Is retailing product a true network marketing opportunity?

On this planet, the lifeblood of any company is retail sales to the end consumer. Think about this, Business models drive the behavior in the field.

Would you agree with me that every product - doesn’t matter what it is - a bottle of water, a coke or Pepsi, an aspirin, a vitamin, a liquid nutritional drink - it could be any product out here … if the quality and quantity of all the ingredients, are exactly the same, I ask people, “Would you agree with me that the wholesale manufacturing cost of any product is within pennies of each other?”

And the answer I get is, “Absolutely, no question about it, that is true.”

Now here’s where the problem comes in.

Marketing The Product To The End Consumer

Let me you a story. Companies A, B and C, these are real companies in real life. Company A hired a doctor to formulate the best vitamin product on the planet - and they did. it’s something you can take all at once. It doesn’t interact with any of the other ingredients. Works great. That company is marketing that product. They are a fairly large company, publicly traded.

Another company comes along and what’s so funny about the story is the COO, the bean counter for the first company, sold his piece of the pie and became a distributor with company B.

company B has a binary compensation plan. Now the first company is a stairstep break away comp plan, second company is a binary. So A is the stairstep, B is the binary. And the binary plan is just one left, one right.

Now, that guy said “Whoa! We had this great product with company A … now we want it with company B. So they go and hire the doctor away from company A to formulate them the best product.

And I would ask you another question. When you are a publicly traded company, you are not spending your money. You are spending investors’ money. So when you put that dot, the comma, the zero on a check, does it really matter to you? Does it really matter where you put it? Absolutely not, it is not your money. It’s like you shopping with my credit card.

So they hired the doctor. What that cost, I have no idea. But they told the doctor, “Make us the best vitamin product!” And he said, “Well … they’ve already got it in company A. But we could take that same formula and I could increase everything one gram.

So He Added One More Gram of Stuff To The Stuff

So every capsule of THEIR new stuff had one more gram in it. Great, no problem, So they created that product.

Now, company C came along, The founder of the company said, “Whoa! Company A, company B, they have got a great product. It’s not patented. Don’t need the doctor. Four manufacturing companies make the identical product. All I need to do is get the formula, take it to our manufacturer, see if they can improve it.”

So they did. So they took the same formula and added to it, improved the formula.

Now, here is the reality, I am going to give you the retail sales price on all 3 company’s products.

Company A: $114 retail
Company B: $104 retail
Company C: $39.95 retail

But Isn’t The Wholesale Cost Identical?

Now, you agreed with me that the wholesale manufacturing cost of any product is within pennies. So why the big spread? If you joined Company B, I know for fact that you can buy that product at the super duper low wholesale price of 79.95.

Now, you got to ask yourself this question, since Company B’s wholesale price is double the retail price of company C. why the big difference? Well, first, you need to understand that the business model drives the behavior in the field. In company A and B, the business model promotes the behavior of recruit, recruit, recruit, recruit, recruit. Why? Because normal mortals will not pay that kind of money for product.

They’ll only buy the product to be in the business. So that business model creates the behavior of recruit, recruit, recruit. Now, company C, because it’s $39.95 retail, that creates a behavior of retail, retail, retail. And you can prove it with these numbers.

To make $10,000 a month on the residual auto ship volume in Company A, you need 1400 – 1600 people. Company B, you need 2200 – 2400 people, Company C … you need less than 400 people. Same product. Same people you are selling to. So the big question is, can average part time people ever build a group of 2400? Or can they build a group of 400 easier? Think about that.

So The Business Model Drives The Behavior In the Field. Always!

Why is your product so expensive? Here’s why, the company need a big, big, big, big, big building. It’s so comical. They say, “Oh, we’re debt free.”Yeah. They’re debt-free off the backs of the distributors, they stole the compensation plan to build the big building. Doesn’t help the reps at all.

Think about this for a second. Companies A, B and C, and the breakage … that’s all profits that they make out of you, the distributor. Breakage is the difference between the wholesale cost and the retail cost, that mark-up from 39.95 retail to the 79.95 wholesale. That pays for the big building, the company jet, pays for all that.

