About Multilevel Marketing Plans - Multilevel or “network” marketing plans are ways to sell goods or services through distributors. Typically, these plans promise that if you sign up as a distributor, you’ll get commissions not only from the sales you make, but also from the sales of the people you recruit to become distributors. These recruits sometimes are called your “downline.”
1. Find and study the company’s track record.
* How long has the company been in business? Does it have a positive reputation for customer satisfaction?
* What can you find out about the product and the service?
* What’s the buzz about the company and the product on blogs and websites?
* Has anyone sued the company for deceptive business practices? Checking with your local Better Business Bureau, Chamber of Commerce and state
2. Learn about the product. What will you be selling? Are similar products on the market? Is the product priced competitively? Is it safe? Can your sponsor the distributor who is recruiting you support claims about the product’s performance?
3. Ask questions. Ask your sponsor for the terms and conditions of the plan: the compensation structure, your potential expenses, support for claims about how much money you can make and the name and contact information of someone at the company who has details about the terms and conditions and can tell you how much the average distributor makes before and after expenses. Get this information in writing. Avoid any plan where the reward for recruiting new distributors is more than it is for selling products to the public. That’s a time tested tip-off to a pyramid scheme.
Multilevel marketing plans usually base at least part of your monthly income and bonuses on the sales of the distributors you recruit. Keep in mind that if you solicit new distributors, you are responsible for the claims you make about how much money they can earn. Be honest, and avoid making unrealistic promises. If the promises fall through, you could be held liable, even if you are simply repeating claims you read in a company brochure or advertising flyer, or heard from another distributor.
If you don’t understand something, ask for more information until it is absolutely clear to you. Your sponsor and other distributors should be willing to answer your questions. Be skeptical and carefully evaluate the information you get. Remember that your sponsor and other distributors above you likely will make money if you join the program. So take your time, and don’t yield to pressure to join.
4. Understand any restrictions. Get the company’s refund policy in writing. Make sure it includes the process for returns as well as restrictions on or penalties for returning unused products if you choose to leave the plan. It may seem like you’re minimizing your risk if you can return products for a reimbursement, but policies vary on getting full refunds and how long it could take. Many plans require you to buy training or marketing materials or pay for seminars if you want to get product discounts or create your own network of distributors. Find out how much time and money other distributors spent on training, marketing materials and seminars when they joined the plan, and whether the plan requires you to participate in periodic training. What happens if you opt out of the training?
5. Talk to other distributors. Ask your sponsor for the names and contact information for distributors at all levels of the plan. Get in touch with them to ask the same questions you asked your sponsor. In most plans, “upline” distributors stand to benefit when you buy into the system, so they should be willing to answer your questions with specifics. If you get vague answers or guesses, ask follow-up questions until you hear and understand the information you need to make your decision. Be aware that there may be shills “decoy” references paid by the company or distributor to pretend they had success earning money through the plan.
6. Consider using a friend or adviser as a neutral sounding board. You may want to consult with an accountant, a lawyer or another person you trust who is not affiliated with the plan to review the terms of compensation, determine whether the plan can back up any claims about the amount of money you can make, and analyze the information you’ve gathered and the answers to your questions.
7. Take your time. Don’t pay or sign any contracts in an “opportunity meeting.” Take your time to think over your decision. Your investment requires real money, so talk to the distributors in settings that make you comfortable and when there’s the opportunity to take your time.
8. Think about whether this plan suits your talents and goals. Ask yourself whether you would enjoy selling products to the public. Find out how many hours a week your sponsor and other distributors spent on the business when they joined the plan and how much time they spend now. Remember that no matter how good a product and how solid a multilevel marketing plan may be, you’ll need to invest sweat equity and money for your investment to pay off. Consider the other demands of the business for example, training, recruiting new distributors, managing paperwork, inventory and shipping — and factor how much time it could take to achieve the amount of money you anticipate.