Looking for ways to make money online in 2017? You’ve probably heard about the newest and greatest get-rich-quick scheme that came out last year. Introduced to the world as “make money online in 2018”, the MLM sales funnel catches everyone’s attention. With the right mix of charisma, confidence, and fake smiles, you’ll be able to convince people to sign up for your “product” and hopefully, make a lot of money with it.
So, is making money online in 2018 a scam? Let’s take a closer look at how MLM schemes work, what makes them different from typical online businesses, and whether or not you’ll actually be able to make money online in the future.
How Do MLMs Work?
Most people are familiar with MLMs, considering that they’ve been around for years. Essentially, MLMs are business models that consist of a distribution of salespeople, often called “Independent Businesses” or “Affiliates”, that sell a product (or products) to end customers
The product can either be a physical item or a service, and the revenue is derived from commissions on the product sales as well as a smaller percentage from the sale of your own products. Let’s take a quick tour of the MLM sales process:
Step 1: Identify the target audience
The first step in the MLM sales process is to identify who the target audience is for your product. Since your product is, in most cases, geared toward a specific group of people, you’ll need to choose your affiliates (salespeople) wisely. The most successful MLM entrepreneurs tend to pick an affiliate program that appeals to a demographic that they are able to sell to successfully. It is also important to remember that your product may not be right for all of your affiliates. You should also consider the size of your organization as well as how much you want to invest in salespeople training before you start seeing sales.
Step 2: Select the right salesperson
The next step is to choose a salesperson to represent your organization. Like with any new business, you’ll probably want to choose someone who is known, has a track record, and is reasonably priced. Ultimately, you want to find someone who is a proven performer in your industry and can help you take your organization to the next level. Once you’ve found this person, it’s time to move on to the next step.
Step 3: Create compelling, value-packed material
The third step, and, in many ways, the most important step, is to create compelling, value-packed material to entice people to click through to your website or to pick up your phone call. The material should offer something new and, sometimes, valuable to the target audience that you’ve chosen. For example, if you’re marketing a software product to information technology (IT) professionals, you might create a whitepaper or a webinar that compresses complex information into easy-to-digest bits of content.
While your goal is to attract potential customers to take advantage of your offer, it’s also important to keep in mind that no one wants to buy something that they already know or believe that they can get somewhere else for free. When creating compelling content, make sure that your audience doesn’t have any knowledge that would make them aware of your product or service’s existence. In most cases, the best materials are those that are both unique to the topic and offer a concrete advantage to the person reading it.
The Advantages Of MLM For New Businesses
If you’re looking for an established brand name that you can partner with to grow your business, you might want to consider an MLM as a route to explore. Here are just some of the advantages of MLM for new businesses:
- A potentially valuable network of customers that you can draw upon for future marketing campaigns.
- The knowledge that you’ll gain by being a part of an established organization.
- The resources that you’ll need to succeed, including human resources, a legal team, and financial planning.
- The ability to save money on your first marketing investments through various sponsored deals and the equity you’ll receive in your organization.
- The potential for upside depending on how you structure your compensation plan.
- The security that comes with being a part of a larger organization.
- The ability to leverage other organizations to gain credibility with your customers.
The Risk Of MLM
On the opposite end of the spectrum, you have MLMs that can be highly lucrative but, as with any new business, are also highly risky. Here are just some of the risks of MLM:
- The inability to predict sales performance, meaning that you cannot guarantee that you’ll make any money at all.
- The high cost of getting started, mostly due to the cost of participating in the recruiting phase.
- The susceptibility to scams and the lure of easy money, which can cause you to throw away lucrative deals that you might otherwise have picked up.
- The inability, due to the high cost of participating, to get sufficient feedback and assess performance, which can result in you losing money or the business failing.
- The inability to scale operations quickly, as your revenue is largely based on customer acquisition cost (selling price + commission) instead of profit margins, which makes it more difficult to succeed as you grow your business.
- The risk of being marginalized by bigger organizations in your industry as a result of being a smaller player.
Whether or not you end up choosing to go down the MLM route for your business, it’s important to remember that every business and every person is different. What is important is that you examine everything, including the pros and the cons, and make a decision that is best suited for your specific situation.