The recent demise of several companies that used network marketing (or a facsimile) to sell their products to consumers, led me to reflect on the reasons that these, and many other companies, like them, fail.
Having been associated with a Consumer Direct Marketing business (a successful one) myself for over 5 years makes me, at least somewhat, qualified to share some of my observations. I became a marketing executive (independent) with my company after being introduced by my “enroller” to the 12 “success factors” that portend a successful company and personal career with that company. My company possessed them all, so I was encouraged.
But in reflecting on the companies that have failed in the past, both long ago and recently, I came to a conclusion that, if there were “success factors”, there must be “failure factors”, as well. Some of these are simply reciprocals of the success factors, which would make it easy. As you and I both know, by now, nothing is easy, so I will continue to “think out loud” with you, here.
First, if the company you are considering is a “pyramid” business model, where only a few early “fortunates” will prosper it is, first of all, illegal and finally, destined to fail, just because of its’ structure. It’s not the shape, because most direct marketing businesses have the “shape” of a pyramid. The downfall of the “pyramid” model is that the preponderance of compensation is not based on product sales, but on signing up others at a significant fee or large “unsold” product commitments. Don’t go there.
Another “failure factor” can be a company that offers one or two products (even if size and applications vary). A company with a large variety of products and product categories that embrace duplicated, family spending, budget allocations that are already being made, offer an opportunity to expand your “approach” market, exponentially, and your potential for success, greatly. But a wide variety of products are not enough. Those products must be higher in quality or unique invaluable ways and they MUST be competitively priced with their alternatives. Unique, superior, competitively priced products are what make the Consumer Direct Marketing model work.
A company that has just started is, sometimes a good bet in the technology/software business, but almost never in consumer goods. A company with no history is using YOU to test every idea. Unless you enjoy being a “lab rat”, avoid this environment. Another factor to examine is the company’s balance sheet (you will have to source that for yourself since they, likely, will not share it). If the company you are considering associating with is carrying bundles of unexplainable debt (and is debt ever?), their future is in doubt, and therefore, so is yours. The company this author represents, for example, has no debt, as in zero, even in capital investments. So a definite “failure factor” is unfunded spending in business, as it is in our personal lives.
Now let’s talk about the effort you invest in creating a consumer, it is considerable, particularly if you do a more than adequate job explaining your products and your business. If the association you are considering allows you to continue benefiting from those efforts in the form of continuing residual income, those efforts are (or eventually will be) worth it. But, there are many direct marketing models that provide “breakaways”, which simply means the money your consumer is still spending, is not enriching you any longer. Call me crazy, but that’s not a good deal, and certainly, qualifies as a “failure factor”. So as you choose whose business model you are going to represent, attach yourself to, and for which you will ultimately be responsible, remember, winners do things differently; losers do different things.
By using the “success factors” as a benchmark for my choice, I was able to avoid all of the “failure factors”. The fact is that my choice was so sound that the only “failure factor” I had to overcome was myself. I was the only variable. Was I going to “try” this business or was I going to “do” this business? In the direct marketing arena, once you have sorted the “successes” from the “failures”, it always comes down to that choice…TRY or DO. I am not going to attempt to influence your ultimate choice, but when you have made yours, commit yourself to the “do” and not the “try” or don’t make the choice at all. Stay where you are, it may work out. Really… REALLY???