A few years back, a prepaid phone card company charged $2 or $3 a minute for prepaid phone calls. You bought a prepaid phone card back then for a dollar a minute. But these were collector’s cards. (”If you don’t scratch the back of the card off, and don’t use the time, it makes it more valuable.”)

So this plastic card, which cost maybe 25 cents to create, was selling for $2 a minute. And the company convinced the people not to scratch it off, so they never had to pay for the phone time.

Isn’t that amazing? It’s no wonder network marketing gets a bad name.

One way to build your business is to sell products at retail. And to do that, you must join a company with value-priced products. It’s important that you look around to find that. Don’t settle for a company that charges 2 or 3 times the product value. Consumers are smart. You will always struggle to build with that company.

We Appreciate You
Michael & Linda Dlouhy
Call 1-352-799-8779 (anytime)
Get my FREE ebook: Success In 10 Steps
“Be A Mentor With A Servant’s Heart!”

Key: How Your Company Business Model Drives The Behavior In The Field 

A huge percentage of successful businesses, both online & offline, offer “autoship.” Autoship - also known as “til forbid” - means your company automatically ships product every month on a credit card order, until they are told to stop.

I never talk to a prospect about our company compensation plan without telling them that they need to be on autoship. I start by telling them how Linda & I won the Diamond trip to Italy last year. A week before we left, our company President called me up and said, “Michael, I’ve got to ask you a question.”

I said, “Sure. What is that?”

He said, “Last Thursday, we noticed in your group that you had a 94% autoship.”

I chuckled and said. “Huh? It should be 100%!”

And he laughed and I laughed. I know that’s extremely high. And he wanted to know, “Well, how do you do that?”

I told him, “Because we explain it.”

Here Is What I Say To My Prospects

It’s designed for my company situation, but you can model it for your company. Just think about these points, and how you can relate them to YOUR business.

Here is what I tell my prospects:

If you’re going to join me in my business, you’re going to want to be on autoship for 4 good reasons. Let me explain that to you.

The first reason you want to be on autoship is, you can now write that autoship amount off your taxes as overhead, just like your advertising budget, because you’re going to use those products to give away as samples to somebody. That is an advertising expense. So you can write that off and get free product from the company.

Reason number 2: you do want to get free product from our company. We have X number of products, and if you’re only using 3 or 4 of them, you might never ever experience our Super Duper Energy Formula. Last month, they gave that away to everyone on a $100 autoship. This month they gave away their weight-loss product.

Now, you might not need to lose weight, but maybe your sister does. If you had a free product, you’d probably give it to your sister.

Reason number 3: you’re going to want to qualify for a free $2000 monthly car bonus. The only qualification for you to get the car bonus is to be on autoship.

When you join as an Instant PooBah, for $189, $29 of that is your kit and your 6 websites. There is no monthly hosting fee for your websites. You get $160 in product, and they pay an $80 fast-start bonus. And in 9 months, you qualify for the car bonus. In 9 months, they add up the autoship volume on your 3rd level, which is your widest level, and if you have a total for the calendar month of at least $2500, they pay you a 10% 3rd level bonus … starting at $250, and it caps out at $2000 a month for your car bonus. So if you had $20,000 autoship volume on your 3rd level, you’d get $2000 a month for your car bonus.

The only bad part of the car bonus is, you don’t have to buy a car. You can use that money for anything you want. Pay off your mortgage, pay your rent, your power bill, buy gasoline, pay for insurance, take a trip to the Bahamas. It’s YOUR money.

Linda & I use that money to invest in real estate. I have one guy buying a boat, another buying an airplane. The point is, it’s YOUR money. Do what you want to do with it. A lot of companies would force you to buy a certain make & model of car with your car bonus. With us, you can use it however you want.

So reason #1 is to write the product off your taxes as advertising, so you’ve got free product. Reason #2 is to get our free extra product every month. Reason #3 is to qualify for the free $2000 monthly car bonus, and … …

Reason #4: If you join as an Instant Grand Space Commander, that’s $499. You get $600 worth of product, and the $29 kit. You get the same websites, no monthly fees. And the company pays up to a $200 fast start bonus on that. So when you sponsor new Instant Grand Space Commanders, you have the potential to make $200 from every one of those sign-ups.

