Multi-level marketing (MLM) is a marketing strategy in which the - TopicsExpress

Multi-level marketing (MLM) is a marketing strategy in which the sales force is compensated not only for sales they generate, but also for the sales of the other salespeople that they recruit. This recruited sales force is referred to as the participants downline, and can provide multiple levels of compensation.[1] Other terms used for MLM include pyramid selling,[2][3][4][5][6] network marketing,[5][7][8] and referral marketing.[9] According to the US FTC, some companies that use multi-level marketing exploit members of their networks and constitute illegal pyramid schemes.[10][11][12] Most commonly, the salespeople are expected to sell products directly to consumers by means of relationship referrals and word of mouth marketing.[1] Some people use direct selling as a synonym for MLM, although MLM is only one type of direct selling.[1][7][13] Companies that use MLM models for compensation have been a frequent subject of criticism and lawsuits. Criticism has focused on their similarity to illegal pyramid schemes, price fixing of products, high initial entry costs (for marketing kit and first products), emphasis on recruitment of others over actual sales, encouraging if not requiring members to purchase and use the companys products, exploitation of personal relationships as both sales and recruiting targets, complex and exaggerated compensation schemes, the company and/or leading distributors making major money off training events and materials, and cult-like techniques which some groups use to enhance their members enthusiasm and devotion.[9][14] Direct selling, network marketing, and multi-level marketing[edit] Network marketing and multi-level marketing have been described by author Dominique Xardel as being synonymous, and as methods of direct selling.[1] According to Xardel, direct selling and network marketing refer to the distribution system, while the term multi-level marketing describes the compensation plan.[1] Other terms that are sometimes used to describe multi-level marketing include word-of-mouth marketing, interactive distribution, and relationship marketing. Critics have argued that the use of different terms and buzzwords is an effort to distinguish multi-level marketing from illegal Ponzi schemes, chain letters, and consumer fraud scams.[15] Some sources classify multi-level marketing as a form of direct selling rather than being direct selling.[16][17][18] The Direct Selling Association, a lobbying group for the multi-level marketing industry, reported that in 1990 twenty-five percent of members used MLM, growing to 77.3 percent in 1999.[19] Companies such as Avon, Electrolux, Tupperware,[20] and Kirby all originally used single level marketing to sell their goods and later introduced multi-level compensation plans.[16] By 2009, 94.2% of members were using MLM, accounting for 99.6% of sellers, and 97.1% of sales.[21] The DSA has approximately 200 members [22] while it is estimated there are over 1,000 firms using multi-level marketing in the United States alone.[23] History[edit] The origin of multi-level marketing is often disputed; but multi-level marketing style businesses existed in the 1920s,[24] 1930s with Nutrilite or California Perfume Company renamed as “Avon Products”,[25] 1940s with the California Vitamin Company,[26] 1960s,[27] and even as late as the 1970s.[28] Setup[edit] MLM binary tree structure. The blue individual will receive compensation from the sales of the downline red members. Independent non-salaried participants, referred to as distributors (or associates, independent business owners, dealers, franchise owners, independent agents, etc.), are authorised to distribute the companys products or services. They are awarded their own immediate retail profit from customers plus commission from the company, not downlines, through a multi-level marketing compensation plan, which is based upon the volume of products sold through their own sales efforts as well as that of their downline organization. Independent distributors develop their organizations by either building an active consumer network, who buy direct from the company, or by recruiting a downline of independent distributors who also build a consumer network base, thereby expanding the overall organization. Additionally, distributors can also earn a profit by retailing products they purchased from the company atwholesale price. Income levels[edit] Several sources have commented on the income level of specific MLMs or MLMs in general: • The Times: The Government investigation claims to have revealed that just 10% of Amways agents in Britain make any profit, with less than one in ten selling a single item of the groups products.[29] • Eric Scheibeler, a high level Emerald Amway member: UK Justice Norris found in 2008 that out of an IBO [Independent Business Owners] population of 33,000, only about 90 made sufficient incomes to cover the costs of actively building their business. Thats a 99.7 percent loss rate for investors.[30] • Newsweek: based on Mona Vies own 2007 income disclosure statement fewer than 1 percent qualified for commissions and of those, only 10 percent made more than $100 a week.[31] • Business Students Focus on Ethics: In the USA, the average annual income from MLM for 90% MLM members is no more than US $5,000, which is far from being a sufficient means of making a living (San Lian Life Weekly 1998)[32] • USA Today has had several articles: • While earning potential varies by company and sales ability, DSA says the median annual income for those in direct sales is $2,400.[33] • In an October 15, 2010 article, it was stated that documents of a MLM called Fortune reveal that 30 percent of its representatives make no money and that 54 percent of the remaining 70 percent only make $93 a month. The article also states Fortune is under investigation by the Attorneys General of Texas, Kentucky, North Dakota, and North Carolina with Missouri, South Carolina, Illinois, and Florida following up complaints against the company.