Tips on Choosing a Network Marketing Company
How do you choose the right network marketing company to work with?
If you decide to pursue a network marketing business, here are some critical questions to consider when looking for such a company to work with.
How long has the company been in business?
The first few years of a company's existence are precarious, and most network marketing companies don't survive.
It is recommended that you choose a company that has been around for 3-5 years at minimum.
One exception is internet based companies which have a different life cycle.
Usually, an internet company is considered viable after two years.
Younger network marketing companies are frequently promoted as “ground floor opportunities” with potential for you to “get in at the top,” but you should only involve yourself with these if you are willing to take the financial and emotional risk, or if the company management has outstanding credentials.
If you are willing to take the risk, you could do well if you have an excellent product, but you will have to put up with the limitations of a new company.
I worked with a new network marketing company that was a year and a half old when I joined.
When it hit momentum growth, the company couldn't handle it.
There started to be delays in getting checks, delayed product orders; then defective products were shipped.
Soon negative publicity began because the products did not have adequate scientific verification, and soon they were out of business…leaving me, the distributor out of business as well!
Was it worth it?
For me, I decided I didn't need any more gray hairs by worrying about whether a brand new company will survive.
You will have to make your own choices.
On the other hand, a network marketing business that has been around for many years will be more stable but may already have a lot of customers and distributors, which could slow the growth of your business because many people already use the products.
Is the company management experienced?
A network marketing opportunity must have reliable, experienced corporate management with strategies for handling rapid growth and other challenges unique to network marketing companies.
Check out the company website or Dunn and Bradstreet to learn more about the background and training of the company managers.
These people will be making decisions that affect YOUR business!
Are the products of outstanding quality?
First, are the products ones that you are interested in or connected with?
You must choose a company that sells products that YOU find exciting.
Some network marketing companies carry several product lines, so you may be able to specialize in an area you particularly enjoy.
For example, one company I have worked with offers three separate but connected product lines, and some distributors choose to specialize in one of them.
You will need to use the products yourself and to honestly feel that they are outstanding. Otherwise, you will not be good at selling them.
In network marketing, your own experience of the products is what fuels your business.
Choose a company whose products are so excellent, so incredible, so life-changing, that they easily stand out from the crowd!
Word of mouth referral only works when a product is worth talking about!
Products should be high quality, and any product claims should be backed up by science an in compliance with all laws.
A company that manufactures all or most of its products is preferable as they have total control over the quality.
Are their products in demand?
Will you be selling something that people want?
Look carefully at market trends to see what kinds of products are in demand.
Are the products reasonably priced?
Some network marketing companies inflate their product prices to claim large commission payouts to distributors. However, who is going to want to pay $25 for a bottle of shampoo?
Prices will not be bargain basement, as a good network marketing company needs to offer premium quality products…but they should be within the range of what is reasonable.
Compare product prices to those of comparable products from high-quality stores or other network marketing companies.
Prices should NOT be so high that you could not mark them up for retail!
Is there a high re-order rate?
For long-term residual income, find a network marketing company that provides consumable products that people need to re-order.
If the products are good, your customers will be satisfied and keep ordering.
It's more challenging to build residual income with one-time-only sale products like water filters, as you need to keep finding new customers.
You will still need to find new customers if you sell consumable products, as there will always be some attrition, but you won't need to always start at the beginning.
Does the company encourage regular re-orders?
Some companies offer incentives like discounts, gifts, or free shipping if you sign up for an auto-ship program which will help your product sales to be regular.
Does the company make it easy for people just to be customers?
Some network marketing companies require a person to purchase a business kit even if they only want to buy products.
Some companies place purchase requirements on their customers!
You should know that many potential customers will be turned off if you make it difficult for them to buy the products.
Look for a network marketing company that allows people to sign up as ‘preferred customers' or ‘wholesale customers' with no extra fees or requirements, and without giving their social security number.
That way they can order directly from the company, saving you a lot of time and energy.
Do they deliver products on time?
It sounds basic, but some companies do not get this one right!
Don't take anything for granted.
Do they have a lot of back orders?
One network marketing company I know of has had several of their favorite products unavailable for months at a time!
No company is perfect, but please check this out before you get involved.
Do they pay their affiliates or distributors on time?
This is an essential thing to check out.
Talk to some distributors who work with the network marketing company you're considering.
You can be sure if the company is late with their checks that the distributors will not be happy!
What do average affiliates or distributors earn?
Reputable network marketing companies will publish annual income statistics so you can see the realities of how many people earned what kind of income. Most network marketing companies have a few high-income earners, and the majority of people make substantially less.
Look for a network marketing company that provides a more even distribution of income, so that average distributors are still able to make a reasonable commission.
Does the compensation plan seem fair?
Can an average distributor be successful?
Statistics have shown that the average network marketer only sponsors two people into the business.
