BE AN MLM DETECTIVE™
MLM Detective Eduction Program 2008™
PART 2
How The MLM Watch Dog Evaluates An MLM Opportunity!
"Continuing MLM Detective Due Diligence Investigation"
OK IT IS A REAL MLM Company!
Continuing MLM Detective Due Diligence: How old is the company? Less than a year old the survival rate is less than 10%. One year to two the survival rate is 30%. Year two to three the rate is 50%. Over three years the survival rate jumps up to over 70%. You have to decide if you want the high-risk route of being a big frog at the top of the heap in a smaller new company pond. Or do you want to be a smaller frog in an older bigger pond with assurance of continued pay for your work?
Continuing MLM Detective Due Diligence: Do the company owners have experience in NetWork Company management? The best combination is a businessman and a good NetWork marketer. As a word of caution, never go with a company with more than two partners, few survive. Do your due diligence on top management including background and financial checks. The biggest failing here is taking the word of an upline recruiter that he, "checked the owners out."
An old saying for MLM Detective is “you can change the products, you can change the pay plan – but you can’t change the owner! It proves true over and over.
Continuing MLM Detective Due Diligence: Does the company have adequate funding to survive? Lack of funding, even during explosive growth, is the biggest killer of NetWork Marketing Companies under three years old. The biggest fib that new companies tell, is that they are well capitalized.
Company Support
Are checks paid promptly on time? Is there a good system for correcting errors? Does customer support provide timely support for questions or problems?
Are products shipped promptly without delays? Delays in shipping may indicate financial problems. Does customer support promptly assist with errors in fulfillment or shipping? This is one of those join a company and test strategies.
Can you order products quickly and easily by cost free phone, fax, or Internet? Can your customers order directly using the same simple methods? Can you and your customers easily get products automatically each month by setting up an "auto-ship" program?
Products or Services
Continuing MLM Detective Due Diligence: Is the product or service competitively priced? Are they unique and or complex... this is necessary! Would you buy the product (or service) if there weren't an income opportunity attached to it? This is one of the indicators of a pyramid scheme. Money generated not the product (or service) is the focus of sales. A simple question to ask is, "if all recruiting stopped tomorrow would I still be able to make money and would the company still be in business tomorrow."
Continuing MLM Detective Due Diligence: Is the product (or service) consumable? The reason nutritionals and skin care are so popular is that they are consumed on a monthly basis. This monthly usage provides a solid basis for a stable monthly income. Is the product (or service) patented, or exclusive to your company? Do the products meet the needs of a major trend such as baby boomers wanting to stay young?
Continuing MLM Detective Due Diligence: Do you like the products (or services)? Can you become excited or passionate about them? A belief system in your products (or service) helps you sell them with enthusiasm. This major factor for long term success in NetWork Marketing. Could you truthfully give a testimonial about their effectiveness?
Continuing MLM Detective Due Diligence: Do the products have a money back guarantee of satisfaction? Do they contain high quality ingredients? Is the product (or service) easily demonstrated? Are there samples available? Is there a product video? Is the product's packaging attractive?
Compensation (Pay) Plan
Continuing MLM Detective Due Diligence: Is it legal? It should be based on the sales of products (or services) and not on bringing in new recruits. Generally a maximum of $500 in product purchases is legal to join a company. The cost to join the company should not exceed what you are comfortable with. You should be able to sell enough of your initial product order to cover the cost of joining the company.
Beware of Get Rich Quick schemes, if the money sounds too good to be true, it is usually a pyramid or downline building scheme. A good Network Marketing pay plan will have an overall pay out between 38% and 55% based on the sale of products. Some new companies try to pay out too much and crash.
Continuing MLM Detective Due Diligence: Does the compensation plan have a proven history? Can you understand the compensation plan and how to maximize your income as you grow your business? If not, ask your upline sponsors to help explain it to you better. Learn how to place new recruits to maximize your income.
Training
Continuing MLM Detective Due Diligence: Does the company have good systems for providing training on products, pay plan and building your group? Are they low cost and easily available? Will your upline help train you? Will your upline help you with your first sales presentations? Will they do three way phone calls with prospective clients?
