Succeeding At Network Marketing

Don’t Trash Network Marketing

Alan — Mon, 30 Aug 2010 07:53:30 +0000

I Seldom Get Upset…

But, one of those rare occasions when I do happened the other day. I was reading some blogs and commenting on them like I try to do once in awhile. I started reading a blog post titled “Residual Income,” always a favorite of mine given that that is one of my primary attractions to network marketing. Think of it like real estate. Once your network reaches a certain size, that network becomes an asset that continues to generate income whether you work or not. (For my take on residual income, see here.)

So I start reading this blog post called “Residual Income” and this individual starts trashing network marketing in order to build up his solution to residual income, which, by the way, was and is a valid solution, but did not require bashing network marketing to make his solution look good. It would be kind of like Ford trashing GM to sell more cars rather than pointing out the features and benefits of owning a Ford.

Anyway, it annoyed me enough that I decided to write about it.

What Do Others Say?

“While seeking rewarding methods for my Network Marketing career, I will employ techniques and strategies that reflect positively on the MLM industry, my company and me.” – from the Code of Ethics of the Multi-Level Marketing International Association (MLMIA)

When considering purchases, I will attempt to purchase at retail from another MLM/Network Marketing company. – from the same source

Member companies shall not make misleading comparisons of another company’s direct selling opportunity, products or services. Any comparison must be based on facts that can be objectively substantiated. Member companies shall not denigrate any other member company, business, product or service – directly or by implication – in a false or misleading manner and shall not take unfair advantage of the goodwill attached to the trade name and symbol of any company, business, product or service. – from the Code of Ethics of the Direct Selling Association (DSA)

In his book “Big League Sales Closing Techniques,” ©1971 (out of print, unfortunately) Les Dane says of the technique of running down the competition to promote your own company or product, “The second salesman got the sale for two reasons: he didn’t try to convince the prospect the competition was junk; didn’t spend his time knocking the other dealer.

“And, he did spend the time selling his product, with facts, and with sensible arguments. … The salesman selling tractors did the same thing. Rather than concentrate on pulling his competitor down, he sold his product and his dealership, being fair to the competition in the process.”

A Bad Taste In My Mouth

Even though he had a valid idea, finding or creating a product to market and sell on one’s own website using all the available channels to attract people to one’s website, after he belittled the entire network marketing industry, I had no further interest in what he said. I did read it, to ensure I didn’t incorrectly duplicate his intention, but, alas, he was just bashing network marketing to build up what he was selling. So, I left a comment, in civil terms, explaining that he should not do that, and that he would get better results if he pushed the features and benefits of his system.

Examples

Remember the old Avis car rental commercials back in the 70s? They used their number 2 position in car rental to position themselves as “we try harder.” They didn’t belittle Hertz (# 1) or say their cars sucked or that Hertz has crappy service, just that one memorable little line, “we try harder.”

Miller Lite, “less filling, tastes great.” No mention or knocking of Bud or Coors or any other beer.

Have you seen any Coke or Pepsi commercials lately? Do you ever see them mention the other one in their commercials? Don’t think so. They sell you on why you should drink their beverage.

So What Am I Saying?

If you work with Mellaleuca, don’t knock Shaklee products, don’t knock Shaklee’s compensation plan, don’t call Shaklee distributors ethically shaky.

If you work with HerbaLife, don’t denigrate Amway.

If you work with NuSkin, don’t put down ReLiv.

If you are selling your company, your products, your compensation plan; sell them. Don’t try to make them look better by making someone else look bad, you only end up making yourself look bad.

We’re all in this together, so let’s act like we are and be supportive of each other.

And if you need something that is sold by another MLM, please do so.

More Data

If you’re considering joining the network marketing industry and haven’t made up your mind yet, check out the video by Tim Sales called Brilliant Compensation.

If you don’t have a company yet, or you’re looking for a better one, check out www.AlansMLMTips.com and sign up for the (free) “7 Days, 7 Insider Secrets” email newsletter.

If you already have a company, and need tips and how to’s on marketing, check out John Eberhard’s RealWebMarketing Blog

Here’s a couple blogs that I like that are specifically on network marketing:

http://www.marcus-baker.com

http://karyrogney.com

Till next time, make it a great week!

The Key Challenge

Alan — Mon, 23 Aug 2010 10:32:35 +0000

When We First Met

When you sign up to start your new business, you are probably very excited. You’ve got this jazzy new product with which you’re going to take the world by storm. You’re going to make a ton of money, because everyone is going to want this. You start making your list of who you want to show your new business to, you can’t wait to go out and show somebody what you’re all excited about.

