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In my 31 years of network marketing, I've never seen a better company than Yoli, that's why I came out of retirement to build another huge business. Fill in the form below for a FREE bottle of Alkalete!
How to Analyze a Network Marketing Company
There are thousands of network marketing and pseudo-network marketing businesses out there. They all claim to be the best, have the best product or service, the most amazing compensation plan since the discovery of fire, and a sure fire duplicable marketing system. For a few, these statements are true, but for most, they are not. The question is how do you get down to the nitty gritty and cut through the smoke and hype to get to the truth?
Over the last 30 years in network marketing, I’ve thoroughly researched over 1,000 companies and during that time I’ve learned (sometimes through the school of hard knocks and empty pockets) how to spot the companies that are going to do well and those that may do well for awhile, but flounder later. In this article, I will share that knowledge, so that you too can dig through the stuff and find the real deal.
As I’m analyzing a company I go through five progressive steps. If any don’t meet my criteria, I eliminate the company, no matter how good the other areas look. Here are the five steps:
1. Management Team – This to me is the most important criteria in selecting a network marketing company. The reason is that you can have a below average product and a great management team will build a huge company. The opposite is true – a bad management team will take an amazing product and drive it into the ground. The keys to look for in a good network marketing management team are: Experience as a successful network marketing distributor (you want them to think like you do); experience building multi-million or billion dollar businesses with facilities, employees, cashflow, etc.; the President/CEO should be a charismatic visionary leader who naturally attracts followers; the CFO should be someone with extensive experience handling money decisions for large companies; there should also be a marketing person who has extensive experience marketing in network marketing. Finally, it’s great if the team includes someone who has experience in international expansion.
2. Market Trends – Once I can see that the company has a good management team, then I move on to market trends. I do the research necessary to assure me that the company is sitting in front of at least one powerful marketing trend. For example if it is a solid network marketing company that is going to be around for years to come and has a solid, ethical business approach, it will be a good entry into the Entrepreneurial Boom – as corporate America has changed and the economy has worsened, more people have become interested in home based businesses. If the company markets a solid health product, then the company may be sitting in front of the powerful Wellness Boom, which is approaching a trillion dollar industry. 76 million baby boomers here in the U.S. are all interested in wellness and that’s a powerful market trend. Take a close look at the product/service market that the company is targeting and determine if market is flooded with similar products/services or if it’s a powerful market trend that will drive the company through massive growth for years to come.
3. Product – That brings us to the product. You will find just about everything sold in network marketing. However, not every product is suited to network marketing. If you look historically at the industry, you will find that the #1 product category is health products; #2 is skin care; and #3 is household products. The reason these are the top product categories is that they are all consumable. The health products are most consumable down to the household products. So, the product must be highly consumable. It should also be unique in some way – patents, exclusive, nothing else like it anywhere, etc. This way you aren’t playing the my product is better than your product game. The product/service should be reasonably priced and compete effectively with what is out in the non-network marketing world. If the product fills a common need, you’ve got a real winner and if it results in an emotional response (it impacts a person’s life in an emotional way), then you’ve got a very big winner.
4. Compensation – Following a good product is a fair and lucrative compensation plan. So, what does that mean. Well, first it’s important to know that historically the average number of people a distributor sponsors in their life with a company is 2-3, so if a compensation plan will not allow a person to earn at least a good part-time income by sponsoring 2-3, then it’s not a fair plan. Also, a person working 10 to 15 hours a week, should be able to develop a $50,000 + a year income within 1 to 3 years with the plan. Finally, it should have big back end money to attract those who want to earn the high six and seven figure incomes. That’s a well balanced and complete compensation plan.
5. Training and Support – The number one reason people fail in network marketing is that they don’t do the work necessary to build a business. The second highest reason is that they are not trained and supported properly. In a good network marketing company you will find a mix of company training – primarily on the product/service, technology, tools, and compensation plan and training offered by leaders – how to build a network marketing business. A solid network marketing company will provide quality tools – company web site, distributor sites, webinars, DVD’s, CD’s, brochures, etc. They will provide national conventions and regional events. The leaders will provide local meetings, teleconferences, and their own webinars. In a we executed network marketing system, no one has the excuse that they weren’t trained properly.
