Is Your Network Marketing Opportunity The Best MLM? Criteria #2: Product Line

Any individual that is serious about building a sustainable residual income using network marketing (or MLM) should evaluate a prospective company according to some basic criteria.  In my previous article, I discussed start-up costs.  In addition to evaluating the opportunity’s start-up costs, here’s another important item to consider:

2. What types of products are being marketed?

I listed this item as #2 on the priority list because I feel that it is one of the most important factors in determining the viability of your prospective MLM opportunity, as it <i>will</i> play a major role in how hard you will have to work in order to be successful.  There are three key factors (minimum) to consider when evaluating an MLM company’s product line: a) product replenishment, b) supply and demand, and c) product availability.

When you are marketing a hot product, the chances that you will be successful naturally improve.  For example, from 2000 through about the 3rd quarter of 2005, real estate prices in the United States were absolutely soaring.  Back then, it was a fantastic time to own a real estate brokerage firm (I bet you didn’t know that real estate brokerage firms are considered multi-level organizations!).  Many agents that worked for brokerages at this time made a lot of money with relatively very low effort.

Unfortunately, products like the one is this example are flawed when in comes to building residual income.  Housing is, for the most part, a one-time purchase.  The average couple may move two, maybe three times in their entire lives.  So if you sell that family a house, you get paid once, and maybe again in 7 to 10 years when they’re ready to move again (assuming that the family chooses <i>you</i> as their realtor).  So in order to sustain a decent income, you have to keep finding buyers for your product, and this can translate into a lot of time, effort, and expense.

Here’s a more viable alternative for the beginning MLMer:  Look for a multi-level company that markets consumable or renewable products.  These are products that must be replaced or replenished periodically (like foods and beverages, household cleaning items, subscriptions, and health and beauty products, to name a few).  These types of items do well for MLM because you enroll distributors or customers once and get paid residually for as long as they maintain the membership.

But there’s another factor that must be considered—market demand.  It’s not enough to belong to an MLM organization that markets consumable products if those products are not in demand.

Continuing with the above example, the current credit crisis has effectively brought the U. S. housing market to a virtual stand-still.  The average American who, just five short years ago, could qualify for essentially any loan they applied for now cannot even open a charge account at Macy’s.  So the demand for housing is negatively disproportionate to the available supply.  If you were a realtor, <b>there goes your income</i>!

But rather than give up completely on multi-level marketing and throw away years of solid networking and relationship building, consider this alternative:  Look for a company that markets a product that is in high demand.  One good resource for evaluation is the Inc. 500 List.  Each year, Inc. Magazine makes a list of the top ranked companies in terms of growth, industry, and revenue.

Finally, look for a company with an exclusive product that cannot be purchased <i>except</i> through that company.  Let’s face it.  Realtors are a dime a dozen, and you don’t even <i>need</i> a realtor to purchase or sell a property.  There are many MLM companies that have specialized vitamins, juices, skin care products, and other items that cannot be purchased in retail stores, making those distributors the exclusive retailers of those products.  Try looking into products with this characteristic.

The bottom line: real estate brokerage firms are <b>excellent</b> multi-level organizations; but if you are a beginning MLMer looking to leverage your time and financial commitments, today’s economy may be dictating that you look elsewhere for a residual income opportunity.  But don’t just take my word for it…take it for checking!