The Morning After

So now you’ve made a few presentations and you feel comfortable with giving it and things are really cooking for you and everyone is signing up. Well, okay, some people are signing up. Or maybe… my friend took pity on me and signed up with me after I told him I’d done sixteen presentations and no one had signed up yet. Or worse yet, sixteen presentations and nobody signed up. Could you keep going at that point?

Thomas Edison, according to legend, figured out hundreds of ways to make a light bulb that didn’t work. Ever the optimist, he said he hadn’t failed, he had just eliminated 899 wrong ways of building a light bulb. He carried on and eventually found a way that worked, providing a good source of light and a decent lifespan for the bulb. Where would you have said enough is enough?

Another is an individual who went to work as a salesman for a company, he made presentations every day, but no sales. After a month of no sales, the owner wanted to fire him so he could find a line of work he was more suited to, but he begged the owner to let him continue. To make a long story short, on his 106^th presentation, he made a sale. After that he started making occasional sales, then more sales; after two years he was the best salesman for the company. How long would you have kept going with no sales?

The Key Challenge

The key challenge is remaining consistent in the face of failures, disappointments, and let-downs. Do you want it bad enough to follow through and continue doing the promotional and lead-generating activities that will eventually create the income you dream about.

If you believe in the product and the company, have a big why for doing the business, focus on the main thing and can be consistent about it, you will be a winner.

To find a company and a product you can believe in, go to AlansMLMTips.com.

If you already found a company to work with, find a mentor or an upline who can train you, get trained and be consistent in applying what they teach you.

If you’re already trained, be consistent in applying what you learned. Be consistent in learning more: about the industry, about leadership, about training others, about every facet of this wonderful industry.

Quotes

We are what we repeatedly do. Excellence, therefore, is not an act but a habit. — Aristotle

Success is all about consistency around the fundamentals. – Robin Sharma

The secret of success is consistency of purpose. – Benjamin Disraeli

Network Marketing And A Mystery

Alan — Mon, 16 Aug 2010 07:53:36 +0000

Business Briefing

I listened to a very interesting business briefing over the weekend. Now, before you roll your eyes and go, oh no, not another business briefing, let me explain what I found so interesting about it.

This briefing had all the usual components, what the product is, what the company is and when they started. You can see the five things that every business briefing or opportunity meeting covers on an earlier blog post of mine called Five Things To Evaluate. This briefing had them all.

What was different about it was the fact that this briefing started with the statement that the upline giving the presentation had done some research into why so many people fail at home businesses. This stuck out like a sore thumb for me, this was something I had never heard in a business briefing. In an industry where statistics say that anywhere from 85% on up of all new recruits quit or fail, if someone said they had found a reason for all that quitting or failure, I wanted to know what it was.

I’ve Seen This Before

Now the funny thing about this was it’s something we’ve probably all heard of, participated in and done with our recruits. What was different was the position it was given and the exact wording of it.

I just went to my bookshelf and of the first eight books I picked up, seven of them mentioned it. (The eighth one was more of a motivational book than a book on network marketing.)

What Some Of My Other Mentors Say

A book that I just finished reading put me in the prospect’s shoes and he put this at number three. Most of the seven books I mentioned above put it near the end of the book.

Most of the companies that I’ve observed or participated in personally at least give lip service to it.

So What Is It Already?

After all that buildup, after I tell you you’re probably going to think “that’s it?”

The top reason found for all that failure was training; effective training. Training that gets you the basics of what you need to do quickly and efficiently and gives you a step by step plan of how to do the business with no wasted effort and makes sure that you understand exactly why you’re doing each step.

With new recruits, it’s essential that you help them get some initial success quickly or they’re going to be gone just as quickly.

Why do you think that almost every book on or about network marketing mentions training and encourages you or even implores you to read books, listen to training videos, listen to training audios? Could it be that no one has come up with a simple, workable system that anyone can use and get started with? Remember that 85% or higher failure or attrition rate?

There are a remarkably few skills that you need to learn to succeed at network marketing, but very few people come into network marketing already knowing them.

What To Do?

You could go hide in a cave or bury your head in the sand, but that won’t bring you the success you want, desire and long for. If you’re here, you’re either already involved with network marketing, are considering getting involved in network marketing or are looking for a better company to work with. (Or maybe you’re a personal friend who likes my writing, that might be possible too…)

If you’re new to the industry and are considering becoming a network marketer, I highly recommend that you go watch the video Brilliant Compensation. This video gives you a fascinating look at why network marketing is such a brilliant home business.

If you’ve decided to become a network marketer and aren’t sure what company to work with, or are overwhelmed with the choices, or don’t know how to evaluate the differences between different business opportunities, go to www.AlansMLMTips.com and sign up for the “7 Days, 7 Insider Secrets” email newsletter. This will give you some great free tips on how to choose a company to work with.

