The #1 Reason For Failure In Network Marketing
 

Are you currently building a network marketing distributorship?
What are your 2 biggest business challenges? (Please list them on a piece of paper & we'll work with you to overcome them)
 

Would you like to do something about them? 
If you knew how I'm sure you would. And here's the first thing you HAVE to know....
The challenges you're having are NOT your fault!   You've done this, You've done that, You're on all the training calls, You've done what your upline has suggested (if you can find them or get a response out of them by email!)  All kinds of people are supposedly having success, and You're not!   Why Not?

Firstly, for me to know how I can best help you I'd like to know if your intention is to build it once, build it big & build it to leave a legacy for your children & your children's children? OR do you want to have to build it over & over again every year or 2? (which happened to me before I learned to APPLY these SKILLS)
 

The Cards Were Stacked Against You Right From The Start!
 

If the cards were stacked against you and you just didn't know it, you didn't realize it, how can it be your fault? And here is why they were stacked against you.....
 

Let's take a very close look at the network marketing business model. Because you're an entrepreneur, you're here to make money, you're in business. So it makes sense to look at the business model, doesn't it?
 

What I've seen is that very often it's your company's business model that causes your problems, not you. Let me give you an example. I'm sure you've seen network marketing companies that brag about having a huge, multi-million dollar home office. They have pictures of it on the website, flash presentations, it's on all the brochures. But the millions of dollars that paid for that building is money that you will never get back in your compensation plan.
 

In network marketing, the ONLY place that money is made, whether by the distributors or the company, is from the compensation plan. Your MLM company does not have another stream of income that generates money for them.  And that pie can only be divided in so many pieces, your compensation is only 1 piece of that pie.

 

Company Income Always And Only Comes From YOUR Compensation Plan
 

So whatever spending you see, that is money that will not come back to you in the compensation plan.
 

And here’s where it really gets ugly. Your company's beautiful building requires maintenance. They need a cleaning staff. It has to be painted, windows have to be maintained, bathrooms have to be maintained, these buildings get cleaned every night. They have a water bill, an electric bill, heating, air conditioning. They do everything necessary to make that building a showplace for the company.
 

 

Who Is Paying That Monthly Bill?
 

Where does that money come from?
 

You guessed it! It's coming from your compensation plan. That is money you will never receive in your check. It's gone.
 

Now, when do YOU plan on using that building?
 

Did I hear you say, "Never!"?
 

Exactly. You will never or seldom use that building, yet you are paying for it. And that's not all. These "huge" network marketing companies brag about their call center & the hundreds of employees they have sitting right there, ready to take your order, giving you the so-called best possible customer service!
 

However, every one of those people is a salaried employee. They get health benefits, maternity leave, vacation leave, sick leave, double pay on holidays when sitting waiting to take your order. The company has sexual harassment insurance. Those employees get bonuses & raises over the years. Each one works in an office at a desk, with a phone & computer.
 

That is a monthly bill.

 

Who Is Paying THIS Bill?

 

Exactly. YOU are! (Are you beginning to notice a nasty trend in this business model?) That's more money again that will never come back to you in the compensation plan.
 

Now … where do you think THIS business model will go in the future? Do you think your company will have less expenses or more expenses?
 

Sure. It'll be more. As the building gets older, it needs more maintenance. The longer people work there, the more salary they expect. As the business builds, they'll outgrow the building … and, of course, build another new building!

Another good indicator of the heart of a company is, where is the warehouse located? Most cities have a warehouse district, very low-rent, low cost. close to the airport where those big 18 wheelers can easily come and go. It makes sense for businesses to keep their stock there. But most MLM companies have the warehouse right next to their big new building. Why? Because it's more impressive, and they can say, "Look at us! Look what we've done!" But who pays for that extra expense?

 

Who Pays For That Extra Expense?
 

Yes, of course. It is you, again.

Does this make sense to you? Is it clear how important maintaining overhead expenses are in determining the business model?
 

So what's the solution? The key is to find a streamlined MLM company … one that doesn't feel the need to put on a show with YOUR money! I’ll talk more about that in just a moment.
 

First, let me give you an example of how this high-overhead business model affects YOUR ability to build your business.
 

