Acid Test for MLM

Discussion in 'Network/Multi-level Marketing' started by NetMecca, May 16, 2013.

  1. NetMecca

    NetMecca Member


    I have spent some time in this arena, and having been naturally suspicious of MLM for reasons I am sure I do not have to qualify, I have come up with an acid test which helps me decide whether or not I wish to participate at all in a particular program.

    1. Do they charge for membership, or require minimum sales, investment or any other form of payment?
    All of these raise red flags for me as I have to wonder why they are charging for this. Are they not able to make money off their products?
    This also directly affects my risk of participation. If there is any risk at all, I also do not like to get involved. The more risk involved, the more likely it is just a pyramid scam.

    2. Are their products saleable (and actually something that people buy already), and sold at competitive prices? If the answer is no, or very difficult, another red flag for sure, since this means that I will not really be able to make any money at all, especially if I am required to invest to participate, and sell products, to make a living. And since most of us are not really sales people, just people trying to get a little extra, this makes things really hard.

    3. Do they promise instant wealth?
    Yeah these leave me very twitchy, very fast. Anyone who has participated in these programs will probably know better but the allure of all of this is often dangerous, and so I prefer to avoid these.

    Anyway, I wish you all the best

  2. closerjim

    closerjim Active Member

    Hello Everyone,

    20 years full time at-home-marketing in sales and network marketing ... things haven't changed much.

    There are those that see a business opportunity for what it likely is .. something to do with sales, something to do with a product that may or may not have be inventoried, something to do with new costs and expenses because this is a business and I wasn't doing it prior to ... "now" in my life --- is there an easier way???

    Yes. It is called investing. Comes with its own set of risks and skill requirements.

    This .... is network marketing.

    If there is MONEY to be put up front.... deal with it. Or .... start your own gig and give the stuff away to anyone that asks and write it off your taxes.

    If there isn't a product or service that REALLY makes sense to you ... not just the allure of the rest of the pitch they threw at you .... don't think twice. Leave it alone and pick a different one.

    Some pay plans are harder than others, but if you are realistic in what it takes to really build a business and are prepared to use the tools-of-today's-marketing so you can get traction and LEVERAGE .... and if work doesn't scare you ....

    You can make it too.
    MarieA73 likes this.
  3. samo

    samo New Member

    NetMecca - i think I have a business for you. :D After I've read your test - I think you'll love it! :)
  4. Bill Brine

    Bill Brine New Member

    Well said, closerjim. To me the first thing anyone should ask themselves before considering an MLM entry is this: Am I a salesperson? If not, am I willing to learn HOW to become a salesperson? If you're in business to promote an MLM product, then you are in sales! Most MLMs have extensive training available to help you become the salesperson you never thought you were. If not, there's plenty of free training floating around out there.

    I'd like to share my 'acid test' for any MLM opportunity I come across, otherwise known as my due diligence.

    1) Is this a company that has been in business for a number of years? The longer the better. I stay away from startups and 'ground-floor opportunities' - they have not proven their business model and so it will take much longer to become successful, if ever. All they have is a lot of hype and a marketing plan that they hope will work.

    2) I always do a Google search for 'company name scam' or 'company name ripoff'. Granted, there are always some dissatisfied distributors no matter what the company, but you can usually get a good idea of how well the company deals with its distributors by looking at the volume of complaints. I've seen some where I discovered there were class-action lawsuits against the company by large numbers of distributors - you can bet I stayed away from those ones!

    3) Find a distributor, preferably not the one that tried to recruit you, call them up and ask them about their business and their experience. Ask them what kind of support they get from their upline. Any successful distributor should be more than happy to discuss their business, even if you are not a potential recruit. If not, that may be a red flag.

    4) Try the products! If you can't get excited and passionate about the products and their benefits, you will most likely not be successful. Any business success is based on passion - you have to work hard to become successful in any business, so if its not something you really care about it just becomes a chore after a while.

    5) Review the Terms of Service very closely and consider whether you are comfortable working within those rules. Also pay close attention to what happens if you break the rules. Some companies will give you a warning and a second chance, and some will simply cancel your distributorship without giving you a chance to defend yourself or to correct your errors. If the TOS are not available on the recruitment website, get them from a distributor or call the company. If the TOS are not available unless you join, that may be a red flag.

