How to start an MLM company
Every year, thousands of people worldwide participate in MLM ventures. The most commonly known MLM ventures include Amway, Mary Kay Cosmetics, The Pampered Chef, TupperWare, Nu Skin, AdvoCare and more.
While many of these organizations offer competitive and beneficial pay structures, many of them offer little reward for those who are low on the “downline.”
Multi-level marketing organizations rely heavily on recruiting new members. While some MLM’s require members to purchase inventory and products from the parent organization, others don’t require members to maintain an inventory. These ventures provide less investment and financial risk for participants.
Many MLM participants don’t make much profit. Depending on where you are in the downline, you might even lose money. The people who generally make the most in MLM companies are those who originate products.
But it’s not that difficult to come up with a product or offer for an MLM. Here are some key things to keep in mind when creating a multi-level marketing organization.
Develop a product, idea, or solution that helps people solve big problems.
Some common niches are weight loss, anti-aging, and cosmetics. (Think weight loss shakes, acai-berry cleanse, gluten-free health bars, age reversing creams and serums.)
While many MLM creators focus on creating physical products, people should remember that digital products and solutions are equally (if not more) profitable.
It’s also easier to recruit new members when they’re not burdened with carrying a physical inventory.
Design a payment plan that makes sense.
If a commission or reward structure is awkward or confusing, people will not want to join or promote your products. This, of course, makes it harder to churn a profit and get your life-changing offer out to the world.
While commissions should be paid in a timely manner, you want to be sure to reward your associates for customer retention. Think about offering bonus incentives for members who are able to retain their downline recruits. Also, consider extra incentives for members with a low refund rate.
Positioning is important.
Unfortunately MLM organizations have garnered a bad reputation over the years. This is because of some unscrupulous business people who put profit over people. Remember, “profit over people” isn’t a long-term business model. If you’re looking for a long-term MLM business, then you need to make sure that you’re putting out a solid product and offer.
Customer service is key.
It’s important to offer top notch customer service for the products you sell. This includes guarantees, and complete disclosure and compliance regarding risks (think: health risks and side effects of weight loss supplements). Just because you’re putting out a new product doesn’t mean you get to make your own rules. Follow the laws of your country.
Beyond offering customer service for your products, offer support for your associates and recruits. This can be as simple as maintaining consistent office hours, having a support phone number and online forum and live chat.
If you want to go above and beyond, you should offer live training via webcasts or in person events. Most MLM organizations don’t include comprehensive, ongoing training. This is one way to make your organization stand out from the pack.
Seek out media opportunities when appropriate. This can include sending out press releases, sponsoring charitable events, and gaining endorsements from media personalities. Share your content online, and make sure that all of your sites are search engine optimized and mobile-friendly.
Maintain a social media presence.
You’ll want to make sure you monitor your social media channels closely. These present incredible recruitment and sales opportunities, you also need to make sure you follow the Terms of Service (TOS) of the social media platforms.
Price your offer appropriately.
While you want to offer your solutions at a price that your market can afford, you also don’t want to price your offer too low. Pricing too low will result in lower profitability. Additionally, a low priced offer will generally attract an audience more likely to receive a refund and garner negative feedback and reviews.
It’s best to test your offer with various markets and price points to see what is the best fit. Ideally, this testing should occur before you “launch” your MLM offer.
In addition to testing price points, you’ll also want to continually test and improve upon the product itself. Listen to constructive feedback. Implement the changes that make sense.
Create a clear and transparent structure for upward mobility within your organization. While people love receiving awards and recognition, most people want more authority, autonomy, and money. Promote and reward accordingly.
Look for enthusiastic product evangelists.
Many of these initial recruits will come from your test audiences. These are the people who gave you that feedback on how to improve your product and offer. Inviting these people to join will make them feel like they’re part of something new and great. “I was one of the first people to try [your product].” Early adopters make great associates!
Seek out mentors and leaders with experience in the MLM space. This is perhaps the most important item on this list.
Creating a new multi-level marketing organization is no easy feat. There are unlimited choices regarding commission structures, recruiting tactics, product development, testing, legal ramifications and more.
While most people want to do all the heavy lifting on their own, the best business people know that when the stakes are high, it’s important to bring in more experienced people to help.
This post was written by DGA Global, a network marketing software development company.
