After 10 years in network marketing and hitting the top position in at least 3 companies and sponsoring hundreds of people and having downlines of several thousand people. I can honestly look you in the eye and tell you that you have very little chance to succeed long-term in network marketing unless you get this one thing. It took me 10 years and working in multiple companies to figure it out after having to rebuild my businesses multiple times and going broke a few times. In fact, I was able to get a check from one company for 3 years after I quit working it, and 5 years from another. But the truth is by the time I got my final checks from both deals the checks were about 10% of what they were when I quit working the business. That is not long term passive residual income. It’s amazing I was able to collect a check for 5 years after I quit working it. I don’t know too many network marketers who could admit to that one.
We all talk about building long-term passive residual income? But is this possible? I believe that it is, but only if your company has great products that people would buy without earning a check. You see, when the downlines that I built prior slowly went downhill and eventually quit paying me. It wasn’t necessarily because of my people. It was because most of the people ordering products each and every month were like me – they were simply buying the products so they could earn their commissions.
You see, only about 20% of all people in any network marketing company are earning any money on a monthly basis. The other 80% aren’t earning any money and when the company charges more for their products than what you can pay for it at the store, guess what? Yep, people go back to where they bought the product before for a fraction of the price. In many cases the company is selling products you would never buy unless you were in the business (brain fuel, colon cleanser, toxin cleanse, etc). I never really understood why network marketing companies would charge so much for their products when unlike retail, they have really no advertising or distribution channels, wholesalers, resellers, etc… Wouldn’t it make more sense that their products should be of better quality and cheaper? I honestly can say a few years back I actually met with an owner of a company who had a product that was made in China for $6 and then he was reselling to his distributors for $60. If you understand profit margins, that’s unbelievable ROI (Return on Investment). In fact, that is almost illegal. Vegas, doesn’t even get that sort of return on investment.
The reason the prices tend to be much higher than retail in network marketing is that most companies re-ordering is done by the 20% who need to earn commissions. The other 80% quit ordering eventually and this is why companies have to continually expand internationally as once they exhaust the 80% they have to go look for more 20% to keep the engine running.
So what is the one thing? It’s really quite simple the goal of a company shouldn’t be to attract millionaire marketers and 20 percenters but to attract 80 percenters. So how do you do that? SImple, you don’t build your business model based on churning and burning. You build your business just like Apple, Ford, Microsoft, and many other great American Companies were built. You build your company with a focus on making a better product/service than whats in the marketplace. In other words, you invest, you innovate, and you continually make better products.
Finally, you make your products affordable enough so they compete with whats on the shelf and that is how you keep the 80% and that is the only way you can ever make and keep your money in network marketing and quit working your business eventually one day and not have to worry about your checks dropping every month like what happened to me. So my advice is to join a company that has great products that are affordable enough that people keep buying them whether they are earning a check or not (The 80%).
This is in my opinion why you will never be able to build a long-term passive residual income with most network marketing companies.
This article was posted by John Lowery
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