Getting Paid to Recruit VS Paid for Creating Volume

One of the most horrible things to happen to this industry is for payments to be made for recruiting distributors instead of helping other people make money. MLM or Multilevel Marketing is suppose to be about a team of people with common goals and dreams working together. It takes team work to make the dream work.

Unfortunately some people look at down line distributors as some clown whose sole purpose is to make me rich.  They use phrases like its all a numbers game. They forget that these are real people with real hopes and dreams of building a future for themselves and their families. If you have the correct mentality for MLM then you will realize that you build your success by helping those people you bring into to your program to become successful. You can build no long term success by taking advantage of people to build your business.

Some companies are now paying recruiting bonus for signing up new distributors. This is done two ways by front loading product on new distributors. The new recruit is encouraged to buy a huge amount of product and buy thier way to the first level in the business. However all the profit goes to the up line member who has achieved some high rank in the organization who is most likely not the direct sponsor. Because this goes to some management level type distributor and not the one who personally did the sponsoring it is designed to only benefit the heavy hitters who are good at building organizations or even worse instituted by those who have already build a successful business to beef up the profits at the expense of the newbie. They know that the average person will only sponsor a couple of  people and will never benefit from this incentive bonus.

And to make things worse even though some companies don't have front loading bonus built into the plans some less than honest people found away of doing this by front loading sales and marketing tools in which super-dopa scum bag makes all the money. Some even sell their services to teach how to build the business they just were enrolled in. These practices are in my opinion evil. These are the kind of practices which hurt the industry as a whole and make good people think MLM is a scam.

And lets not forget about the poor bastard that just got ripped off. He or she may have spent several hundred to several thousand dollars to build a business to benefit their family only to be screwed by captain a-hole so he could get a fast track bonus. Getting in business with these jerks may have just doomed this new distributors chances of building a future. What about the relationships this guy will destroy with family and or fiends if he does sponsor someone who buys into same fast track rip off.  How would you feel if you got ripped off and your close friend was part of the scam.

Lets stop looking at people as dollar signs and start looking at them as business partners. If we sponsor people with the expectation of gaining success by helping other people gain success we will make good money and feel good about it. We all have the ability to bring integrity back into this industry of MLM by saying no to scams which pay for recruiting people instead of getting paid to help people.

The Theory Behind Product Points and Business Volume

In the world of MLM or Multilevel Marketing you will come across two terms in some form or variation. This two terms are product points and business volume. When analyzing a product line and compensation plans you will see products usually assigned four sets of numbers. These four are as follows: Point Value, Business Volume, Wholesale Cost, and Retail Price.

Wholesale Cost is obviously what you as a distributor pays for the product and Retail Price is what your customers outside of the MLM program pay for the same product. But what about the other two what are they and why are they important?

Each product is usually assigned a point value (PV) and is used to determine the amount of volume you create in product. This is used to determine the level you reach in achievement which in turn effects your bonus pay level. The business volume (BV) is normally the amount you are being paid on for your bonus.

The theory behind points is that it makes a business inflation proof. Lets say each product averages 2.5 PV and you need to reach a 100 PV to achieve a level in the business you would need to move 40 products. Lets say the average whole sale price is $5.00 in 1211. To reach that 100 PV mark you would have 40 products X $5.00 there by creating  $200.00 in volume. Now lets say 20 years from now the wholesale price is $10.00 each for the same 100 PV you would create $400.00

If the level in the business was based on a wholesale or retail price the amount of products needed to sell would be 1/2 as much in the above illustration. This would mean that the person who reached that level $20.00 years from now would make less than they would today. The actual dollar amount would be more but because of inflation the amount of purchasing power would be reduced. The theory is that by using points the money you would make after reaching a certain level would not erode away with inflation.

Business Volume or BV is what the volume you get paid on. For example lets say a product has 5 PV and 10 BV attached to them. they have a wholesale cost of $8.00 and a retail price of $12.00, lets also say you are entitled to 10% bonus on what you sold what would you make.

