Let paint a picture before we get into the 5 P’s Test. A friend or family member keeps pestering you to look at “an amazing money-making business” of some great product or service that requires only a minimal investment. All you have to do is attend a “business opportunity meeting” at someone’s house or at a nearby hotel. They finally confess, or you find out that the opportunity is MLM (Multi-Level Marketing or Network Marketing), but you are assured that everything is legitimate. “No, this is not a pyramid scheme. The products which you can get wholesale are revolutionary! You could make thousands of dollars fast, maybe tens of thousands, maybe hundreds of thousands, maybe millions.”
Sounds too good to be true? How do you respond appropriately and still keep your friendship or family relationship? How can you politely and assertively say no? Or if you are indeed curious about how you can possibly make extra income, how do you determine if the “opportunity” is real and even right for you and your circumstances? You need to perform the “5 P’s Test” that will make the person who is soliciting you prove at a minimum that their MLM Company is a legal and genuine business that might serve your needs. After the “5 P’s Test”, you can say no tactfully, or you can go forward with further precautions and strategies to maximize your advantages, save money and avoid costly mistakes.
Not All MLM Companies Are Fraudulent
Despite problems from public misunderstanding and a few fraudulent companies, today’s networking companies feature legitimate products and services that offer income opportunities for the right person who decides to seriously and systematically pursue a business through hard work, patience, and perseverance. Millions of individuals around the world have achieved success in otherwise limited economic conditions, especially women.
Network Marketing is especially suited to the Internet age with the ability for a representative to market products anywhere and anytime with the company’s representative-customized website. Requiring no technical skills or special knowledge, just about anyone can join a company with a relatively small investment (although new representatives must be aware of the pressure or risk of buying too many products initially).
Even if network marketing is easy to enter and start, the business is not for everyone. Problems in the past (and present) have arisen because of personal misconceptions as well as company deficiencies. Sometimes products, the company, and the concept of network marketing are over-hyped, resulting in unreal expectations, disappointment, and failures. Network marketing success is slow in building (like most careers), taking up to 5 years to be fully profitable. While a company may have thousands or tens of thousands (as in the larger MLM companies) of productive practitioners, there is a high turnover rate of those joining and quitting the business.
In Multilevel Marketing, Salespeople Have An Incentive To Market Products Well If They Are Compensated Accordingly
Lack of success in network marketing stems from a lack of work and effort by individual representatives and is worsened by a company’s lack of training and support. Furthermore, new representatives are first very excited by compensation plans that are eventually difficult to attain or are too complex to understand. When a company’s compensation is very lucrative for the big producers at the expense of the average or new representative, motivation to continue and work at the business wanes and leads to failure.
Still, network marketing is booming, and finding the right company with the right products and/or services may be the answer in tough economic times in industrialized countries and may still be one of the few opportunities for women in the developing world. Laid-off workers are familiar with network marketing as a home-based business that can supplement or replace lost income. Many MLM companies are household names with their own famous brands. Even the billionaire Warren Buffet has been involved with MLM Companies (his Berkshire Hathaway owns the Pampered Chef and once owned World Book and Kirby Vacuum).
“The 5 P’s Test”: Questions and Issues for the Person Who Is Soliciting or Recruiting You for MLM to Answer
What is their company all about in terms of product, mission, and history (in summary), including valid testimonials and honest reviews of the company? What makes their company unique or special?
Product Or Service
What are their company’s specific products or services with their unique or special benefits, values, or “ingredients”? Where are their products made, and who makes them? Ask for honest reviews of their products or services, including any negative ones and the sources (objective) of the reviews. Even competing products should be compared.
Who are the members and leaders up and down in their organization, and what are their past backgrounds in business, the community, and also personally. Leaders must have solid reputations without criminal or shady histories. How do you (the person recruiting or soliciting) fit in the company? Ask them to share personal stories that tell of their genuine reasons for joining the company, including any hardships or challenges, or real accomplishments.
Pricing (And Promotions)
What are the prices of products (and services), and what are special promotions and pricing advantages for members and “leaders”? Present Catalogs and Full Price Lists. Again compare prices to the competition and justify any higher costs.
What is their company’s “compensation” plans? You need a summary of programs that include honest and true figures for specific members, including their own profits or gains. Tell about outstanding performers and earners, including those with “normal” income. People want honesty! Some are just looking for part-time opportunities or “decent” money!
If the recruiter and the MLM company pass the above test, consider joining but only after attending at least 3 -5 meetings, depending on your time availability. Let the company work hard in “recruiting” you. If you intend to sign up, wait for the inevitable product promotions for joining, including product discounts and reduced sign-up fees. Try all the products you are interested in and ask for free samples or drastically reduced prices. If you do sign up, do NOT agree to any “Auto-Ship” (automatic monthly minimum orders that you have to pay for!) unless you truly have customers/buyers ready to use and pay for the products. Resist the pressures of being placed as a “Manager” or Director” or similar “high commission” position achieved only through buying large volumes of products, even at a “preferred” discount. You may never recoup your investment. “Take your time and save your dime!”
Top Achievers May Not Be Transparent
Do not be blindly impressed by those who seem to be very successful in a particular MLM Company. Most “top achievers” will probably still keep their current employment which would indicate that their very large incomes may be inflated or short-lived. Joining an MLM Company means going to work and growing a business (remember the 5-year build-up) and being good in all the usual skills required for success: persistence, knowledge, and belief in your product or service, and long hours performing sales, accounting, and strategizing, not to mention all those meetings at a hotel or perhaps now your own house where you are trying to attract new customers and recruits who should all make you complete the “5 P’s Test”.
Finally, just beware of MLM companies who seem to talk more about recruiting than the actual product or service, which is the foundation of the entire network marketing business. Just say, “Sorry, not for me at this time.” Analyze the MLM opportunity presented and do yourself and your friend or family member a favor. There are many choices for excellent MLM Companies with products and services that may be right for you to use and sell.