How
To Evaluate Any Network Marketing Opportunity
You
listen to the sales presentation, done by one of the company's
top producers; you're promised the possibility of earning
a significant six-figure income if you are persistent. Moreover,
you learn about the tremendous tax benefits available to
small businesses. Your skepticism begins to diminish as
you wonder if network marketing isn't something you should
consider. After all, you hear, more new millionaires are
coming of network marketing today than any other sales field.
This
is the point when you need to stop and breathe deeply. Before
you decide to get caught up in the enthusiasm, which will
be contagious, and buy in immediately, take this advice:
Let the enthusiasm cool off. Then begin the process of deciding
which company to join by finding the answers to the following
questions:
How stable is the company?
Two ways to judge a company's stability are: first, get
a credit report from Dunn and Bradstreet. Second, find out
how long the company has been using network marketing. Most
companies never survive two years. Therefore, at least two
years in the business is a good yardstick in judging a company's
stability.
Does
the company stand behind the promises it makes about its
products?
This question is important to ask product companies. Call
the company and ask these questions:
•
Does the company validate their products' claims, e.g.,
does a health food product have clinical trials done by
independent laboratories?
• What is the company's refund policy if the customer
is not satisfied? How quickly do they refund the money?
• What is the company's buy-back policy on inventory purchased
by distributors? Most companies promise to buy back inventory
not more than a year old. But sometimes this policy is
illusory because of the complex administrative hoops the
distributor must jump through and because there is no
limit on when the refundable money must be paid back to
the distributor.
Buy
the product and try it. Do you like it?
Does
the company want you primarily to (1) sell products/services,
(2) recruit people, or (3) both?
Most companies want you to recruit people to distribute
who in turn will recruit people to distribute who in turn
will recruit people to distribute. But if the company is
only recruiting people and no one is selling the product/service,
you may want to look carefully at the company. Will the
distributors use enough product to keep the company afloat?
Further,
you may just want to market a product and not manage a whole
sales force of downline (the people you get to sign up under
you) distributors. If so, find a company that will let you
do that. Your commission should be enough to let you make
money retailing the product or service without having any
downline. This means that the commission paid on retailing
should be about the same as the commission paid on recruiting
new distributors. Nevertheless, it's useful to remember
that most of those who earn top money in network marketing
are the people who are able to get others to overcome the
stigma of network marketing - to recruit, train, and finally
support people (called their "downline") who are able to
get others to recruit, train & support people, etc.,
etc.
Will
the products sell?
Before you buy too much inventory - a good guideline is
don't buy more than you can sell or use in a month - do
some comparative shopping to find out answers to these questions:
•
Is the price of the products reasonable? Can customers
find just as good a product on the market for less? Usually
network marketing companies offer products which are only
available through them and which are claimed to be (and
may be) better than those offered elsewhere.
• If the products are not unique, are they priced competitively?
• Are the products so desirable that people will continue
using them and recommending them even if they stop being
distributors? This is an important question, since most
companies have a high attrition rate among distributors.
• Will the products sell even if not marketed through
network marketing.
Does
the company really have momentum?
Every company will claim that the time to join is now because
of the "S" curve, a curve that marks rapid growth times.
Momentum is important because growth magnifies efforts.
If you join during a growth period caused by either the
age of the company, or by introducing a new product, or
by getting a new patent, this growth can attract new distributors
and more sales. If the company or product is growing at
3% a year, your business growth will mirror the 3%; but
if the company or product is growing at 30% a year, then
your business growth should also mirror that percent.
What
kind of sponsor support is offered?
We can't overstate the importance of this answer. Not all
sponsors are created equal The person who takes you to the
meeting becomes your sponsor if you sign up under him or
her. You are locked into that person for a long time. To
avoid this, don't sign up immediately. You can wait, shop
around, and find a sponsor who is known to provide strong
support to his people. It is not polite for a sponsor to
accept you at a meeting if you have been brought there by
another sponsor. You will need to get the person's card
and call them after the meeting. Be careful even if you
are signing up only to buy the products at wholesale. You
may want to become an active distributor later, and you
will be locked into the person you are buying from. To find
the right sponsor:
•
Attend several meetings in your area.
• Introduce yourself to numerous successful sponsors.
• Evaluate their reputations. Ask them what they do for
their people and how long they have been doing it.
Some
sponsors are like robots, signing up everyone but supporting
none; others, more responsible, do mass advertising or marketing
and pass warm leads along to their downline. One of the
major benefits of a network marketing company is that you
are in business for yourself, not by yourself: to realize
this benefit, you must sign up under the right person.
What
kind of training and support do they offer?
The statement that "The product sells itself" is rarely
true. All companies promise training; few deliver the consistent
quality that makes training effective. Evaluate the training
and the support materials. Look for:
