Not all Network Marketing companies were created equal, and selecting the right one (for you!) may mean the difference between success and failure. It did for Darren Falter, and the following article is adapted from his book, How to Select a Network Marketing Company. It has sold over 40,000 copies in soft cover in 10 countries and is in its fifth revision.

Falter was introduced to Network Marketing while a full time university student in 1990. Between 1990 and 1994 he worked hard at several opportunities but failed at them all. What saved him, he said, is that he never blamed his failure on the industry. He continued to believe in Network Marketing but by 1995 he was “fed up”: “Up to that moment I had tried so many different strategies with so many different types of businesses, selling so many different kinds of products (that) I decided that if I was going to be successful, I had to select the best home-based business.”

Borrowing “quite a large space” in his parents’ basement, Falter compiled a list of over 200 top home-based business programs and amassed “files full of substantial information” on each. He eventually narrowed this list down to the five best programs and then picked one of the five and, “for the first time in my career, I launched a successful business that took me to a solid income that provided financial security for my family for years.”

To find the right company, Falter endorses two basic rules:

First, do your own research. Don’t trust someone else’s facts and figures.

Second, do not make decisions while you are in an emotional or hyped up state.

Questions we will be looking at in this article are:

Which product or service industry is the most profitable?

Should I go with a new idea, or with something tried and true?

During which phase of growth should I join a company?

Which distributor compensation plan is best?

How can I tell if a company’s management team has high integrity, and that they are experienced, competent and committed?

How can I find time to study and compare all of these companies?

And finally,

Which company is right for me?

Please bear in mind that while no scrutiny system is perfect, a good system is better than taking the first opportunity that presents itself, and certainly better than a stab in the dark. To make the task manageable, we break our quest down into four components:

1. Product / Industry

2. Timing

3. Compensation Plan

4. Company / Management

In this issue we will look at product, industry and timing. In the following issue we will examine the compensation plan, company and management.

Product / Industry

This includes Buying Clubs, Catalog Shopping, Household Products, Lead Generation Programs, Jewelery, Gold, Silver and Collectibles, Legal Services, Nutritional Supplements and Health Products, Personal Care Products, Telecommunication Services, Water Filters, Travel Programs and others. After reviewing over 200 Network Marketing companies, Falter found that the overwhelming majority fell into four categories:

1. Nutritional Supplements 71%

2. Personal Care / Skin Care 14%

3. Household Products 6%

4. Telecommunications 5%

This gives a good idea of the trends in Network Marketing. To further evaluate an opportunity, goods and services can be checked against the following seven criteria:

1. Emotional, Ideally the product or service should trigger an emotional reaction, which in turn creates an emotional bond to the product. It is easy to see how nutritional and skin care products may do this, if they make you feel better and look better. Telecommunications would however have limited emotional appeal.

2. Consumable, The product or service should be used regularly and replaced on a monthly, weekly or even daily basis. Vacations, exercise equipment and such are not “consumed” on a weekly or monthly basis and so do not generate residual income. Falter considers this to be the most important of the seven qualities.

3. Unique, The product or service should have a unique twist, something that the competition doesn’t have or can’t get.

4. Traditional, Although a product should be unique, it must not be so unique that people cannot recognize it or identify with it. Once you have to explain what it is, you are edging into dangerous territory.

5. Valuable, The product or service must be worth its price, yet allow for a healthy profit margin. If everyone (distributor, company, customer) benefits, you’ve got a winner.

6. Timely, The product or service must be in high demand, RIGHT NOW.

7. Stable, The product or service must also be in high demand LATER. Will the product or service be in high demand in 20 years? If the answer is yes, you have a winner. If demand increases with time, all the better.

Now check the product you are considering against these seven characteristics. Your objective is to get seven yeses.

Finally, keep your focus and don’t get sidetracked by personal biases, personal likes and dislikes; in the end what matters is what other people want.

Now double check your research results:

Make a list of the top twenty most successful companies and find out which products they are marketing.

Make a list of the top twenty income earners in Network Marketing and find out in which industries they are earning their millions.

This should give you a good idea of what works well in MLM. (This sort of information can be found in MLM books and trade journals.)