[34] • A February 10, 2011 article stated It can be very difficult, if not impossible, for most individuals to make a lot of money through the direct sale of products to consumers. And big money is what recruiters often allude to in their pitches. [35] • Roland Whitsell, a former business professor who spent 40 years researching and teaching the pitfalls of multilevel marketing: Youd be hard-pressed to find anyone making over $1.50 an hour, (t)he primary product is opportunity. The strongest, most powerful motivational force today is false hope.[35] Legality and legitimacy[edit] United States[edit] MLM businesses operate in all 50 U.S. states. New businesses may use terms such as affiliate marketing or home-based business franchising. Many pyramid schemes attempt to present themselves as legitimate MLM businesses.[13] Many courts, and portions of the public assert that all MLMs are essentially pyramid schemes even if they are legal.[9][36][37][38] The U.S. Federal Trade Commission (FTC) states Steer clear of multilevel marketing plans that pay commissions for recruiting new distributors. Theyre actually illegal pyramid schemes. Why is pyramiding dangerous? Because plans that pay commissions for recruiting new distributors inevitably collapse when no new distributors can be recruited. And when a plan collapses, most people—except perhaps those at the very top of the pyramid—end up empty-handed.[39] In a 2004 Staff Advisory letter to the Direct Selling Association, the FTC states: Much has been made of the personal, or internal, consumption issue in recent years. In fact, the amount of internal consumption in any multi-level compensation business does not determine whether or not the FTC will consider the plan a pyramid scheme. The critical question for the FTC is whether the revenues that primarily support the commissions paid to all participants are generated from purchases of goods and services that are not simply incidental to the purchase of the right to participate in a money-making venture.[40] The Federal Trade Commission warns Not all multilevel marketing plans are legitimate. Some are pyramid schemes. Its best not to get involved in plans where the money you make is based primarily on the number of distributors you recruit and your sales to them, rather than on your sales to people outside the plan who intend to use the products.[41]and states that research is your best tool, giving eight steps to follow:[41] 1. Find—and study—the companys track record 2. Learn about the product 3. Ask questions 4. Understand any restrictions 5. Talk to other distributors (beware of shills) 6. Consider using a friend or adviser as a neutral sounding board or for a gut check 7. Take your time 8. Think about whether this plan suits your talents and goals Criticism[edit] The Federal Trade Commission issued a decision, In re Amway Corp., in 1979 in which it indicated that multi-level marketing was not illegal per se in the United States. However,Amway was found guilty of price fixing (by effectively requiring independent distributors to sell at the same fixed price) and making exaggerated income claims.[42][43] The FTC advises that multi-level marketing organizations with greater incentives for recruitment than product sales are to be viewed skeptically. The FTC also warns that the practice of getting commissions from recruiting new members is outlawed in most states as pyramiding.[44] In April 2006, it proposed a Business Opportunity Rule intended to require all sellers of business opportunities—including MLMs—to provide enough information to enable prospective buyers to make an informed decision about their probability of earning money. In March 2008, the FTC removed Network Marketing (MLM) companies from the proposed Business Opportunity Rule: The revised proposal, however, would not reach multi-level marketing companies or certain companies that may have been swept inadvertently into scope of the April 2006 proposal.[45] Walter J. Carl stated in a 2004 Western Journal of Communication article that MLM organizations have been described by some as cults (Butterfield, 1985), pyramid schemes (Fitzpatrick & Reynolds, 1997),[46] or organizations rife with misleading, deceptive, and unethical behavior (Carter, 1999), such as the questionable use of evangelical discourse to promote the business (Hopfl & Maddrell, 1996), and the exploitation of personal relationships for financial gain (Fitzpatrick & Reynolds, 1997).[46][47] In China, volunteers working to rescue people from the schemes have been physically attacked.[48] MLMs are also criticized for being unable to fulfill their promises for the majority of participants due to basic conflicts with Western cultural norms.[49] There are even claims that the success rate for breaking even or even making money are far worse than other types of businesses:[50][51][52] The vast majority of MLMs are recruiting MLMs, in which participants must recruit aggressively to profit. Based on available data from the companies themselves, the loss rate for recruiting MLMs is approximately 99.9%; i.e., 99.9% of participants lose money after subtracting all expenses, including purchases from the company.[50] In part, this is because encouraging recruits to further recruit people to compete with [them][9] leads to market saturation.[14] It has also been claimed (b)y its very nature, MLM is completely devoid of any scientific foundations.[53] Another criticism is that MLM has effectively outlived its usefulness as a legitimate business practice. The argument is that, in the time when America was a series of relatively small, isolated towns and rural areas not easily accessible to small companies, MLM was a useful way to let people know of and buy products or services. But the advent of internet commerce, with its ability to advertise and sell directly to consumers, has rendered that model obsolete. Thus, today, nearly all modern MLMs ostensibly sell vastly overpriced goods and services (if there even is a real product or service involved at all) as a thin cloak of legitimacy, while their members are driven to recruit even more people into the MLM, effectively turning these programs into pyramid schemes.[37] Because of the encouraging of recruits to further recruit their competitors, some people have even gone so far as to say at best modern MLMs are nothing more than legalizedpyramid schemes[9][36][37][38] with one stating Multi-level marketing companies have become an accepted and legally sanctioned form of pyramid scheme in the United States[36]while another states Multi-Level Marketing, a form of Pyramid Scheme, is not necessarily fraudulent.