Network Marketing

Big Time Network Marketing on a Small Budget

By September 28, 2017 No Comments

Network marketing has been traditionally built person-to-person though relationships, face-to-face recruiting and active networking. The game has been attracting fellow entrepreneurs and customers to buy the company’s products. Some people are able to amass fortunes developing huge networks of representatives without ever doing any traditional advertising (cold marketing). When I first got started, I did not have any confidence in my ability to develop a large network through typical face-to-face relationship marketing.

While I was highly attracted to the business model, the residual income it could deliver and the concept of earning a small piece of other people’s efforts, I could not see myself doing it the same way everyone else was. I wanted to be able to try and fail as many times as necessary until I got it figured out. I didn’t want to sell products to my friends and family as the sole means of marketing. I found out I was not alone.

We learned to create a constant flow

By investing in traditional advertising like any other business and teaching my team what works, we learned to make the phone ring, and the business started developing much faster than anyone ever imagined. As we learned to create a constant flow of new recruits and customers, my friends and family became interested in the system and now we really had something to talk about. It was the best of both worlds.

Advertising costs money. Like any other investment, the more you have to invest, the more you can earn (and potentially lose). There is nothing “guaranteed” about advertising. The only safe way to advertise is to test in small increments and when you hit on a formula that works, increase your investment and distribute the knowledge through your team. What do you do if you have little or no money you can spare to advertise? That’s a great question. The answer is to do the same thing you would do if you were sitting on any business goldmine and you needed investment capital to launch it. You’d get an investor.

The network marketing model works very well with investors. The compensation plan in most MLM opportunities will usually allow for you to sponsor your investor, place them in your downline organization, and enroll any new recruits coming from the advertising—under your investor’s distributorship ID#. This activity has the potential to pay you both and excellent stream of monthly recurring income. How long will your investor have to wait until they break even? There is no way to know exactly, but compared to other forms of investment available to them, they could enjoy returns unheard of in most industries.

For example, an investment suggesting a possible 25% annual return with relatively low risk would be mind-blowing, and this investment opportunity (if it existed) would have more investors than it could handle. Be clear in your mind that at a 25% annual return, it would take about 4 years for them to break-even (with their principle investment/equity still in-play). In network marketing groups, the representative’s mindset is often in fear of any advertising activity that doesn’t break-even in a month or two. My friend, this is not good thinking. Investors would fight to invest in a good opportunity that produced double-digit returns and successful business owners advertise every day with funds they know they won’t see until the following year.

If your initial tests positively demonstrate that you can enroll a new person into the business opportunity for an average advertising cost of under $300, then I’d say you can help develop the organizations for your investor/recruits and help them make mind-blowing returns through your efforts. For example, let’s say you landed an investor willing to fund a $30,000 advertising campaign or three investors willing to do $10,000 each. Let’s say that your cost-per-enrollment was $300 even. That would mean, through this campaign, you would have enrolled 100 new recruits.

Let’s say your new recruits do an average of $300 in volume their first month. That would be $300 x’s 100 people or $30,000 in sales volume. If you and your investor earned a combined 20% on the $30,000 in sales volume, that would be $6,000 in commission which could be reinvested into advertising or used to pay back part of the investment. My personal feeling is that the proceeds are best reinvested over and over until you get into a momentum-phase.

Now let’s say reality sets in and of the 100 recruits you enrolled, half of them quit the second month, 40 of them are still interested, but slow-starters (using the product and “thinking” about the business), and 10 people are actively recruiting. Now, your cost for these 10 people was what? I’ll help you out with the math. They cost you $1,000-to-$2,000 each. So your follow-up, support, and cultivating their interest really matters at this stage. This is where you can really hit a home-run, or waste a great opportunity.

Let’s say the 10 recruits you have actively pursuing the business do a combined $10,000 of sales volume the third month. If you and your investor earned 10% each on that sales volume, you’d have another $1,000 of income to reinvest or pay back the initial investment. You know my feeling on paying back the investment. My belief is to think like a business person and don’t even suggest measuring the return-on-investment until you’ve had a full year to develop the network.

Now, let’s say that out of the remaining 40 slow starters, you end up with a dozen product users and only 2 active business builders. Let’s say that of the 10 most active recruits, 7 quit by the third month, and 3 are seriously involved. You now have a bunch of product users and 5 serious builders duplicating your exact marketing campaign in your organization. Of those 5 serious builders, you’d also have several hundred potential warm market prospects to work through their lists.

Here’s where it got interesting for me. My investor/recruits were seeing the return possibilities clear as day, and we got to the point where they were referring other investors and we were matching them with committed full-time or part-time business builders. This really drove the business development quickly.

In reality what can happen is there are more investors than competent people to work the communications and entrust a campaign investment with. So, this is where your management and leadership ability can really pay off. You will be needed to organize larger co-op advertising campaigns, you’ll be needed to identify people who are truly walking their talk to potentially match up with advertising funds and you’ll be needed to train people how to work the system over and over. Ideally, you will be “teaching-to-teach” which is when your life starts to get really good. The payoff of having people on your team who know the systems as well as you do can be really staggering.

If after one year’s time, just one of the 100 prospects has the commitment level and ambition that you do to really make it work, you and your investor could be enjoying a powerful stream of residual income for years. It really takes just one very serious person on your team to make tens-of-thousands per month. Find 3 of them and you could really be in good shape.

Why am I being so bleak and anticipating such high failure rates in my examples? The reason is because, that’s reality. You can do better or worse. But it is best to know what you and your investor deem the minimum acceptable return beforehand. My feeling is that if you agree to reinvest 100% of their commission back into the business for the first year, they will have the best chance of seeing impressive double-digit or better monthly returns on their original investment.

This sort of payout potential is the stuff made up in fairytales, but many of my friends, family and I are living proof that it can work. I’ve seen it work in dozens of companies across all kinds of products and several breeds of compensation plans. We’re talking about typical business here, nothing new. Start-up investment capital, and traditional advertising. What sort of twists can you add to this? Well, if your investor really “gets it”, they might be willing to help support you to develop their organization full-time. If you ask me; that would be a dream come true for both of you.

DISCLAIMER: THESE EXAMPLES ARE THEORETICAL ONLY AND MAY HAVE NO SEMBLANCE OF SIMILARITY OR REALITY COMPARED TO THE ACTUAL RESULTS OR PAYOUT YOU ARE CAPABLE OF EARNING. ADVERTISING IS RISKY AND TRICKY. DO NOT RISK ANY MONEY YOU CANNOT AFFORD TO LOSE. ADDITIONALLY, THE CONCEPT OF GETTING AN “INVESTOR” FOR ANY BUSINESS IS A VERY TOUCHY SUBJECT FRAUGHT WITH LEGAL RISKS, DISCLOSURE REQUIREMENTS, AND SECURITIES LAW. TO AVOID ANY SUCH EXPOSURE, BE SURE TO BE CRYSTAL CLEAR YOUR “INVESTORS” ARE MERELY INVESTING IN THEIR OWN BUSINESS. YOUR OFFER IS SIMPLY TO WORK THE ADVERTISING CAMPAIGN INVESTMENT FOR THEM WITH HOPES OF MAKING THEM AND YOURSELF A GOOD RETURN THROGH THE COMPANY’S COMPENSATION PLAN.