What training methods does the company provide? The more the better such as video tapes, audio tapes, conference calls, manuals, newsletters, satellite shows, Internet, plus live local, regional and national training.
Sales Aides & Tools
Continuing MLM Detective Due Diligence: Is there Internet support and training? Does the website help you sell products or services? Are there local meetings that you can take prospects too? Are there good quality dvds, video and audiotapes available? Is there a good Internet web site with information available? Is there a presentation you can learn to do in 5-10 minutes that will catch a prospect's attention? Are there good brochures for mailing? Is there an 800# voice mail system with sales information on it?
Folks, that is about as good as it gets as far as what a company should do and provide!
Rod Cook
MLM - NETWORK MARKETING WATCH DOG WISDOM
By Rod Cook
1. DO make sure the MLM - Network Marketing Company and its MLM - Network Marketing distributors aren’t forcing the sale of a large amount of product or services. This is called “front loading” or “garage qualification.” to qualify you as an MLM - Network Marketing distributor for commissions. An amount over $500 is very suspicious. Good MLM - Network Marketing companies don’t require a lot up front when you start as an MLM - Network Marketing Distributor. You need products to sample yourself and to learn to sell, so not having any product purchase is a shaky deal.
2. DO make sure the company actually emphasizes sales to Customers as a part of the company’s marketing plan. The company to be legal actually has to have track record of sales to Customers (that do not belong to the pay plan). Company training should emphasize such sales in their training material. In your computer back office or print out they should show up in your genealogy as Customers (who do not belong to the pay plan. It is confusing but often these are called “retail sales” but they can be at wholesale prices. It is illegal for a company to force you to sell at a specified retail market up.
3. DO make sure the company has training that you understand. Initial training should show you how to make retail sales to Customers (don’t belong to the pay plan) as well as sign up new MLM - Network Marketing Distributors underneath you. If not ship the product back ASAP (or terminate the service) and get your money back in regard to #4 below.
4. DO make sure the company distributor agreement (that you sign on paper or online) has a buy back policy for products/services guarantee for 90 days up to a year (best). The buy back should return 90% of your money when you return the products. Return of money on services should be prorated to the last day of the month used. Ask to be shown this before you join the MLM - Network Marketing Company
5. DO be sure your MLM - Network Marketing Distributor personal monthly maintenance (or purchase) requirement (qualification) is no more than is “comfortable” for a MLM - Network Marketing distributor and his family to consume each month. A sign of safety is if, your Retail Customer’s sales are counted as part of your monthly requirement. Remember a Customer does not belong to the pay plan nor can they make money.
6. DON’T join a MLM - Network Marketing Company that makes earnings claims that are not fully documented as average earnings for a particular rank) within the company’s distributor ranks. If distributor make potential “money you can earn” claims on websites – run! If they show big checks? Run! Lightening is going to strike in the form of Federal or State Governments!
7. DON’T join a nutritional MLM - Network Marketing Company that makes or allows wild claims about it’s products to cure or help medical conditions. That includes wild personal testimonies. Run! Lightening is going to strike in the form of Federal or State Governments!
8. DON’T be in a big hurry to join an MLM - Network Marketing Company unless you like the products or services it offers. If money is the only reason that you are joining? Wait a while and think it over! Consistent top money earners are ones that love BOTH the MLM - Network Marketing product and the MLM - Network Marketing pay plan earnings.
9. DON’T expect to get rich quick. Any real MLM - Network Marketing top earner will tell you it takes time and effort sometimes years to make higher end MLM - Network Marketing earnings.
10. DON’T join an MLM - Network Marketing Company unless your MLM - Network Marketing Sponsor (the one signing you up) makes a commitment to help you with training and your first retail sales.
THE FTC DUE DILIGENCE THINGS TO WATCH OUT FOR
Mar - 2006 – You see them weekly or daily. If it's recruiting people to sell so-called web access kiosks, web connected ATMs. or dealing in other Internet-related activities, consumers are being lured to the vast commercial potential of the Web by business promoters.