[38] In October 2010 it was reported that multilevel marketing companies were being investigated by a number of state attorneys general amid allegations that salespeople were primarily paid for recruiting and that more recent recruits cannot earn anything near what early entrants do.[54] Industry critic Robert L. FitzPatrick has called multi-level marketing the Main Street bubble that will eventually burst.[55] Network Marketing Definition: A business model in which a distributor network is needed to build the business. Usually such businesses are also multilevel marketing in nature in that payouts occur at more than one level. 121 5 138 Network marketing is a type of business opportunity that is very popular with people looking for part-time, flexible businesses. Some of the best-known companies in America, including Avon, Mary Kay Cosmetics and Tupperware, fall under the network marketing umbrella. Network marketing programs feature a low upfront investment--usually only a few hundred dollars for the purchase of a product sample kit--and the opportunity to sell a product line directly to friend, family and other personal contacts. Most network marketing programs also ask participants to recruit other sales representatives. The recruits constitute a reps downline, and their sales generate income for those above them in the program. Things can get sticky when a network marketing network compensates participants primarily for recruiting others rather than for selling the companys products or services. A network marketing system in which most of the revenue comes from recruitment may be considered an illegal pyramid scheme. Since network marketing programs are usually exempt from business opportunity regulation and arent defined as franchises under state and federal franchise laws, youll need to do your own investigation before investing any money. Multi-level marketing businesses sell a variety of products from vitamins to vacuum cleaners. Starting a MLM business makes you responsible for not only selling but also recruiting a sales team. Keeping your employees motivated is a challenge. You also have to create a payment structure that rewards salespeople sufficiently to keep them happy and at the same time grow earnings for the company. Ads by Google $0.01 Web Hosting Scalable, Secure Web Hosting. Try Our Award-Winning Service Now! hostgator/1Penny A Different Way of Selling MLM, also referred to as direct selling or network marketing, uses a different approach to sell products and services. MLM is different from single-level marketing, where a salesperson earns a commission for selling directly to the consumer. As a MLM operator, you must create you own sales distribution channel. MLM businesses resemble that of a pyramid structure, where you as the top salesperson earns a profit from all sales generated under the sales distribution line that you create. This income is referred to as residual income, and is the greatest source of income to your company. Advantages If you build a motivated sales team, you could potentially earn a substantial amount of residual income, which means more free time to grow your business. MLM leverages the power of word of mouth to reach consumers. A good product in the hands of a motivated sales team may spread to family members, friends and neighbors rather quickly. In addition, your overhead cost may be minimal under a MLM structure. You may operate as a home-based business, using your own space for storing the product. Much of your operating expenses go toward paying commissions to salespeople, but since this is a variable cost, you only pay when a person completes a sale. Related Reading: How to Be the Best You Can Be in MLM Disadvantages As the owner, you are the face and voice of the product whether you like it or not. Expect to spend an inordinate of your time managing people, their emotions and expectations. The heavy reliance on residual income means that your income stream may dry up suddenly if a salesperson fails to meet his quota. This could easily happen, because in many cases that salesperson must not only be accountable for his sales, but of the sale people he recruits under him. These are people he may not know. Therefore, your earnings potential is limited by the selling ability of others not directly under your control. A MLM business may strain your personal relationships. Lower-tiered salespeople, particularly those within your circle of family and friends, may harbor ill feelings if they fail to advance within the organization. Considerations You must believe in the benefits of the product or service you intend to sell if you want to have a successful MLM operation. This may require that you constantly purchase the product for your own use. Build your sales team with people who share your passion and enthusiasm. Hold regular sales meetings to monitor the productivity of salespeople to ensure that they meet the companys sales objectives. You may also have to participate in motivational seminars and travel frequently. So factor these into your schedule and budget. If you are not the best at public speaking, find a person within the organization who is a good motivator and public speaker to address the sales team. Create incentives such as performance bonuses and a higher payout for top sales people to keep your sale team motivated. There are tens of thousands of people that get involved in MLM/network marketing on a yearly basis. Some join because of the product, as they are told that it is going to be “the next breakthrough product, one that has “never been seen in the industry. Some are taken in by the lure of “making big money with this revolutionary pay plan. In most cases, these people have never been given a way of evaluating these companies to see if they are actually “worthy of us to promote. One of my mentors, Michael Klimek, once gave me some advice on how to evaluate any MLM program. He gave them to me as 5 different criteria, but I am going to expand them out to 12, as I feel that there are additional criteria that should be taken into consideration as well. Here is my expanded list of criteria that you should use while evaluating any MLM program: 1. Company track record – Do your “due diligence on the company. Check out the company by going to the Better Business Bureau in their local area. See if there are any complaints filed against them, and see if any have been resolved. 