I'm thinking of 3 different companies right now. They all market the same product, a multi-vitamin pack. It's an awesome product, flat-out works, and all 3 companies market the identical formula, identical raw ingredients. Except Company #3 has also added to the formula a chelated enzyme to allow you to digest & absorb nutrients better.
 

Now, would you agree with me, that to produce that product, same quantity, same quality, same formula, the cost of production for those companies is within pennies of each other?
 

 

Of course it is.
 

 

Well, Company #1 markets the 30-day supply of that vitamin pack for $117. So do you think you're going to be able to retail that to someone? Do you know anybody who would gladly pay you $117 for a 30-day supply of a multi-vitamin pack, regardless of how great it is?
 

I'll bet you don't. It'll be tough, for sure. So therefore, you're going to have a challenge to retail that product.
 

Company #2 sells the same formula for $108. It's still expensive. You're still going to have a challenge retailing that.
 

Company #3, which has the same formula, with the added chelated enzyme, so you can digest & absorb it better, sells it for $39.95. Now, I ask you, is that affordable? Do you think you know people who may purchase that product from you?
 

Absolutely.
 

The Business Model Drives The Behavior
 

 

So what kind of behavior do these different business models create in the field? Here's what happens.
 

People who market the more expensive products spend their time recruiting. This is where the money is made for them. There's no money in retailing for them, because nobody's going to pay that high price for that product.
 

So what do they have to do? They have to recruit, recruit, recruit.
 

And what happens after you join them? When they sponsor you into the business, they have no time to work with you! You're in, they've got their commission & they have to move on to recruit the next person. They don't have time to work with you because their business is built on recruiting because they couldn't possibly retail such expensive products.
 

Now, do you have any idea why Company #3 can afford to sell the same formula, with the added chelated enzyme for better digestion, better absorption, at $39.95? Why do you think they can do that?
 

They do not have the overhead.
 

They have way less overhead than the other 2 companies. Their warehouse is in the warehouse district. No multi-million dollar home office. They take 97% of their orders automated over the internet, so they need very few actual employees.
 

Company 3 Has Just a Small Fraction of The Overhead that Company 1 or Company 2 has
 

So it's a more distributor-friendly business model.
 

 

We’ve found that 92% of the population doesn't like to sell and doesn’t want to be sold to. How aggressive do you think you have to be to move a box of a 30-day supply of a multi-vitamin pack at $117 each?
 

Pretty aggressive, wouldn't you agree?
 

And let me ask you this. Who do you think is buying this? You don't know anybody who'd buy it. I don't know anybody who'd spend $117 for it. However they sell plenty of it. Who do you think is buying it?
 

It's the distributors. The distributors are buying it. Why? Because they have to qualify to get their bonus check. That's the only reason they're buying it. This pricing doesn't create a retailing behavior.
 

 

A Real Life Example Of Value Pricing & How To Positively Affect A Customer
 

Do you know anybody who suffers from a blood-sugar disorder like hypoglycemia or diabetes?
 

Probably yes, agreed?   This person that you know, do you think they may know 5 or more other people who also suffer from diabetes or hypoglycemia?
 

Yes, they probably would.
 

Well, do you think they might be interested in a product that could help them rebuild the pancreas and possibly take them off insulin or at least reduce their insulin intake? Do you think they’d be interested in a product like that?
 

I bet they would. Do you think they can afford to pay $19.95 for that product?
 

Sure they could. In fact, if you had that product, you could even afford to gift that to the right people, using it as advertising, couldn’t you?
 

What Would You Rather Have?

Would you rather have people coming to your website, purchasing this product for $19.95, all these different people sharing with each other, or would you rather be in one of those first 2 companies, trying to market a $117 multi-vitamin pack? Which one makes more sense to you?
 

Company #3's multi-vitamin pack and the diabetic product, agreed? And look again, why can this company afford to do this?
 

Because they're streamlined. It creates a retailing behavior. You can do business this way. Anybody can purchase products at this price, because it’s affordable. Does that make sense?
 

Of course.
 

And There's Another BIG Surprise!
 

 

This is really interesting - guess which company of those 3 pays more to the distributor in the compensation plan and requires fewer people to get yourself to a $10'000 a monthly recurring income?
 

Yes, it's Company #3.

How is it they can do that?
 

That's right, less overhead. And now you're starting to get the picture. You're understanding why it's so tough for you to make money in network marketing.
 