If you come in as an Instant Poobah at $189, you can get up to an $80 fast start bonus.

Now … there’s also a $29 level, if you just want to be an associate. You don’t get any product.

The main thing is, the autoship is the same for both the Instant Grand Space Commander & Instant Poobah. So if you come in at $499, you can leverage and earn a $200 fast-start on your recruits, and if you want to build income, that gives you your best value.

I Never Push Them One Way Or Another

I give them that information and let them make up their mind. And most come in as Instant Grand Space Commander.

Now here’s the point. If a person almost understands what I just said about the business, and about how they can write it off their taxes and everything, is there any reason they wouldn’t be on autoship?

There’s only one time a guy told me, No, he couldn’t afford it. And I asked him what he did for a living. He said he worked for Home Depot. So I told him that when he goes in to work on Monday, change his withholding from 1 dependent to 9 dependents. The government will never challenge it or check it. They’ll take $50 to $70 a week less out of your check.

And you’ll get $200-$300 a month more money in your pocket that you can build your business with. At the end of the year, when you file your taxes, all you have to do is claim your home-based business, and you can write off all the money your’re spending on your business because of that. (I’m not a tax consultant, and you need to talk with your tax consultant to verify this.)

If you explain that, you’ll get 90% or more on autoship. Why would they not be on autoship if they understand how this works?

Now here’s the point. Maybe you build a group of 1000 reps. But if you only have 100 of them on autoship, what good did you do? So you’d better build from the top down, having your front-line leaders on autoship.

Make sense?

We Appreciate You
Michael & Linda Dlouhy
Call 1-352-799-8779 (anytime)
Get my FREE ebook: Success In 10 Steps
“Be A Mentor With A Servant’s Heart!”

First of all, you’ve got to have a direct splash page for your #1, #2 and #3 selling MLM products. And please don’t put a business opportunity attached to the splash page. You will literally drive people away from you.

People love to buy a product, but they don’t want to be sold. They absolutely don’t want to be sold. Make sure you have company-approved testimonial pages, so network marketing distributors don’t have to make their own.

The Big Problem

The network marketing company doesn’t offer these single product pages to distributors, so now the distributors on their own go out and create this stuff. They see in the Policies & Procedures that reps are 100% responsible for what they do in building their business. OK. Great.

So the company doesn’t STOP you from putting ads out there that this product cures cancer, grows your arm back, grows your hair back and all that stuff. They let reps make these wild claims. Why? Because the product sales are pouring in.

Some guy reads that ad and says, “My gosh! I’m bald. I want to grow my hair back, I better buy the product.” Or somebody is dying of cancer, and you advertise your “cure.” They say, “I better go get some.” So they do.

And then what’s amazing is, someone writes the testimonial that it grew their finger back. Then the next guy writes, “Well, it grew my hand back.” You have to top that, so the next one says, “It grew my entire arm back - and my leg.”

So they do a one-up on each other. The sales are pouring in. Meanwhile, the distributor’s neck is on the line, because the company can chop it off it anytime … like as soon as the Federal Government says “Whoa! Hey, you guys are making product claims!”

Now, the company has to show the government that they have been going back and terminating distributors who make these unbelievable claims. Meanwhile, product sales in the company are skyrocketing.

The Company Is Making Tons of Money

So much money. They have to go build another bigger building, so they can be bigger than the next one on the block.

They have to have that. And then the 3rd thing these companies do is, they charge people for their back office. It does not cost them $39 a month for that website. It doesn’t cost them FIVE bucks! But they charge the distributors $39 for their whole back office to look at your business center and your genealogy and to organize and so forth.

Companies like that are making $100,000 minimum a month off the distributor’s backs. It’s another profit center, just charging reps for the stuff.

