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Solving the Problems of Network Marketing

Being Employed vs Self-Employed

Working to support myself rather than a boss and several layers of management has always been my aim – and for all but a few years of my life, that’s what I’ve been able to do.

Corporation.But as I get a little older and want more time away from the keyboard, I’m exploring my options to find the best way forward.

How to support yourself, not your boss! Click To Tweet

In my last post (click here if you missed it) I wrote about the challenges I have faced with blogging as a business that have resulted in my decision to go full circle and continue building my online business using a Network Marketing (MLM) model – a model that has made me a good income in the past.

My readers probably fall into one of four categories:

  1. No idea what Network Marketing Is
  2. Tried it once (or more) and will never try it again
  3. Tried it once (or more) and like the concept, but hit too many of the problems of network marketing, so “off” it right now  <<< ME, until a month ago!
  4. Love it – and open to looking at an MLM business to run full-time or alongside other commitments

Readers in category 2 will probably prefer to leave now….. unless…. they could be closet category 3s, like I was until about a month ago.

What Is Network Marketing?

Briefly, it’s a low cost way of running your own business as a “distributor” supplying products sourced by the parent company to a “network” of contacts that you build. Some of those contacts will be customers, and some will also be distributors with their own customers. Depending on the exact compensation plan, you will make a small profit on the sales of all products within your network.

Here’s a slightly longer definition of MLM.Finger-px

The structure is very much like the conventional business structure shown above – EXCEPT that network marketing is a “meritocracy”. If the people on the “lower” levels work hard enough (sell enough product) they can surpass the earnings of those “above” them.

Everyone has access to the same products and business plan, what determines your success or failure is YOU.

So Why Isn’t Everyone Doing It?

The theory is great, but it has to be admitted that in many companies there are some pretty damning problems with network marketing.

Hence the reason for me being “off” it until very recently, even though it was the online business model that, about six years ago, earned me more than anything I’ve tried since then. £2000+ per month part-time, at the height of my success. Unfortunately, instead of the income continuing to rise, it started to fall, because I fell foul of….

The Problems of Network Marketing

Having built a big team (2000+) – with the help of some very active distributors who joined me – the biggest problem of all was….

Losing the Team

One reason was that there are certain types of compensation plan where distributors in your network fall outside your earning capacity.

This happened to me in that previously successful business, and soon there was a huge part of the team I wasn’t earning on. This can also happen with Binary plans, where the “legs” have to stay balanced – which I have found very hard to do. People tend to love them or hate them – depending on whether they can perform that balancing trick! Many people can’t, so they don’t earn on the unbalanced leg. Sounds complicated? It is, and however much people dress it up, people can lose out with binaries, so be careful.

The other reason my income started falling was that my team (network) started to leave in droves, faster than I could replace them. Here’s why I had to spend my days scurrying to replace distributors who quit….

Don’t Want To Make A Monthly Purchase

The reason for most of them leaving was that they weren’t making enough profit to cover their monthly purchase.

Having started a business to MAKE money, they were pretty quick to leave when after a couple of months they weren’t in profit, yet were still having to shell out to buy a monthly product.

This is particularly galling if you are having to buy (and theoretically sell) a target volume of product to retain a promotion level earned in a previous period. There comes a point when even the most devoted distributor can no longer ignore (or use) that legendary pile of stock in the garage.

At this point some companies recommend you “give samples” to prospective customers – and I don’t mean a couple of 20gm taster pouches. I have been cold-called by hopeful distributors who then turned up on my doorstep with huge multi-packs of free products as samples that they left for a week for me to try. The intention was that at best I would be so delighted with the product that I would buy it, or at worst feel obligated to buy something out of pity.

Don’t get me wrong – these were great products, and some I bought and still use. I just question the fact that the only way some distributors could find to meet their monthly sales targets was by giving away boxes of products.

Giving out free samples at that rate is a serious cash outlay and not a great sales tactic in my opinion, but I guess it has the virtue of shifting product from the garage!

As a slight aside, if you were to pay several thousands for a conventional business, you wouldn’t expect to be in profit in a couple of months – but it’s a sad fact that people are talked into MLM with grandiose ideas that you can be rich in weeks. The average distributor won’t be. Fact. Most will quit, more broke than when they started.

Why?