 

Next question. As time goes on and the bloated business model of Company 1 & 2 continues, what is going to happen?”

 

Let me tell you what MUST happen. They'll have to raise the price of the products and pay less in the compensation plan. It has to happen. There's no other source of money for them, so there's no other way to pay for increased expenses. They've created a monster that they can't control. The only thing they can do to keep it going is to keep feeding it.
 

And this is where you'll end up paying $4 for a bar of soap, $20 for a bottle of shampoo, $100 for some liquid nutritional. There are MLM companies out there right now where you can find those prices.
 

 

Where Have Some Of The MLM Giants Gone To?
 

And it will get worse & worse over time. That's why companies flat-line. You know the famous names of the big-time, old-line companies … they are flat-lined.
 

So what do they do? They go into new countries. They open new countries, because they cannot compete in the US anymore. Their product prices are too high, their pay plan is inadequate. Their USA business & distributor base just falls by the wayside.
 

I recently read about a well-known nutrition juice. The article had a lot of stories of people making money. The company has an absolutely gorgeous building, all decorated in Tahitian motif. The building temperature is maintained high to be the same temperature as it is in Tahiti! They have a beautiful waterfall, a fountain in the foyer with their nutrition juice pouring out of it!
 

And what is this company doing to make money? They're opening up restaurants where they'll serve food & their juice. Now where is THAT money coming from? It's coming out of the compensation plan, and distributors are paying for it.
 

They say they're doing it to generate leads which will go to certain leaders in the company … which means that if any reps benefit, it will be the heavy hitters - the ones who’ve already built big. It's just a way of transferring money from the part-time rep to the company & the heavy hitters!
 

 

You can look for product prices to increase and your compensation to decrease. That's the problem when your overhead is sky-high.
 

 

The Network Marketing Business Model truly does drive the behavior in the field.

 

Let me briefly share with you about being in a STREAMLINED company...

Important Clues In These Facts:

Is it a Private Company....or a Publicly Held Company?

Publicly held companies issue securities through an offering/shares that trade on a stock market. Private companies do not have to go through the lengthy process of filing 500 pages to the NASDAQ or SEC every time it has an opportunity to enhance the compensation plan neither does it have to seek approval of its shareholders, nor the expense of attorneys attached to such an improvement. Private companies don't want the responsibility to shift from distributors to shareholders. Generally speaking, shareholders want an increase in revenue for themselves, not the distributors!

How are Most Orders Taken?

Are they an Internet based company? 95% of ALL orders should happen ONLINE. How many customer service reps are there? will their overhead grow out of hand? Many companies spend millions a month on unnecessary customer support overhead, which is money taken out of the pay plan.

Does the Company Own and Maintain any Big Buildings?

.... With golden faucets in the corporate bathroom.  No need to create extra overhead simply to look better than the next company!!  There should be No competition as to whose building looks better than the next!   No huge, profit-eating building complex. No Roman Empire bricks and mortar buildings being built to outdo the next! No Fortune 500 attitude or ego. What about the corporate Jets, Boats & Yachts?

Is the Company's Warehouse in the Warehouse District?

.... or is it attached to a high-end, fancy, bloated and showboat corporate office? Being in the warehouse district keeps rent low and gets product to the end-consumers faster.

Does the Company have huge, fat, inflated salaries for the corporate officers?

Does the company focus on how much money they can make, or on how many people they can help & build. Does the agenda from corporate & the field coincide exactly? How many corporate officers are there?

Does the Company OUTSOURCE their HARDWARE and OWN and DEVELOP ALL its SOFTWARE?
This way they don't have to pay for costly hardware upgrades every twelve months. They will never be held hostage by an outside software company.

Does the Company have a true Vertical Integration relationship with its Manufacturer and Production Laboratory?  without creating a financial burden for the company?

Does the Company have an Outside Funding Source?

....where it has to pay interest to banks? Do they need any outside venture capitalists who continue to take over more shares in the company every time they write the company another million dollar check.... then very soon these venture capitalists own your company and sell your company right from under your nose!! Does the Company Call ALL the Shots....?

Is the company truly a 5 Pillars, forward thinking Visionary Company?

 

 

 

Home |  How To Evaluate ANY Company Using The 5 Pillars Technique |

| Streamlined Company |  MLM Sucker | Contact Me |