The Four Essentials
There are 4 essential elements of every successful MLM company, and all elements must be present if the MLM company is to succeed.
We suggest you use these elements to evaluate any MLM company you might be researching.
1. The Company
The MLM company must have strong corporate management and financials. It must have good cash backing, be well managed and ethically run, and all company policies and procedures should be administered fairly.
In our experience, the "get rich quick" companies or the "get in now" companies will always fail. These types of companies have no long term view of longevity or success.
Therefore, you should ensure you chose a MLM company with good cash flow, is highly ethical, operates with integrity and has sound corporate management.
2. The Products
An MLM company’s products need to be excellent and provide value for money.
Your evaluation of a MLM company’s products should be rational and objective and not clouded by glamorous advertising or flashy sales people.
Perhaps the easiest way to evaluate a company’s products is by asking yourself the question:
Would I be comfortable recommending this product to someone I know?
3. The Compensation Plan
The MLM company’s compensation plan must provide a fair reward for reasonable effort. If it does not, the company will fail.
In our experience, the 3 main types of compensation plans all have their drawbacks:
- Unilevel plans pay distributors well in the early stages, but they fail to provide adequate amounts of long term income.
- Binary plans are very difficult to work efficiently and effectively, and they tend to be unfair for distributors.
- Breakaway plans pay well later in a distributor’s career (if you are a senior distributor). But, the initial income reward is often poor.
For these reasons, we recommend a "hybrid plan".
The compensation plan should also pay 50% of the MLM company’s product turn over to the distributors, and the distributor’s bonus should reflect approximately 10% of the gross product volume that flows through the distributor’s “bonus level”.
4. The Training and Marketing System
A MLM company’s training and marketing system is critical.
A good MLM company will have a fantastic culture that ensures upline distributors help and coach downline distributors.
There must also be a professional and "not for profit" training system that allows the distributor to get training independently of upline distributors.
It is essential this training be provided at cost and be not for profit.
Historically, a major deficiency in MLM companies has been the industry’s requirement that distributors are expected to make a dramatic personal change in their lives if they want to be successful within those companies. This is unreasonable and unwarranted.
Rather than the distributor being required to change to suit the marketing system, the marketing system must suit a new distributor.
If the MLM company has a marketing system that requires distributors to make drastic personal change, it is highly likely that a distributor who finds it difficult to make that change will ultimately be unsuccessful in the MLM company.
Alternatively, if the distributor successfully makes drastic forced personal change, it is very likely this will negatively affect the distributor’s business, as well as their personal and family lives in an unacceptable and intrusive way.
It is therefore critical that the MLM company’s marketing plan be flexible enough to suit its distributors, and not require them to pursue drastic personal change.