We quote again from a training by Mike Akins summarized by Beth Heilman:
At best, only 25% of your distributors will be earning a profit or breaking even on their qualifying product purchases. What are the other 75% going to do? If they are networkers involved to make a profit, they will drop out. You cannot escape this ratio …
There must be end users who are not earning an income. The program has to be able to attract non-income earners …
A program will begin to unwind from the bottom up … Actually, this principle affects the unwinding process very early in the building process. If you never understand anything else, it is vital to your success that you comprehend this principle …
Small organizations of only a few hundred or a few thousand can experience the unwinding process as they build.
(Mike’s comments refer mainly to a company where many non-builders will join as reps in order to be able to buy at wholesale rates. In companies with just a retail price, the required non-builders can be customers.)
The problem arises when your company or upline promotes recruiting only without promoting customer gathering at the same time. For both our examples, we’ll use a typical autoship of 100 points at $150 with a respectable commission rate of 30% on the purchases of both reps and customers.
Let’s look at a growing downline in Company A which promotes recruiting only.
You make your monthly autoship of $150 and sponsor five people. Those five people generate 5 x $30 = $150 to you and you have ‘broken even’ with your products paid for. You are now in ‘profit mode’. BUT, you have created five people NOT in profit mode.
Then those five people sponsor five people each and move into ‘profit mode’. BUT, now you have 25 people NOT in profit mode. The next step is 125 people not in profit mode and then 625 people not in profit mode and then … well, you get the picture.
A business model like this creates an ever-increasing number of people not making a profit, and at some point, the unwinding will begin as people drop out at the bottom. The ripple effect will move upward as checks begin to dwindle and more and more people quit.
Worse than that, you have also created an illegal pyramid which will draw the attention of the authorities. Not good for you or the company!
If the trend is not reversed, downlines will vaporize and the company will collapse.
Now let’s look at a healthy Company B that promotes customer gathering as well …
You begin with your $150 autoship, and as you build your business, you aim to gather at least five customers. As you sponsor new distributors, you teach this same principle and duplicate customer gathering in your downline.
Once you have five customers, you have your products paid for, and your five distributors will be generating a profit to you of $150.
When your five new distributors do the same thing by gathering five customers, you will have helped five more people move into ‘profit mode’. Then 25 people making a profit, and then 125 people in profit, then 625 people in profit and then … well, you get the picture.
You have created a healthy downline with high retention.
Better than that, you have helped to create a healthy company with over 80% of its revenue coming from customers, i.e. non business builders who are not attempting to make a profit.
Network marketing is a partnership between you and your company. When you gather just five customers, you have done your part to help yourself and your downline, and you have done your part to support the long term health and viability of your parent company.
Click here to learn how to plan and protect your future in MLM.
Bob and Anna Bassett
519-371-1028
Skype bobbassett
bobandanna@togethertothetop.com