If you’re already with a company and looking for training, there are so many sources of training that it becomes tedious to sort out the good from the bad. In a future post, I’m going to cover some of what I think are the best.

For now, I’m going to sign off. Till next time, make it a great week!

Humor

Sometimes I notice funny email subject lines, I thought this one was great! I received it from Toshiba yesterday.

“Weekend Special: Free Memory and Hard Drive Upgrades – Starting at $399”

How much would it be if they weren’t free?

If It’s Network Marketing,

Alan — Mon, 09 Aug 2010 08:17:12 +0000

Why Aren’t We Taught How To Market?

If you’ve read some books on network marketing, you will probably have noticed that very few, if any, of the books out there mention what marketing is. Does anyone else find this strange?

We work in an industry called network marketing, or multi-level marketing and nowhere within the industry does anyone explain what marketing really is. I have read a couple blogs where other people have noticed this lack, but it’s actually pretty humorous that this seems to have gone undetected for so long.

Kind of like a dog groomer not knowing what grooming is (caring for an animal’s cleanliness and appearance). Or an airplane pilot not knowing what pilot means.

Seems sort of silly when you apply it to other industries, doesn’t it?

What Is Marketing

Let’s start with the easy, my Encarta Dictionary says marketing is “the business activity of presenting products or services in such a way as to make them desirable.”

The Oxford Dictionary says “the action or business of promoting and selling products or services , including market research and advertising.”

From BusinessDictionary.com we get “As a practice, it consists in coordination of four elements called 4P’s: (1) identification, selection, and development of a product, (2) determination of its price, (3) selection of a distribution channel to reach the customer’s place, and (4) development and implementation of a promotional strategy.”

Now, if you look over those four elements, in network marketing we are left with number four as the only area we normally have any control over.

The purpose of marketing is to create a want or a desire and to sell something to the people in whom you’ve created that want or desire.

So What Is Sales

This is another oddity that I’ve noticed in network marketing, we’re selling a product or service, but we’re not supposed to say that’s what we’re doing, we call it sharing or telling a story.

So let’s define sales and selling. Sales is the exchange of goods or services for an agreed-upon amount of money. That seems safe enough, I have a car, you want the car, offer me $2000 for it and I agree. You get the car, I get the $2000.

Okay, selling; the process where the salesperson ascertains, activates, and satisfies the needs or wants of the buyer to the mutual, continuous benefit of both buyer and seller.

Or, as I like to put it, selling is a conversation designed to help the buyer acquire what he needs or wants.

I think the problem arises, and where most people’s dislike of sales as an occupation comes from, is most of us have experienced the salesperson who did not have the intention to help, but only wanted your money, and would do pretty much anything to get it.

I used to hate sales, with a passion, but since I found and understood these definitions, I actually like selling. It’s enjoyable helping people acquire what they need.

What Does This Mean?

Once you’ve joined your company, what do you do? You have to market yourself and your company/product/service/opportunity.

The almost universal method that we are all taught in network marketing is to make a list of friends, family and acquaintances, the longer the better. Then learn how to approach these people and present your company/product/service/ opportunity. I don’t know that this is the best method of marketing, it certainly is easy enough to learn and practice will improve your skill at it.

You can apply the three-foot rule and talk to anyone within three feet of you. This requires developing a speedy method of communicating what you’re all about to a stranger or good skills at developing conversations with strangers.

You can hand out business cards or flyers to people in shopping malls or grocery stores. You can post flyers, you can put ads on Craig’s List, start a blog, there are probably hundreds of methods of getting your name in front of other people.

A whole new world has opened up in the form of social media, Facebook, Twitter, Linked.com, MySpace, etc. These are valuable ways to market yourself and your company very cheaply.

The whole point is to get your information in front of someone who’s interested so that they can act on it.

The best way, in my humble opinion, is to find or pick a certain type of people, or a certain occupation, or people in a certain location, find out by asking people what they think is good, bad or indifferent about green apples (or whatever product/service/opportunity you’re asking about). Ask enough people and a pattern will emerge. Use that pattern to your benefit and grow your business.

Marketing Is Valuable

People spend years learning marketing and business colleges teach it for one reason, it’s good business. Network marketing companies depend on you for the majority of their marketing and they pay very nicely if you figure it out. Are you interested enough to figure it out?

One of my favorite blogs for marketing is the RealWebMarketing Blog, written by John Eberhard. He writes about once a week on topics of great relevance to what we are doing as network marketers. I urge you to check it out and add more knowledge about marketing to your arsenal along with the motivational and inspirational to keep you going and growing.

Quote

If you’re attacking your market from multiple positions and your competition isn’t, you have all the advantage and it will show up in your increased success and income. – Jay Abraham

Focus On This

Alan — Mon, 02 Aug 2010 08:30:43 +0000

What Is Focus?