But the company needs to create the pages, so the distributor won’t do it. The company knows better than to put wild claims in there. If they do it, then THEIR neck is on the line. That way, the company is liable, rather than the individual rep.

The only reason to spend your time and your blood, sweat, and tears to build this business is to have it sustain you over your lifetime. Anything that puts you at risk should be eliminated from your gameplan. So be sure YOU aren’t the one making wild claims.

We Appreciate You
Michael & Linda Dlouhy
Call 1-352-799-8779 (anytime)
Get my FREE ebook: Success In 10 Steps
“Be A Mentor With A Servant’s Heart!”

The most amazing stupid tricks network marketing companies do is letting some legal department enforce their policies and procedures.

Give this some thought. If a network marketing company has a legal team that writes the policies and procedures and oversees the legalities of the company, the network marketing company has generally spent about a quarter of a million dollars retaining this legal department.

So now the legal department has to justify their existence, since they just added a quarter of a million dollars overhead to the company. So the legal department  writes Policies and Procedures so convoluted, so confusing … it’s just legalese.

And you have to read chapter 7, and remember 7.C. Then down in 19.D, they talked about it again, and you have to pull those 2 together. They talked a little bit about it up here. Now they add the rest of it down here.

But if you don’t connect the two, you don’t know what they’re talking about.

Lawyers LOVE Writing All This BS!

Example: in some companies, the P & Ps say you are responsible to monitor your downline organization’s activities. If THEY do something illegal, then YOU are responsible for that.

A friend of mine got terminated because one of his downline members recruited somebody who was in another deal sideline, which was cross recruiting. But they held the sponsor responsible, and they terminated him, so they could steal his check. Real simple. Real simple.

And your person signing the bonus checks needs to have built a downline themselves. MLM CEOs who have never built a downline do not have a clue about MLM distributors.

Network Marketing Companies Would Be NOTHING Without Distributors!

CEOs who have built a downline know that. They know that companies are nothing without the distributors.

Sure, they need a product. Yeah they have to ship a product. Yes, they have to send a bonus check. But who built the company? Who built the volume?

Answer: The distributor. And if the CEO realizes that, then they treat the distributors like gold. They don’t have some legal department trying to terminate their distributors.

Stupid Trick #2

And the other stupid thing that network marketing companies do is, they don’t listen to the field. The reps are in the trenches everyday. Companies need to know what their reps see, what they do, what they hear, what they say.

We tell people all the time, “Read your Policies & Procedures.” I got a call the other day from the COO of a company. Actually, his secretary called me to ask some questions about why I am telling people to read their Policies & Procedures. because they have a bunch of people doing it and it ticks them off!

This company, based out of Texas, has the most ruthless Policies & Procedures you’ve ever seen. They are unbelievable.

Want To Sell The Business YOU Built? Fuhgeddaboudit!

For example … if you wanted to sell your downline, sell your business, you have a 10-page document that you have to fill out. And before you offer the business to anybody, you have to offer to the company first.

And when you mail your request for them to buy it, you have to include a $100 nonrefundable fee. And then they can say yes or no!

Next step is, when the company says “No”, they will then send you 3 upline people that you can sell your business to. You have to offer it to each of them one at a time. And the P & Ps stipulate that to buy YOUR business, they must resign their own business.

So usually, they say “No”. And after all 3 have turned you down, one at a time, then you have to offer your business to somebody in your downline. And they make it so clear - they say “if you circumvent any part of this procedure, you are terminated.”

so I told the secretary to have the COO call me and we could visit about the situation. And the secretary said that he does not talk to people directly!

And I said well, “Well, he talked to YOU!” So she told me he doesn’t return phone calls, doesn’t talk to any reps directly.

I was stunned. I sat in my chair thinking, “Wow! This is unbelievable!” Now this guy wants to talk to me to find out why I am telling people to read their policies and procedures. That is amazing. what a trip!

P.S. - Have you read YOUR P & Ps lately?

We Appreciate You
Michael & Linda Dlouhy
Call 1-352-799-8779 (anytime)
Get my FREE ebook: Success In 10 Steps
“Be A Mentor With A Servant’s Heart!”