However, the Federal Trade Commission (FTC) says that many of these business opportunities are scams that promise more than they can possibly deliver. Scam artists pull in innocent entrepreneurs with false promises of big $$$$ with little work. They pitch Scam Home Business Opportunities on the Web via mass spam; through TV infomercials, classified ads in your local newspaper and Opportunity magazine "advertorials"; telemarketing pitches, free seminars, and mass mailings. YOUR EDITOR SAYS: Do you due dilgence just like you are right now wether for business opportunity or MLM - Network Marketing!
Here are a few examples of Internet-related business opportunities identified by the Federal Trade Commission (FTC) that often pull in unsuspecting entrepreneurs.
Example 1: Selling walk-up Internet access
The Pitch: The promoter claims you can earn big money by selling machines or kiosks that provide walk-up Internet access - for a fee - in places like airports, hotels and shopping malls. The machines cost thousands of dollars, but the promoter says the cost can be recovered because the machines generate "amazing" earnings. And, the company promises to help find profitable locations for the machines.
The Problem: Rather than the high-traffic locations that the promoter promises, the buyer's machines get placed where demand for Internet access is low. As a result, a would-be entrepreneur can't possibly make the promised earnings.
Example 2: Giving seminars/meetings on making money on the World Wide Web
The Pitch: The promoter advertises you can earn more than $150,000 as an "Internet consultant" who sponsors free seminars to teach other consumers how to make money on the Web.
The Problem: The seminars/meetings really feature high-pressure sales pitches for the promoter's Internet yellow pages or Internet advertising. And, even though the promoter promises to provide Internet and sales training to buyers - for a fee of several thousand dollars - the buyers never get the promised training. In the end, they never earn the promised amounts.
Example 2: Providing TV access to the Web
The Pitch: The promoter promises that you can earn thousands of dollars a month by signing up people to sell devices that provide television access to the Internet.
The Problem: The program claims to pay you based on how many people you recruit into the program, not on their product sales. That makes the program a pyramid scheme - not a legitimate multi-level marketing plan. Pyramid schemes are illegal. Mathematically, nearly everyone who participates in them loses their money. When there are no new recruits, the pyramid collapses.
The FTC offers this advice to all of you considering an Internet-related business opportunity:
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Consider the promotion carefully. If it claims buyers can earn a certain income, then it also must give the number and percentage of previous purchasers who achieved the earnings. If an earnings claim is there - but the additional information isn't - the business opportunity seller is probably violating the law.
Consider the promotion carefully. If it claims buyers can earn a certain income, then it also must give the number and percentage of previous purchasers who achieved the earnings. If an earnings claim is there - but the additional information isn't - the business opportunity seller is probably violating the law.•Get earnings claims in writing. If the business opportunity costs $500 or more, then the promoter must back up the earnings claim in a written document. It should include the earnings claim, as well as the number and percentage of recent clients who have earned at least as much as the promoter suggested. If it's a work-at-home or other business opportunity that involves an investment of under $500, ask the promoter to put the earnings information in writing. ED Note: This is new in FTC warnings. In general they have haven't enforced the Existing $500 federal limit, or pushed 500+ registrations at the Federal Level. The Watchdog notes this is an indicator of more active enforcement of this limit. Over $500 Watch Out!
Get earnings claims in writing. If the business opportunity costs $500 or more, then the promoter must back up the earnings claim in a written document. It should include the earnings claim, as well as the number and percentage of recent clients who have earned at least as much as the promoter suggested. If it's a work-at-home or other business opportunity that involves an investment of under $500, ask the promoter to put the earnings information in writing. ED Note: This is new in FTC warnings. In general they have haven't enforced the Existing $500 federal limit, or pushed 500+ registrations at the Federal Level. The Watchdog notes this is an indicator of more active enforcement of this limit. Over $500 Watch Out!•Study the business opportunity's franchise disclosure document (ed. note: required if over $500 in six months). Under the FTC Franchise Rule, many business opportunity promoters are required to provide this document to potential purchasers. It includes information about the company, including whether it has faced any lawsuits from purchasers or lawsuits alleging fraud. Look for a statement about previous purchasers. If the document says there have been no previous purchases but the seller offers you a list of references, be careful: the references probably are phonies.