According to the American Heritage Dictionary, focus means “to direct toward a particular point or purpose.”

Now, in order to direct something, in this case, your network marketing business, toward a particular point or purpose, do you think it might be a good idea to know what that point or purpose is?

I thought you might. So, what is the point or purpose you’re shooting for?

What’s The Point?

The point, or purpose, in the beginning is to achieve some initial success, if you don’t have that, you probably won’t stick around long enough for anything else to matter.

After that, your purpose becomes learning the business of network marketing so that you can build towards your goals and help others build towards their goals.

In their book, Your First Year In Network Marketing, Mark Yarnell & Rene Reid Yarnell say “The key to building a successful business is to stick with one system long enough to allow it to work.”

So Why Is Focus So Important?

Without focus, anything can knock you off the path. Another company, another recruiting system, another leader that you think has a better idea, or even the latest email you got saying that with the XYZ method, John Q. Public made $42,000 in the last 15 minutes. The possibilities are so huge in network marketing you might be tempted to swallow this and go off on a tangent only to discover a month later that you’ve wasted the last month.

You want to stay on a consistent path, otherwise those people you sponsor to work with you get confused and lose their focus (why, because you’re their leader and you lost your focus). Stick with one plan, follow it religiously and others will follow it too.

Put Your Blinders On

Mark & Rene call all the possible distractions and divergences that you might possibly encounter in your first year “the scatter bomb.” They warn you to put your blinders on so that you can stay focused and not get distracted. When you’re working in a traditional business, your boss ensures that you don’t get distracted or he fires you.

In a network marketing business, you are your own boss, so learn a system, put your blinders on and do that system consistently.

Otherwise, you’re going to get distracted, lose your focus and give up on your dreams; and I want you to have your dreams come true.

Consistency

Once you’ve got a system that is working for you, you have to follow that system. Whether you have 3 hours per week to devote to your new business, or 30 hours per week, when that time slot that you’ve allotted for working your business arrives, you had better be out there doing whatever your system requires.

Busy-work

Network marketing requires a flow of people to talk to or promote to in order to find people who want your product or your business opportunity. That means that when your “business” time arrives, you should be doing what you do that gets you that flow of people.

Reorganizing your email address book doesn’t do that. Reading a book on leadership skills doesn’t do that. Putting together and printing a full color one page flyer to hand out doesn’t do that. (Handing that flyer out to 40 or 50 or 100 people does.)

In other words, whatever time you have allotted for your business, make sure to keep the main thing the main thing, whatever you’re doing to attract people to your business or your product; that’s what you should be doing. Whether it’s handing out flyers, or handing out business cards, talking to people one on one, blogging, doing surveys, whatever you do to approach people, make sure you actually do that and not the easier to confront things that don’t put you in front of people.

Fit the other things in wherever you can.

The Slight Edge

I would be remiss not to mention at this point one of the key success strategies. Jeff Olson devoted a whole book to this called “The Slight Edge – Secret to a Successful Life.”

In his book, he outlines his philosophy as the difference between simple disciplines done every day vs. simple errors in judgment. The simple disciplines are easy to do and easy not to do. But done consistently over time, the simple disciplines add up exponentially just like compound interest.

A couple of examples, let’s say you decide to go on a diet, you’re going to cut out snacks and junk food and eat only three nutritious meals per day. Are you going to notice any difference the first week? Not likely, but I promise you if you do that every day for a year you will notice a difference. If you get inconsistent on doing this, will you notice that you’re getting worse right away? No, but keep it up for a year and see where you’re at.

Let’s say you decide to talk to one person every day about your business. Are you going to sponsor anyone the first week? Probably not. But I guarantee you if you keep doing that every day without fail, you will start succeeding. What’s going to happen if you skip a few days or a week, are you going to notice any huge change in your sponsoring? No, but over time are you going to have less happening in your group? Absolutely.

I encourage you to read this book to understand the importance of simple disciplines done consistently.

How Do I Find A Company To Work With?

One of my purposes in starting this blog was to give my readers information on what to look for and why.

For more information, go to www.AlansMLMTips.com and sign up for the “7 Days, 7 Insider Secrets” email newsletter. It’s a free newsletter that will give you more ideas on what to look for in a network marketing company.

Quote

Every day do something that will inch you closer to a better tomorrow. – Doug Firebaugh

Everything You Always Wanted To Know About Network Marketing, But Were Afraid To Ask

Alan — Mon, 26 Jul 2010 08:20:30 +0000

Why I’m Writing This Blog

I’ve had a some people ask me what books I recommend . I thought this would be a good opportunity to let you know what my favorites are, and why. And then open up the discussion and have you comment back and tell me which books, videos, etc. are your favorites and why.

