This article will detail how to go about choosing an MLM company. I show the reasons behind the Who, Why, What, How, and Where of choosing an MLM company that is suited to you. These points have been valid for years and will be valid long into the future, not just in 2023.
I am assuming you know how MLM, more commonly known as Network Marketing or Direct Marketing works, if you’re not sure the following basic diagram shows the initial stage of recruitment.
The diagram above shows how you have built a small downline.
First, you recruited two, those two went and recruited two more who then went and recruited seven more.
This makes the system a big hierarchy because you are also a part of someone else’s downline.
Initially, you will not make any money from these 13 people because their joining fees go straight to the company.
However, if the company has a policy that a new participant must purchase a certain amount of product then you will be paid a small commission from those purchases.
The commission payments work on a sliding scale.
You will be paid a higher rate for your initial recruit’s purchase and less for the lines below them.
And of course, you will continue to receive commissions from the products you sell and the products they sell.
This is just a simplified example, there is nothing to stop you from recruiting more participants and then splitting the participants into more say a left and right downline.
But, let’s get into how you go about choosing an MLM company to become involved with, without ruining your reputation and alienating your friends and family.
The Basics of Choosing an MLM Company
It all begins with the “Who, What, Where, When, How, and WHY!
Let’s start with the Why.
Not the why you want to become involved. We all know you are looking to grow your income selling a product that actually helps people, and you may be working on a plan to work from home.
The WHY you really need to understand is why you need to do some serious research into the various companies promoting what you believe are good products.
The products may align with your values, but do the company’s values and behavior align with your principles?
It would be useful to have a book and compile notes on each company you research.
These are the 5 major questions you should be asking:
- Who are the owners, and who else is involved in the management of the company?
- How long has the company been operating?
- Is it National or International?
- Are they registered with the BBB and do they have any complaints or lawsuits filed against them?
- Is the compensation plan easy to understand?
A short overview of the importance of those questions:
1. Many MLM company owners have a history of setting up companies going broke and setting up new companies.
Many top executives have chequered histories of working for one company as a top-line distributor, then switching companies or starting their own, and taking proprietary property belonging to the previous company with them.
2. It can take a couple of years before a new MLM company can get its act together. A lot of it depends on the guys at the top. Look for a company that has its organizational structure together.
3. If the company has international outlets check out who the international managers are.
Other countries have strict laws regarding MLMs, but you still need to check for complaints in those countries. Just google complaints about XYZ in new Zealand for instance.
Those two organizations are two of MLMs and other deceptive advertiser’s nightmares. Reading complaints about a company on the BBB website can tell you a lot about a company.
Truth in Advertising is proactive in protecting consumers from deceptive advertising and does pursue legal action against companies it believes are scams. The BBB on the other hand acts more as a conciliation advocate between a company and a consumer.
Slow delivery times for instance usually mean their organizational structure is not working, or worse there may be a cash flow problem.
The number of complaints and slow response times will provide clues as to why you should not become involved with a company.
Product complaints mean bad quality. I tend to not place too much value on people wanting a refund. They have made a mistake and want out. Any company will hold the cash for as long as they can, not just MLMs. But it is still a red flag.
5. The Payment Matrix:- To be honest I see them and my eyes glaze over. I once had a girlfriend who could figure them out easily because she was a member of a few MLMs.
If you can understand it, or have someone give you a clear explanation, you will not be going in blind as to their payment structure and methods.
How is the MLM Selling? To Whom, and Where?
MLMs have a tendency for selling organically. It saves them the costs of advertising in mainstream media, who are not exactly fans of MLMs.
The internet has changed the selling process more than a little (more on that below). The previous way of promoting an MLM by holding meetings or parties was a genuine organic way of generating sales. All done with the cost of a few phone calls and giving out some samples.
It may have taken some effort to organize. Sure, some won’t show up, but those who do have a genuine interest, and everything is upfront.
This next bit is crucial.
A is a team leader and a seasoned MLMer, who knows a lot about the product and the company. She knows how to conduct a product discovery night, and, she is there helping B (who she recruited), get started.
This is what a good team leader should do. Throwing a new participant in at the deep end is a setup for failure. Everyone needs some help initially. Plus it is a great way to build goodwill and expand your business.
So, if you go to a meeting take note, because it may be expected of you one day, and also, if due to your research, this MLM came across your radar as a successful company, then you can be nearly 100% certain that it has its act together.
Attending a meeting is one of the best things you can do. It is the place of discovery, the place to ask pertinent questions, face to face.
The questions could include:-
- How many marketing distributors for this company are in my community?
- How many are actively promoting the product? A great percentage of participants buy products for their own personal use without worrying about the promotion side of things.
- If you join who would be your sponsor?
- Who does the product(s) help and are they affordable?
- What are the various options to join?
During my research into one MLM company (I forget which), one guy told me he joined via their online page, then found out most of the people in his street were members of the same organization!
Let’s move on to Where the company is selling.
My guess is 99.99% of MLM companies these days have a website. That in itself is not a bad thing.
But, joining a MLM via a website and confining your marketing efforts online is not going to advance your financial position. In fact, quite the opposite is likely to happen.
This is another reason why, before handing over any money, you should find out how many participants a company has actively promoting their products in your area.
There may only be one or two, and they are easy to find, just look for small notices on notice boards in shopping centers or in the windows of small retail shops.
If you have come to the conclusion that the product promotion in your locale is far from saturated, then call the number shown on a notice you have seen and arrange a meeting with them.
This way you can get the full story on what is happening in the local area, and evaluate your chances of success.
By listening closely to the answers to your questions you can gauge the level of sales expected of you, and how much pressure there is likely to be for you to achieve certain targets.
If the answers continually move to recruiting, then you most probably have chosen the “wrong horse”.
Of course, there is always more you can do. Checking out the local library and reading some books on MLM is one more thing you could do.
I have quite a few reviews Here.
Talking to people who have been involved in MLMs can be a help, but there seems to be little middle ground on the subject. It is either loved or hated.
Personally, I don’t hate it, but it is not my thing and I don’t become involved in them. Each to their own.
Hopefully, the tips above help you in making your decision.
Thanks for reading.
This solopreneur article shows how one guy makes $150,000 a year working 3½days a week.