There you go; those are my five steps in analyzing a company. Each one is progressive in that if one doesn’t pass, the research ends. I will not recommend or get involved with a network marketing business that does not meet all five criteria. Now, you will find variations of quality in each area, but when you find a company that excels in all five, whoa, you’ve got a real winner.
If you're at a point where you are searching for a network marketing business, hopefully this will help you cut through the fog and find the light. If you are already with a company and are completely happy, then you might store this away for some future year when you are looking. In any case, I hope this helps you to eventually enjoy total time and financial freedom in this great industry.
About the Author: Rod Nichols
Member Since: 08/06/2007
I'm a Distributor For:: Yoli Blast Cap Technology
Other Company: I am a founding distributor and Triple Diamond with Yoli
Industry: MLM
Primary Web Site: http://www.AlkalinityBiz.com
How to Analyze a Network Marketing Company
Great article, Rod. I would add to #1, if the management has experience as a network marketer, he would know how tough it is to build a business so would have policies & procedures that are fair to both the company and distributors, not just the company.
For #2, it is advised never to join a company until it's at least 2 years old.
#3. You definitely need consumables. The hardest thing to do is to get new customers, so you want to keep them coming back.
#4 The compensation plan must be fair. And, with proper training & a system of duplication, a part-timer can learn how to sponsor more than 3 people and ultimately reach unlimited income.
Be empowered to prosper!
Great article Rod!
Great article Rod!
I'm sure this will be very helpful to those who are seeking to find the right company for them.
Cherie
Why You Should Analyze a Network Marketing Company
These are all gret points, Rod. It is extremely important that we analyze companies before we join them.
Most of us make our decisions with our heart rather than our head. I guess that's why 97% of all network marketer's fail.
I think all of your points are good ones, but I especially like your point about the products. Many MLMs have great products, but most of the products are being purchased by distributors at exorbitant prices. They do this to remain qualified for the compensation plan. Bad move.
If the product you sell as an MLMer isn't a good value at full retail price, the coompany will fold. You need consumers who are not reps to clamor for your products because of the products uniqueness or high quality.
I enjoyed this article a lot.
Why You Should Analyze a Network Marketing Company
These are all great points, Rod. It is extremely important that we analyze companies before we join them.
Most of us make our decisions with our hearts rather than our heads. I guess that's why 97% of all network marketer's fail.
I think all of your points are good ones, but I especially like your point about the products. Many MLMs have great products, but most of the products are being purchased by distributors at exorbitant prices. They do this to remain qualified for the compensation plan. Bad move.
If the product you sell as an MLMer isn't a good value at full retail price, the company will fold. You need consumers who are not reps to clamor for your products because of your products uniqueness or high quality.
I enjoyed this article a lot.
WHICH Is MOST IMPORTANT In CHOOSING a BUSINESS OPPORTUNITY
Great post, and one I almost agree with entirely, except one point. You hit on the product, but in the end, in MLM or any sales, without the product, you have no company, and without a company, who needs a top management team.
Granted, with a top management team you can take a lessor quality product and it may see limited success, but in my experience, lessor quality products never survive for the long term, no matter how great the management and company are.
In my opinion, it is all about product or service first and foremost. Every company starts with a product, and top quality high value products which are exclusive and patented will make the company, the company does not make the product or service. I guess it comes to what comes first, the chicken or the egg. lol
Again, I agree with your overview and points, but I put the product or service on top as most important. I have never found a company with the best product or service, best price point, exclusive, patented, etc., ever fail. But I have seen many top management teams fail over and over in the industry selling less than the best, or at best, the same old same old. Value rules in a recession, so it is even more important than ever to have the best product or service, best quality, and at the best price. VALUE RULES in todays economy, and what use to work no longer does, and that is the me too hype we see over and over again in the industry.
