Marketing plan in MLM company: pitfalls

Hello, Ekaterina!

I want to get into MLM business.

I am studying MLM companies, no experience yet, my head is a mess.

Can you advise on what types of marketing plans different companies have?



Best regards, Vladimir

mailto:[email protected]



So, over and over again, I see how novice distributors evaluate the prospect of working in a company solely based on the analysis (usually quite superficial) of the marketing plan.

The logic is simple: I will choose an MLM company where they pay the highest percentage for turnover, and in such a company, I will definitely get rich.



Unfortunately, most newcomers do not take into account the fact that companies whose products are HARD to sell pay a HIGHER percentage. Companies where anyone can sell and recruiting is easier pay a LOWER percentage. But the actual earnings of a distributor in the latter company often turn out to be higher than in the first case.



I have an acquaintance, his name is Mikhail, and he lives in the glorious Russian city of Yaroslavl. Quite regularly, Mikhail from Yaroslavl sends me mathematical calculations proving that the MLM company he collaborates with pays a HIGHER percentage compared to the company I collaborate with.



At the same time, Mikhail does not ask himself the question: "In the end, what goes into the distributor's wallet - percentages, points, or actual money?"



Let me explain this with an example.

Let's assume that Mikhail's company sells a super-duper magical device for all diseases. The retail price of Mikhail's company's magical device is $300 (This is a purely hypothetical example, do not draw any analogies. In reality, Mikhail's company sells other products).



To find a buyer for such a super-duper device, Mikhail needs to work long and hard for a whole month.

That is, firstly, he needs to find a potential client suffering from various terrible diseases.

Secondly, it is necessary for this client to be willing to try the new "panacea" on themselves. Thirdly, the client must be able to afford to purchase the product at a price of $300.

Of course, such clients do not walk in crowds on the streets... And most of the people Mikhail meets do not meet all three requirements - perhaps they are able to pay, but are healthy, or vice versa. And sometimes they are sick, could afford to buy the super-duper device, but do not trust modern medical trends and prefer to be treated at the local clinic.

But when Mikhail does manage to find such a client and "close the deal," he receives a wonderful retail income - 50%. And he is very pleased. Unfortunately, this rarely happens. And in reality, Mikhail manages to sell 1-2 devices per month.

 

Now let's evaluate such a company from a recruiting perspective.

Even if Mikhail's MLM company does not require newcomers to buy such a device (which most similar companies with expensive products do require), recruiting in such a company will not be significant. This is because only talented salespeople survive in such a company, and people who joined the company to "earn some extra money without much effort," i.e. ORDINARY PEOPLE, of course, cannot sell such products. Consequently, recruiting is very small and unstable.



But in return for the network turnover, such a company pays, let's say, 20% of the group's turnover.

Let's assume that by making inhuman efforts, Mikhail managed to find several good salespeople, and his group generates a turnover of $3,000.

So, in a good month, Mikhail earns $300 in retail, and another 20% of the group's turnover, which amounts to $600. In total, it turns out to be $900, which, you will agree, is good money for Yaroslavl.

At the same time, we consider two factors: Mikhail himself works from morning till night. His people are workaholics too. It is very, very difficult to retain such people. If one of his salespeople leaves (which happens often), Mikhail has to find a replacement for them. That is, to maintain income at a certain level, one needs to work a lot and hard, and there is no need to talk about any serious development of the structure in such a company.

Now let's consider a different type of MLM company.

This company sells very ordinary, in-demand, and understandable products. Let's take, for example, soap, toothpaste, and laundry detergent. The prices of this company's products are quite reasonable, i.e. affordable for ordinary average consumers. To sell such products, you also need to find customers, of course. For example, find out who in the city of Yaroslavl washes their hands, brushes their teeth, and does laundry:-)



Selling products of such a company is easy, but the retail percentage is not that high - 30%. ORDINARY PEOPLE who came to earn some extra money can cope with selling such products. And if they can EASILY earn 30-50$ at retail, they can also easily attract others, similar ORDINARY people, who also just want to earn these 30-50$ without much effort by selling essential products. And these people can attract others, not only in Yaroslavl...



As a result, a group in such a company is built easier and faster, the turnover of such a group grows, and there is no need to exert superhuman efforts to maintain it at the required level. Therefore, the turnover of such a group can quickly reach the level of $3,000, then double, and then triple...

So, even if the company pays only 5% of the group's turnover (not 20% as in the first example), and each distributor earns a little at retail, the REAL INCOME of a distributor in such a company can be MUCH HIGHER than that of a distributor with super-duper gadgets. Maintaining turnover in such a company is incomparably easier, the group grows on its own, without requiring colossal efforts.

That's why, when evaluating a marketing plan, never fall for the illusion of high percentages. They don't always justify themselves.