$12.00 (retail price) - $8.00 (wholesale cost) = $4.00 (retail profit)
$10.00 (business volume) X 10% (bonus level) = $1.00 (bonus received)
$1.00 (bonus) + $4.00 (retail profit) = $5.00 (total profit on product)

This is important to understand because this will have an effect on our evaluation of marketing compensation plans. If the average point value per product is low then you need to move more products then with a company that has a higher average point per product. Also we need to evaluate the ratio of points to business volume. A company with a 1 PV to 2 BV ratio is paying less than one paying 1 PV to 3 BV ratio.

So when you and I are reviewing the multitude of MLM or Multilevel Marketing plans please remember to keep PV/BV in mind because it has a lot to do with how much work is needed to achieve a level in a business and also how much we will be compensated for build an network marketing organization.

What Multilevel Marketing was suppose to be

Let me take a minute and discuss what multilevel marketing was suppose to be and what people have turned it into. To do so let me tell you about the founding of one of the largest and oldest multilevel marketing companies in history. That company is Amway. At this moment we are not evaluating the business opportunity only it's founding and the way the business started out. Because this will give us a foundation of what the first multilevel marketers envisioned.

Before Amway came into being there was a company named Nutralite which had some what of a multilevel structure. Problems arose within the Nutralite program and some of the distributors broke off and formed Amway. Two individuals started a manufacturing company called Amway and the rest created a separate corporation know as the ADA or Amway Distributor's Association. And agreement was reached between the two in with Amway Corporation would only sell products to the existing ADA and the down line they create. Amway was not allowed to add new distributors to the top of the chain any new business would come in depth under the 12 original distributors.

In the beginning they only had a couple of products so in order to create volume distributors where forced to develop a retail base as well as sponsor other people into the network. They in turn would have to teach others to do the same. As time went on the product line grow to several hundred products as well as agreements with other companies to market their products though a large catalog. As time went on people were encourage to forget about retail and just focus on sponsoring and using your own product line. The phrase was coined become a total user not a total loser.

This concept of just buy your own stuff has spread into many other multilevel marketing companies. The marketing in multilevel marketing has turned in to the multilevel buy your own crap club. This is the reason the industry has had such negative criticism through the years and why so many people have failed miserable in MLM.

When you take out the marketing part of multilevel marketing you take out the quick upfront money needed by many to reinvest in there business in order to build a successful organization. You will always make more money in the beginning by developing a retail base then you will by sponsoring. The bonuses paid out in the beginning with a small group are minimal at best. And in some of these companies the cost of buying products and training materials strips away a distributors savings accounts instead of being funded by retail profit. No business can survive long with large expenses and tiny revenue and neither can the average distributor.

Multilevel Marketing needs to get back to it's origins and reintroduce marketing. People need to get into business to market products and or services and then leverage themselves by teaching others to do the same. You don't need millions of people in your group just a hand full of people who truly want to be in a business. You need to get people in business to be in business and create volume, not to get people to get people in business just to get other people in business and have hundreds of people in business who have no business because they have no revenue.

Multilevel marketing has gotten away from marketing products because we were told people were afraid to sell. News Flash: Sponsoring is selling. There is no difference in selling a tube of lipstick than there is in selling someone a business concept except it is easier to sell lipstick. Also more people will be willing to buy lipstick than get in your business. If the people you sponsor are afraid to sell lipstick what in the world would make think they have what it takes to build an organization. If you are afraid to approach a person about a product you certainly will be afraid to approach someone about a business concept.

This is the reason so many people fail in multilevel marketing. It's this perverted concept of abandoning marketing and sponsoring people who should be retail customers or wholesale customers at best. You don't need everyone to get into your business (unless you are a wholesale buying club). You just need to get the ones who have the guts to market. The rest are customers. If you throw away retail customers you through away 95% of the people you come in contact with. People will always take the path of least resistance. There will always be more people who will be willing to be customers than distributors.

