How to Choose the Best Network Marketing Company

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Many factors will contribute to your success as a network marketing business owner: the company, your core beliefs, commitment level, ability to market and brand yourself, problem solving skills, relationship building skills, leadership abilities and posture.

The first step to building a successful network marketing business is deciding the company with which you will partner.

#1 Long Term Growth & Stability

You need to be certain that the company you choose has the ability to give you long term growth and financial security. 

Do a background check on the company you’re considering. Contact your local Better Business Bureau for a reliability report on the company. Over the last ten years network marketing has exploded and with it a whole slew of companies have arrived selling everything from household products, to travel services, to legal services. So conduct your due diligence, be selective and choose a company with a proven track record of success. When I started my network marketing business one of my major concerns was choosing a well established company with stability and security. I was neither interested in joining start-up companies nor partaking in any “ground floor opportunities.” Unfortunately, ninety percent (90%) of businesses fail within the first five years. Therefore, I recommend looking for a company that has been around for at least five years.

#2 Compensation Plan

Ninety-five percent (95%) of networkers build their business part-time. To build a profitable business and keep your retention rate high it is important to choose a company with a compensation plan that is profitable for both full-time and part-time representatives. 

There are four basic compensation plans:

• Binary • Matrix • Stair Step Break-A-Way • Uni-level

The binary compensation plan allows a distributor to have two front-line distributors. When a distributor sponsors more than two distributors, they are placed below the distributor’s front-line. Compensation is driven by volume instead of levels.

In a matrix compensation plan, which looks like a family tree, a distributor is allotted a predetermined number of recruits at each level. For example, in a 5×7 matrix, each level down to seven can have five downline distributors across – totaling 97,655 people. This plan also allows for “spillover.” Spillover occurs when someone not enrolled by you is placed in your downline. Since this plan allows for compensation on volume and levels, this is a good fit for both part-time and full-time distributors.

The stair step break-a-way is the oldest type of network marketing compensation plan. The compensation increases at each step, with the highest compensation at the top step. After a distributor advances to the top step they “break-a-way” from their upline and their original sponsor receives a percentage override on the sales of the entire break-a-way organization.

The uni-level allows distributors to sign up as many people as they want on their first level and their downline may do the same. Therefore, uni-level distributors don’t advance to positions beyond distributors, regardless of their performance.

This structure allows for maximum compensation and exponential growth. I wouldn’t recommend over analysis of various compensation structures. It can become unnecessarily complicated. Since many companies incorporate variations of these compensation plans, the most important task is to select a company that will allow you fair and profitable compensation.

The general areas of concern are as follows:

(A) Introduction Commission. This is immediate commission earned from the introduction of products and services to new members. This provides new representatives instant commissions as they build their residual income.

(B) Advancement Bonuses. The company rewards and acknowledges your advancement from one level to the next.

(C) Leadership Bonuses. This is where you help develop leaders in your group and you get an additional bonus for your leadership efforts.

(D) Car Allowances. This is a monthly stipend given to distributors who have reached a certain level of success. FYI: The make and model of the car should be of your choosing.

(E) Vesting. The company rewards years of hard work and dedication by allowing the representatives to “retire” (receiving ongoing residual income) without production requirements.

Another consideration is the company’s ability to meet its financial obligations. With the credit crunch and current state of the economy, selecting a company that is debt-free and without the financial burden of a mortgage could prove to be very wise.

The company needs to be fiscally responsible to afford day-to-day operations and ensure representatives are paid when promised.

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Photo by Luana Norões

Scrutiny should be given to privately held versus publicly traded companies. The implosion of mortgage-backed securities has given me pause when deciding to affiliate with publicly traded network marketing companies. To the detriment of marketing representatives, publicly traded network marketing companies are tied to Wall Street and have a fiduciary responsibility to financially reward its shareholders first. Therefore, the compensation plan is not always profitable and their marketing representatives often suffer. In fact, marketing representatives at publicly traded network marketing companies are paid less than marketing representatives at privately held network marketing companies 9 out of 10 times.

Privately held companies’ only responsibility is to honor their mission statement. So be certain to inquire about the mission of the company before joining any company. Publicly traded companies are required to disclose their financial condition every ninety days to the U.S. Securities and Exchange Commission (SEC) and other governmental agencies. To get the best of both worlds…Join a privately held company that publishes their financial earnings.

#3 Products & Services

Some network marketing companies have a very narrowly focused product or service offering. 

The best option is to find a company that offers both products and services. Companies that offer a large selection of unique consumable products and are committed to bringing new products and services to the marketplace as the trends change will give you a lifetime of residual income.

Time the trends. You make money when you time trends and lose money when you disregard trends. There were 78 million people born in this country from 1946-1964, better known as the baby boomers. Baby boomers are the largest consumer and account for 65% of all monies spent in the nation. In the 50’s the baby boomers made Gerber baby foods a billion dollar company. Similarly, Buster Brown, Mattel toys and other kid based products had enormous growth. By the time the boomers began reaching adulthood their generation almost single handedly grew the car industry, especially Ford with the popular Mustang.

The 1970’s real estate boom was attributed to the boomers reaching the age where they were ready and able to become homeowners. Conversely, by the 1980’s the real estate boom failed because there was a surplus of homes and the demand decreased. Likewise, boomers are reaching retirement age and want to look better and live longer, healthier lives. They are currently spending $400 billion a year in health and wellness products.

Look at what industries are currently expanding and those on the cusp of expansion. It is important to represent a product or service that you believe to be valuable. There needs to be a genuine need for the product. If your family and friends could benefit from this product and service, chances are many others will as well. Ask questions. Does the company stand behind its products? Does it have a money back policy? You must have faith and excitement in the products and services in order to successfully sell and recruit team members.

#4 Training System

It is critical to choose a team that has a training system. Many network marketers quit because no one has properly trained them to build a successful network marketing business. The company and upline representatives must be eager and possess the proper skill set to facilitate your journey to success. Look for a company, a team, and a sponsor that has a system in place that you can use from day one to build your network marketing business. The system you use to market your business must be simple and easy to replicate.

#5 Company Management

Be sure to check out the track record of the management team of the network marketing company. Does the executive and management team have the necessary leadership experience and skills to take the company into the 21st century? Is the company prepared to deal with exponential growth? What is the mission of the company? Do they have what it takes to reach these goals? Is the company in any other countries?

The internet enables marketing representatives to expand their businesses globally. A good company has a strong internet presence to order products, enroll customers, present opportunities and train representatives.

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