2. Financial strength – Even if all factors seem to check out, this is one of the key factors to why many MLM programs fail: not enough money to keep it afloat. Remember that 95%+ of all MLM companies never make it past its 5th year. 3. Strong management – Check out the names of the people running the company (i.e. the CEO, CFO, President, etc.) to see what experience they have had in running other companies: a. What have they previously done? b. Were they successful? c. Do they have solid business credentials? d. Do you get a good “vibe from them? e. Do they seem to have “integrity, and is it someone you can trust with your future & the future of people you want to introduce your business to? The last question is of utmost importance, because I’ve seen it where some companies have terminated “sloughs of distributors for the most ridiculous of reasons. Usually, it’s only because the company has created some “loophole so they don’t have to pay them that huge paycheck. For example, one of my good friends was in a “not-to-be-named juice company. She was making in the “mid-4 figures on a monthly basis, and was suddenly told that she would be terminated since she was ranking #1 on Google when people searched for that particular company. Is this fair? No, I don’t think so! But it didn’t matter to them. She couldn’t fight the company’s decision, and she was terminated anyhow! 4. Unique consumable products – Does the company produce an unrivaled product? Is there competition for that particular product, and how do they “stack up against each other? What kind of market niche is there for that product? 5. Competitive pricing – Do the products “stand well in comparison to products currently in the marketplace? Don’t become “garage-qualified just to meet the minimum requirements to be given a paycheck by the company. For example, there was once a company back in the 1990’s that sold water filters. To qualify for a paycheck, you had to buy thousands of dollars of these water filters. Thus began the term, “garage-qualified, which seems pretty self-explanatory. 6. High reorder rate – Is there a real “perceived value in the product? Does this product get ordered over and over again on a monthly basis? It’s quite simple to understand that if there is a low reorder rate, there will be low residual income. Conversely, if there is a high reorder rate, there will be a high residual income. 7. Low attrition – This, in layman’s terms, is the number of people that stay on as customers every month. This just means that if a business builder is making money, he/she will continue on with the company. If they are continually in a negative cash flow, usually the average period of time given for this is approximately 90 days. If they go beyond this period of time in a negative cash flow, they will quit the business. 8. Low personal production requirement – This is where you have to analyze what the monthly product purchase is to qualify for a paycheck. After this has been established, you must ask yourself if the “Average Joe can also meet these requirements. 9. Low entry costs – As in our previous example with the water filter company, it did cost several thousands of dollars to just “get started on the right foot. If these costs are too high, then the “Average Joe can’t afford it. Thus they will never quite get started. 10. Timing vs. trends – Never believe the “Get in on the ground floor, “Be first, or “Pre-launch starts now hype! Timing to join a company is bad when you observe their growth has stopped. Conversely, timing is good when you observe consistent growth in the company. You also have to look at the changes that are happening in that particular market niche. How will they have to adapt to maintain profitability? 11. Legal, fair, balanced compensation – This must reward everyone in a win/win fashion, and build a “network of “many people doing a little bit of the same thing. As with the teachings given by one of my previous mentors, Michael Klimek, he taught me to analyze a compensation plan based on a small, attainable number that the “Average Joe can reach. Look at how much you & every person has to order every month, and see how you are compensated for this. 12. No risk – You should always evaluate the risks of the business versus the possible gains. Where the number of risks is smaller than the gains, it would almost seem prudent to move forward. Please be aware of any companies that offer a “shadow business, that is one that would appear to make more money with the sales of motivational materials (i.e. tapes, books, CD’s, etc.) than they would with actual product sales within their organization. These companies should be avoided at all costs. If you use the following 12 criteria that I have provided you in evaluating any MLM/network marketing opportunity before getting involved , your chances of success with that program will be greatly increased. 3 Critical Factors to Succeed In Multi-Level Marketing By Contributor | Reply • • • • • • • • • • • The three pillars of success in Multi-Level Marketing are: • Residual Income • Leverage (of Time and Money) • Duplicability or Geometric Growth Network Marketing, ‘MLM’, and Multi-Level Marketing are all terms that refer to the same type of business model. While many close-minded people outside the industry (and others who’ve tried it and failed), have biased or negative wrong impressions, and despite the fact that it is used and abused by many crooks and con-artists, this business model has exceptional performance potential. There are bad apples in every bunch, and this industry has more than it’s share. But it can produce outstanding results if you know how to find the right company. And to maximize your potential, there are a few simple concepts whose understanding is critical to your success. Unlike franchises or conventional businesses, Network Marketing, MLM, and Multilevel Marketing are the only business