    6) Up front costs, minimum sales, monthly required orders? Of course there are going to be these. You have to remember that most product-based MLM companies have made a decision to NOT sell their products through investing millions in traditional forms of advertising. They have instead decided to market their products exclusively through the recruitment of distributors. So the only way they can make money from their products is through distributor sales, and, through them, customer sales. There are exceptions to this (Trivita comes to mind). So you need to take these into consideration when doing your due diligence.

    7) The products themselves: if the products are a better version of something people can get elsewhere for a lower price, that is certainly a consideration and will generally be a harder sell. Usually the higher price point is justified by the product being better in some way - more concentrated and therefore lasting longer, more pure, etc. etc. If the product is something that no-one else is doing and that adds great value to someone's life or business, that to me is an easier sell.

    8) I agree with NetMecca - if the opportunity offers instant wealth, run the other way as fast as you can!

    Finally, trust your gut. If after gathering all this information something still does not feel right, look elsewhere.

    Whatever business you enter, it will require time, effort, money and a willingness to learn for you to become successful.
    MarieA73 likes this.
  5. FreeCashMan

    FreeCashMan Well-Known Member

    To get an idea of proven successful mlm business models one can refer to the Global 100 list put out by Direct Selling News. Technology has made it easy for anyone to create an mlm but the factors for a potential long standing network marketing company to be a success has not changed.
    MarieA73 likes this.
  6. MarieA73

    MarieA73 Member

    This is all good info; however, it seems to me that someone looking for an MLM opportunity may be looking first at the comp plan, upline support, etc. when I feel the product/service is the most important. There has to be a product or service that is legitimate, well-priced, etc. for the MLM to be legal and sustainable. Many times those looking for an MLM want to believe in the product that happens to coincide with the best comp plan. But really, you will have the most success if you don't look at the comp plans first, but find a product/service you can get really excited about and believe in, and then make sure the comp plan and the rest is lined up to your liking. Because, in the end, you are going to be selling the product/service.
    Bill Brine likes this.
  7. BuyYourOwnHouse

    BuyYourOwnHouse New Member

    I only have one acid test and it's what is my initial reaction to the opportunity and/or product (some companies don't have both). If I am immediately excited or interested, there's a pretty good chance others will be too. And if I'm not, well then how could I expect to have any success with the company? After that acid test, of course I will run through others, like the comp plan, consumer reports, etc. I also don't think just because a company is new it's a bad thing, especially if the initial investment is quite low. I can't tell you how many times I've looked at the top earners in MLM's and a good majority of them got in early - I've always wanted to duplicate that some day.
    MarieA73 likes this.
  8. NetMecca

    NetMecca Member

    Wow more traction that I expected, thanks guys.

    A very large number of very useful comments. I especially like the one from Bill Brine about being a sales person. Most of the companies expect you to be a sales person, as this is the only way you can earn. If you are not, you will probably just end yup annoying your family, and not achieve anything real. And if you wnat to become a sale person, learn how to close a sale. That is the key and Iwould suggest you do a few quick courses on this subject to help you. Figure out the buying signs of your potentials and learn how to close.

    I think the age of the company is important to prove the business model, however, here I would specifically comment on the risk element. The question of how much risk you have to take on to participate in an opportunity directly influences my decision of participation. And when considering risk I consider both time and money. My time is extremely valuable to me and I prefer not to waste it.

    MarieA73 likes this.
  9. MarieA73

    MarieA73 Member

    Aside from risk, is the question of control. How much of that risk is directly under my control. If there are too many elements to my success that fall outside of my control, I am turned off; however, if the risk is in things I can influence, I then simply need to assess my capabilities and desire.
  10. talfighel

    talfighel Silver Member

    For any network marketing opportunity to be successful, you have got to have some products to sell and members do have to pay a monthly fee to participate. If you don't have to pay anything and the opportunity become a free to join and participate in, how in the world are people going to make any money?
  11. NetMecca

    NetMecca Member

    Well the problem with memberships and sharing in membership fees is that it become a pyramid scheme. The profits for members should lie in the commissions earned from products sold, not from memberships. This is the mature of a true MLM.
    MarieA73 likes this.
  12. MarieA73

    MarieA73 Member

    NetMecca is right(sorta); however, there are re-ships where you are buying consumables where there is a product or products (Amway/Quixtar for example). It's not a ponzi, there are products, and you can buy the same stuff month after month. Same with many skin care and health products (juices, etc.). Of course, then there is EN, where you are buying a blog, "education", and access to the membership...not as sure about that one.
  13. closerjim

    closerjim Active Member

    Some great comments and input here on these posts. Good on all of you!