Can’t Sell

Related to the above is the fact that most of us can’t sell, and don’t want to sell, or “Share” or whatever euphemism is used to dress it up. If we COULD sell, we’d probably be high-fliers in well-paid sales jobs instead of hassling friends and family to relieve us of pills and potions they could probably buy for less down the High Street – which leads us onto…

Over-priced Products

However the company dresses up the “quality” and special ingredients, the fact is that a large proportion of the sale price is distributed as profit to distributors. So when you or your customer see a similar looking product at half the price on the High Street, and with no P&P to pay, it’s easy to pop it into your shopping trolley and forget “buying as your own customer”.

High mark-ups aren’t just a feature of network marketing companies. I have done freelance work for two High Street chains of retailers where the selling price was SEVEN times the cost price. They had nothing to do with MLM, they were conventional retailers.

Don’t Want To Bother Family And Friends

The traditional (pre-Internet) model of network marketing was to approach your family and friends. This does not sit well with me.

Since the day that my poor sister bought an MLM burglar alarm (don’t ask!) from me, I have steered well clear of family and friends as customers. The wretched alarm packed up a month after she bought it, by which time the company had gone bust anyway. She kept it blinking at me balefully on the sideboard for many months to remind me “Never again”.

Of course with the advent of the Internet your network can stretch way beyond family and friends and so it should. Because you can easily ruin important relationships by continually badgering family and friends to support your ailing business.

If you had a conventional High Street shop you would tell you family what you’re doing and HOPE they might buy from you occasionally. You wouldn’t (I hope) keep badgering them to “Buy my products”.

Not Enough Time To Run Your Business

Although we blithely talk about a part-time business it’s completely unrealistic to expect that you can sign up for an MLM, do nothing, and money will flood in.

To make fast money you need to make fast sales and build a team to do the same. You may start off with the best of intentions, and plenty of time to build a customer base and team of distributors…. but unless you, AND your team, can sustain this, many compensation plans will penalize you by demoting you from the qualification so hard-won.

My offline business has peaks and troughs – sometimes it’s really quiet, and I have time for my online business, other times I’m so busy I’m working round the clock and can’t handle having to try and sell products or replace flagging distributors.

For me, part-time must really mean part-time… and occasional too!

Poor Support and Marketing Resources

Another problem you might have that drains your time is lack of support when you have questions. I joined one business, brought in several people and had a decent down-line but I couldn’t get my upline to answer my questions. Perhaps he didn’t know the answers either. It wasn’t obvious who HIS upline was, and it was only a very low cost business so I lost interest (blush).

Are there good marketing materials? One of my reasons for joining a network marketing business is to tap into professionally created marketing material ready done for you, such as videos and professionally hosted webinars. Maybe even local meetings. Otherwise you may as well follow a conventional wholesaler / retailer model and produce your own material.

There’s A High Failure Rate In MLM

All the above add up to the fact that there’s a high failure rate in network marketing. Maybe as high as 97%. Ouch!

Personally I think this is a bit of a non-problem for THIS article, because it’s not specific to MLM.

There’s a high failure rate in ANY business venture. Everyone is different and some people just aren’t cut out to be in business for themselves. They’d rather sit at home and watch TV. Nothing wrong with that – just as long as they don’t criticize any business model for their results. At least with an MLM business you shouldn’t have spent much money getting started, unlike franchising where you could have paid many thousands.

My Solution To The Problems Of Networking

I hit one or more of the above problems in every MLM business I tried, and had really dismissed it as a workable model for the future …. until I found a business that has an option to earn passively, until you have increased your confidence in the business model.

OR – because most people are poor at recruiting, you may decide to stay completely passive and buy the service that just lets the traders trade for you.

How To Find Out More

If you are at least open minded to learning more about this concept, there are several options:

  • Ask me for an invitation to a closed Facebook group where you can watch some videos and ask questions – Click here to message me on Facebook

Because most of this article has been about the problems of MLM, and because the concept is better presented by the professionals in the group, I haven’t attempted to explain the plan.

I hope that you will at least wish to dip your toe into the water opening a Free Account to learn more.

 

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Joy
 

I left it too late to plan for a financially secure retirement. Don't make my mistake. Start building an extra income with a part-time (or full-time) business online. Think you don't have time? Can't afford the start-up cost? Can't meet sales targets? Contact me for free advice (no obligation) on the best fit for your circumstances.

  • Rachit says:

    Another Interesting Update.

    I’d surely love to check out your plan and be at the places you mentioned in the bottom of the post.

    • Joy says:

      Hi Rachit,

      Glad you found it interesting. I will invite you to the Facebook group where you can watch some videos – hope you can catch the webinar too. It’s less than an hour away!