Success to all, Mike
You are all right on the
You are all right on the button with the exception of one point. I disagree with Irma on the two year mark. I understand the philosophy but unfortunately with a lot of companies by that time the top has been so loaded that it is difficult for others to REALLY get there. If someone is just looking for a normal growth or income then that is the prudent approach, but you are already way behind. When you get on board with a company it is like playing the stock market. You are actually investing in this company. Do you wait to see how fast the company grows and then come in after everyone else has made their money or do you take the small gamble and jump in when you see a company that has all the 5 points and is really ready to take off. Would you rather be one of the first at the top or wait and see and join when everybody else does. These points are a great way to analyze a company when it is fresh and new and get on board before everybody else does. Would you rather be on board a lets say Mary Kay before they were two years old or now. This article gives people the keys to look for, especially for the new companies. Take these points and look for that up and coming company with say less then 500 distributors rather then those with tens of thousands. That is when this knowledge will serve you best.
With Gratitude,
Paul Blann
http://prblann.ws
Network company annalizys
Rod, with my mentor, Michael Dlouhy, I've learned to look at the opportunities as the so called "5 Pillar Copmpany". Thay are:
1 - Does the company management have personal experience building their
own networking organization? Have they done it with integrity?
2 - Has the company passed the "early failure" Time Line? Are the
company's products timed with the beginning of a massive trend of
consumer demand?
3 - Does the company have a Remarkable product at a reasonable price?
4 - Does the compensation plan pay Part-Timers?
5 - Does your Mentor offer a System for Success that will work for
You?
As you see, they are in line with your ideas and this is good. I liked the article very much.
Fernando Oliveira
A Mentor with a servant's heart
http://Feroliva.mentoringforfree.com
Great article. Really
Great article. Really enjoyed it. Personally, my tested method of picking winners in Network Marketing is simply: Product! Product! Product!
Will I buy this product at this price if there was NO compensation plan behind it?
Can I sell just the product and get repeat buyers from total strangers (not family and friends who may just do the one-off 'pity'buying to help you out)without pitching the opportunity to them?
Can I confidently and passionately introduce myself and my products ANYWHERE without talking about the comp plan/network marketing part?
Does the product offer real value and tap into people's emotions?
Good luck to anyone still searching for an opportunity...once you find the right one, you'll know deep down cos it becomes so natural and your passions comes through!
Strong Points
I remember reading Henry Ford say "companies don't pay wages, products pay wages." Quality products(or services) are the backbone for any company to grow and prosper. Management must be able to make sound, business decisions for the future of the company, but if the products are inferior, nothing with overcome strong management leadership. Market trends such as health & wellness(Uncle Sam wants to takeover the healthcare industry) and training (educating & developing others for the business)remain very crucial to the long-term success of any company.
why you should analyse a network marketing comany
Thanks Rod. Top article. This is one of the most valuable information I have come across lately. Very important for your success building the business and very critical to start a network marketing business.
aarati
MLM => the most 'CRITICAL' Evaluation Factor
Hey Rod:
I believe that we are both long term "advocates" for this great industry.
As a highly respected industry professional, you always seem to contribute very "positive" articles, which I greatly appreciate.
To me, the Network Marketing "business model" is one of the finest creations ever developed by the human mind - regardless of whether you build it ONline - or OFFline - or both. It really has no equal for the average person, to be able to gain total economic independence. Having been involved as a Network Marketing customer, entrepreneur and coach for over 20-years, I continue to enthustically recommend it.
EVALUATION - When it comes to "selecting" a Network Marketing company to set up a Home Business - I have some strong feelings I'd like to share...
First, I totally agree with ALL of the important criteria you mention above -- but I believe that one "very critical" factor is missing -- and to me, it should absolutely be the ((#1)) starting point for ALL of us, whenever considering ANY MLM company -- bar none.
I cannot stress enough, the urgency surrounding this ONE factor -- it ought to be JOB ONE -- just as it should be if we were buying a Franchise, a Home, a Brick-And-Mortar biz, a high-rise Office Tower, Apartment complex, Condo, etc, etc. And I say that both as a Financial Advisor and having served on the Board Of Directors of our DRA (Distributor Rights Association)...
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http://www.MLM-DRA.org/BillOfRights.asp
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Having served on the Board for almost 4-years, representing Canada - I (we) have "seen" the horror stories that happen constantly between Companies and Distributors.
