Zeroing In With Some Preliminary Questions
FINDING THE RIGHT COMPANY
By Jeffrey A. Babener
Excerpted from Network Marketing: What You Should Know, Jeffrey Babener, Legaline Publications
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If you've decided that you're right for network marketing, and that it's right for you, it's time to go out and find the best company to join. Or, if you've already signed up with one, it's time to make sure it's worthy of your time and effort.
Choosing the right company is not a matter to take lightly. "There is no substitute for some hard-nosed investigation," says Doris Wood, executive consultant for The Wood International Group, an Irvine, California network marketing consulting firm. "Remember, you are going to be living and breathing your networking experience for years. Due diligence pays off. It can bring you added financial security and many new friendships."
Wood adds, "You are going to be asking your friends and neighbors to join this network marketing opportunity, and your credibility and reputation is on the line - so take the time to be sure that you are doing the right thing."
Here are some questions you should be able to answer with a "yes" for any company you're seriously considering. Think of this as a preliminary step in the selection process.
1. Product and Price
Does the company offer a high-quality product for which there is a strong demand in the real-world marketplace?
Is the product fairly priced, and priced competitively with similar products?
Can the product be demonstrated, and does it stand out when you show it to friends?
Is the product proprietary to the company, and available only through its distributors? (Ever notice how you can't buy Avon products in stores or Shaklee vitamins at pharmacies?)
Is it backed up with a customer satisfaction guarantee?
Is post-sales service or customer assistance available?
Do the people who participate in the program buy the product enthusiastically based on its own merits, even if they don't participate in the compensation program?
2. Investment Requirement
Can you participate in the company's program without having to make any investment other than purchasing a sales kit or demonstration materials sold at company cost?
3. Purchase and Inventory Requirements
Can you become a distributor or sales representative without having to fulfill a "minimum purchase requirement" or "inventory requirement?" (When you are pitched to put thousands of dollars of inventory at the very beginning, run fast in the opposite direction.)
Does the company's compensation plan discourage "inventory loading?" (This is a dubious feature that should be avoided. However, there may be activity level requirements - rules requiring that you maintain a basic minimum level of personal purchase volume or sales in order to keep your distributor status.)
4. Sales Commissions
Are sales commissions paid only on actual products or services sold through distributors in the network to the end user or ultimate consumer? (This means that products don't end up in basements and closets - they are used, because they have genuine value.)
Does the compensation plan avoid paying commissions or bonuses for the mere act of sponsoring or recruiting? (If it pays "headhunting fees," it is illegal.)
5. Buy-Back Policy
Will the company buy back inventory and sales kit materials from distributors who cancel their participation in the program, as long as these items are in resalable condition? (This policy is required in states which have adopted multilevel distribution statutes.)
6. Retail Sales
Is there an emphasis on actual retail sales to end consumers - that is, to people who are not participating in the distribution program?
Can the company demonstrate efforts to market products to the ultimate consumer?
Do the company's distributors have ongoing retailing requirements to qualify for commissions?
7. Distributor Activity
Are distributors in the company required to actively participate in the development and management of their networks? (Many of the MLM statutes require that distributors perform bona fide, supervisory, distributing, selling, or soliciting functions in moving product to the ultimate consumer.)
8. Earnings Representations
Do the company's literature and training materials scrupulously avoid claims of income potential that is, promises of specific income levels other than demonstrations of verifiable income levels for common achievement levels within its program? (The Federal Trade Commission, attorneys general, and postal inspectors all have their eyes on the matter of earnings representations. The acceptable approach emerging is that there should be no earnings representations unless they are based on a verifiable track record of the average earnings of distributors. For instance, a company should have statistics to show the percentage of active distributors and the average earnings of active distributors.)
9. Training Programs
Does the company offer its independent distributors solid training opportunities in sales and recruitment?
Are different levels of training offered to match the increasing levels of experience and responsibilities of distributors?
If you were able to answer "yes" to the foregoing questions for a particular company, consider that company to be a prime candidate. But there are other things to do and consider before you sign up.
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