Timing is Everything
According to Dr King, professor of marketing at the University of Illinois and co-author of The New Professionals (about the rise of Network Marketing as the next major profession), a company goes through several major growth phases as it matures into a stable, long term opportunity. The first growth stage is known as the “formulation stage”. This is the start-up phase when companies are most vulnerable and over 90% go out of business within 12-24 months.

The second phase of growth is referred to as the “concentration phase”. During concentration, the company is getting its ducks in a row and working out the bugs. Similar to the formulation phase, the concentration phase is still considered a start-up phase and it is a risky time to get involved. These two phases are often referred to as the “pioneering phase” and most experts agree that the risk to reward ratio is too high to consider getting involved.

If and when a company reaches around $50 million in annual sales, the company experiences a phenomenon known as “critical mass”. This figure should not be taken too literally but it is a real phenomenon and will occur slightly before or slightly after the first $50 million, bringing with it the beginning of the company’s “momentum growth phase”. During this phase, if the foundation was properly laid, a company can go from obscurity to becoming a household name with 4-6 years.

According to Bruce Hedges, (Who Stole the American Dream? Pp131,132), when critical mass hits, suddenly everyone wants what you’ve got, growth goes into overdrive and sales begin to explode!

The last stage of a company’s growth is the “stability” or “maturity” phase. This is a great time to have a large downline but a tough time to build one. Growth in the stability phase is significant, but slower. However, it is now clear that many companies have learned how to maintain healthy growth during the stability phase.

One way they do this is by continuing to diversify the product line. Sometimes companies will go through second, third, and fourth momentum cycles as a result of this type of innovative marketing. Also, entering new international markets every year can keep a company profitable for decades. When a mature company expands into a new country, this creates a true ground floor opportunity without the risk associated with start-up programs.

As Network Marketing continues to evolve, distributors will realize that getting in early will become less and less important. An entrepreneur’s primary concern will be selecting a company that has long term stability, not short term “flash-in-the-pan” profits. But although selecting a company in the stability phase will be a much more inviting option than it once was, there is still no better time to build a Network Marketing business than during the “hypergrowth” momentum phase.

One further note: just as companies have momentum phases, so can entire industries, and indications are that the Network Marketing industry as a whole is entering a momentum phase (but now is not the time to elaborate on this).

Cheers,

Steve

MLM stands for Multi Level Marketing and is also known as Network Marketing or Referral Marketing. A company is considered MLM where the products or services delivered to their customers, are distributed by independent contractors also known as distributors. This is the major point of difference between MLM and conventional systems. Instead of a complex system of wholesalers, warehouses, distribution centers, freight companies and retailers – with all the added costs at each point of handling – MLM companies normally deliver direct to either the distributor or the customer. The savings in infrastructure, multiple handling, storage and transport are huge. These distributors are compensated based on their own sales as well as the sales of other distributors they have recruited and trained. The terms “multi level” and “network” come from this concept of recruiting and training a huge group of distributors (also known as a downline) as your own sales force within this company.

The idea, of course, is to build a huge downline that will amass a large customer base. Obviously, the person who has the most customers in his/her network is compensated the best. Most MLM companies do very little advertising in comparison to more conventional companies, since word of mouth referral is the primary promotional medium. This represents enormous savings, which are normally channeled into network rewards. Compensation plans very from company to company but if you build your downline the right way you can reap a huge financial reward.

Most of us do a little network marketing every day. The difference is that we don’t really know that’s what we’re doing and we’re not actually getting paid for it. Let’s say you saw a great movie and recommended it to all your friends, you are doing network marketing for the theater and the film company that produced the movie.

The same goes for a favorite restaurant; article of clothing, favorite album or a good book you just read. Herein lies the difference between network marketing and multi-level marketing. Network marketing does not have to be multi-level nor does it have to include building a downline.

The problem in network marketing arises when people focus solely on recruiting recruiters and training them to recruit. Neglecting to acquire customers and to train your downline to do the same results in no compensation. Legitimate MLM companies only payout when customers are acquired not when a downline distributor is acquired. A lot of the negativity towards network marketing arises because of lack of understanding of this one issue.

To your success!

Steve

I find it interesting the varied responses you get when you mention network marketing, mlm or multi level marketing to others.