My First Choice

My first choice is Inside Network Marketing by Leonard W. Clements, not because this is a how-to book that tells you how to do network marketing and achieve your dreams, but more because it’s an eyes-open insider’s look at network marketing. As Mr. Clements says in the introduction, which he calls Read This Before You Proceed, ”… this book isn’t about getting rich. It’s about getting rich with knowledge. If anything, it’s more about how not to lose money in MLM.”

Mr. Clements sub-titled the book “An Expert’s View into the Hidden Truths and Exploited Myths of America’s Most Misunderstood Industry,” so if you haven’t read this one, you’re in for a treat of little known facts about the industry, and it includes a list of resources for further study.

Second Choice

My next choice is a book called Your First Year In Network Marketing by Mark Yarnell & Rene Reid Yarnell. This is one of the best that I’ve read on off-line network marketing. It goes into all the ins and outs, what to expect, what it takes, where to start, how to get trained, how to train, staying focused, maintaining enthusiasm, and many others.

In the foreword, written by Richard Poe, also an author of books on network marketing, Mr. Poe says, “This is a book that every first-time networker needs to read. It shows you exactly where the pitfalls lie and how to avoid them. And it does so in language that anyone can understand, reinforcing each point with inspiring, real-life anecdotes. For those networkers who take their business seriously, Your First Year In Network Marketing is, quite simply, indispensable.”

A Video

My next pick is a video called Brilliant Compensation. This presentation was put together and narrated by Tim Sales, a network marketer who put together this video to handle the “is this network marketing/mlm” objection. He does it brilliantly, using an analogy to a type of business that most people are at least somewhat familiar with. It also includes Dr. Charles King, a college professor who offered the first college course in network marketing.

Final Pick

My last recommendation of this blog is The Slight Edge by Jeff Olson. Although Mr. Olson made his fortune from network marketing, this is not a network marketing book per se. It is a book that teaches you why some people succeed where others don’t, the slight edge that makes the winners who they are. And how you can become a winner by using the slight edge.

So, What Are Your Favorites?

I want to know what your favorites are. What book taught you the most? What book inspired you the most? What speaker or video turned things around for you and put you squarely on the road to success? What book have you read more than once?

I want to hear from you, write me back in the comments and let me know what your picks are. I look forward to hearing from you.

Network Marketing – The Chicken or the Egg?

Alan — Mon, 19 Jul 2010 09:14:03 +0000

The Books Say The Egg

It seems like every book I’ve read says you should begin your network marketing career in this fashion:

1) Find a great company with a wonderful product

2) Find an awesome sponsor within that company who can mentor you to success

3) Go to work with your sponsor

4) Learn the ropes

5) Make money while you learn

6) Find others to duplicate these steps

That would be the egg.

But The Chicken

Might look like this:

1) A friend or relative tells you about the company he’s working with

2) You sign up because you like the product or the company or your friend

3) You don’t know what to do and neither does the person who signed you up

4) You tell a few people about it and nobody else is interested

5) You quit

Or maybe like this, which it did for me:

1) My brother tells me about the company he’s working with

2) I sign up

3) With the help of my brother’s sponsor, I sign up someone

4) That person makes several sales

5) I get excited and try to repeat steps 3 & 4

6) Number 3 runs out of warm market to talk to and loses interest

7) I move on to another job and while not losing interest, don’t network market for several years

8) I read books, I start and run my own traditional business

9) I sign up for another network marketing company and fail

10) I keep running my business

11) I read more books

12) Etc.

The Reality

I’m guessing that most people reading blogs about network marketing or home businesses or work from home jobs have experienced some version of the chicken scenario; jumping in and trying to figure it out.

The ones who persist through the failures and keep learning eventually discover that there is a reason most books give you the first version, i.e. the egg: you increase your chances of success by doing things in that sequence.

It doesn’t mean the chicken is wrong, or the pig or the cow or the bull moose; if you keep your eye on the goal, you’re going to get there. (For more on the goal, see my earlier post “Why, Oh Why.”)

I want to help you speed up the process.

What Do I Do If I’m already A Chicken?

Keep going! The only thing that can stop you is if you quit. If you know where you want to go, you can get there. As Jim Rohn once said, “working hard on your job makes you a living, working hard on yourself makes you a fortune.”

The difference between the first chicken who gave up and the second chicken (me) is that I didn’t give up. I kept working on myself, reading books, finding mentors, etc.

If you’re already in a company and you’re happy with the products but not so much with your sponsor, find a mentor, read a book, learn how to talk to people. Develop the skills and attitudes you need to attract people into your life, whether mentors, teachers, or business partners.

What If My Company or Product Isn’t So Great?

Hey, it happens. The initial hype can generate enthusiasm for a company or a product that isn’t that good. Don’t throw out the baby with the bath water! Find a better company/product and go to work.

