How to Pick a Network Marketing Company

How do you pick a winner?

No one in their right mind would want to pick a company that is likely to go out of business.  Yet many people do.  And, even with what I’m about to share with you, there’s no guarantee that your network marketing company will last for life.  

So…what exactly do you look for when picking a winning network marketing company?

Is it the company that has the best product?

Is it the one with the most scientific evidence to validate their product?

Is it because everyone already uses what you have?

Is it the management team that makes it the best?

How about he compensation plan?

Before I get into the specific details of picking the right MLM opportunity for you, let me quickly share why I’m even qualified to address this question.  

I’ve spent the past 22 years doing network marketing.  A great majority of that time has been full-time in the field as an actual network marketing distributor.  The past nine years my time has been invested in speaking and training for companies literally all over the world.  I get to meet top earners, new reps and company owners everywhere I go.  I get an amazing viewpoint as a speaker.  It allows me to see different cultures, comp plans, systems, products and ownership.  

Very few people have the viewpoint I have.  Most people only see what they’re in.  I get to see everything.  THAT is why I am qualified to address this specific question.  

So…how do you pick a network marketing company?  

Let’s clarify the question a bit.  

How do you pick a WINNING network marketing company?

The reality is that you could throw darts a board and pick literally ANY company you want.  But…when it comes to rational decision-making, there are several factors you need to consider before choosing one.  

The intention of this is to help you pick a winner, something that has the potential of being a long-term play for you.  

I’ll tell you right now that there are few things you want to avoid like the plague.  

  • Don’t do gifting programs. 
  • Don’t play money games.  
  • Stay away from stuff that promises you millions with little or no effort.  
  • Run from companies or ads that promise to build it FOR you.  
  • Stay away from anything that promises CASH sent directly to you.  

Here are a few FALSITIES that are also perpetuated upon people that simply are not true:

FALSE:  You have to be one of the first in to make any money.  

I have several personal friends of mine that have entered companies many years into their existence and still done incredibly well financially. 

FALSE:  It takes little to no effort. 

Network Marketing requires work.  In fact, it takes a lot of work.  When people tell you that you don’t have to do anything, you’re not likely to make anything.  

FALSE:  You can build it 100% online.  

Show me someone who has.  There isn’t one single solitary sole that I know or have even heard of who builds their network marketing business 100% on the Internet.  Yes…you can use the Internet to market and build relationships, but you can’t hide behind a computer and make money.  

FALSE:  If it’s not ground floor, you’re too late.  

First of all, most companies take a little while to get their legs and figure stuff out.  Getting in early CAN be good, but to say “it’s too late” if you sponsor in after the company has been around for a while is a complete joke.  

There are probably several other garbage lies that are perpetuated upon new people looking to enter this profession, but those are certainly a few of them.  

Does the Product or Service Suit You?

First and foremost, does the company suit you and pull on your heart strings?  Do you REALLY believe in what you’re about to bring to market?  

You cannot be successful long-term in a company where money is your only focus.  Sure…we likely ALL do this to make money, but having that as your only driving factor is a recipe for failure.  You’ve got to like what you’re selling and believe in it to the core…IF your objective is for a long-term play.  

If all you want to do is make some money and be in something that keeps your interest only for a little while, then pretty much anything will do.  

But let me ask you this.  How many times do you want to have to rebuild in your life?

By the way, the likelihood of you being with only one company for your entire MLM career is slim to none.  Sorry.  Just being honest here. 

The sad truth is that people talk all the time about building a company, work it hard for three to five years, then enjoy the Golden Years of your early retirement without every working again.

Companies come and go.  It’d be great if you could pick such a winner that you never have to rebuild again, but probably not likely to happen.  

And…by the way, that doesn’t make our profession bad.  If you work on developing your skills and your abilities related to building a downline, you take those skills wherever you go.  

It is possible that you find one company and stay there for life.  It’s just not likely.  

But here’s a little spin on that to make you feel better.  What if you had a 7-year run with a company where during that time you earned say $1.5 million dollars?  Then…the company makes a bad decision and they end up going under.  

You could cry and go back to a job where your held captive by someone else, with very little personal freedom.  Or…you could go, “Wow…I just made $1.5 million dollars over the past seven years.  That’s an average of $214,000 a year without having a boss!”  

