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Joel Comm's Thoughts on MLM (Multi-Level-Marketing)

Joel Comm made a post on his blog about MLM (Multi-Level Marketing), and I responded to his post with the comments below by talking about my own experiences in MLM with Pre-Paid Legaland offering some advice to people (for whatever it's worth).

I hope you find it beneficial!

Hey Joel!

Very interesting topic. As someone who has not been able to make one MLM go anywhere, but now having a productive organization in a large, reputable MLM, I found your opinion expressed above to be congruent with mine.

In many cases, MLM is an opportunity for the individuals at the top to exchange money. In other words, they create the "opportunity" as an excuse for a business model.

Most companies have a variation of this story...
Their vitamin, lotion, potion, or pill is different.

"It's different because it's harvested by monks in the far off land of Treblakastan who have to hike three days in freezing rain to pull the berries off the rare Jujobar tree and they can't tell you where it is, because it has such rare healing powers that if they told you where it was, the world would overrun the location and destroy the fragile ecosystem.

"And, here's Jim, who says eating/drinking/using this product saved not only his health, but also his dog's health, fixed his leaky gas tank on his truck, improved his marriage, and got him a raise at his job. Oh, and the product is good for the environment. And, you can get it automatically sent to you through a monthly autoshipment.

And you want to pay this monthly autoship, because you're stupid if you ever stop taking this vitiman/lotion/potion/pill. And, if you do the autoshipment personally, then your team will too. And if you recruit six people who pay for the autoshipment, who recruit six, who recruit six, who recruit six, who recruit six, you will make $1,000,000 in your second year with this company."

And bear in mind that when I'm saying all of this satirically, that I actually like working inside of an MLM right now.

One of the things that MLM has done for me, as has Internet Marketing, is put me in touch with some amazing mentors who have helped me in my path to entrepreneurial success. (I've read so many great books, and gone so many cool places, based on the recommendations of people I've met through MLM.)

Here's what I've discovered in looking at MLM's (or any companies/opportunities really).

If you want to build a business (MLM or otherwise), it must have the opportunity to have sustainable growth.

Sustainable growth falls into several categories.

However, here are a few things to know:

- What is the marketplace?
Are there a sufficient number of people who would buy the product/service, even if there were no opportunity attached to it (think "would I buy this at the grocery store, at this price?" If the answer is yes, then before joining anything attempt to find out if other people would also buy it, even if they had no interest in becoming involved in the business.)

- How are you being paid?
Is your commission based on bringing new people in to the business (BAD), or is it based on a legitimate sale of a legitimate product/service? In other words, if you sell one bar of soap, or one bottle of perfume, do you know how much money you will make? If you ask a question (of someone who is trying to recruit you into an MLM) along these lines, and get into talking about Points Value and Business Value, and "it depends on how much you buy", and how much your team buys, and BLAH, BLAH, BLAH... then I would run away. It's mostly easy to improve what you can track, but if you don't know how much you're going to be paid for a certain level of production, then it's very difficult to improve anything, because there's really very little to track, or the tracking is extremely difficult.

- Who is the competition, and how will they respond to this product/service?
If there is no competition right now, then think: Who could be the future competition? Is this a non "Me-Too" product or service? (HINT: If you're in a vitamin/lotion/potion/pill company, and it really goes well (which you want it to), then that's bad news for you, because Wal-Mart and every other mainstream store can have the EXACT same thing on their shelves within 3 months or less (Read The 4-Hour Workweek). That is not good for sustainable growth.)

Wow, I didn't know I was this passionate about this topic.

Here's what you need to do when investigating a business opportunity of any kind:

LEARN to ask GOOD questions, and then make up your own mind.

There are lots of resources to learn how to ask better questions. But in the end, make sure you can, at the very least, answer these questions:

#1. How am I being paid, and how much am I being paid?
(and don't take "It depends" as an acceptable answer)

#2. Who is the competition, and is this a physical product or service that can be easily bought or duplicated?
(and you may need to see through some marketing hype to answer that question)

#3. Is there a real demand for this product we're going to be selling in the marketplace (even if they told me that there was no selling involved), or is it just another example of something that's already being sold at Wal-Mart?
(or could be sold there within a few months)

This should help people to make decisions about what is a "good" MLM, and what is a "bad" MLM.

To see which MLM I personally recommend to fit these criteria, please click here.

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