Not only will your attitude be better, your honesty with yourself and your prospects will improve and so will your results.

For more info on how to pick a company or a product, see my post called Five Things To Evaluate, or go to www.AlansMLMTips.com for free emails on how to pick them like a pro.

Another Quote

“Would you like me to give you a formula for… success? It’s quite simple, really. Double your rate of failure. You’re thinking of failure as the enemy of success. But it isn’t at all… you can be discouraged by failure / or you can learn from it. So go ahead and make mistakes. Make all you can. Because, remember that’s where you’ll find success. On the far side.” – Thomas J. Watson, founder of IBM

Network Marketing and Product Sales

Alan — Mon, 12 Jul 2010 08:18:17 +0000

Where Does The Money Come From?

I really didn’t think I was going to spend any more time on the basics of picking a network marketing business to work from home with, but an email I received this week changed my mind.

It was an email asking me to check out a company that this individual thought was a “winner” and wanting to know what I thought about it. Since one of the things I do to continue my own education is check out other companies, I did go to the website and look around a bit.

Doing so got me to wondering if people have any clue where the money comes from in a business – traditional or network marketing – either one.

What does a company get paid for? Anyone want to take a guess? Yes, you there in the pink blouse? Sales, you say. Well, close, anyone else? Okay, you there in the cowboy boots. A product or service. That’s right!

The only thing a company gets paid for is delivery; delivery of service (think electrical company providing electricity, lawyer providing legal service, phone company providing phone service) or delivery of product (anyone not know what Wal-Mart, Target or 1-800-FLOWERS sells). Every company is in the business of delivering something, whether it is a service, a product, advice or access to information.

Some people think it is sales because that is where the money usually changes hands, but what is that money paying for? It’s paying for the past, present or future delivery of the service or product.

You may be asking by now, what the heck does this have to do with network marketing? (Or, maybe not, you might be brighter than I was when I first started in business for myself.) But bear with me, I’ll get to the point shortly.

What Does The FTC Say?

In a 2004 United States Federal Trade Commission (FTC) Staff Advisory letter to the Direct Selling Association states: “… The critical question for the FTC is whether the revenues that primarily support the commissions paid to all participants are generated from purchases of goods and services that are not simply incidental to the purchase of the right to participate in a money-making venture.” – Kohm, James A. (January 14, 2004) (reprint). RE: Staff Advisory Opinion – Pyramid Scheme Analysis. Federal Trade Commission.

In plain English, that means that if you make money from recruiting other people into the program without any product or service changing hands, you might be in a pyramid. On the other hand, if nobody makes any money from recruiting, it’s probably not a pyramid.

If the product or service sale is obviously separate from signing up for the business, it’s probably not a pyramid.

This gets tricky to evaluate sometimes because less ethical companies try to obscure it.

Where Does The Money Go?

In a traditional business, money gets allocated to various parts of the business; so much for basic overhead (rent, lease or mortgage; lights; phones; water; trash service; etc.). Then so much for marketing and advertising, so much for salaries, so much for the sales force, accounting department, the actual production of the product or service, and so on, to cover all the various functions that make a business go.

In a network marketing business, money gets allocated the same way. But it gets divided up differently. In a network marketing company, you still have the basics of putting the company there, just like with a traditional company. There has to a headquarters, production facilities, lights, phones, etc. But all the money that a traditional business puts into marketing, advertising and sales gets put into the compensation structure to reward the independent sales force for their work promoting the company and the product and making sales.

Traditional Business (Brick & Mortar)

Now, I’m probably belaboring the obvious, but here are a couple examples of traditional businesses.

TV Repair Shop – rent, test equipment, advertising, employees’ salaries, electricity, phone service, internet service, heating/air conditioning, water, trash disposal, shelving, computers, TV parts, etc. plus profit. Product = repaired TVs. People pay for repaired TVs which pays for all the foregoing.

Flower shop – rent, advertising, employees’ salaries, electricity, phone service, internet service, heating/air conditioning, water, trash disposal, shelving, computers, flowers, vases, baskets, balloons, greeting cards, ribbons, stuffed animals, etc. plus profit. Product = beautiful ways of saying thank you or congratulations, Happy Birthday or “I love you.” People pay for those, which pays for all the foregoing.

Network Marketing

The network marketing company itself has to pay for the home office, the home office employees, rent, electricity, phone service, internet service, heating/air conditioning, water, trash disposal, product development, product delivery, etc., but theoretically no marketing or advertising. (Most companies do some marketing and advertising to their sales force, that’s you and me, to keep them motivated, interested and in the know about company plans.)

Then there’s the independent sales force. You/me/they sell the product or service the company provides which brings in revenue for the network marketing company, which in turn pays you for those sales.

