Posted: Mon Jun 21, 2004 2:28 pm Post subject: Selecting A Network Marketing Company
Selecting a network marketing / MLM opportunity is a very challenging task. However, it is critically important to your success as it directly relates to your ability to have your new home business actually return a profit. This article outlines exactly what you should be looking for and specifically what criteria to evaluate.
First, focus on an industry that is growing and in front of and supported by current trends and market demographics. As a simple yet powerful example of this we would find such a market in the wellness and nutritional industry. As the largest segment of global population, the baby boomers (born 1946-1964), age they continue to turn towards nutrition and wellness products to maintain their health. Just as we all likely will do as we age. This baby boomer demographic has literally driven American and Global economies for the last 5 decades. From the phenomenal growth of Gerber in the baby food industry (1946-1960), to Hoola-Hoops skateboards Frisbees and Slinkees in the mid 1950�s to mid 1960�s, to the muscle cars of the 1970�s and the housing and stock market booms of the 1970�s and 1980�s this demographic of people has and continues to be a driving force in our economy. So it is indeed quite logical to select an industry, opportunity, and company that is in front of this demographic as it is highly likely that it will experience fantastic growth. Thus our example above of the health and wellness industry which is right now in front of this impressive demographic and beginning its boom. There are other industries like this and some are in front of other powerful market forces or demographics. We provide this example as it a shining beacon among all industries that are in front of various trends or demographics.
With that in mind, and after narrowing your selection down to a specific industry and a handful of companies the next thing to scrutinize is the individual companies themselves. This can be done by researching the company history and management. If they are established, legitimate, and have a solid management team you should find information forthcoming and freely available. If desired you should also be able to visit their facilities and examine for yourself the operations of the organization or you should be able to find and speak to someone who has done just that.
After that effort you will likely only be left with only a few viable organizations and true potential opportunities to participate in. The next step in your quest to find a great network marketing business opportunity is the products the company offers coupled with the compensation / marketing plan. There are basically only three categories of product lines: Consumable, Durable, and Service. Any of these can be viable but the most successful focus on highly consumable product. Even if the category is durable or service related there had better be reordering occurring or else the prospects for long lived monthly recurring / residual income will be limited. So make sure that whatever company you choose has a product or service that people reorder or reuse. This should narrow your search down even further. It is also worthy to note here that many companies with very high quality products or services fail because they couple these with the wrong compensation plan.
Finally there comes the issue of the compensation plan. There are many compensation plans in the network marketing industry and there are a few things to consider when evaluating them. We can start off with an assumption that nearly all network marketing participants, professionals and new representatives alike, agree on. That is that regardless of the opportunity it takes about the same amount of effort and work to find and enroll new business participants. Further, research shows that the majority of folks enrolling in a network marketing business never reach down in the multi level compensation plans to take advantage of percentage payouts beyond the second level. These being the facts we should evaluate a compensation plan to make sure that the average individual (usually a part timer) can really earn an income and be profitable in a reasonable period of time based on a realistic view of what the average individual can achieve. Therefore, we should take a hypothetical situation of an average individual enrolling only four new business participants and helping each of them to enroll four. This would mean a total of 20 business participants, call it our 20 Club, in the entire organization. Now we must assume that everyone does some ordering or volume because a true and viable (Not to mention legal) network marketing company compensation plan pays on the sale of products or services (Not on Enrolling New Members). So we will assume for our evaluation that each person in the organization orders $100 each month of a consumable product. This creates a volume of $2,000 in our 20 Club organization. Next we need to ask the question; what will the average individual earn from this volume each and every month in ongoing residual commissions? Remember, we do not want to concern ourselves with enroller or quick start bonuses because they are not a measuring stick of what one will earn residually on the volume of products moving through the organization that has been created. The focus here is what will the average individual earn on an ongoing basis for the time, money, and effort they have put to this point? We can then apply that to the commissions on levels that various organizations (The ones that remain and that we are evaluating) would pay for this structure and evaluate the return for the average representative based on the time and effort they have put in. Also, we need to consider the fact that the number one reason for attrition, dropout, and failure in network marketing companies is that the average representative has such a difficult time in achieving a profitable situation. Knowing this we can conclude that if the plan we are evaluating yields more than $250 per month or thereabouts, this would be a plan that would significantly reduce the attrition rate in an organization. That is because in our assumption the average representative will need to spend at least $100 on their products (mentioned above but can be for personal use or sale in most instances) and will likely need to acquire a few sales aides, product samples, and do a bit of advertising (newspaper, business cards, flyers, etc�). Therefore if one can achieve more than $250 in residual monthly income on this hypothetical 20 Club organization that is doing $2,000 in monthly volume it can be said that this is a plan that is very advantageous to the average individual representative and very beneficial to retention and growth within the organization.
After going through this scenario with literally hundreds of companies there are only a couple that meet the criteria we have laid out. Regardless of what we have found through our research the method used and evaluation process remains intact and viable. Therefore, it is strongly recommended that you do this type of homework before becoming involved in a network marketing / MLM business opportunity.
To aid you with this there is a really fantastic online tool that will compare compensation plans based on the hypothetical 20 Club mentioned above in this article. In addition, this database driven tool contains results from nearly 200 MLM companies and you can compare one to another and examine what your ongoing monthly residual earnings would be in the 20 Club scenario. We highly recommend you give it a test drive by visiting the MLM Comp Plan Calculator at:
http://www.boconline.com/opportunities/MLM/CompPlanCompare.asp
I agree with nutrition bein the hot seller of the next few years and years to come, I also agree new and good commission structured companies that build 1 power leg for you so you only have to build one are the best ways to go! Thats why I am where I am today.
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