      Joy

  • Basharath says:

    Hello,
    Very descriptive article. Gave a clear method to solve all types of problems. This type of posts shows that there is answer for every problem.
    Thank you for sharing…

    • Joy says:

      Hi Basharath,

      I’m glad you think I addressed the problems of network marketing and provided answers.

      It’s a shame it has such a bad reputation, but some of the compensation plans are really punitive. With this one I really feel all problems have been solved.

      Have a good week, Joy

  • Mike Gardner says:

    Another insightful article Joy, I have always stayed away from network marketing as have never really understood the mechanics of it, based on your info will investigate a little.

    • Joy says:

      Hi Mike,

      I have looked at Network marketing so that I can have an extra part-time income to be less reliant on my offline business. It would be good to think of retiring one day, but my present pension provisions are completely inadequate for that.

      If you do decide to have a look at any network marketing plan I’d be more than happy to look it over for you and hopefully avoid any of the pitfalls above.

      Have a good week, Joy

  • Steffi Black says:

    Thank you for your authenticity in sharing your challenges – both good and bad – very helpful for those in the networking marketing industry and for small business owners in general.

    • Joy says:

      Hi Steffi,

      Thanks – I just hope that by sharing what went wrong for me I hope that I can help someone else avoid making the same mistakes.
      Often network marketing and general business are treated as if they are different, but in my opinion if MLMers treated their new business as a real business, they would stand a much better chance of success. Joy

  • Hello Joy! What a Great article my friend, you sure did solve a lot questions here and looks like you have found yourself a winner. do keep us posted on your results!
    Thanks for sharing..Chery :))

    • Joy says:

      Hi Chery,

      Glad you like it, thanks. This business solves all the problems I’ve had in the past – and I’m delighted to say that just today I got my first payment, which is designed to put your initial purchase price back into your pocket.

      I was particularly pleased with that as I’ve been very busy with my offline business so not had much time to spend on the shopping club.

      Have a good week, Joy

  • Mark says:

    What a refreshing article Joy!

    Somehow, even when you’re being brutally honest, it still comes off as very informative and so refreshing to hear!LOL!

    I really love your description of the MLM process.

    And you’re so right, a vast majority of people are too entrenched with the employee
    mindset, to ever be successful in trying to work for themselves.

    They expect to be paid top dollar,and receive consistent raises, on minimal effort!LOL!

    It’s a great gig when you can get it!LOL! thanks for shedding some light
    on some of the all too common challenges of trying to make a go of MLM!

    • Joy says:

      Hi Mark,

      Glad you like the article. I think it’s necessary to be brutally honest from the outset about how tough network marketing is. I’ve had several attempts at it, but learned from each one what did and didn’t work and I hope that by sharing the problems up front people will think very seriously about the commitment required.

      No use expecting an easy ride or we’d all be riding round in fancy cars and yachts!

      Enjoy the rest of your week, Joy

  • Mark says:

    That’s the truth Joy!

    But the other thing is, maybe by being so brutally honest up front, you can sort of pre qualify and dismiss those that are really looking for a “get rich quick” type of
    opportunity!

    If they know up front what it’s going t take and they stick around, they may be
    worth investing some time in!LOL!

    Take care and continued success!

    • Joy says:

      Yes – I guess that’s sort of what I had in mind, although until you specifically said it I hadn’t thought too much about it.

      If people can’t afford the time or money to start a home business I would never want to put pressure on them. That only ends in disappointment and wasted time for me and for them.

      You too, Joy

  • I would prefer those to be brutally honest than to sugar coat things. At least this way, I would save myself the trouble of getting myself involved in something that wouldnt have been right for me.. as well as saving your time and energy for someone else who would be a better fit.

    • Joy says:

      Hi Miriam, Exactly my reasoning! The truth will come out in time – so best for it to come out from the outset.

      Have a good weekend, Joy

  • rugby world cup 2015 says:

    nice post like it on network marketing

  • Sue Bride says:

    The internet is full of “information” on how easy it is to succeed in MLM no wonder people fail. Even those who are prepared to put in the time and effort need to develop various skills before they can start to do well.

    Many of the predominantly online based MLM’s are aimed at other marketers. It’s recruiting that matters, not the product, which often have a limited market.

    It sounds like your new venture will have a much broader market. I wish you much success.

    • Joy says:

      Thanks Sue,

      I hope to balance the mis-information out there in some small way, because |I don’t think I’m the only one who has found it’s NOT easy to succeed at network marketing.