Examples:

Mona Vie – sell a bottle of their nutritional drink and get paid for it.

Pre-Paid Legal – sell a legal plan and get paid for it.

Primerica – sell an insurance plan and get paid for it.

Seems Simple, Doesn’t It?

But, some companies don’t keep it simple like that.

One company I investigated paid a residual commission on cell phone service that your job was to find customers for. That’s legitimate. Where it got murky was that they paid commissions on the purchase of the website you needed to do business on line, they paid commissions on the sale of their promotional magazines, and there was a bonus on signing someone up for the business. Near as I could tell, most of the money was not being made on the sale of the cell phone service.

Point! I said I would get to the point shortly. Here it is, the company this individual wanted me to check out was a grocery company. You pay a one-time fee to sign up, I think it was $200. You recruit others into the company, who pay their $200, after five people cycle through under you, you get $500 of which part of it goes back to start your new “cycle” and part of it is paid to you in the form of a voucher.

The selling point was that this $200 voucher, which you could earn as often as you could sign up five people, would pay for your groceries and so you’d never have to pay for your groceries again.

Now stick with me here, if nobody ever actually buys groceries except with their vouchers, and you can’t get vouchers without recruiting people to work with you, what are you getting paid for? If you answered that you are getting paid for recruiting, go to the head of the class.

They are selling it as a business where you can earn free groceries, but in reality you’re getting paid for recruiting people. Which means when enough people complain to the FTC, they’ll look into it and shut it down. The people who haven’t had time to recruit anyone when the FTC shuts it down are out their $200.

For more on pyramids and scams and how to detect them, you can look at Pyramid, Scam, or For Real.

Free Groceries? Or Free Information?

One of the 7 Insider Secrets is what kind of products to look for, along with what kind of company to look for.

It’s really a great set of criteria to evaluate a company with. Go to www.AlansMLMTips.com and sign up for the “7 Days, 7 Insider Secrets” email newsletter.

Quote

I always wanted to be somebody, but now I realize I should have been more specific. – Lily Tomlin

Happy 4th of July!

Alan — Mon, 05 Jul 2010 07:16:26 +0000

Celebrate The Reason For The Day

I want to wish all my friends the best Independence Day ever. Before I move on to the topic of network marketing and working from home, I want to remind everyone why we celebrate this day, so bear with me for a small demonstration of my love for the good old USA.

The Declaration of Independence

“When, in the course of human events, it becomes necessary for one people to dissolve the political bands which have connected them with another, and to assume among the powers of the earth, the separate and equal station to which the laws of nature and of nature’s God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation.

“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable rights, that among these are life, liberty and the pursuit of happiness. That to secure these rights, governments are instituted among men, deriving their just powers from the consent of the governed. That whenever any form of government becomes destructive to these ends, it is the right of the people to alter or to abolish it, and to institute new government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their safety and happiness. …”

Thus began the grand experiment in self governance that is the United States of America.

Begin Your Own Grand Experiment

Network marketing can provide you your own personal declaration of independence. Lest you jump into network marketing thinking you’re going to get wealthy overnight, let me remind you that there was a long road to hoe between the Declaration of Independence and actual independence. This little thing called the Revolutionary War, or the War for Independence, came before actual independence, and so did the intra-colony squabbling over what type of government we should have. There were many heartbreaks, heartaches, losses and setbacks between the Declaration and the reality of Independence.

Do you think you’re going to go from where ever you are right now to where you want to be overnight? The odds are against you. But, are you willing to suffer through your own war for independence? Are you willing to suffer the slings and arrows of loved ones who don’t believe in you? Are you willing to search for the right mentors who will help you learn what you need to learn to achieve your independence?

Do you know what independence means to you? What type of freedom are you looking for? The Declaration was a statement of where we wanted to go as a country. Have you stated where you want to go with your independence? What do you want independence from? Independence from the 9 to 5? Independence from having a boss? Independence from a job you hate? From a job that you think makes no difference in the larger scope of things?

Are you willing to fight for your independence? Are you willing to work and learn and fail and work and learn and work some more to make your dreams come true?

Your Why

You may have noticed from all my questions in the previous section that being willing to start on your path to independence and success, and stick with it till you reach it has a lot to do with your why. Why do you want what you want? Is it strong enough to keep you motivated through whatever self-imposed barriers you’ve created or the doubts of others, or the rejections you might get. To help you figure out your why and locate what will drive you to success, see my earlier blog “Why, Oh Why.”

Once I Know Why, What’s Next?

Once you know why you’re going into business, you have to figure out what you’re going to do and who you’re going to do it with. In other words what home business or opportunity are you going to go to work with. You should find a company to work with or a business to do that aligns well with your why for doing it and thus increase or maximize your chances for success.

