For any MLM company, there are two main paths to scaling: internal improvement and exploring new markets. While the first path is seen as primary and familiar, entering international markets often raises questions and concerns among business owners.
In this article, we will analyze the three main strategies for MLM company expansion into international markets and discuss how to avoid common mistakes.
Scaling MLM Business in the International Market
The initial challenge facing the company is overcoming the language barrier. This is not surprising, as clarity in communication is the key to success in any endeavor, especially in network marketing. However, translating resources into local languages is not enough, as each country's market is unique and differs, including in behavioral characteristics, legislative regulation, and other aspects. To correctly assess the company's prospects in the market of a chosen country, it is important to get an expert evaluation.
Specialists at FlawlessMLM have extensive experience in launching projects in countries across different regions of the world and can assess the prospects for your company's expansion in the market of a chosen country or region. Our experience shows that there are three effective strategies for entering new markets:
STRATEGY 1: DISTRIBUTOR-LED EXPANSION
By allowing international sponsorship in your company's bonus plan, you provide an opportunity for experienced leaders of structures to expand their activities beyond one country. This usually encourages them to enter new markets and actively work there. Top leaders see unexplored territories, especially in border regions, as a real gold mine. Leading leaders in Germany will attract distributors in France, the Netherlands, Belgium, Luxembourg, Poland, Denmark, and so on, which can create a gold rush among leaders in new markets. Specially designed bonuses and incentives can temporarily further accelerate this growth.
One caveat about this method is that companies without a local presence can too easily succumb to the influence of local feedback. When network marketing leaders offer their ideas or criticism in a place where the corporate team is located, there is a built-in filter that helps management separate good ideas from bad ones. Without this localized point of control, unscrupulous leaders may end up on top.
Pros: low investment, quick results
Cons: low level of control, loss of trust in the company due to leaders' mistakes
STRATEGY 2: CORPORATE EXPANSION
Establishing a corporate presence through local offices or headquarters is a mandatory condition for MLM companies in many countries. This is especially important for companies that expect rapid growth and will require streamlined accounting processes to comply with local tax laws.
If your company has already succeeded in hiring employees to handle a large volume of work locally and conducting regional training, having a local legal entity with corresponding home offices will be critically important for supporting and attracting and retaining high-level talent.
Pros: Fast market penetration
Cons: High cost, lack of a "Plan B"
STRATEGY 3: EXPANSION THROUGH AN IMPORTER
Collaborating with a local organization through a distribution agreement can be beneficial for companies with a large inventory of goods in stock. In such a collaboration, the local supplier takes on the burden of import while maintaining flexibility in pricing and solving network tasks.
Our experience suggests that it is important to pay attention to the fine print in your agreement with importers. You need to delve into all the details to avoid nuances with payment cycles, lost profits due to product returns, and customer service issues that can tarnish your brand's reputation.
Pros: Low investment, flexibility in management
Cons: Your reputation is in the hands of the contractor
HARD and SOFT Launch
The strategies mentioned above can be implemented in two ways: hard and soft.
The first involves active expansion and significant initial investments to create initial momentum. The advantage of this method is quick payback, but it also entails the risk of losing financial investments. When choosing this launch method, it is important to have a preliminary expert analysis of all the nuances of entering the market.
The second, soft option involves gradual, cautious actions and constant intermediate analysis of results. On the other hand, this approach can help managers adjust their practices to maintain flexibility and invested funds, potentially slowing down progress.
Sooner or later, any successful company faces the need for international expansion. By analyzing all the nuances and choosing the right strategy or even their combination, the entrepreneur gains huge chances of success. The FlawlessMLM team can become your reliable partner on this path, providing high-quality consulting and cutting-edge technological developments. Follow the link to get a live expert consultation.