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POLICIES & PROCEDURES - This is the LEGAL AGREEMENT we sign when we "join" an MLM company (and sadly, it's usually signed without even "reading" it, let alone carefully "studying" it).
-- By itself, the P&P document will tell us "everything" we need to know about the integrity (or otherwise) of the company owners. It may be in the "fine print" - and we may need to "dig" for it - but the P&Ps will truly reveal a company's thinking - its heart - its attitude towards the field. It spells out the Corp. 'attitude' behind its -Terms & Conditions - its Comp Plan - its Customer Service - it's Product Research - its Customer Satisfaction Guarantees - its whole Field Support Structure - and much more.
-- Many companies have a "ton" of RED FLAGS in their P&Ps and in their T&Cs (Terms and Conditions) -- I call them "gotchas" -- and many have P&Ps that run 20-40 -to over 100 pages long! Many P&Ps are not even 'openly displayed' on their website Home Page.
-- Hidden P&Ps - To me, it is outrageous that any MLM company would NOT show a link - easy to see - right on their Home Page - to their Policies & Procedures. Some companies actually "hide" their P&Ps - and//or won't let you even "see" them until you're almost signed up - or worse still, not "until after you join" - amazing. What does that tell us ((perhaps they 'do' have something to hide))?
-- The P&Ps are drawn up by the company's bank of attorneys - to protect the "Company" - not the "Affiliare / Distributor" - and it gives the "company" all the control, power and ownership ((of ALL the assets - the products, services, offices, promotional material, websites, compensation plans - and "our" "downlines")).
-- Many (perhaps most) of these P&P documents contain some very serious "gotchas" - minefields, that WE as Affiliates need to become educated about, and keenly aware of - such as "wrongful / unjust terminations" - potential "lawsuits" - the right to impose negative changes in the Comp Plan - the right to "go direct" and bypass the Rep -- all things that can wreck absolute havoc on families, both financially and emotionally.
NOTE - Obviously, the companies have every right to protect themselves legally (and thus, their Affiliates) - that goes without saying. However, many of these (often, boiler-plate) P&Ps contain language that most lay people cannot understand - but, bottom line => Affiliates / Distributors do not - "own their OWN" business - as is usually promoted in the glossy print ads. They are strictly "commissioned Sales Reps" for the company. Not that this is a "bad" thing - it's just the reality. Yes, Network Marketers are IC's (Independent Contractors) - strictly for TAX purposes, so as not to be treated as Employees - but suffice to say, they are not IBOs (Independent Business OWNERS).
ECONOMY - More and more people right now are "searching" for financial alternatives to an uncertain future. Our industry holds the "perfect answer" for many of them, including those who previously might "never" have looked in our direction ==> some very intelligent, ambitious and talented - executives - professionals - baby boomers, etc. (those who usually have a healthy 'Rolodex' too! :-) This reality alone, could become a "major bonanza" for us in this industry -- BUT quite frankly, if most were to "study" in advance, the Network Marketing 'P&P Agreement' (or had their advisors review it, for them) - they would NOT like what they see -- they would run. This is a sad statement on our industry. P&Ps need to be revisited by the companies -- they need to be totally re-designed, in an effort to bring about an authentic, long term "business partnership" environment between Companies and their Reps.
If (potential) Distributors would only take the time to "print out" and "read" and "study" those P&Ps first - (or have a legal mind do it for them) - BEFORE ever agreeing to them, and signing on the dotted line - they might avoid the terrible heartache that they could face later. Again - this is not to "put down" the many fine MLM companies out there - no. This is only to strongly encourage "due dilligence" - and to give a "heads up" about this.
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MORE => The "BUSINESS RATIO"? - The company must have an excellent, verifiable (healthy) "business ratio" of Customers to Reps (ideally, a 75%-to-25% ratio, or better - otherwise, it will become unstabe, and begin to unravel at some point).
MORE => "ATTRITION" RATE? - It must have a verifiable low "drop out" rate (attrition is the "curse" of the Home Business industry)
MORE => IS IT A GOOD "FIT"? - You need to carefully determine - in advance - whether the business being considered will FIT you properly, in terms of your time, money and marketing skills (one or more of these attributes will be required by most companies - but not 'all'). As well, there are some businesses that you could "never" build successfully - no matter how hard you try - because of your particular 'personality' trait (a KEY consideration).
