.
The low entry cost to become a network rep attracts people who have a low commitment level. They typically join an MLM company without any marketing experience – or a plan or budget for marketing their new business.
At the same time, most networking companies provide only the most basic marketing tools to their reps. Usually EVERYONE in the company uses the same IDENTICAL, replicated website and receives the same limited “training”. You have to realize that you are then competing for retail sales and new recruits with EVERY other rep in your company – nationwide or even worldwide. At the same you are competing for new reps in competition with every other network marketing company!
Note: most replicated websites have a way to gather the email addresses of inquiries. These emails are accumulated within the COMPANY’s system. This is intentional so that when reps quit the contact information remains the property of the COMPANY.
Conclusion: success in most network marketing companies is going to REQUIRE that you do something (actually MANY things) that you are not trained to do, and thus uncomfortable doing. Sounds like a path for failure and it is over 90% of the time!
MILLIONS of new network marketers try – and fail – to convince friends, family members, and complete strangers to go into business with them.
And virtually ALL of these target “team members” are also completely CLUELESS about how network marketing works!
What is required for success in ANY online business has become known as a “marketing funnel”. This funnel gathers contact information of prospects and reps and then produces customers at the other end. These leads and customers become YOUR property. You then must FIRST begin a carefully crafted education process BEFORE you present your business opportunity!
All of your potential business “partners” creates a list which can then be directed to ANY product, service, or primary business (including MLM or affiliate links.)
You need to understand that it is a REALITY that over 90% of the MLM inquiries you generate will NOT join your business opportunity! You NEED multiple sales opportunities to create multiple streams of income.
So – contrary to the advice of almost all network marketing companies – the FIRST step is not making a list of 200 friends, family, and distant acquaintances! The first step is to plug your “leads” into a generic marketing funnel. This allows you to separate the minority who are actually interested in your MLM, and to promote MULTIPLE offers, products, and services.
This can NOT be overstated. You need to build your own personal brand – You, Inc – and create some personal credibility. (After all, you may also join another opportunity at some point, or become involved in multiple opportunities or affiliate programs! You can NOT afford to lose all the fruits of your marketing efforts if you change companies.)
You are also going to NEED to commit to a serious marketing education. The “training” available from your COMPANY is not enough! PLEASE accept the recommendations found in the Online Marketing Training section of this blog as a start in acquiring the equivalent of a “graduate degree” in online marketing!
This training is not optional. As mentioned, you are truly competing with every other Rep in your company (AND THOUSANDS OF OTHER COMPANIES!) for new recruits. You need to learn how to become an effective sponsor of other networkers. Serious potential recruits will not only research the MLM company but also the downlines within the company that they can choose from! Serious business builders don’t join companies, they join LEADERS!
A final note related to the sales of products within your network marketing company: be aware that MOST companies intentionally and openly CHEAT their Reps! These companies pay commissions based on a reduced sales total, often called “Business Volume”. This artificial number is typically 70% to 80% of the actual retail sales total. In other words, you get cheated out of 30% of your commissions every month.
At the same time, MOST companies pay commissions only on the “lesser leg” of your downline organization. This means that less than half of the (artificially reduced) monthly sales volume is used to calculate your commissions. Most people just assume this is just standard procedure across the entire network marketing industry – but it is NOT. You get cheated if you join a company with this type of compensation plan!!! The BEST network marketing companies do not have qualifying levels, unbalanced “legs” or commissions paid on reduced “Business Volume”! Learn more at randyreek.com/residualincome.
Your success in MLM will largely be dependent on how visible you can become as a marketing expert – outside of your chosen MLM company!
Now that you have been thoroughly educated on the CHALLENGES facing your network marketing business, I have some advice if this is your chosen business model:
First, MAKE SURE you chose an established company with a wide range of products and services.
Second, your success in MLM will REQUIRE that you are a “product of the product”. By that I mean, make sure the product or service is SO GREAT that you and/or your customers are willing to buy it – month after month. Remember, you will probably be REQUIRED to sign up for an “autoship”, that is, automatic monthly purchase to qualify for commissions. Again – ask yourself HONESTLY – would you use the product or service if not for the income “opportunity”?
Third, is the product or service unique enough and has such a list of compelling benefits that you have an HONEST chance of selling it on a retail basis? By that I mean, can you sell it to your friends or the businesses you patronize? And are the benefits so intriguing that some of these customers will say to themselves, “I should tell others about this!” (In other words, raving fans become reps themselves!)
There is ONE network marketing company that Randy endorses and promotes only because it matches ALL these criteria: the Internet Customer Acquisition Network
Check out the link above for more information on this network marketing company that is building a HUGE retail base of enthusiastic business customers.
Again, I invite you to check out some of the other Marketing Training resources available to you on this blog. I offer ONLY the resources I have used successfully to build MY business! (this is after over 30 years of sales and business experience.) As I built my catalog of skills I have forced myself to become knowledgeable in blogging, social media, video marketing, attraction marketing, and more! I recommend you do the same!