See…but now you not only have the skills to do it again, you likely have developed a reputation for yourself where you’ve got people who will follow you into whatever new venture you are forced to pursue.  

I’ve had to build six companies in 22 years.  I’ve made money in all of them.  And…I don’t regret any decision or situation that’s ever occurred, including one company I invested 11 years of my life in that ultimately went out of business.

So…again, the first thing you should be thinking about is “Does this company and what they bring to market suit me?”  

If it does, then you’re likely moving in a good direction of picking the right company that is suitable for your personal desires.  

The Management Team and Ownership:  What’s their Background? 

In the end, it’s these people who make or break the opportunity.  The ONE thing that you have no control of is corporate decision making.  While we are in charge of our financial destiny, THEY are the one’s who write the check.  

So…you better do a damn good job of checking out WHO is running the company and what their background is.  

There are people running companies today, as I write this, where they owners have been thrown in jail numerous times, have run company after company into the ground and have screwed people left and right.  Yet…they continue on.  

Google them.  Research them.  Do a background check if you must.  

And…you also have to use your gut.  What’s your gut tell you?  Does it feel right?  Are you getting a sneaking suspicion that something just isn’t exactly as they say?  

And…let me say this.  Just because someone had a charging order against them or spent some time in jail, doesn’t mean they are a bad person or an unable owner, it just means they may have made some mistakes in the past.  Have you ever made a mistake?  Thought so.  

But again…use your better judgment.  Do some due diligence.  

  • Do they have corporate experience running a network marketing company? 
  • Are they a distributor who finally decided to start their own company?  
  • Do they know anything about network marketing at all?
  • What is their background?

These are simply things to think about and consider as you go about choosing a company.  There’s no right or wrong answer on the four questions I referenced above, you just need to know that the owners set the rules.  

The Best Compensation Plan in the Business

The best comp plan in the business is the one that pays you.   

There is no single greatest compensation plan in network marketing.  Whether you choose a breakaway, unilevel, binary, matrix, 2-up, or any other variation or combination is your choice.  

Breakaway comp plans are the oldest in the business.  I will say this, a breakaway compensation plan is typically considered a “full-timers” plan, even by those that are in them.  There are some incredible, amazing companies doing billions of dollars in sales that have breakaway comp plans out there. 

Unilevel compensation plans are probably one of the more widely used comp plans today.  A unilevel compensation plan, much like a breakaway, enables you to front line sponsor as many people as you like.  You’re typically paid a fixed percentage down through several levels of people in your organization. 

Binary comp plans enable you to sponsor only two people on your front line, thus the term binary:  two.  Anyone else you enroll must go under one of those two people.  More and more companies over the past several years have been able to last long term using a binary structure.  For years, companies who had binary comp plans didn’t last long.  However, over the past 10 years or so, more and more companies have figured out how to operate and function long-term with this kind of pay structure.  

Matrix compensation plans aren’t used by many companies.  In fact, there is only one big network marketing company that I can even think of that used this type of compensation structure.  That’s not to say they’re bad or good, it’s just a fact.  A matrix compensation plan typically limits your sponsoring width and depth.  For example, a 2-by-7 matrix enables you two put two people on your front line and pays you 7 levels deep.  

Australian 2-up comp plans, also referred to simply as 2-ups are primarily used by top-tier direct sales companies.  These comp plans typically require you to give up the commissions on your first two sales to your enroller.  

Like I said, the best comp plan is the one that pays you.  It doesn’t necessarily make a company bad or good because of the comp plan they offer, it is simply a matter of personal choice.  In fact, most companies, regardless of their compensation plan type pay out approximately the same amount of money.  

I would say that on average, most companies pay out between 25% and 50% of their incoming sales revenue to their distributor forces.  

I don’t ever pick a company solely on a compensation plan.  And, there is no #1 greatest compensation plan out there.  In fact, anyone who says that has to be an idiot.  The only way you could make that statement is if you did a statistical analysis of every other compensation plan being offered by all companies currently in business.  And…no one has the time to do that.  

The Upline Leadership

Being with an active group of people that are driving the business and have experience and skill is likely a good thing.  

If you’re new, working with an experienced crew can be extremely beneficial in helping you figure stuff out quickly.  