models that take advantage of all three of the important, yet misunderstood principles of: Passive Residual Income – Leverage – and Geometric Growth And the combination of all three of these elements is what gives the Network Marketing business model it’s synergy and exceptional performance potential. In fact one outstanding company I’m aware of has actually built designed synergy into their business model. MLM and the “Get Rich Quick” Mentality Whether it’s a franchise or conventional business, both require major investments of time and money, and special skills if you hope to be really successful. Even the relatively small percentage who achieve true success usually take years just to break even. On the other hand, with the advent and popularity of the Internet and the rampant quest to “Get Rich Quick for Doing Nothing”, many people have gotten all excited about affiliate, associate, referral, or co-op programs as they are sometimes called. But very few of the thousands of these being promoted have any real chance of making any significant money for the vast majority of people who get involved. A perfect example is an email I recently received from one of these programs who claim to be ‘the best’. They bragged that they were paying “over $400,000 in commissions each month!” and have “now grown to over 650,000 affiliates!” Those are interesting statistics some might get excited about. Let’s see… if they’re true… They’re paying an ‘average’ of $.61 per affiliate… That’s sixty one cents ! Wow! How would you like to retire on that?! They claim later in their letter that some are making $10,000 a month. If that’s true, then to come up with an ‘average’ of sixty one cents each, the vast majority have to be making absolutely nothing. There is a much better way to achieve your dreams! But you have to: 1) Take the time to understand these three critical principles – Passive Residual Income – Leverage – and Geometric Growth Then… 2) Learn to ask simple questions – so you can teach what you know to others. If you’re even moderately successful in networking, you undoubtedly understand and believe in the three principles above. If you haven’t yet had the success you desire, you may not completely understand these principles, or how to get them across to others. Highly successful networkers have learned how to ask the right questions, then help others understand and take advantage of these important and powerful concepts. Unfortunately these principles are not well understood by the majority of the population. And that’s just one reason why so many fail at network marketing. There are lots of other reasons, and it would take a book to cover them all. But this is one of the more common ones. Because if you don’t understand or believe in these principles, it’s impossible to help others fully comprehend and appreciate them. Let’s face it, our educational system trains (or brainwashes) us to be conformists, to do what others tell us to do, and to prepare for a JOB, not an entrepreneurial business opportunity. So those of us who crave our independence and freedom, head in that direction in spite of our education, rarely because of it. And even though many people claim they’d like to be their own boss or own their own business, only a small percentage of the population possess the necessary desire for success to risk stepping out of their ‘comfort zones’ to pursue their dreams. Most people are afraid of failure, and for them it may be better and easier to live life in a rut. Others are satisfied or even happy with their jobs, incomes, or lifestyles, and that’s great for them. But if you’re one of millions who yearn for more freedom and control in your life, you must understand the following three principles to achieve True Success in Network Marketing. 1. Residual Income: Residual income is recurring income that continues to come to you long after the work you’ve done to produce it has ended. There are lots of ways to produce residual income. But many people don’t understand it. Others have never thought about or been exposed to it. And unfortunately, many ways of producing it are out of reach for ‘average’ people. Successful authors, actors, musicians, and insurance agents are some of the more familiar avocations that produce residual income. Probably the simplest and best example of passive residual income is interest earned on money in the bank or other investments. It gets paid or credited to you without you having to invest any more time to produce it. Using the “virtual millionaire” concept I will explain below, if you had a million dollars in the bank earning 6% interest, that would produce about $60,000 of annual income (before taxes). So if you have any source of passive residual income producing $60,000 or more a year, you are a “virtual millionaire”. And with the right business, that can be much easier to accomplish than trying to overcome all the roadblocks to accumulating a million dollars in the bank. Instead of Uncle Sam fighting you all the way (taxing all your income), he actually becomes an active partner by giving you all kinds of tax breaks and incentives to succeed. There are only two sources of money: 1. People at Work 2. Money at Work THAT’S IT! The simple goal of Retirement & Financial Planning is to make sure you accumulate enough money (or income producing assets), so that when you decide or are forced to retire, it will produce enough PASSIVE RESIDUAL INCOME for you to enjoy the lifestyle you choose for as long as you live. The same concept holds true in Network Marketing. But Leverage, and Duplication or Geometric Progression, can help you build it much faster in the RIGHT Network Marketing program. One of the first questions I often asks prospects is: “If you had the choice of doing a job and earning $500 once, or getting paid $100/mo for the rest of your life, which would you choose?” You’d be surprised at how many answer $500! These people either, 1) are not good prospects or, 2) need some education. That question is one quick and simple way to pre-qualify people. Those who don’t understand that principle may never achieve their true potential. Obviously $100/mo. will surpass a ‘one time’ $500 relatively quickly. And if it lasts for a few years, or better yet – the rest of your