What is MLM (Network Marketing)?
 

In its simplest form, Network Marketing is a process of building a team of productive individuals to distribute and consume products and/or services. It is finding people at the right time in their lives, to take advantage of a unique and timely opportunity. It is not going door to door, or beating your friends over the head with products or services they don't want. Nor is it convincing people to do something they don't want to do.

Today Network Marketing is being taught at several colleges and universities including the University of Illinois, Chicago and Nova Southeast University. Many Fortune 500 companies have recognized Network Marketing as a viable and profitable way to move products to the end-line consumer. For many years, Excel  Communications was the number six long distance phone company in the U.S. Travelers Insurance owns Primerica, a multi-billion dollar Insurance company that is sold through Network Marketing. Dainippon, a 7.5 billion-dollar Japanese company, owned Shaklee Vitamins, until it was bought out by a very successful U.S. company. Gillette, Colgate Palmolive and many other companies own divisions that sell through Multi-Level. Nu Skin International entered Japan with the largest entry of any foreign company in Japan's history, doing over 138 million dollars it's first year in Japan. That is bigger than Coca-Cola's first year in Japan, bigger even than General Motors' first year there.

People join a Network Marketing company for many reasons. There are basically two types of working people. Those with money and no time to enjoy it and those with time but no money. In most cases people join a Networking company to fill the void in one of the above mentioned scenarios.

A doctor or other professional will join because he or she is a slave to their practice. When they are not working, they are not making any money. Although most physicians enjoy a high-income level, unless they have invested well, they have very little time freedom.

Time leverage is a real key to understanding MLM. J. Paul Getty said it best when he said "I would rather have one percent of the efforts of 100 people than 100% of my own efforts." He wasn't lazy, he was smart. The beauty of time leverage is it allows you to be in a dozen places at once and derive income from each one of those places. Just think about the man or woman that owns a dozen McDonalds franchises. Although they can only be at one location at one time, they are receiving income from all twelve. The problems in that scenario are obvious. With each location they have to have a substantial capital investment. They have to have inventory, employees, income tax, such as Federal, FICA, etc. Typically in a linear situation (where you are exchanging time for money) the more locations and employees you have the more management headaches you have.

With Network Marketing you can be not just in dozens of locations, but hundreds even thousands, even tens of thousands of locations and derive income from each one of those locations. Unlike traditional leverage (i.e. employees, fixed geographic sites etc) the more locations (people/distributors) you have the less management hassles there are.

What so many professional people fail to understand, is that even though they hope to have money and time, they are by definition locked into being the "focal point" of their income generation. They have educated themselves or been promoted into zero leverage.

Once you truly understand the leverage of Network Marketing, a concept that has all of the upside of huge business without much risk, with the unlimited income potential and a portable business, it may be hard to go back to traditional business.

Others who do not have high paying positions join with the hopes of a reaching the upper levels of income. Still others join because they love the product or service. They may have joined initially to get the product at wholesale and found they loved sharing with people. Then there are the entrepreneurs. Those that love the challenge, the excitement of starting a new business.

Whatever the reason you are looking to join or have joined a Network Marketing business, it is important to evaluate five key elements of any company. Evaluate them with a sharp eye, knowing full well that, unfortunately, most companies and in particular most MLM companies don't succeed. In my 25 years of Networking, I have learned that the following five criteria must be examined carefully to ascertain that the company you are looking at has 100% of these five criteria. Once that has been established, you can proceed with some degree of certainty that the future of the company is bright.

I. The Company Itself.

Is the management of the company strong and experienced in Network Marketing? Has their honesty been put to the test and have they passed that test? Are they sufficiently capitalized and can they expand if the company grows faster than they have anticipated.

Most often, the companies that fail, do so because of management.
 
Either:

#1. They simply do not have the knowledge to maneuver the twists and turns that a new company gets bombarded with.

or

#2 They do not have enough money to grow when the company takes off.

or

#3 They cannot fulfill the product orders during a vertical growth period and back orders become so lengthy that distributors quit in frustration
 

or

#4  The owners are just not honest. They put money in a hidden account, file bankruptcy and hurt a lot of people in the process. Make sure, to the best of your ability that the management team is honest, and thinks long term.

II. The Product or Service.

If you are selling a product, in order to insure that your success will be maximized put it under the microscope and ask" is the product I am carrying unique, visible, emotional and consumable?

Products that are not unique, meaning that they are not patented, or are easily copied, are ripe for a copycat. Your market in most cases is going to have a size limit. If you are the only player in that market, you can hit a home run. If you popularize that product and it is easy to copy and a dozen other companies do so, what is your chance of succeeding?

Products that are not visible have to be "sold". Since most people don't like to sell, having visible results allows the product to speak for itself. No selling is necessary. A picture is worth a thousand words.

If a product has "emotional" results people will naturally get excited. They will talk from their hearts and their enthusiasm will do much of the work.

Lastly, a product that is consumable gets used up week after week and needs to be reordered. Therefore a distributor only needs a handful of customers that reorder every month. Remember that Network Marketing is a lot of people selling a little, not a few people selling a lot.

Make sure too, that you feel good about your product and your company. There is a lot to be said for how you feel in your "gut" about a particular opportunity.

If you're looking at a service driven company, ask yourself--"Is the service widely needed and accepted?--Is there a lot of competition?"

In either case, product or service, it will be a lot easier to work in a growth industry. You could be the best vinyl album salesperson in the world and would still starve to death in a society using Compact Disks.

Choose your company well. There is a lot riding on your decision.

Make sure that you have done your homework. It will take a little time and often the novice Networker wants to jump right in. However, a few weeks of investigation will give you years of results.