A guide to evaluating network marketing and multi-level marketing (MLM) opportunities, including key questions to ask about products, training, compensation, costs, and company reputation.
Network Marketing, or Multi-Level Marketing (MLM), can be a viable tool to help you reach your financial goals. There are now thousands of companies that use network marketing as one of their channels of distribution, or even as their sole channel. To employ network marketing is to use word-of-mouth advertising through individual business owners or distributors who market a product or service. These individuals make a profit on their sales as well as on the sales of others with whom they share the opportunity, creating a distribution network. Quixtar, Shaklee, and 5-Links are examples of companies that use this method of marketing.
As you explore this type of business for yourself, there are a few things you should consider. For as many good, honest, and legitimate organizations as there are in the world, there are nearly as many unscrupulous ones. As with any business or investment opportunity, do your homework.
- What is the product or service that you will be representing? If the company manufactures, distributes, or represents something that you believe in, you will have a much better chance of success. If not, you will find it difficult to convince others to believe in it and buy it. Since product flow is the essence of any business, you will need to be able to show others the benefits of yours.
- Is the product consumable? In other words, will the customer use it up and then need more on a regular basis? Consumables create repeat business (if your product and your methods are of high quality), which is important to creating a long-term, stable income. Nutritional supplements are a good example of a consumable; automobiles are a poor example.
- How many products or services does your company represent? Some people prefer to work with a networking company that represents one product—a vitamin line, for example—while others prefer a wide and diverse product line. The advantage of a single product is that you can become an expert in that product, which can improve your ability to sell it. The advantage of a diverse line is that you have something for everyone, which can improve your ability to reach more customers.
- What type of training is offered? You should not be left to fend for yourself. Any reputable networking company offers training, either through the company itself or through the business owner or distributor team. Since the people who work as salespeople, distributors, or representatives are all independent business owners, they may offer you training as part of joining their team. You thereby enjoy the advantage of being trained by people who have already done what they are teaching you to do. If they haven't done what they are teaching you to do, be wary. Also, investigate whether the training comes with a personal mentor—a human being who can interact with you—or whether it is done online or through audio and video presentations. Audio and video can provide excellent training, but they should be supplemental to personal attention from someone to whom you can be accountable and whom you can approach for guidance.
- How many levels down does the compensation plan pay? There should not be a cut-off point beyond which bonuses are not paid. If this is the case, then there is a point where your efforts are not rewarded, and there is no incentive to help your team. Since network marketing relies on sales through creating a network of people, you need to know that, as the newest person on the team, your success matters to someone at the top. Hopefully, those people care because it is the right thing to do, but knowing that your success affects their bottom line gives them an additional reason to care.
- What does it cost? Any business costs money to start. While buying a franchise or other traditional business can cost thousands or even millions of dollars, starting a networking business is relatively inexpensive—usually in the hundreds of dollars. However, you need to assess what you can afford to invest. Do you need to purchase a starter kit of products? What do the training materials cost? What does ongoing training (seminars, conferences) cost? Do you need an office (i.e., computer, internet, telephone, voicemail, fax machine)? Businesses cost money, period. You must decide how much you are willing to invest.
- Is this company reputable? It is a good idea to check into the background of the company. As with any company, you can check the Better Business Bureau to see if there are any complaints against them. But remember that in most cases you were introduced to this company by an individual or team of people, not by the parent company itself. Therefore, the parent company could have a spotless record, but those with whom you would work may be less than honest. There may also be complaints against the company that are unfounded, made by someone who had a problem with their particular team but took it out on the parent company.
- Your best background check is almost always your gut feeling. You should interview the person or team you are about to join and feel comfortable with what you hear. If the person introducing the business plan to you makes you uncomfortable, don't do business with them. The parent company—should you like what they offer—can usually give you the name of another person or team in your area that you can interview if you are not happy with this one.
- You can also check with the Direct Selling Association (DSA), an organization that monitors and regulates (to some extent) any company that sells directly to the consumer—whether through network marketing, mail-order, or the internet.
- Doing a Google search (or using another search engine) is the worst way to get information on this type of business, as any malicious individual, person with an axe to grind, or even the company's competitors can post in a forum or create a negative-spin website. Always consider your source of information.
Once you have assessed all of this information, you are in a position to make an educated and informed decision.
Practice Network Marketing
A guide to evaluating network marketing and multi-level marketing (MLM) opportunities, including key questions to ask about products, training, compensation, costs, and company reputation.