To get assistance on this, go now and sign up for the free newsletter 7 Days – 7 Insider Secrets newsletter. It gives you some tips on things to look for and think about before jumping in with a company on your road to independence. Good luck and may the force be with you!

Quote

“Our deepest fear is not that we are inadequate. Our deepest fear is that we are powerful beyond measure. It is our light, not our darkness that most frightens us. We ask ourselves, Who am I to be brilliant, gorgeous, talented, fabulous? Actually, who are you not to be? You are a child of God. Your playing small does not serve the world. There is nothing enlightened about shrinking so that other people won’t feel insecure around you. We are all meant to shine, as children do. We were born to make manifest the glory of God that is within us. It’s not just in some of us; it’s in everyone. And as we let our own light shine, we unconsciously give other people permission to do the same. As we are liberated from our own fear, our presence automatically liberates others.” – from A Return to Love, by Marianne Williamson ©1992

I Can’t Do That, I’m Scared

Alan — Mon, 28 Jun 2010 07:24:00 +0000

A Survey

A couple of years ago, I read a report of a survey done by Len Clements in 1991 by Market Wave, his marketing research firm. While brainstorming for an idea about home businesses for this post, I ran across a note I had made at the time suggesting to myself that I make a website out of the results of this survey.

The survey was done on over 6,000 people who were not at that time business owners, and had never been business owners. The question asked was “If all obstacles were removed, would you like to own your own business?”

An astonishing 85% said yes, they would prefer to work for themselves. I say astonishing only because getting 85% of any diverse group to agree on something this wholeheartedly must mean there’s something to it.

Another way of looking at it, as Mr. Clements himself says, the other 15% must have misunderstood the question, or why wouldn’t they prefer to work for themselves.

WOW

This almost makes me want to go out there tonight and start applying the 3 foot rule. (In case you don’t know, the 3 foot rule means you prospect or try to recruit anyone within 3 feet of you.)

If 85% of the people want to work for themselves, let’s get to it. How can we possibly fail? Just start talking to people, right? How hard can that be?

Hold On A Minute There, Buckwheat

If you’ve tried the 3 foot rule, you know as well as I do that you don’t get 85% of the people within 3 feet of you interested in your opportunity. In fact, I felt lucky if I got one in 100 to express any interest. Hmmm, there must be something else at work here.

Now granted, there can be things you’re doing that are driving prospects away, such as being needy, having a lousy presentation, poor sales skills, etc., etc.

However, after seeing that 85% figure, Mr. Clements got interested in what kept people from starting a business if they wanted one. If that many people want to have their own business, but don’t, there must be some pretty compelling reasons preventing them from starting.

So, he did further research.

Things That Go Bump In The Night

After further inquiry, it was discovered that people had some basic fears about starting their own business. And the same four fears came up over and over and over. Not everyone had all four, but everyone had one or more of these four.

1) It takes too much money

2) It takes too much time

3) There’s too much risk

4) I don’t know how

Those were the four fears that kept those 85% from following their preference for owning their own business and working for themselves.

What’s Holding You Back

If you’re here reading this blog, you’ve overcome at least some of your fears of starting your own business. Aside from mlm or network marketing, do you know of any other business model that 1) has low start-up cost, 2) gives you the ability to start part-time or spare-time while you get it started and profitable, 3) has low risk, and 4) teaches you how to do it?

If you are thinking about starting your own business or are looking for your dream business, sign up for the free 7 Days – 7 Insider Secrets newsletter and learn how to find a company that maximizes your chances at success.

Acknowledgment

Humor

A group of professional people posed this question to a group of 4 to 8 year-olds, ‘What does love mean?’

‘Love is what makes you smile when you’re tired…’ Terri – age 4

‘Love is when my mommy makes coffee for my daddy and she takes a sip before giving it to him, to make sure the taste is OK.’ Danny – age 7

‘Love is when you kiss all the time. Then when you get tired of kissing, you still want to be together and you talk more. My Mommy and Daddy are like that. They look gross when they kiss’ Emily – age 8

‘Love is what’s in the room with you at Christmas if you stop opening presents and listen.’ Bobby – age 7

‘During my piano recital, I was on a stage and I was scared. I looked at all the people watching me and saw my daddy waving and smiling. He was the only one doing that. I wasn’t scared anymore.’ Cindy – age 8

‘My mommy loves me more than anybody. You don’t see anyone else kissing me to sleep at night.’ Clare – age 6

‘Love is when Mommy sees Daddy smelly and sweaty and still says he is handsomer than Robert Redford.’ Chris – age 7

‘Love is when your puppy licks your face even after you left him alone all day.’
Mary Ann – age 4

‘You really shouldn’t say ‘I love you’ unless you mean it. But if you mean it, you should say it a lot. People forget.’ Jessica – age 8