I got the chance to speak to a group of entrepreneurs about the structure of the system. One of the questions that came up was: ”Why are you so incurably positive about network marketing?”
I answered, ”Because there's nothing in the structure to be negative about.”
When I answer that way to the kind of questions that sometimes come up, people tend to shift a bit in their seats and then they want to share experiences about how people around them have behaved when they've joined various network concepts.
Most of the time I agree with them! That's something we need to work on. That's something we need to educate people about, but it has nothing to do with what we were talking about: the structure. It has everything to do with the culture.
The structure is set. The culture can always be worked on and developed.
Because if we're talking MLM (Multi-level marketing), that's an organisational structure. Direct selling is a business model. How people behave is an individual and cultural behaviour.
We build a network of distributors, that's how we get products out on the market. How we build the internal structure for compensation and split the profits is another matter.
When people say to me ”Is this one of those MLM companies?” I always answer: What's your definition?
Then they often say ”Distributors who recruit new distributors who recruit new distributors…”
Then I answer: ”Okay, so you're curious about how it works. What distributors do and what the organisational structure looks like are two different things. Let's talk about that…”
Compensation drives behaviour, yes, but if you think the compensation plan affects behaviour in the field more than the culture leadership creates, you're wrong.
It's very rare that I see a problem in the structure, or rather, in the serious companies I know of and have seen over the last 16 years I haven't found a single case where the structure is the problem.
I've seen many, many with too little customer focus who therefore tend to run into trouble with regulations. It shouldn't be about recruiting distributors, it should be about moving products out onto the market. We take orders from customers. In that situation there's nothing wrong with the internal organisational structure.
We often hear people say:
”You know, my neighbour was doing something like that years ago and he nagged me for weeks and I never went to any meeting. He gave up after a few weeks, so that stuff doesn't work…”
Imagine the same scenario if you open a shop, sign a three year lease on a commercial space, bring in half a million worth of stock because you've become a retailer for different brands in whatever industry you choose. Imagine you ”try” inviting a few people you know to that shop, but after two weeks you feel it probably isn't working, so you shut it down.
Nobody would do that. It isn't about whether the model works or not. It's about whether the individual is willing to do what it takes to make it work. Whether you're a consultant, a yoga teacher or a salesperson, it's how you treat people that decides what picture they get of what you do, not the company's organisational structure.
Those who do the work and follow the system get results. There are three questions Tim Sales taught me many years ago…
- Are there MLM companies that make money? Answer: yes.
- Are there distributors in MLM companies who make money? Answer: yes.
- What separates the distributors who make money from the ones who don't? It comes down to how many meetings they've sat in….
If you're going to learn to play guitar or learn to ice skate, you need to invest time. Just like when you build a business, whether it's direct selling or any other type of business.
The days are gone when we talk about passive income and the ambition to bring in a couple of people who do the work. When you bring someone into the business, that's when the work begins.
I read in the book Leadership Train by Orrin Woodward that often it isn't that people look down on a network marketing business. Often it's that they've seen people far too many times who haven't taken it seriously. That's why they're sceptical when someone has gone into something and ”tried” two, three or four companies and never chosen to make anything of it. This time it's time for you to take this seriously.
I've become an ambassador for this whole profession and model. Yes, there are companies that aren't positive examples of how to build a business, but that isn't down to the structure, it's down to the culture.
You can design the compensation plan in several different ways, but however you turn it around, half of the revenue still has to go out in compensation. It's just a matter of taste whether you have a wide plan or a deep plan, a lot of customer focus or less customer focus.
There are 3 types of companies, taken from Tim Sales when he was interviewed by Larry King 12 years ago. It came out on YouTube a while back, shortly after Larry King sadly passed away.
Category 1. The companies that put 80% of the focus on customer acquisition because they know that's what generates revenue immediately and in the long run. No authorities have any problem with these companies. Not many people criticise a business where a product is sold to customers who actually want the product.
Category 2. The companies where 50% of the focus is on customers and 50% is on recruiting new distributors. Bringing in new independent distributors. It can depend a bit on what kind of product is being sold and a bit on how deep the compensation plan is, how many levels it pays out on or what balance you need to maximise your profit. There are companies doing well with a 50% focus on customers. That's also the general recommendation at EU level and in the US. The Federal Trade Commission recommends that at least 50% of revenue comes from end customers who aren't part of the distribution network. That means being on the safe side of the regulations, otherwise the authorities may want to look at how you build the company and the compensation model.
Category 3. Those who build with 20% focus on customers and 80% focus or more on new distributors. That type of company risks running into challenges with the authorities, because the authorities want companies to become more customer focused.
There's really nothing wrong with the direct selling model or the Multi-level Marketing organisational structure. It's when the designer builds a structure that rewards the wrong things that it can go sideways.
It usually shows in the results. Companies that build a structure people want to be part of, a structure that rewards the right behaviour, grow, and they grow well. They last over time.
Companies that are more about promoting recruitment and hyping passive income and getting others to do the work will never work over time, because nobody is doing the work. Culture.
I'm incurably positive about this business model, but I do think there are things that need correcting. I work with education. I teach people what this is really about, because I know this is one of the absolute strongest trends going into the future.
So many people want more flexibility, to control their own working hours, work with whoever they want, have no boss, stand on their own feet without building everything from zero. They have a parent company behind them that takes care of logistics, distribution, customer support, IT, websites, a marketing department that produces new presentation material… The only thing to do is to sit in meetings.
Then it's a choice whether you want to work only with customers, there are many who choose to do just that, or whether you also want to build an organisation.
If you want to work only with customers, then you like meeting customers, you like presenting and selling. Helping people get hold of good products. That's something you have to master anyway if you want to lead anyone else…
Are you interested in organisation and leadership, coaching and education? Then sooner or later you'll probably build an organisation and invest your time in helping other people learn these things too. Before you've learned the basics of presenting and customer acquisition you obviously can't coach anyone else in it, and that's one of the biggest advantages of this model, that nobody becomes a leader without having done all the basics.
That's what I'm interested in. Lifting other people up and helping them break through. I've chosen to do it in this model.
That's what I'll stand for and that's what I'll be occupied with for the rest of my life. We need a lot more of us to straighten our backs and stand up for something.
I'm working to get this model recognised. The first thing we need to do is become many, many more. I've chosen it because I believe in it. This works. So many good examples showing what's possible.
Be the example that shows what's possible, and we can help so many more into the future. We're looking for natural leaders who want a training ground where they can learn the basics of direct selling and build a business they can live on within a couple of years.
We're a global network of professional entrepreneurs in different industries who work to inform and educate about good products that make people's lives better. We're developing an unbeatable culture in the team and we've chosen an organisational structure that's very powerful for everyone who works professionally.
