Understand, however, that just because a business is legal does not mean it is necessarily a good idea. MLM businesses, although legal, are extremely risky. Distributors invest their own money in products that they may or may not be able to sell. Building downlines is difficult and time-consuming. Also, you put others at financial risk when you bring them into your downline. Before becoming involved in an MLM, decide whether you are comfortable with not only risking your personal savings, but also with the ethical dilemma of making money off of others’ financial risks.
You can also make money with services. For example, thanks to the deregulation of utilities, you can get in on MLM energy companies.
A Unilever compensation plan pays the same amount to all distributors. This pays well if you are a good recruiter. With a stair step breakaway compensation plan, your payments increase as your distributors’ volume grows. Once they reach a certain level, they break away from you. Many companies use this plan because it is tried and true. Be aware that once a distributor breaks away, you may need to replace her to make your monthly quotas if you have them. [9] X Research source In a forced matrix compensation plan, the organization of distributors looks like a grid. This means that a certain number of people you bring in to the company will work directly for you, or be on your front line. But after that, any other people you bring in will spill over, or be placed underneath them. This plan encourages team work. [10] X Research source A binary compensation plan allows you to have two distributors on your front line. After that, other distributors go beneath them. Sales volume must be balanced between the two distributors underneath you before you receive any commissions. This plan is simple to understand and offers fast growth. Be aware, however, that although binary plans are designed to operate legally, some companies do not run them as they are designed. [11] X Research source If the commission is too high, your company may fail. The higher the commission, the less value the customer receives for her purchase. “Downlines” are the distributors beneath you. For example, if you are seller A and recruit seller B, seller B is your “downline. " You will probably earn a percentage of seller B’s sales unless you are operating on a unilevel compensation plan. [12] X Research source Downlines greater than 5 may run into regulatory legal problems, since emphasis is on selling to distributors rather than the customer. This type of organization may be attacked as a pyramid scheme.
To succeed you have to listen to your mentors. Learn what they have to teach you. Find out what they did to become successful and duplicate it.
Use a strategy called FORM, which stands for family, occupation, recreation and money. Engage your prospect in a conversation about these things, and note problems they discuss. Mention to them that you might have a possible solution to a problem area, and make your sales pitch. [18] X Research source Understand the risk of pitching an MLM business idea to friends and family. The failure rate for distributors is enormously high. Recognize that you risk damaging important relationships in your life if the business fails. Carefully weigh the chance of losing the trust of friends and family with the promise of making money.
Failure rates for MLM distributors is almost 99 percent. The support and training you offer your recruits can make the difference between success and failure.