    Some additional thoughts.

    If there is a product OR services being offered that real people really use, you're okay. That's for the question of whether vitamins and soap is better than training, blog software, autoresponders, etc. are better.

    What isn't okay is a "fee" just to belong and have the right to get others to pay that "fee" just to belong and people are paid for collecting suckers to pay the "fee" .... right?

    As for "age of the company" --- depends on some factors that go along with it.

    For instance, risk tolerance. If you're simply not geared toward times when it's not clear if they know what they're doing or not and you have to "hold on and do nothing" for a week or two while "they" sort it out --- maybe the more established companies are your cup of tea.

    But if the Founders are simply branching out into an expansion of PAST SUCCESSES.... you may want to jump in (ala poster BuyYourOwnHouse's wish to be in early) and ride what could be a huge wave of success.

    And if you can find a program that has that maturity / stability AND a "new one" that compliments or supports the other... such as a nutritional type program along with a "marketing tools" type program (which would be the newer one) then all the better. Spreading your risk.

    THE BIG ONE ... is this, from our own 20+ years experience.

    If you pick a company that you are not ALREADY spending money in that product or service category or NEED TO in order to make something go (again, thinking marketing tools for example, that you'd need to spend on anyway) and you're NOT already pretty flush with cash flow -----> don't go there.

    Why not?

    Because you won't have the financial gas to keep going. Here you are ... all excited about the newest most powerful "something" that does wonderful things to everyone (aren't there a few of those out there?) but YOU aren't already spending HOUSEHOLD BUDGET MONEY on that stuff now.

    But NOW you are, because there's going to be an autoship / automatic delivery in order to be pay qualified. And there's going to be other expenses associated with your new business that you don't even dream of yet.

    What good will it do you if you start and can't finish?

    What I'm suggesting is, even if it's not "sexy" to you ... pick something you either NEED ANYWAY (tools / training / marketing type company) or something you SPEND ON ALREADY.

    Then, when stuff like marketing ... cards ... traffic ... extra gas to go see people ... whatever it may be that you don't see coming right now, comes up; YOU'RE STILL GOOD!

    Finally, Upline Support.

    You know what hurts? When you don't get GOOD upline support. Beware of someone (as noted earlier) who dodges your questions like .. "how much do you make now yourself?" with ... "you know, it's not about ME ... it's about what YOU can make --- ya know?" Bull! It's not a sin to just say, "I'm as new at this as you are almost. But ... I have x years experience and I love this company, I've made X dollars in the past and we can crush this thing together!"

    Emphasis on the TOGETHER.

    Or ... "You know ... I'm new at this too and haven't made a DIME yet! But I'm working PERSONALLY with a guy who DOES make awesome money and you and I will be talking with them later on ... and you can hear from him / her exactly what's going on."

    Note .... you're looking for honesty and open answers --- cuz guess what? YOU will be asked that same stuff. What do YOU want to be taught to do.... dodge the questions or have honest answers and --- BACK UP.

    It's out there ... just know what you're looking for.

    Have a super week!
    MarieA73 likes this.

    CRIPLEY Member

    I have been in 3 mlm and I must tell you to really study the opportunity. Programs that require you to front end load can cost you big $$$. To be successful you have to totally believe in the product without question. And just understand you will get a lot of no's. the system needs to be a step by step process from proven successful people. If this seems to intense and especially you do not connect with your prospective sponsor do not get it. Their are other programs to where you are the sales agent and get paid when the public try their products usually a free trial.
    MarieA73 likes this.
  15. MarieA73

    MarieA73 Member

    I do like the idea of google searching the company name and "scam" to see what those who have complaints say. Of course, every company will have complaints, but do they have any merit in your eyes. You shouldn't turn a blind eye toward what those with negative experiences have to say. Don't go in blind.
  16. closerjim

    closerjim Active Member

    You're absolutely correct, MarieA73....

    There IS a tendency for us to "turn a blind eye" to facts, reports, things that CONTRADICT or "rain on our parade" when we want to see the positives.

    Negative reports don't mean it's a bad opportunity. UNLESS you can't find any POSITIVE reports and especially when you see a lot of negative reports that all have similar or the same issues. Like "they don't pay" or "can never get product" or "you can never get support to respond" or ... "the phones are dead!"

    Just be careful and let the reality of what is there to be seen ... BE SEEN by YOU.
  17. closerjim

    closerjim Active Member

    The bottom line on the acid test?

    "Is this one you'll actually do?"

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