Your upline doesn’t make you however.  You do.  Regardless of how good your upline is, it is YOU that will make or break the business.  Remember that the only person to blame for your success or your failure is you.  Take ownership in that and be personally accountable for your actions. 

It is never the sponsor’s fault, the comp plan’s fault, the system’s fault or the product’s fault.  It is always YOUR fault.  Look in the mirror and see what kind of person is staring back at you.  

Your upline’s role is to support and guide you.  In fact, it is in the Independent Distributor Agreement of virtually every company in existence that the Sponsor’s role is to be a supportive one.  

However, the reality is that sometimes you end up with a disappearing sponsor.  And…if you do, you’re going to have to step up to the plate and figure some stuff out on your own.  I would also suggest this if you have someone who has disappeared on you.  Look upline.  Find someone else who is upline from you who has a vested interest in your success and reach out to them for help. 

The Marketing Systems and the Tools

When you are presenting your product or opportunity to your prospect, it’s great to be able to plug into a system that doesn’t require you.  

 In other words, having tools that do the information disseminating for you is certainly an advantage.  

The reality is that most companies or distributor organizations within those companies have tools at your disposal.  

If you end up in a deal an their expecting you to just go out and “pitch” the program without any tools to help you, you’re likely going to struggle.  

But again, most good companies have plenty of tools in their arsenal.  

The Timing and Marketability of the Actual Product

 Not only do you require being in something that pulls on your personal heart strings form a product standpoint, but having something that is highly marketable in today’s current environment is also important.  

Trying to sell LP records today, which are archaic and a thing of the past is obviously a lose-lose proposition.  

  • Is your product positioned in front of a trend or riding a current trend?
  • Is the market size for your product or service significant?
  • Do people already use or buy something similar?
  • Is there already an existing need in the market?  

Those are just some points to ponder in your search.  Riding the wave of growth of a burgeoning trend can certainly be advantageous.  

The Culture

One thing I can tell you as a speaker who has conducted hundreds and hundreds of events, every culture is different.  Some cultures are purely product driven lovers and some are full of hard-driving marketers.  Demographically companies differ as well. I’ve spoken for audiences that are all 50+ as well as groups of people who are all 25-35.  

This again is simply a point to consider on your journey of finding the right opportunity for you.  

Some companies have done an overwhelmingly amazing job of creating a driving culture of doers.  There’s magic in that.  If being around producers that make big things happen is something that you desire, then considering the culture of your companies distributor force is something to look at.  

My Summary on Picking a Great Network Marketing Company

  1. Pick a company that you feel good about.  
  2. Stay away from money games.  
  3. Check out the owners. 
  4. Do your homework. 
  5. Use your gut. 

Then….put your head down, stop looking and get your butt to work.  Don’t look up, down or sideways.  STOP looking.  START working…and don’t stop.  

Jumping from company to company is a recipe for failure.  Once you’ve chosen your opportunity, stick to a plan.  Give it time.  Don’t think you’re going to be rich in six months, because you won’t.  Exercise patience.  Focus on your skills.   Work hard.  Stay consistent.  And…don’t take things personally.  

Go get it.  

Comments

17 Comments

  • Mark

    Reply Reply 19 February 2012

    Excellent article, and for me perfect timing! The hard hitting, direct, common sense that I expect from Todd.

  • Rasul

    Reply Reply 19 February 2012

    Hey Todd,
    I have been around this industry for a while, I have never heard such an unbiased, honest (without being negative), appraisal if how to choose a company. I have a friend in search mode now and I’m going to forward her this article. Thanks for being and keeping it so real.

  • Jeffrey Kistner

    Reply Reply 19 February 2012

    Hello Todd! That’s by far the best post I’ve read on how to pick a network marketing company. Your FACTS and INSIGHTS are valid. I’ve been NWM for 21 years and I’ve only been with six companies and like you, I would have liked that number to be less. I’m not a Jumper Junkie! However, It’s not always our choice. I love where I’m at for the reasons you’ve mention above. I agree with you! Go! Go! Go!

  • John @ Learn About

    Reply Reply 19 February 2012

    Really loved this post Todd, it was complete from A to Z.

    I learned a lot about the various types of compensation plane and what things to consider when picking a network marketing company.

    Well Done !!