Do you have to meet group volume requirements to be paid?
This can be a big problem if you're short on product volume one month…you either have to make a significant purchase to get a check, or go without your check.
Will you lose the volume of distributors in your group who progress in their business?
Some network marketing companies penalize you for sponsoring a distributor who advances more rapidly than you, by removing that person from your group.
Companies with a “Breakaway” compensation plan will remove a downline distributor's volume from your group volume once she reaches a certain ‘breakaway' level…leaving you scrambling to either make up the difference in volume yourself or lose the income.
Can you earn a profit from product sales?
…Or do you need to recruit others into the business to make a profit?
Make sure your products can be comfortably retailed, which provides you with immediate profits.
Find out how many customers you'd need to earn $300 a month which is usually enough for you to start showing a profit.
Can you reasonably expect to find this number of customers?
A reputable network marketing company will pay you only for product sales, or sales of your downline distributors….they should not pay you to recruit new distributors.
What kind of marketing support does the company provide?
Do they provide good quality free or low-cost marketing materials?
Beware of a company with high priced sales and motivational materials!
They should be focused on helping you sell products, not on getting rich from their sales aids.
Can you access company information quickly from a website or fax on demand?
Are there easy ways for you to check your group volume, view your downline, and order products online?
Most companies provide this free, some charge a fee.
Do they have a distributor services department?
Some companies offer a toll-free distributor line and e-mail service, most I've seen make you pay the long distance telephone charges.
Are there distributor incentives and prizes? It's great to be recognized and rewarded when you're doing well!
Do they provide regional training and distributor support events?
Most of these are paid events though some companies provide a free products certificate if you attend.
Do they have any internet marketing systems?
This area is not a strength for most network marketing companies, but it always helps if there are some experienced internet networkers in the company.
There are some business tools that allow you to build any business including a network marketing business on the internet using proven internet marketing techniques.
Does the network marketing opportunity you found listen to distributor feedback?
Find out what channels of communication the network marketing company uses to stay connected with distributors, such as distributor advisory boards, voice mail, and so on.
Talk to distributors of the company you are considering. Are they happy with the company?
Do they feel their voice is heard?
Also, notice the company's internet marketing policies. Do they allow their distributors to market online, or do they have such strict guidelines that you can only talk to people one on one?
Find out what the network marketing company policy is on using self-funded advertising sources.
Some network marketing companies will not even allow you to participate in a referral leads generation company, which would allow you to get your leads free through referring your team.
How much does it cost to get started?
Your network marketing company may allow you to sell products as a preferred customer so you don't need to purchase a distributor kit.
Other network marketing companies require the purchase of a business kit which can cost from $10-$100.
Depending on the network marketing company, you may need to purchase a certain amount of products to activate your business.
For most companies, there is an auto-ship requirement to get paid, which ensures that you are continually moving product volume through your personal use, for product samples, and for resale.
You will also need to purchase some promotional literature, business cards, perhaps a network marketing company approved website or other online marketing materials, leads or other advertising services, and some products to try yourself and to use as samples to share with others.
Depending on your budget you could get started for a few hundred dollars or up to $1,000…but DON'T pay for high-cost training seminars, fancy office space or other high priced services.
Reasonable distributor training seminars usually cost $30-$100 per day.
Remember, you want your network marketing business to be duplicatable.
If your potential business partners see you investing big bucks, they will not look at your business as something they can do!
Are there monthly sales quotas or purchase requirements?
Most network marketing companies have volume requirements for their distributors.
This is the amount of product volume that you must purchase for personal use, as samples, or sell to others each month.
This amount can vary from $100 to $300 a month. Find out beforehand how much you product volume you need to be paid.
This set-up ensures that you use the products personally, but don't get involved in a network marketing company whose products you won't use, or whose purchase requirements are beyond what you feel you can comfortably consume and sell every month.
MOST good network marketing companies have several autoship levels to accommodate all different budgets and family sizes.
Is it a good business opportunity?
Is this a network marketing company and opportunity that you would feel excited about?
That you would want to recommend the products or the business opportunity to a friend?
- Educate yourself about network marketing before you get involved, so you know what to expect.
- Don't allow yourself to be pressured into making any hasty decisions.
- Carefully check out the credentials of any network marketing business you are considering being involved with.
- Know yourself and your interests so that you choose a product line that interests and excites you.
- Choose a network marketing company whose values are in harmony with your own.
Though network marketing is not like traditional sales, you will still be selling products and looking for potential business partners.
If you are not willing to learn how to do this, it's best to find another kind of business.
There are many other venues you can follow if you want to build an online business as a solopreneur.
Is Network Marketing for You?
If you think you might enjoy being a part of a network marketing company, one of the best ways to explore the industry is to request information from legitimate, reputable companies and talk with their representatives.
Don't allow yourself to be pressured into any decisions.
Take your time, pay attention, and do your homework.
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