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What is needed to use multilevel as a sales tool?

December 19th, 2012 Leave a comment Go to comments

At my company we have several products as well as services that would fit perfectly with the multilevel networking sales processes.

1.- How much should we give to every person for every product that he/she sells?
2.- What are the advantages/disadvantages with this kind of process?
3.- For every product sold, every person within the networking how much money or percentage of the fee shall receive?

I have plenty of questions and so little space to write them on, i’m very interested in putting this into my company, I’m not looking to acquire products from an existent networking company.

Thanks,

How effective this will be depends a great deal on the nature of the product or service. I’ve been in several "plans" and my dad was in Amway, always having meetings. I’ve still got a firm belief that there are GREAT benefits to this type of structure and that it is not necessarily a "scheme". For example, isn’t it better to reward distributors instead of giving millions of dollars to advertising companies? I’d rather see the "underdog" rewarded for loyalty to a brand or product, than billions going to the next thing about to interrupt my favorite TV program.

The key, and the greatest potential flaw, is that the distributors/affiliates have proper training, especially in what sales techniques to avoid. For example, a potential downfall to an online business would be your website becoming a well-known source of SPAM as money-hungry affiates start promoting the product in all the most inappropriate, off-topic places.

This is true in the real world too. How many people have gone to Amway or Tupperware parties just to support their friend, and then avoid future contact because you know it will end in some sort of sales pitch? Word of mouth is great, but not if it turns distributors into some sort of social paria. I’ve actually seen Amway leaders telling new distributors that if their friend isn’t interested in a better life through their business opportunity, then they shouldn’t waste time with that friend anymore. Sounds more like a cult than a business to me.

So on to some actual TIPS…

Make sure that, after all the commissions and multi-level rewards, you still have a product that, at the stated retail price, is something viable that a consumer would buy even if they were not interested in "joining the business". Because this is one area where many MLM plans have a bad reputation.

Then there’s the promise of income. People join because they see this neat structure where they tell 5 friends and THEY tell five friends and they tell THEIR five friends, then wow! That’s 5 x 5 x 5 or 125 customers already! When THEY tell 5 friends that makes 625. Pretty soon if you go down deep enough in the structure you’re getting commissions on millions of sales.

There is only one problem with that economic model… pretty soon you will run out of people, because (thankfully) we don’t breed that fast.

One solution to this, which I plan on implementing in an affiliate system (I’m a web programmer) is a way to turn the structure on it’s head. Have release dates for new products, and when a new product comes out, the LAST people to join are given the FIRST opportunity to sign on to the new product. In effect, each product has it’s own unique MLM plan attached. I’m not sure how workable this will be, but the complexity should not be too much to handle when the whole thing is computer-automated.

So to sum up (for now), it seems that the ideal product for this would be one that had an extremely low production and distribution cost (downloadable online software or web access for example), something that could generate REPEAT as opposed to ONE-TIME sales, and that could still be sold at a competitive, even bargain, price, such that closing a sale would be almost a no-brainer.

I’d love to expand on this already somewhat-lengthy answer with anyone who has an interest. See my Yahoo Group, MLM Strategies…

  1. gruumsh
    December 19th, 2012 at 12:28 | #1

    How effective this will be depends a great deal on the nature of the product or service. I’ve been in several "plans" and my dad was in Amway, always having meetings. I’ve still got a firm belief that there are GREAT benefits to this type of structure and that it is not necessarily a "scheme". For example, isn’t it better to reward distributors instead of giving millions of dollars to advertising companies? I’d rather see the "underdog" rewarded for loyalty to a brand or product, than billions going to the next thing about to interrupt my favorite TV program.

    The key, and the greatest potential flaw, is that the distributors/affiliates have proper training, especially in what sales techniques to avoid. For example, a potential downfall to an online business would be your website becoming a well-known source of SPAM as money-hungry affiates start promoting the product in all the most inappropriate, off-topic places.

    This is true in the real world too. How many people have gone to Amway or Tupperware parties just to support their friend, and then avoid future contact because you know it will end in some sort of sales pitch? Word of mouth is great, but not if it turns distributors into some sort of social paria. I’ve actually seen Amway leaders telling new distributors that if their friend isn’t interested in a better life through their business opportunity, then they shouldn’t waste time with that friend anymore. Sounds more like a cult than a business to me.

    So on to some actual TIPS…

    Make sure that, after all the commissions and multi-level rewards, you still have a product that, at the stated retail price, is something viable that a consumer would buy even if they were not interested in "joining the business". Because this is one area where many MLM plans have a bad reputation.

    Then there’s the promise of income. People join because they see this neat structure where they tell 5 friends and THEY tell five friends and they tell THEIR five friends, then wow! That’s 5 x 5 x 5 or 125 customers already! When THEY tell 5 friends that makes 625. Pretty soon if you go down deep enough in the structure you’re getting commissions on millions of sales.

    There is only one problem with that economic model… pretty soon you will run out of people, because (thankfully) we don’t breed that fast.

    One solution to this, which I plan on implementing in an affiliate system (I’m a web programmer) is a way to turn the structure on it’s head. Have release dates for new products, and when a new product comes out, the LAST people to join are given the FIRST opportunity to sign on to the new product. In effect, each product has it’s own unique MLM plan attached. I’m not sure how workable this will be, but the complexity should not be too much to handle when the whole thing is computer-automated.

    So to sum up (for now), it seems that the ideal product for this would be one that had an extremely low production and distribution cost (downloadable online software or web access for example), something that could generate REPEAT as opposed to ONE-TIME sales, and that could still be sold at a competitive, even bargain, price, such that closing a sale would be almost a no-brainer.

    I’d love to expand on this already somewhat-lengthy answer with anyone who has an interest. See my Yahoo Group, MLM Strategies…
    References :
    http://finance.groups.yahoo.com/group/mlm_strategies/

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