  • Gene Grass

    Reply Reply 19 February 2012

    Todd, Thank you! This is, BY FAR, the best, clearest, most concise, and to-the-point article for everyone to read whether new to the industry or as a “wake-up moment” when the decision to change companies occurs!
    A person must resonate and have passion for the product/service and the mission of the company. 99% won’t do! It’s ALL IN !!
    Management, ownership, culture, and values of company are also very important factors to consider.
    Building a business, enjoying it, and having fun while doing it with the others in the company are critical to creating your personal success. … and Success is the Journey, so why not enjoy the rise? THANKS!
    This is a fantastic article! I recommend everyone to forward it to their prospects!

  • Chris Pawlowski

    Reply Reply 19 February 2012

    Always insightful and straight to the point with facts, observations of substance and real talk. Thanks Todd, you are a pillar of what is great about network marketing. Awesome post.

  • Sue Seward

    Reply Reply 19 February 2012

    Great information Todd. You did not mention one of the newer compensation plans which is becoming more popular and that’s the Hybrid. A combination of the binary and unilevel. I’ve worked with several different companies; putting in fifteen plus years, with various compensations plans and you’re absolutely right, it takes a lot of work, discipline, persistence, consistency, developing yourself personally and never giving up. Treat your Network Marketing business like a ‘real’ business and it will pay you. One of the real advantages I’ve seen personally with the Network Marketing business model is the education and self development a person can receive. That in itself can in the long run become priceless.

    Appreciate your insight as always!
    Sue

  • Michelle Wimberley

    Reply Reply 19 February 2012

    Todd,

    I am so glad you wrote on this topic! I found your article to be exactly what I needed to read as I was preparing to do a sponsoring call for my company this week. You made it clear to me that I have selected the right opportunity for me. I love our products, our leadership, our training, and our president loves to write really big checks. Thank you for helping me prepare so my message will be clear and focused to help others see if the company I am with is right for them.

    Love it!
    MIchelle

  • Arnie Fulmer

    Reply Reply 19 February 2012

    Hi Todd,

    I enjoyed your post thanks for sharing. I really appreciate it when someone can give an excellent breakdown of what to look for, and how to look at a network marketing opportunity. I love the simplicity!

    Thanks,

  • Darrell Evans

    Reply Reply 19 February 2012

    This may be one of your best posts that I’ve read since meeting you back at LTD-1. You nail it when you start by saying that one of the most important factors is picking a company/product/service that you ‘feel’ good about and then making sure there are tools take you out of the equation. Unfortunately, I let myself fall into a hype company screaming comp plan with hype leadership and a product that had appeal but wasn’t heart felt…I didn’t follow my gut and it was an 9 month experience that I walked away from and it wasn’t because I didn’t make any money. I’ve now stepped back to wait for the right feeling. Thanks for your leadership and candid viewpoint Todd.

  • Steve Myers

    Reply Reply 20 February 2012

    Great article Todd. I’m very grateful I got it right the first time with my company. Were creating more Fun, Freedom, and Fulfillment in a lot of peoples lives and going to be around for a long, long time. Thanks for all you do Todd. Make it a great day!

    Steve

  • Stephanie

    Reply Reply 20 February 2012

    I have to say I am so glad that you mentioned all of the above. All you need is a good product and good people who are passionate about that they do. I have heard about a lot of these companies being scams and they have been around for 20 years or more. There is no one great comp plan or greatest company they ALL fill a need. Thanks Mr Falcone!

  • John Moussan

    Reply Reply 20 February 2012

    Todd this is incredible insight. I want to say thank you for taking the time to write this.

  • Demetrice Etheridge

    Reply Reply 20 February 2012

    Absolutely OUTSTANDING. Straight to the the point and no bias fluff.

  • David

    Reply Reply 29 February 2012

    So you say you cannot build a Network Marketing Company just by being online. What if you recruit prospects online and use the Telephone to further the relationship? Does that still count as Building your Business Online? Great Job by the Way Thanks for the info.

  • Eusebio Arroyo

    Reply Reply 23 April 2012

    Hey man thanks! Loved this post.

  • Jan

    Reply Reply 3 May 2012

    Thanks for the article! I just plugged into you recently and am finding great info!
    I am in the process of picking my first company, and this really, really helped me!

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