      Thanks for your good wishes. Certainly going well so far.

      Enjoy the rest of your weekend, Joy

  • Hi Joy,

    Damn good post about the much maligned business of mlm.

    Back in the 90’s I made some excellent money with a pre-paid phone card mlm biz. Course I had to advertise daily in the local paper, hold weekly hotel meetings & sell the cards harder than the opp.

    Yet, because the service was competitively priced and the company was quick to pay, the whole deal made good business sense.

    Alas, the market finally caught up with us & the company owners took their profits (and some of my commissions 😉 & moved down to the Cayman’s, if memory serves.

    Point being, long-term business success demands steady movement of competitively priced goods & services, sold at a profit…even with mlm structured businesses.

    Uh, my experience, anyway…

    Sooo, is the biz you referred to so candidly in this post, limited to the UK, or are we greedy Yanks invited?
    Edward

    • Joy says:

      Hi Edward

      How lovely to see you back on my blog – missed you!

      Thanks for sharing your experience with the pre-paid phone card mlm biz. You obviously worked hard at it, and made a success of it, which I can imagine from knowing your work ethic.

      The business I am talking about is world-wide, so you’d be most welcome to take a look. The health product that is launching in August would sit very nicely on your blog because there are no monthly commitments. People buy it as and when they need the next pack.

      The compensation plan is best explained by the company videos that you can see within our Facebook group. There is also a regular Sunday evening webinar so hope I can interest you in taking a look at that?

      Hope your move went well and that you’re now settled in.

      Joy

  • Mary Sloane says:

    Congratulations Joy

    Great to see open minded people talking realistically about network marketing.

    I love network marketing even though it can be slow to build but that is like any REAL business. Ask anyone who has built a real business from scratch or even a franchise business. It takes years and years to see a real profit.

    While a shopping club has some appeal I always found it easier if I was passionate about the product.

    I’m excited by what I do now as I can help people to support their lifestyle with a variety of income streams while they build their long term network marketing business, and it protects them in case the network marketing business doesn’t work out. It is unfortunately never actually our business and the company principals have a lot to do with its success or failure.

    All the best in this big adventure!

    • Joy says:

      Hi Mary,

      I agree it’s important to be passionate about the product, so the attraction of the shopping club concept is that there are different products that will appeal to different people, yet all purchases contribute to the overall success of the company.

      What you say about the business principals is very true, and I have been “caught” that way before. I am very wary of start-up companies now and prefer older-established businesses like this one. I agree the current longevity still doesn’t mean it’s 100% guaranteed, but the lesson I learned from my earlier mistake was that the company took my email list with it. I now maintain my own “list” with a reliable auto-responder (which is another income stream). Always something new to learn 🙂

      Thanks for your kind words and good wishes. The more people realize that network marketing is a real business and NOT a get rich quick scheme the better for everyone.

      Have a great weekend. Joy

  • BG Jenkins says:

    Hi Joy, Well, I’ve certainly been through the MLM ups and downs, as you’ve explained so well. Buying products to keep myself active and hoping that folks would see the value in them. Great explanation of all areas of MLM. I’m glad you’ve found a company that works well for you.

    • Joy says:

      Hi BG,

      Yes, I think we’re not the only ones who have been this route LOL.

      Glad you think I covered the main challenges that this company has overcome, and watch this space for more news as the Salustra nutrition products launch in August. (Some of us have already had samples and they’ve met with a great response.)

      Have a great weekend. Joy

  • This is an excellent overview of network marketing, Joy.

    You’ve really outlined the main issues and challenges, and I think most network marketers can understand them all from first hand experience.

    Glad to see you’ve found a company that you like and that seems to overcome the typical pitfalls that you’ve mentioned.

    Good luck with it. Sounds like an exciting path to be on.

    • Joy says:

      Hi David

      Thanks for your kind words. Yes, I’m afraid I’ve been through the mill with some past network marketing businesses and identified many reasons why they didn’t work for my personality and life style. Although it has to be said that the same plan I failed with has made some distributors very successful.

      This company ticks all the boxes for me, getting round previous problems, and if other people have had the same difficulties I had it might be right for them – while still offering the same opportunity for the people who have the more traditional MLM personality and drive.

      It’s no get-rich-quick plan, so I’ll be posting my usual type of topics in the future, but I’ll certainly be providing updates on my progress here as I’m more excited about this than I have been for a long time.

      Enjoy the rest of your weekend, Joy

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