This industry needs to stop wasting it's time trying to recruit people who will pee their pants at the idea of sharing a product with people and start focusing attention on looking for people who are willing to build a real honest to goodness business. We also need to stop destroying the dreams of those who are willing to do the work by teaching them to chase the pants pee crowd instead of teaching them to build solid business with like minded people who are not afraid to sell.

Why retail products are so important

In my opinion an honest legitimate Multilevel Marketing company has to have products or services that are marketed to people outside of the business. If the only volume created by the company is to distributors than you have a dog. If you see a company that says by product snake oil for $29.95 a month an sponsor your friends to by snake oil then run away. There reason it is being sold this way is because the company knows that no one would by the crap unless there was some get rich quick ponzi scam involved.

Why do I say that? Because the simple reality is that people will take the path of least resistance. This means more people will be willing to buy a product from you at full retail than become a multilevel marketing distributor. With that simple reality in mind why would you want to limit your volume as a company by making it mandatory to get into the multilevel marketing business to buy the product? The answer is that either you are completely clueless about multilevel marketing or they are marketing overpriced crap that no one would buy in a store.

As a Multilevel Marketing business person why would you want to limit your earning potential by limiting your personal or group volume. If there is no retail sales then all your money is from people you sponsor into the business. If there volume is limited to each member purchasing $30.00 a month of product X then how much money will you make. Lets say that you get 10% of your front line distributors. You would need to sponsor 10 people just to cover your $30.00 a month purchase ($30 X 10% = $3.00 X 10 = $30.00) now lets say those 10 people each sponsored 10 people and level 2 also paid out 10%. LOL good luck. Now you have 110 people paying out $3.00 ea. You would make a whopping $330.00 a month and killed your self to get there.

Now lets look at a $30.00 product that wholesales at $25.00 you can sell the product to people outside the network and make $5.00 ea. Lets say you sponsored no one at first but sold 10 bottles of product X. You would make $50.00 almost as much as sponsoring 10 front line people. Now lets say you now sponsor 10 front line people and teach them to do what you just did. Now lets look at your income. You would still make $50.00 a month retail profit as would each of the ten but you would also make a much bigger bonus. (10 Distributors selling 10 products each is 100 products. 100 products at $25.00 wholesale price is $2,500.00 volume. $2,500.00 X 10% = $250.00 bonus + $50 retail profit is $300.00. Now compare that $30.00 you would have made by everyone just using the product.

Without retail products the only way to make money is to recruit and not everyone is successful at doing that at least on a large scale. This means the little guy makes nothing and will soon stop buying product X and the company goes out of business. If the company has legitimate products and services that real people outside the network will buy then even the little guy can make money and there is a higher likelihood they will stay in and continue to create volume.

 

In search of the perfect Multilevel Marketing opportunity

Many years ago I spent a lot of time and money trying to build a multilevel marketing business with a company I will not name at this time. I spent 15 years in and around the business and have a good understanding of marketing plans and how to determine if the plan is good or a waste of time. After 10 years of being out of the business I have decided to seek out a new multilevel marketing company to work with.

I have decided that I will investigate as many companies as I can find out marketing and product information on before I make a decision to join any company. So the comments you read about each company examined will be honest and not based on  trash talking someone else's business in order to promote my own. Unfortunately that is not the case with most people blogging about this subject. Most are either trying to sell you their plan or are pissed off at the industry and just want to vent.

I promise that I will provide links to all the programs that I am reviewing so you can do your own research. And I am sure we will hear from many individuals who are in those business who will most likely leave comments on this blog. It is up to each and everyone who reads this blog to do their own homework in regard to MLM companies. Some of the companies will be awesome and others will be dogs. In the end I will choose one or more company to represent based on what is most important to me. At that time I will make full disclosure of which companies I  will be working for and what made me choose that company.

It is my hope that this site will be of help to those who are seeking to either supplement or even replace their incomes with MLM or Multilevel Marketing also sometimes referred to as Network Marketing.