life – it will really be a blessing. Producing enough passive residual income can make you a virtual millionaire in a relatively short time, compared to working for someone else and scrimping and saving for 30 – 40 years. A VIRTUAL MILLIONAIRE is someone who has enough money coming in every month, whether they work or not, to support the lifestyle they choose, for as long as they live. It’s also nice to have something significant to pass on to your heirs or favorite charity. But like everything else in life, even residual income has a downside. The biggest one is, just like compound interest or geometric progression, it normally takes a little time for the magic to start working. The power and beauty of residual income is on the back-end, not the front! Many people have a hard time understanding this fact and mistakenly chase false promises of quick or easy money. That’s why there will always be crooks and con artists in the world pitching “get rich quick and easy”. Successful people ignore them. Naive or greedy people usually get burned. Residual income is NOT about “get rich quick”, even though with the right opportunity it’s possible to produce a small fortune in a relatively short time. If you’re especially talented or have the time and money to invest, you may have some success in less than a year. And many people do. But without a major investment of time or money it takes most ‘typical’ people a year or two of part time work to generate a decent income, and another year or two to really hit the big time. But achieving success with 2 – 4 years of part-time effort beats the widely accepted ‘standard’ plan of slaving 20 – 40 years working for someone else to make them wealthy! Most people who fail at network marketing either choose the wrong company or just give up too soon and quit because they expect INSTANT results. But because the real beauty of residual income is on the back end, not the front, once you build it you have the financial security and time freedom to do anything you want the rest of your life! The RIGHT network marketing opportunity allows anyone, with no prior experience, special skills, or large capital outlay, to build long term, passive residual income. A critical component to building long term residual income is offering high quality, high demand, value-priced, ‘consumable’ products or services that people use and re-order month after month. Because of this simple fact, the top industry in Network Marketing by any measurable standard is Nutritional Supplements and Personal Care products. Some people refuse to consider this industry because they don’t take supplements themselves or don’t understand the ‘Big Picture’ and successful business model of this industry. Do you think Burger King and McDonald franchise owners invest hundreds of thousands of dollars because they like to eat fast food burgers? Not hardly! They understand human nature and trends in society. We’re a convenience oriented society, and a large part of the population would rather eat low cost convenience food, even if we know it’s not good for us. But there’s also a booming trend toward improving your health, improving your life, and developing personal and time freedom. Many ‘opportunity seekers’ completely miss or ignore these trends in society. If your business is in front of multiple long term trends, you dramatically increase your chances for success. I’m not saying it’s not important to believe in and use your own products, because it is! But for true success you have to recognize major trends in society, and your products or opportunity must meet ALL the highlighted criteria above – high quality, high demand, value-priced, and ‘consumable’. (And in this case, ‘consumable’ does not necessarily mean just ‘edible’. It means used and/or re-ordered on a regular basis.) And with the right business the rewards can be much more than just financial! It’s hard to put a price tag on the goose bumps you feel or tears that come to your eyes sometimes when someone thanks you profusely for introducing them to a product that has had a major impact on their health, their life, or their financial situation. Unfortunately some people never grasp the importance of this additional benefit. Most good people want to feel they are doing something worthwhile with their life. And it’s not just about making money, even though many narrow-minded or greedy people will try to convince you it is. It’s also about helping others. And doing both , can make the right business doubly rewarding! But your business also has to have profit potential. Some ‘price-based’ products or services have lots of competition and limited profit potential. If you choose a business like that you have to do a lot more volume and it’s hard to build loyalty, which is an important element in producing long term passive residual income. 2. Leverage: Every successful person or business (in or out of Network Marketing) takes advantage of leverage. There’s only 24 hours in a day! And no matter how talented you are or how much you get paid per hour, if you don’t take advantage of leverage you’re limited by the number of hours in a day. By learning to leverage your time, you can also benefit from a percentage of other people’s efforts, and dramatically increase your income and freedom. If you’re reading this article on the Internet (on my website or someone else’s), or in a magazine, that’s one simple example of leverage. I don’t have to be physically present to teach you something. I may be sleeping, or vacationing on the other side of the world while you are learning or sharing this information. Unfortunately in most traditional businesses, the only ones who benefit from leverage are the owners or stockholders. The loyal, hard-working employees do most of the work. The unique and wonderful thing about the Network Marketing business model, is that everyone has the same opportunity to become the ‘owner’ of their own business – with a fraction of the investment of time and money of a traditional business or franchise. And instead of worrying about training people to become your competitors, in network marketing the people at the top have a vested interest in helping others on their team succeed. Again, the question I ask prospects here is: “If you