While sometimes the first thought that comes to mind when you hear multi-level marketing (MLM) is scam, the good news is, there are marketing opportunities that are designed with good intentions. Even with good intentions, many MLM's have a poor track record for various reasons. So how do you detect a good opportunity in such a massive market? Here are things to look for when considering multi-level marketing.
Research The MLM Company
Use the internet to research MLM companies. There are two key things you want to find out before making moving forward with a company.
- Longevity: How long has the company been around? – Most established companies have already proven themselves and are stable. When you choose a company that has been around for a long time, chances are they have already worked out their kinks and more importantly, have worked through their financially problems and/or leadership challenges. When considering longevity, you also want to make sure the company is still growing and will continue to grow in the foreseeable future.
- Reputation: What are people saying about the company? – Find out if the company has any lawsuits against them. Find out who is running the company and research them. Do your due diligence and go with your gut instinct.
These are simply things to get you started in the right direction as you go about choosing a company. There’s no right or wrong answer to the two questions above, it is just smart to have background information on MLM companies your are considering.
Find Out The Compensation Plan
The best compensation plan, is the one that pays! According to Ronald Kimmons, Business Writer for the Chron, companies typically use one of four business models. Before choosing what company to invest in, it's beneficial to understand the compensation models.
- Binary: This compensation plan enables you to sponsor two people, and two people only on your front line. This means that anyone else you enroll/recruit must go under one of the two individuals you are sponsoring. This comp plan has repopulated in the industry over the past 10 years after many years of not working. Companies have figured out how to operate and function long-term with this kind of pay structure.
- Unilevel: These compensation plans are also known as breakaway plans and are probably one of the more widely used comp plans today. A unilevel compensation plan allows you to front line sponsor as many people as you want. You are typically paid a fixed percentage rate down through several levels of people in the organization you built.
- Matrix: A matrix compensation plan puts limits on your sponsoring width and depth table. For example: a 2-by-7 matrix enables you to put two people on your front line and pays you 7 levels deep. This compensation plan is not used by many companies. This is not to say that MLM companies that use it, are good or bad.
- Australian 2-Up: This comp plan is also referred to as 2-ups and is primarily used by top tier direct sales companies. These compensation plans usually require you to give up the commissions on your first two sales to the person who enrolled you.
Most companies end up paying out about the same amount money regardless of the comp plan in place. You can use online tools to calculate your commission based on different compensation plans. Deciding on what comp plan to go with is simply a personal choice.
Product selection is one of the first steps in choosing your desired MLM company. To be successful, you should be passionate about the product or service you are providing. If you are not, find a different product. Even if you like the products and you are motivated in the field, you should consider several factors before you decide to invest and sell the product.
- Quality: This is probably the most important factor. The quality of the product or service will determine the retention of your customers. Before you decide to sell a product, try it out for yourself and read online reviews from customers who are not MLM distributors.
- Price: If your product or service is expensive, the quality must match. Expensive products will also narrow your interested parties to those who are wealthier. To reach a wide range of customers, products should be in the medium range price.
- Uniqueness: Try to find a product that will be hard to substitute or imitate. Finding a MLM company that owns patents on their products or services is a guarantee that the same type of product will not be sold elsewhere in the near future or sold in stores for a much cheaper price.
It's important to understand that you will need to go with a product that has a considerable demand and that people will use more than once. Harvard Business Review Online states that going with a tangible consumable product preferably one that is ordered every month, is always a safe option mainly because you will get repeat orders if the customer is satisfied.
Support and Training
To achieve success in this field, you need to be well trained on the products and services you sell. You will also need to be trained in successful methods of recruiting and retention. A good MLM company will provide its distributors with training specific to their products and methods. They will also offer a free distributor website, no cost training calls along with webinars, and low cost business cards.
It is a good idea to research what type of training and resources the company offers. Tools are very important in this line of business. You will not be able to build a solid foundation for your marketing company without proper business tools.
There are a plethora of other things to consider when deciding on a marketing company. Some things are more important than others, and some things are just simply personal preference. The best thing to do is to always evaluate your business moves just as you would in a traditional business setting.