Are you finding it difficult to crack the code of success in network marketing? Then this is for you...
I remember like it was yesterday. When my manager at the oil company dropped the bombshell. He said, "As of next week we'll be removing the commission component from your package." For me, that meant my salary would be halved overnight. Needless to say I was out the door and never went back.
Of course, it came at the worst possible time. The ink had barely dried for the property I'd just purchased with my then husband. It was my first home with a big mortgage on the outskirts of Sydney in Balmain. Panic stations set in for a brief moment followed by sheer determination to make it on my own. I'll show them what they allowed to walk out the door!
It was shortly after losing my job that I went into business for myself and to see if I had what it takes to create success in network marketing. I partnered up with a health and nutrition company and spent the next five years trying to make it as an independent business owner.
I was driven and highly motivated. Working fourteen hour days was the norm back then. I had the energy and something to prove.
But after five years I was worse off financially than when I first started. EVERYTHING I made I put back into the business. In my attempts to build it I decided to free up some cashflow, so I let my house go, I let my car go and I racked up a ridiculous amount of credit card debt all in the hopes of making it big online.
But nothing was working. I was losing motivation and I'd say, about four years in, I lost my confidence. COMPLETELY. My marriage also fell apart and things just got worse from there. This whole trying to make it big on my own and have success in network marketing was turning out to be a very bad idea.
I became desperate.
What was my problem?
Why was I failing so miserably?
I had an excellent work ethic. I wasn't afraid to put in the time or spend some money to make it happen. I was quite a risk-taker and was happy to follow the plan and do what was recommended (for the most part). I saw others succeeding and I didn't think that they were any more talented than me.
So what was it?
It wasn't until I decided to move away from that business and I was considering getting started in another opportunity (the business I still run today, fifteen years later with Prosperity Of Life) that the answers became so clear.
And actually there were two significant things that stood out.
So what did I do second time round that caused me to have success in network marketing?
I DID THE MATH (I'll share the second significant difference-maker in a future post).
But doing the math and getting clear on this up front made all the difference in the world.
Let me explain.
In any business there is a cost involved to acquire a customer and then a profit that you make as you service that customer.
In the first business I ran (which was a traditional multi level marketing - MLM - opportunity) the cost to acquire the customer was a little more than the profit I made.
In round figures I would pay approx. $200 USD in advertising to acquire a customer and the profit I made was an average of $100 USD. So I would only make money if and when the customer re-ordered. Sometimes the client would re-order and sometimes they wouldn't.
A quick bit of math tells you with twenty clients that are repeat ordering you're making about $2,000 USD a month. (As a side note, as a distributor building my business with Prosperity Of Life I made an average of $100,000 USD per month from my seventh month of business by servicing twenty clients a month.)
It's worth mentioning that in a traditional network marketing or MLM business model it's largely encouraged to retail your products to the people in your warm market. This is good advice because it's how a traditional MLM business model was intended to be built. Sell to people that you know because, of course, you won't incur any advertising expenditure by building it this way.
But I never felt comfortable promoting to people that I knew, so I followed the plan of advertising to build up a client base. And that costs money.
In that first business I also had the ability to make money by recruiting new distributors. Back then I would break even on new recruits. Meaning it cost me as much to recruit a new team member as what I would make on the front end.
This is pretty typical with MLM - breaking even on the front end. What you're hoping for (and banking on) is your new recruits duplicating your efforts and in doing so you would make a small percentage on the profits from their sales volume in the form of royalties.
I discovered that you require A LOT of people in your organization for your check to add up to anything significant. And try as I might, I just never attracted strong leaders who were in a position to build the business the way that I was attempting to do it, through advertising.
I was breaking even and re-investing my profits every month for five years. I learned that not many people were in a position to do that. No, not many at all. In fact I didn't find a single person in five years who could successfully duplicate the way I was attempting to build it - through advertising long term.
And is it any wonder? People do what you do, not what you say. So of course I would attract people who would want to build the business the way that I was attempting to build it, through advertising. If I was building through warm market I have no doubt that I would have attracted people who were comfortable building through the people that they know, the way that it was intended. See the problem? It took me five years to figure this out. You're welcome.
It's worth mentioning that I'm super grateful for my first network marketing experience. I don't blame the company or my upline for my failure or my lack of success in network marketing. I have clarity now on what's required to build success in network marketing and your more traditional MLM type of business model and I understand why they recommend promoting to the people that you know. If you're someone who is comfortable doing that I think that success in network marketing could be possible for you. Particularly if you choose a business with a product line that you can really get behind.
But for me the whole "friends and family" promotion requirement was a mis-match and I thought that I could simply advertise my way to success, which was a miscalculation on my part.
So when I was considering Prosperity Of Life as a potential business I got clear on the math. I understood that when I had a new client move forward on the entry-level product I would make $1,828 USD.
One client and I would very close to the level of earnings that took me twenty clients in my MLM business. Two clients and I'd be sitting at $3,656 USD.
This math made a whole lot more sense to me and I could see a clear path to success in network marketing.
I remember questioning Michael, the gentleman that introduced me to the business, how he went about promoting the products and the opportunity and how difficult it was to attract clients at this level.
My experience to that point was selling lower-priced products and I'd wondered if it would be much more difficult to promote a higher-priced ticket item.
Like me, Michael had also dabbled in Multi-Level Marketing and tried to create success in network marketing as well, so he fully understood the nature of my question. And here's what he shared with me.
He said......"It takes just as much time and effort to secure a client where your profit is in the thousands as opposed to it being in the hundreds. It's just a different client and we teach you how to reach the qualified people for this product and opportunity. In fact, in my experience, it's even easier because it's a higher calibre of person that you're dealing with. Our customers are hungry for growth and expansion."
This made sense to me and a seed was planted which then went on to become a reality. I thought, "What if I could service twenty clients in a month like I had in my MLM days?"
Twenty clients times the profit of $1,828 USD....I did the math...it was just over $35,000 USD.
And guess what? After what felt like a bit of a slow start, in my fifth month of business I secured 20 new clients! And then, from that point forward, I averaged twenty new clients per month in the building of my business. Success in network marketing had become my reality!
Over time I found that if I simply re-invested about 10% of my profits back into my marketing I had a well-oiled machine and profitable business.
Talk about a game changer! I went from struggling to make rent to absolutely flourishing! Sleepless nights turned into peaceful sleep for the first time in months (perhaps years if I'm honest with myself.)
And Michael's experience turned out to be my experience. I did in fact find it easier to secure the client and work with the client on this higher level. There was more energy. More excitement. My clients were on purpose and because they were feeding their mind with the powerful personal development products they were fired up and taking a high degree of responsibility for their results.
I went from attempting to push and force a result to being in absolute flow for the first time in my life. What a splendid place to be.
And the best bit?
I saw my clients' lives transform and witnessed many of them reaching this optimal state of flow as well!
So as you're considering going into business for yourself or wondering if you can have success in network marketing, make sure you get clear on the math. Ask the questions and get the clarity that you need. My first time round in business I went in blindly not understanding the importance of basic math. Second time round I knew the right questions to ask and it made all the difference to the outcome.
Here's to your success!
Rachel Krider - Co-Owner Prosperity Of Life