Some people just look at you with a blank stare never having heard of these terms before. Others ask, “Is this one of those businesses like Amway?” or “How much do you get paid off of me?”. What about the infamous line “Oh, that’s one of those pyramid things!”. Others will be curious to find out more even if they have already been involved in MLM. They will just say “Tell me more about it…”

My favorite group is the kind of people who immediately tell you its a scam because they have joined one before and failed. Even worse, they just heard about this concept from someone else who failed and so they assume its a scam without any first-hand experience.

Don’t Judge Too Quickly

The funny Ameriquest Mortgage Commercials are kind of like some people’s first impression of network marketing. Get the facts from someone that is successful in the industry and remember, don’t judge too quickly.

Ever since Amway and other pioneering companies, people have been exposed to multilevel marketing either directly or indirectly and have been forming opinions about it. Network Marketing is not for everyone and by no means will everyone succeed just like in any other business. All I can ask of you, is to at least get the facts before you form a concrete opinion about any multilevel marketing company and/or the MLM industry as a whole. Use caution and don’t ever jump in blindly; you still need to make sure it is a legitimate company, but please don’t form opinions before you do the research.

Multilevel marketing is neither good nor bad. Unfortunately, people label it one way or the other depending on whether or not they made money, while understandable, is not very rational.

Enjoy,
Steve

If you are one of the 95 plus per cent of network marketers who are still spinning their wheels in this industry and not making any money then there is very good reason.

Let’s remove lack of action for a moment because undoubtedly this will account for many failures within the network marketing business. But the truth is, there are seven prime reasons why today’s network marketers simply cannot get off the starting blocks with their businesses.

Ann Sieg was a struggling MLMer for many years who did everything right in promoting her business. She made a list, attended meetings and poured her heart and soul into trying to grow her business. She was moderately successful but always hit a point in her growth where the large brick wall placed in front of her just couldn’t be scaled.

Her main problem, one which is the core reason why many MLMers quit their business within the first three months, was attracting enough prospects into their funnel. She had plenty of belief but couldn’t understand why she wasn’t seeing the results in proportion to her efforts. Yet, she kept being told that perhaps her belief levels weren’t strong enough or to attend more meetings or that everyone is a prospect.

The fact is, every one is not a prospect in network marketing. Sieg was finally fed up with the industry and decided to find out why it was some people were successful and the majority weren’t. You know what she discovered?

The 7 Great Lies Of Network Marketing

Bottom line is, just about everything you’ve been taught about network marketing, to quote a passage from her report…”is BS.”

Sieg set about compiling her report, The 7 Great Lies Of Network Marketing and knew deep down she was going to offend some people. Let’s face it, despite more than 95% of people failing in MLM, there is still a propensity to get defensive when someone starts to belittle the industry.

Fact is, Sieg doesn’t belittle the industry. She recognizes it as one of the truly great vehicles for the average citizen worldwide to create financial security for themselves.

What she does attack are the tired old mis-truths still being taught today in droves on unsuspecting new network marketers about what’s required to build a successful MLM business. How’s this for some familiar stuff:

- anyone can do this business
- every one is a prospect from your family, relatives, friends and strangers
- you don’t need any skills other than being able to make a list or
- you’ll have your business built for you

Do they sound familiar to you? Truth is, anyone can do this business but only with the right skill set. And those skills should be taught even before they join the business. Most people who join a network marketing business don’t have skills such as marketing and promotion and to some extent sales.

And possibly one of the most irritating of The 7 Great Lies Of Network Marketing is being told one needs more self belief and belief in the business. Well, that’s true but how does that get you the fuel to build your business, namely prospects.

The Renegade Revolution

There is a shift happening with regards to promoting network marketing today and we are on the verge of a new boom within the industry. The 7 Great Lies Of Network Marketing may have hit a nerve or two but now that the dust is settling, the growing numbers of renegade network marketers who continue to emerge every day is strong testimony to the message conveyed within the report.

The 7 Great Lies is a free report which you can download here. If you are set in your ways and still believe making a list and hassling friends and family is the way to prospect then don’t download the report. It will offend you. However, like the majority of network marketers, if you’re looking for a lifeline to pluck you out of the MLM sea of despair, then the 7 Great Lies is for you.