First Step Marketing

How many people really succeed?

There are no precise answers to this question and certainly not everyone becomes successful. Some drop-out must be expected from any downline. It would be a miracle if everyone who joined stayed. This would defy human nature!

Anyone starting in network marketing should realise that a large percentage of their downline will do little or nothing. Many will become inactive distributors (product users only). Many active distributors do not make much of an attempt at making a profit or making their business grow, and some drop out altogether.

However, by understanding what causes new distributors to drop out, you can minimise it in your network and ensure that your network becomes a success. Remember that not everyone in your network needs to become a superstar to make you successful. Even if most members of your network merely buy products for themselves and a few friends, you can have a hugely successful business.

Let’s look at the causes of drop-out:

New distributors are over-sold. They expect financial miracles and become disillusioned.

• There is a lack of support. Most people are not self-starters. They need help to get started and become a success. Sponsors need to balance the amount of time they spend recruiting new people with the time spent supporting their new downliners. Those who seem willing to make the effort should be supported all the way.
• There is a lack of recognition. Especially at the beginning, people need reassurance. Even if you can’t continuously be with people, give them recognition in your newsletters. Congratulate people on achievements, no matter how small. Give awards galore at presentation meetings. Aim at building people up. If people get more satisfaction from being in your network than from any other activity, why should they leave?
• There is a lack of direction. Perhaps, above all, your distributors need to learn from you, especially if you are a top producer, enthusiastic, positive, hard-working, cheerful, optimistic, friendly and have a ’show and tell’ approach to your downliners. That’s a great kind of leader to have around.

How do you make money?

There are a number of variations on what follows, but the basic principles are the same in most networks. Distributors make money in two ways:

• by making a normal retail profit on sales
• by earning a rebate (or discount) based on products ordered from the network marketing company.

Here is how it works:

• Every distributor orders and pays for stock in anticipa‑

  tion of what she will sell, or to fulfil a customer order.

• To obtain the goods, the distributor completes a distributor order form which lists the distributor’s cost price.
• She gives this order to her sponsor (the person who recruited her). The sponsor supplies the goods there and then. (In some organisations, orders are placed directly with the network marketing company for direct despatch to the distributor.)

All distributors are given a standard retail price-list, the customer price-list, at which products are sold. When the distributor sells to a customer, she makes her profit.

Networkers make money in two ways:

Normal retail profit The network marketing company sells products to distributors at, for example, 25 per cent discount off the listed retail price on the customer price- list. If a distributor sells goods for RI 500 in a month, the cost to her will be RI 125. She therefore makes a profit of R375. (The actual discount will vary from company to company.)

Another way of putting this is to say the distributor makes a 33,3 per cent profit on her cost price:

R375 ÷ RI 125 = 33,3 per cent.

Volume rebate Over and above this profit, distributors earn an extra discount, depending on the volume of goods ordered each month. The volume of goods bought in any one month determines the size of the discount given. This discount (or rebate, as it is often called) is given on the cost price of the goods.