had the choice to receive 100% of one person’s efforts, or 5% of 100 peoples’, which would you choose?” And again, if they answer 100%, either: 1) they’re not a good prospect or, 2) they need a remedial math class or additional education. Many talented people would rather just depend on themselves, and have difficulty grasping the importance of this concept. Obviously 100% of one is always only one. But 5% of 100 is five. That’s a 500% increase and is significant! And with synergy, sometimes it can be even more! Not only will the total result with leverage almost always be a lot more, but your income is not dependent on only one person. If it is, and that person gets sick or injured, disabled, dies, quits working, or decides to go on a long vacation, your income could stop! But if your income is produced by the activities of many, it is much more dependable. Even if something unexpected or negative happens to one or more of those people, it only has a minor effect on the total production. That’s what allows people who understand and take advantage of this to live the lifestyle they choose or get paid while on extended vacations. It’s great to get paid while you’re on vacation or doing other things you love! That’s one of the many advantages of leveraging your time, and is just one of many reasons so many high income professionals from all walks of life are flocking to get involved in Network Marketing. Many professionals who make great incomes, get frustrated at the ‘bottom line’ after putting in long hours just to cover overhead and miscellaneous expenses. No matter how much you earn per hour, if you don’t learn to leverage your time, your earnings will always be limited by the number of hours you can work in a day. And nobody wants to work 24 hours! But even with a small network marketing organization, you can produce equivalent results to working 24 hours a day, with a fraction of the individual effort. Learning to leverage your time (and money) is an important step toward gaining Financial Independence and Time freedom. 3. Geometric Growth – Duplication – Power of One: The best illustration I’ve seen of geometric growth is the penny-a-day example. It’s also frequently used to illustrate the benefits of tax free compound interest. If you start with one penny, and double it every day 30 days, how much will you have at the end of 30 days? If you haven’t heard this before or don’t remember, go ahead and take a guess. Day two you’d have 2 cents; day three you’d have 4 cents, then 8, 16, and so on. How much at the end of 30 days? I’ve never had anyone who hadn’t heard this before come close. So don’t feel bad if you don’t, and I promise not to laugh. Ready? Did you pick a number? Would you believe over FIVE MILLION DOLLARS?! ($5,368,708 to be exact!) That’s right! Most people don’t believe it until they punch it out on a calculator. And even then it’s sometimes hard to fathom. But it’s true. Isn’t that amazing? That’s a simple illustration of how networking can work. If I can teach you, I’ve doubled myself. If we each teach someone else, we’ve doubled again. And as this goes on and on it can produce amazing results in a relatively short period of time, just like the penny example. The easier your program is to do and the lower the cost to get involved, the more people you can appeal to and the more potential for geometric progression to work. Programs that are too complicated or expensive for ‘average’ people to do will always hinder your growth. Great salespeople can succeed at almost anything they apply themselves to. But not many people have the talents, skills, or desire to be great salespeople. IT’S NOT DUPLICATABLE! The Network Marking business model is about a lot of average people doing a little, not a few talented people doing a lot. While lower cost of entry can be an advantage, many programs that are ‘free’, don’t offer any real potential for significant income, and often attract people who aren’t willing to work to build their business. So realistic income producing power is an important area to consider. Joining a ‘downline club’ or any other program that promises any variation of – “we’ll do everything for you” – will never produce significant long-term passive residual income, because the majority of people who join are looking for a free ride or are too lazy to build anything significant. None of these programs have ever worked long term and none ever will. It’s a simple fact of life successful networkers accept early on. The penny a day example is a great model for illustration, but in ‘real life’ it never works exactly like that. Some people never recruit anyone, and others find 10 – 20 – 30 or more. It helps to understand human nature, and an IMPORTANT, but little known reality called REVERSE GEOMETRIC GROWTH. Understanding this important principle is also critical to your success! Despite the fact it rarely works in reality like it’s illustrated on paper, the principle of GEOMETRIC GROWTH is still one of the THREE PILLARS TO SUCCESS with the RIGHT Network Marketing Business Opportunity. With the RIGHT business and these POWERFUL PRINCIPLES, even average people who are willing to work and to learn can achieve their dreams. And above average people may exceed their greatest expectations. If you can understand and believe in those three principles, and find the right company, you will succeed in Network Marketing. If you’re willing to teach these three principles to a few others, the results might just amaze you! The beauty of Network Marketing is that you can get started with very little investment of time or money, and no major changes in your present lifestyle. Eventually, passive residual income can give you the freedom to live the lifestyle you choose, and pursue and enjoy your dreams – whatever they are! Many positive changes have been made in the industry, and several simultaneous mega-trends help make this the best time ever to get involved! The time to start is NOW! But it’s important to pick the RIGHT company and industry! If you understand: 1. The importance of consumable products 2. The reasons for the popularity of the Nutritional Supplement Industry 3. The importance of high quality, high demand, value-priced, products YOU’RE MUCH MORE LIKELY TO HAVE ABOVE