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The Biggest Mistake EVERYONE Makes When Marketing An MLM

Marketing an MLM (multi-level marketing) can be particularly hard – harder than most businesses. It comes down to a key mistake that most people in MLMs make, and we’ve seen it over and over again. The good news is that all it takes to fix is a small change in focus.

Before we jump into the meat and potatoes of what to fix and how to fix it, let’s quickly explain what an MLM program actually is, because you can’t fix something that you don’t understand (if you already know this stuff like the back of your hand, and can’t stand to read another explanation, skip down a few paragraphs).

Defining MLMs

MLMs are companies (like Amway) that get their customers to do the selling for them. Let’s say that I’m selling a product for an MLM. I can sell you the product, but I can also sell you the opportunity – I can get you so excited about the product that you want to go out and sell it too, and if I can get you to do that, I’ll earn commissions on everything that you sell. Anyone that I recruit is part of my “down-line”, and I get rewarded for the successes of my down-line.

This is a kind of circular; you get people excited about the opportunity by telling them that they can, in turn, recruit people into their own down-lines, and make money while they sleep and other people are out selling the product.

So far, this might just warrant a raised eyebrow, but most MLMs will charge some sort of “sign-up fee” or “initial inventory fee”, or something that basically means you’re paying them for the “opportunity” to sell their product. Starting to sound fishy? Starting to sound like a pyramid scheme, even? Usually, that’s more or less what it is.

There’s an easy rule of thumb for telling between a legitimate MLM and a pyramid scheme, and that is by asking where most of the company’s money comes from. Do they make most of their money by selling products? In that case, it’s a legitimate MLM, and more power to them. If they make most of their money by selling the opportunity, though, then it’s a pyramid scheme. No power to them!

The Marketing Mistake

The thing is that even with legitimate MLMs, people tend to get very excited about selling the opportunity – they reason that if they can get just three friends to sell for them, and then each of those friends gets just three friends, and then each of those friends gets just three friends, and so on… just three levels down, they’ve got a hypothetical sales-force of thirty-nine people out there earning them commissions.

Not a bad dream, right?

There are two problems with this, though, and they both come down to the basic mistake of trying to sell the opportunity before you do a good job of selling the product.

The first problem is that you can’t sell the opportunity if you can’t sell the product. Much as we’d like to believe that we will find and recruit some sales superstars to sell the product for us, the truth is that sales superstars can sell anything, and they have plenty of offers to choose from. The only way you’re going to get them excited is by showing them your own sales record, and demonstrating with cold hard facts that there is money to be made here.

The second problem is that you generally won’t be able to recruit a down-line that is better at selling than you are. If you can figure out how to be successful selling the product, then you’ll be able to train your down-line to do the same, and there’s a lot of money to be made by all. If you can’t sell the product yourself, though, then odds are that neither will they.

The Moral of the Story

Think of selling the product as a baseline income, with selling the opportunity being a multiplier. Let’s say that it can even multiply that baseline by a pretty big number. No matter how big that multiplier is, though, if you’re multiplying it by zero, you still get zero.

The lesson to be learned from this mistake is that if you want to be successful with an MLM, you’ve got to start by selling the product, and only move on to selling the opportunity once you’re doing well with that product.

So how can you sell the product?

Same way you sell everything else. It’s a product, like any other, so go back to the marketing basics, and study your chain of conversion. Who is the target market? What is the real value being offered to them? Are your 4Ps of marketing all on target?

If you answer these questions, develop a solid marketing strategy, and then execute it to deliver maximum value to your prospective customers, then you’ll make money selling the product. And if you can make money selling the product, you can make even more money selling the opportunity.

Want more lessons and tips like this one? Subscribe to the Mirasee.com blog, or sign up for our FREE Seven Day “Business Fireproofing” Video Course!

 

About Danny Iny

Danny Iny (@DannyIny) is the CEO and founder of Mirasee, host of the Business Reimagined podcast, and best-selling author of multiple books including Engagement from Scratch!, The Audience Revolution, and Teach and Grow Rich.

9 thoughts on “The Biggest Mistake EVERYONE Makes When Marketing An MLM

  1. I was never a fan of this kind of marketing. MLM’s is everywhere, but it just doesn’t smell like an MLM. Not to say it’s a bad thing, but I have ran across many others just smell like a scam and I run the other way. The focus I see all the time that turns me off is the strong ploy to get people under you instead of just selling the products at hand. Sure it’s how you make more money, but most times you can turn customers into your business partners if they believe in the product first. 

    • Hey Sonia, I completely agree with you, and I hate being roped into a friend who suddenly wants to talk to me about a “great opportunity” – it’s sad to see people brainwashed this way. It’s completely different if they see you using something for six months, and then you start using it and liking it, and only then do they tell you about the “opportunity”…

    • Hey Sonia, I completely agree with you, and I hate being roped into a friend who suddenly wants to talk to me about a “great opportunity” – it’s sad to see people brainwashed this way. It’s completely different if they see you using something for six months, and then you start using it and liking it, and only then do they tell you about the “opportunity”…

  2. My opinion, MLMs should be treated as referral networks with rewards, not businesses as many claim.  You should consume the products yourself, first and foremost.  Then you tell your friends about it so they consume the products, then they tell their friends.  You are 100% right that it’s the products that need to move, not the memberships.  It’s like blogging.  There are going to be a few big fish and the others are going to be exponentially smaller players.

    • I agree 100%! And the smaller players can grow, but not if they’re get-rich-quick types who are attracted by the sparkly lights of the “opportunity”!

    • I agree 100%! And the smaller players can grow, but not if they’re get-rich-quick types who are attracted by the sparkly lights of the “opportunity”!

  3. What’s up Danny and Peter!

    This was great! I’m not into MLM…but it’s out there big time. Search for something on Youtube and the chances are you’ll find someone trying to recruit you to be a part of their down-line. The funny thing is when they slip up and say that they’ve only been with the company for 2 weeks! In my opinion, the hustle shouldn’t be to recruit at this stage, but rather to sale – just as you’ve promoted here. 

    But the problem is a lot of companies sale the luster of having people under you. So, that’s the mission. A lot of people think they can sale…they’ve read a couple of books that make it sound easy; attended a couple of seminars that make it sound fun – but the reality is, everyone is not good at it. It’s hard, it’s tough. Especially when your initial audience is your family and friends, and referrals linking from them. So, to avoid that discomfort, they take the easy route: recruitment. They lose focus in recruiting the right people – they just want the numbers. But what are numbers if they don’t generate numbers! Right!

    You guys produce great videos. I love them. Thanks for sharing how this should be done. It’s really a common sense approach; easy to understand and apply. Should be a rule of thumb.

    • “The funny thing is when they slip up and say that they’ve only been with the company for 2 weeks!” – LOL!!

      Jk, thanks for stopping by! I think you hit on something important here: there’s a phenomenon of people trying to make things “so easy”, when really they’re not – marketing, sales, and anything else worth being good at takes work, and you can’t learn it in a 90-minute seminar. 🙂

  4. Pingback: A Plague of Opportunities | Hire Me Dammit

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