Network Marketing, or Multi-Level Marketing (MLM), can be a viable tool to help you reach your financial goals. There are now thousands of companies that use network marketing as one of their channels of distribution, or even as their sole channel. To employ network marketing is to use word-of-mouth advertising through individual business owners or distributors who market a product or service. These individuals make a profit on their sales as well as on the sales of others with whom they share the opportunity, creating a distribution network. Quixtar, Shaklee, and 5-Links are examples of companies that use this method of marketing.
As you explore this type of business for yourself, there are a few things you should consider. For as many good, honest, and legitimate organizations as there are in the world, there are nearly as many unscrupulous ones. As with any business or investment opportunity, do your homework.
- What is the product or service that you will be representing? If the company manufactures, distributes, or represents something that you believe in, you will have a much better chance of success. If not, you will find it difficult to convince others to believe in it and buy it. Since product flow is the essence of any business, you will need to be able to show others the benefits of yours.
- Is the product consumable? In other words, will the customer use it up and then need more on a regular basis? Consumables create repeat business (if your product and your methods are of high quality), which is important to creating a long-term, stable income. Nutritional supplements are a good example of a consumable; automobiles are a poor example.
- How many products or services does your company represent? Some people prefer to work with a networking company that represents one product—a vitamin line, for example—while others prefer a wide and diverse product line. The advantage of a single product is that you can become an expert in that product, which can improve your ability to sell it. The advantage of a diverse line is that you have something for everyone, which can improve your ability to reach more customers.
- What type of training is offered? You should not be left to fend for yourself. Any reputable networking company offers training, either through the company itself or through the business owner or distributor team. Since the people who work as salespeople, distributors, or representatives are all independent business owners, they may offer you training as part of joining their team. You thereby enjoy the advantage of being trained by people who have already done what they are teaching you to do. If they haven't done what they are teaching you to do, be wary. Also, investigate whether the training comes with a personal mentor—a human being who can interact with you—or whether it is done online or through audio and video presentations. Audio and video can provide excellent training, but they should be supplemental to personal attention from someone to whom you can be accountable and whom you can approach for guidance.
- How many levels down does the compensation plan pay? There should not be a cut-off point beyond which bonuses are not paid. If this is the case, then there is a point where your efforts are not rewarded, and there is no incentive to help your team. Since network marketing relies on sales through creating a network of people, you need to know that, as the newest person on the team, your success matters to someone at the top. Hopefully, those people care because it is the right thing to do, but knowing that your success affects their bottom line gives them an additional reason to care.
- What does it cost? Any business costs money to start. While buying a franchise or other traditional business can cost thousands or even millions of dollars, starting a networking business is relatively inexpensive—usually in the hundreds of dollars. However, you need to assess what you can afford to invest. Do you need to purchase a starter kit of products? What do the training materials cost? What does ongoing training (seminars, conferences) cost? Do you need an office (i.e., computer, internet, telephone, voicemail, fax machine)? Businesses cost money, period. You must decide how much you are willing to invest.
- Is this company reputable? It is a good idea to check into the background of the company. As with any company, you can check the Better Business Bureau to see if there are any complaints against them. But remember that in most cases you were introduced to this company by an individual or team of people, not by the parent company itself. Therefore, the parent company could have a spotless record, but those with whom you would work may be less than honest. There may also be complaints against the company that are unfounded, made by someone who had a problem with their particular team but took it out on the parent company.
- Your best background check is almost always your gut feeling. You should interview the person or team you are about to join and feel comfortable with what you hear. If the person introducing the business plan to you makes you uncomfortable, don't do business with them. The parent company—should you like what they offer—can usually give you the name of another person or team in your area that you can interview if you are not happy with this one.
- You can also check with the Direct Selling Association (DSA), an organization that monitors and regulates (to some extent) any company that sells directly to the consumer—whether through network marketing, mail-order, or the internet.
- Doing a Google search (or using another search engine) is the worst way to get information on this type of business, as any malicious individual, person with an axe to grind, or even the company's competitors can post in a forum or create a negative-spin website. Always consider your source of information.
Once you have assessed all of this information, you are in a position to make an educated and informed decision.
Practice Network Marketing
By Howtodotips
A guide to evaluating network marketing and multi-level marketing (MLM) opportunities, including key questions to ask about products, training, compensation, costs, and company reputation.