AVERAGE SUCCESS! Successful Network Marketing offers many benefits: Passive Residual Income – No Boss – No Commute – No Dress Code – Income Tax Reduction – More TIME for kids, family, hobbies, or whatever is important to you – Above Average Income – and much more. If I had to sum it up in one word it would be FREEDOM! – Freedom to work as much or as little as you want, to come and go as you please, and to spend more time doing whatever is important to you. Once you experience this FREEDOM, you’ll wonder how you ever lived any other way! There’s no free lunch though. It’s like riding a bike. If I asked, “Would you rather ride a bike uphill or downhill?” most normal people would say, “down.” But in order to coast down the hill, you first have to ride your bike up. Once you start, you may find yourself enjoying the exercise and additional benefits of improving your strength, endurance, and health. The same is true in this business. You have to ‘climb the hill’ (learn the business) before you can ‘coast’. Many people learn to enjoy the process of becoming better people, helping others, and improving much more than just the financial part of their lives. There are many routes to the top of the hill. Some people choose to take a gradual incline and may take a little longer to get there. Others prefer the direct route, and choose to pedal directly up the steepest side. The beauty is, the choice is yours. We can show you the routes, and you decide what’s best for you. We’ll be there to encourage and guide you every inch of the way. Recommended Books on Multi-Level Marketing: • MLM Blueprint: Your Subconscious Journey to Network Marketing Success • Success In 10 Steps – Secret MLM Strategies • Be a Network Marketing Superstar: The One Book You Need to Make More Money Than You Ever Thought Possible • Guerrilla Multi-level Marketing: 100 Free and Low-Cost Ways to Get More Network Marketing Leads • Your First Year in Network Marketing: Overcome Your Fears, Experience Success, and Achieve Your Dreams! About the Author: Mike Duffey enjoys the FREEDOM a successful home business provides, and the security and benefits of passive residual income. For valuable FREE information and training visit his ’Success University’ website It never ceases to amaze me the extreme polar views on the topic of network marketing and MLM. Some people are passionate about it in the extreme, and there are even top celebrity authors like Robert Allen, Mark Victor Hansen, and Robert Kiyosaki doing it and advocating it. Yet, in many circles, you might as well declare yourself a leper as admit to being in network marketing. So, what is the problem with MLM and network marketing? Maybe its the pyramid structure? But you cant really take issue with the tiered compensation structure—almost every large sales organization in the world has that. Salespeople get commission, and sales managers get overrides or bonuses on top of that, and sales directors on top of that, and VPs on top of that. Or maybe its the fact that you have to pay to participate in it? But that cant be it—thats a standard franchising model. And I assure you, the franchise fee of most traditional franchises dwarf the sign-up cost of any MLM program by comparison. Now certainly, there are illegal pyramid, or Ponzi, schemes. This is where the money is all being made off of signing up other people, with little or no real product ever being delivered. But in spite of whatever perceptions people may have, the fact is that Amway, Excel, Meleleuca, PrePaid Legal, USANA, and many others have sold millions upon millions of dollars of products to happy customers, many of whom are NOT also reps. So, there may be a perception problem here, but if so, the perception is out of line with the reality. But surely the bad reputation MLMers has some more basis in fact than the occasional illegal pyramid scheme? The real problem with MLM is not MLM itself, but some of the people it attracts. Network marketing is just a business model, and it really amounts to micro-franchising. Its upside is that it has a very low cost of entry, with the potential for exceptional revenue, and there are those who achieve that. But those same things that make it attractive make it attractive to many who are NOT really qualified or prepared to become business owners. The salient characteristics of MLM make it attractive to people who: • have not done well in their business or profession and have little money saved up to invest • have no previous experience owning or running a business • have no previous experience in sales • have little or no experience developing business relationships other than that of employer/employee/co-worker • are not satisfied with their current level of income • have unrealistic expectations of the amount of work involved compared to the revenue realized Dont get me wrongIm not saying that theres anything wrong with any of these things, or that this describes even a majority of network marketersonly that it describes a disproportionate number of network marketers, and that many of them never do anything about it. As a result, many network marketers end up: • over-selling the opportunity • inappropriately discussing business in social situations • coming across as desperate • over-focused on new recruits and neglecting existing customers as a result • being either inaccurate or deceptive when talking about their business Again, Im certainly not saying that this describes a majority of network marketers, but itdoes describe enough of them to tarnish the reputation of the rest. To pre-judge someone based on the basis of a small minority of people in that group is horribly unfair, but we must realize that most prejudices have some basis in reality, even if it has been distorted. So whats the solution? Theres a first time for everything. And network marketing/MLM is a great opportunity for people to have their first business, their first sales role, etc. My point is thisrecognize it for what it is: its a business, and you are a business owner. And if youve never owned a business before, if youve never done sales before, if youve never networked before, you need to learn about how to do so, not just from the network marketing/MLM experts, but from established experts in those fields.