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INTEGRITY - This is SO important to look for. It should be the very "foundation" of the company's Leadership. It is moral soundness - it is honor - truth - character - freedom from corrupting influence, or motive. It is about practicing the Golden (Platinum) Rule. It is about treating people with respect - without judgement. It is the most 'fundamental source' of one's personal worth. INTEGRITY should cause the Management / Ownership to provide the highest level of CARE and ACCOUNTABILITY to those they lead. We need to look for it - in their Vision - in their Mission - in their Leadership - in their Purpose - in their Values - in their Promises ==> so that we will always "know" we have the SECURITY of being able to pass our businesses on - to our children and to their children.
If (potential) Distributors would only take the time to "print out" and "read" and "study" those P&Ps first - (or have a legal mind do it for them) - BEFORE agreeing to them, and signing on the dotted line - they might avoid the terrible heartache that they could face later. Again - this is not to "put down" the many fine MLM companies out there - no. This is only to strongly encourage "due dilligence" - and to give a "heads up" about this.
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"SELF" BRANDING - My own recommendation is to NOT make our "MLM" be our BUSINESS. We're leaving ourselves open to possible abuse + we're far too vulnerable if that becomes our "primary" source of income Instead, our MLM should be (an important) "part" of our overall BUSINESS ENTERPRISE ((diversification + multiple [Affiliate] income streams = both for personal protection and for higher profitability)).
PRODUCT - The "only" product you should ever lead with is ==> YOU (to build relationships "first").
This is one of the reasons that some of the 'pioneers' of Internet Attraction Marketing (like Joe Schroder, Mike Dillard, Diane Hochman and Ann Sieg) all put SO much weight on the critical need for us to brand OURSELVES first - and not the companies / products / services, etc. It reduces the risk greatly - it makes us far less vulnerable.
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More Due Dilligence => http://www.MLM-Wise.com
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More Due Dilligence => http://www.MLM-Wiser.com
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Again - love your coaching on this and other issues Rod - just wanted to add this (major, in my opinion) component to the "evaluation" equation.
Warmly / Peter A.
Peter Arnold, CLU, CFC / Founder
Business Achievers Academy / Canada
Great Post with Great Ideals
I agree with almost everything you mentioned. I differ with a few of your comments. I do not think you have to have a huge facility to have a good MLM. The backing that I feel is most important is having a Management Team that thinks of the representatives before they think of themself. This is call Integrity. You will have a much larger retintion with a management such as this.
The second thing, I think that is most important is having a Mentor or Group of Mentors that will take you by the hand and help you until you are able to fly alone. This is called relationship building. People will follow people faster than they follow companies. It is the trust in the Mentors that keeps the momentum going. With that you will sponsor more than 2-3 people in your life time.
If you and your company has trust and integrity, the word will spread and you will have people coming to you instead of going to them.
You are so right about the Comp Plan and the Products. They both are a must to have a great opportunity.
Thanks for giving me the opportunity to share my thoughts and God Bless to all.
Maggie Kress
maggiekress.com
Finding The Best Network Marketing Company
Hey, there Rod. I really enjoyed your article... I have written one very similar to yours. So you know what that means... we are on the same page!
I think a big part of choosing that right Network Marketing Company for you... is how passionate it makes you.
I have learned that sometimes it may take a few trials until you discover which company strikes your fancy and makes you passionate.
For the most part... just being involved with Network Marketing or MLM, shows that you are in the right place to begin with.
Thanks again, Rod.
Thanks
I appreciate your information. I have recently written about the same topic as well. Glad to see my thoughts are shared by others out there as well.
Great Article
Rod,
This is a great article, and had these points in mind when I selected a network marketing company for the first time. I worked as an executive recruiter for 8 years, and know the importance of assembling the right management team. The company I chose has an executive team who's built successful businesses like XanGo, Tahitian Noni, NuSkin and Nature's Way. I'm looking forward to reading more of your articles as I develop my career in network marketing.
Kris de Leon
http://www.myqivana.com/krisdeleon