MLMer’s Survival Guide.

 

Devoted to people who are at the bottom of the MLM net and seek ways to move up.

The information below may help you to move up in the MLM world without using deception. But it can help you only if you are a smart and hard-working person.

The way is to follow the next five steps:

Step1. Understand the problems inherent in MLM

Step2. Select the right solution

Step3. Design your own AP

Step4. Compete with top-levels participants

Step5. Extend your network.

Step1. Understand the problems inherent in MLM

The basic problems of a legitimate MLM are:

  1. MLM companies get the lion's share of income not from the consumer market (customers) but from their own distributors. The business life of MLM companies depends on their ability to grow and preserve the net of distributors.
  2. Costs of entry to MLM programs for a participant/distributor are high. Participants are required to buy seminars, products and the like in order to participate in the MLM program. But this exposes them to the risk of losing this money (cost of entry). In fact, the majority of participants at the bottom of the net/pyramid do lose their money.
  3. Market size is finite. Even children know that any market is finite (at least for the reason that the number of people on the Earth is finite), but many MLMers ignore this fact. When this limit is reached, the MLM Net formation is stopped and many participants (sometimes more than 90%) became losers.

 The key to success is to solve some of these problems. At least the first two problems can be solved. No method or program can solve the third problem, but it is do possible to increase the market’s limit on a finite number).

Step2. Select the right solution

Usually MLMers do not solve the above-mentioned problems. They are trying to extend the market by going into cyberspace, but in this way they usually create the additional problem of generating SPAM.

To find a way to the solution, let us consider the following analogy (see Table1):

Table1. Analogy between MLM networks and social hierarchy in the era of feudalism:

 

Feudalism’s hierarchy

MLM hierarchy

Top

King

MLM Company

1-st level

High-ranking feudals

High-ranking distributors

other levels

ordinary aristocrats

ordinary distributors

Last levels

Poor people

Losers

As we know from history, feudalism was replaced by the more progressive system of capitalism.

In capitalism there is no fixed hierarchy as in feudalism, but there is competition among many hierarchies, so the key idea is- to repeat the way that evolution (or God) chooses.

If you do this (recreate competition), then the winners will be the smart and hard-working individuals, not the first-comers (as in MLM).

Step 3. Design your own AP

Truth to say, there is no need to invent something that can compete with MLM, it does exist and prosper. This is Affiliate Marketing (or the more modern version,- Affiliate Network Marketing). In many ways it is analogous to MLM, but it does not have the first two problems that MLM has. An Affiliate is not a distributor. She/he does not buy/sell products. An Affiliate only refers customers to a seller (for example, to you). There is zero cost of entry in an Affiliate Program, therefore there is no risk for an Affiliate. The commissions are paid according to a scheme similar to MLM. You should decide how many levels your scheme has, how mach you pay on each level, and the type of payment (fixed or percentage).

Let us consider this step on the example. Assume that you buy a product for $90 price, sell it for $100 price. In addition, a company will pay you commissionsaccording to the scheme:

From your first level distributors, 4%

From your second level distributors, 3%

From your third level distributors, 1%

From your forth level distributors, 1%

From your fifth level distributors, 1%.

If a distributor is at the bottom, her/his income is only 10% from a sale (there are no distributors "under" the distributor). You can propose to her/him a commission up to 19%(you should reserve at least 1% for yourself). Suppose you choose the following scheme:

14%- from your own sales (this means that an affiliate who refers a customer to you receives 14% from the sale)

5%-from first-level  affiliates

1%- from second- level affiliates.

Now compare the two propositions

Characteristics

Initial MLM scheme

Your AP scheme based on the  initial scheme

From own sales

10%

14%

From first level

4%

5%

Cost of entry

High

Zero

Operational costs (transportation/storing…)

Non zero

Zero

Risk to loose money

High

Zero

Step4. Compete with top-level participants.

Look at the table above and ask yourself this question: hich proposition is more attractive to the people on the last levels of the company network?

Now let us estimate how many people in the network.

Suppose the net was grown by a factor 10. This means that on the first level there are 10 high-ranked distributors (winners), on the second level 100 distributors (each high-ranked distributor recruited 10 new distributor), on the third, 1,000 distributors, … and on the sixth level, one million distributors (losers).

In this network, more than 90% of distributors may find your proposition more attractive than the initial proposition of the company, so you can recruit these persons as your affiliates.

Step5. Extend your network.

Now you have something that has a value and can compete with the initial product/service, so you can extend your network in any direction.

Let's look at some possible dimensions:

1. Risk-averse people (research shows they are in the majority). These people do not want to risk their capital, so they never join a MLM network, but these people do can refer a lot of customers.

2. Distributors from other MLM companies.

3. Web site owners.

4. E-mail list owners.

5. Many internet users seeking opportunities to earn some income without risks.

Lastly, be open minded. Anyone can do the same thing you do, so be prepared to compete with others. 

 

 

Copyright © 2002 AdvMathAppl
Last modified: Jan 14, 2002