There is so much hype every where about the success of
MLM and the financial and other rewards associated by employing
a successful MLM campaign. But what are the statistics? What are
the real facts? If you do your research you will find out that although
several companies associate their success stories to MLM. Big
giants like Avon, Amyway, Mary Kay and several others have huge
MLM teams which are assets for them. But it is also a truth that
almost seventy to eighty percent of the companies that are new
entrants in the field encounter failures and loses. Why is it so?
Where things go wrong? Here are a few areas that require proper
consideration:
REASONS FOR MLM Failures
Lets’ find out a few reasons of MLM failures from a
company’s perspective:
• SELECTING WRONG PEOPLE:
One of the major pitfalls is the selection of wrong people. In
46 CALVIN CLARKE
order to maximize their commissions MLM promoters frequently
select any one when recruiting individuals to be part of their
down line. People who are actually non serious and if they
cannot make enough commissions they portray a bad image of
the company every where. This is hazardous for a company’s
future growth. Other people might feel reluctant to join the
company and / or to buy the product.
• COMPROMISING ON RESEARCH AND DEVELOPMENT:
It is also essential for companies to remember that MLM is a part
and parcel of your over all business strategy. Few companies focus all
their efforts on MLM and forget the rest. This is where things go wrong.
With excellent marketing efforts it is also crucial to invest in research
and development and producing a unique product with sound features.
No matter how good is your marketing and distribu-tion network,
without a promising product, all the rest is useless.
• INFLATED COMMISSION PLANS:
Some companies, in order to attract more and more people and to
stay a head of competitors, offer unrealistic or over inflated commission plans and product prices and promises overnight wealth. Avoid
doing that firstly because you may soon collapse financially, secondly
you may be viewed as a scam and people feel reluctant to join you.
• INABILITY TO COMPREHEND Market Demand and Supply:
In the greed of expanding market penetration and reaching to
millions of people, the one major mistake that a few companies do
is to forget the basic economics. It is essential to evaluate market
demand and supply of the product. Companies may spend huge
sums of money in MLM but what they don’t realize is the economic
scenario. Also the price you fix is a determinant of demand and
supply, especially if the product you offer is not too different from
MLM Success Guide 47
what is already available every where in the market. Hence it is essential to evaluate all these factors before investing blindly in MLM.
• USING UNETHICAL PRACTICES:
The most hazardous move that may damage a company’s
image is the implementation of unethical practices to generate short
term profits. Practices such as making fake promises about product
attrib-utes, charging a high up front fee or demanding a huge initial
invest-ment from new people to join you distribution team, forcing
them to buy huge amount of products that are realistically
impossible for them to sell, may earn you short term profits but
damage your long term image and existence.
It is true that MLM promises huge sums of money but it is
essen-tial to realize that there is no miracle and you need to be
prudent and vigilant while developing MLM strategies and should
use legitimate and ethical tactics, other wise you will collapse.
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