Study the business opportunity's franchise disclosure document (ed. note: required if over $500 in six months). Under the FTC Franchise Rule, many business opportunity promoters are required to provide this document to potential purchasers. It includes information about the company, including whether it has faced any lawsuits from purchasers or lawsuits alleging fraud. Look for a statement about previous purchasers. If the document says there have been no previous purchases but the seller offers you a list of references, be careful: the references probably are phonies.•Interview each previous purchaser in person, (Ed. Note: see Due Diligence above) preferably where theirbusiness operates. The FTC requires most business opportunity promoters to give potential purchasers the names, addresses and phone numbers of at least 10 previous purchasers who live the closest to the potential purchaser. Interviewing them helps reduce the risk of being misled by phony references.
Interview each previous purchaser in person, (Ed. Note: see Due Diligence above) preferably where theirbusiness operates. The FTC requires most business opportunity promoters to give potential purchasers the names, addresses and phone numbers of at least 10 previous purchasers who live the closest to the potential purchaser. Interviewing them helps reduce the risk of being misled by phony references.•Contact the attorney general's (ed note: see above WatchDog Library) office, state or county consumer protection agency and Better Business Bureau both where the business opportunity promoter is based and where you live to find out whether there is any record of unresolved complaints. While a complaint record may indicate questionable business practices, a lack of complaints doesn't necessarily mean that the promoter and the business opportunity don't have problems. Unscrupulous dealers often change names and locations to hide a history of complaints.
Contact the attorney general's (ed note: see above WatchDog Library) office, state or county consumer protection agency and Better Business Bureau both where the business opportunity promoter is based and where you live to find out whether there is any record of unresolved complaints. While a complaint record may indicate questionable business practices, a lack of complaints doesn't necessarily mean that the promoter and the business opportunity don't have problems. Unscrupulous dealers often change names and locations to hide a history of complaints. •If the business opportunity involves selling products from well-known companies, call the legal department of the company whose merchandise would be promoted. Find out whether the business opportunity and its promoter are affiliated with the company. Ask whether the company has ever threatened trademark action against the business opportunity promoter.
If the business opportunity involves selling products from well-known companies, call the legal department of the company whose merchandise would be promoted. Find out whether the business opportunity and its promoter are affiliated with the company. Ask whether the company has ever threatened trademark action against the business opportunity promoter.•Consult an attorney, accountant or other business advisor before you put any money down or sign any papers. Entering into a business opportunity can be costly, so it's best to have an expert check out the contract first. If the promoter requires a deposit, ask your attorney to establish an escrow account where the deposit can be maintained by a third party until you make the deal.
Consult an attorney, accountant or other business advisor before you put any money down or sign any papers. Entering into a business opportunity can be costly, so it's best to have an expert check out the contract first. If the promoter requires a deposit, ask your attorney to establish an escrow account where the deposit can be maintained by a third party until you make the deal.•Take your time. Promoters of fraudulent business opportunities are likely to use high-pressure sales tactics to get you to buy in. If the business opportunity is legitimate, it'll still be around when you're ready to decide.
Take your time. Promoters of fraudulent business opportunities are likely to use high-pressure sales tactics to get you to buy in. If the business opportunity is legitimate, it'll still be around when you're ready to decide. Reporting Possible Fraud
If you suspect a business opportunity promotion is fraudulent, report it to:
•the state attorney general's office in the state (see the Watchdog library for AG's where you live and in the state where the business opportunity promoter is based.
the state attorney general's office in the state (see the Watchdog library for AG's where you live and in the state where the business opportunity promoter is based. •your county or state consumer protection agency. Check the blue pages of the phone book under county and state government.
your county or state consumer protection agency. Check the blue pages of the phone book under county and state government. •the Better Business Bureau in your area and the area where the promoter is based.
the Better Business Bureau in your area and the area where the promoter is based. •the FTC. File a complaint online at www.FTC.gov or call toll free 1-877-FTC-HELP (1-877-382-4357).
the FTC. File a complaint online at www.FTC.gov or call toll free 1-877-FTC-HELP (1-877-382-4357). BE AN MLM DETECTIVE AND DO YOUR DUE DILIGENCE
