I am a full time network marketer so I know a lot of people in the business.  I consider these people to be a great blessing in my life… most of the time.

The downside to knowing so many network marketers is that I am continually getting pitched on every MLM under the sun.

Actually that is really not so bad.  I love this industry and I enjoy hearing about what’s happening.

(It helps that I am in an extremely solid company and I know we are the best opportunity out there.  This wouldn’t be much fun if I thought I was in the wrong company!)

But I know that for many reasons (including geography, budget, personal interests, etc) different people choose different opportunities.  And that’s fine.

But recently I have been pitched with a very misleading ebook intended for newbies.  It supposedly “exposes the fatal flaws of MLM” but what it really does is perpetuate harmful misconceptions and confuse beginners.

If you know me, you know that I am passionate about helping beginning marketers.  I am upset today because I feel that beginning marketers are being mislead about some of the fundamental principles of multi-level marketing.

There are myths and fallacies and half truths floating around that beginners are eager to accept.  I see these lies being promoted as truths and it hurts me to see people being deliberately mislead.

The #1 worst lie is that the product is not very important.  Scammers will always want you to focus on the numbers in the compensation plan.  Scammers will always want you to focus on how you will get leads.  Scammers will always want you to focus on the internet or advertising co-ops or ANYTHING BUT THE PRODUCT.  “The product is not important” is the mantra of the MLM scam artists.

It is a LIE that product doesn’t matter.  If someone is telling you that their product is “fine, yeah it’s OK, don’t worry about it” then you are being lured into a scam.  Product quality and price are the bedrock of a successful long term business.  If the person recruiting you is not leading with product, if they are mentioning product as an afterthought, then you are being scammed.

Product is important because not everyone in your matrix will be making money.  This should be obvious.  The people at the bottom of a matrix are never in profit.  Visualize a matrix in your mind.  Do you see that the people at the bottom have no one under them?  (That’s what it means to be at the bottom, right?)  So the people at the bottom are NEVER making money.  NEVER.  But in a reputable company this is perfectly OK.

How can it be OK that there are all these people at the bottom not making money?  Because they are customers!  In a reputable company you ALWAYS end up with a huge layer of customers at the bottom who have no interest in the business but love the product.  They feel that they are getting a good deal on it and are thrilled to keep buying it.  These customers are the foundation of your business.

Think about it: If your product is NOT great and if it is NOT fairly priced you will NEVER get that layer of happy customers at the bottom.  Your bottom layer will be unhappy distributors who aren’t making money and who are getting ready to leave.  This is obviously unstable.  You can keep working like a maniac to bring more and more new people in.  Or you can give up and watch the whole thing implode and wither away.  But you can never enjoy solid residual income.

If you only ever understand one thing about MLM, understand this: Retention is the key to building income and product value is the key to retention.  It is easy to suck people into an opportunity.  It is easy to get people to try a product.  But if those people don’t love the product they will drop out and the best compensation plan in the world won’t help you!   Seriously, if compensation plans and marketing were all it took, we would all have become millionaires a long time ago.

So focus on this: To keep that bottom layer of happy customers,  you MUST have a really great product at a really great price.  That is why product matters so much.

OK, now you understand that product is key.

Let’s look at some of the lies and myths that unscrupulous marketers use to snare people into bad MLMs…

Power Line or Fear of Loss.  This is a system where prospects take a “free tour” and then are bombarded with a torrent of high pressure emails telling them that if they don’t take a paying position immediately they are going to lose a lot of money.  The strategy is to scare people and rush them into joining.  This is about as bad as it gets in our industry.  You obviously cannot build a solid reputable business this way.  These systems are ALWAYS a big red flag.  When you see this you KNOW that you are looking at something that won’t be around very long.  This is the easiest lie to identify and avoid.

Break even with only a few people.  This sounds like a good idea at first.  However it is usually the sign of an overpriced low-value product. (And remember: low priced, high value products are the key)  Think about it: Imagine you have a hair cut MLM.  Hair cuts are worth about $15.  If you sell them for $45 you can pay out big commissions and you can get all your distributors breaking even right away.  This is where they tell you: “No one ever drops out of an opportunity where they are making money!”  But remember, the people at the bottom are NEVER making money.  Unless they are somehow happy paying $45 for $15 hair cuts they will soon quit and then the people above them will no longer be in profit so they will quit… and so on up the levels of your matrix until it gets to you and then you will quit too.  Of course this is exactly how most MLMs operate and why they fail.

International opportunity.  This sounds like an obvious good thing doesn’t it?  Why aren’t ALL MLMs available internationally?  Well actually there is a very good reason.  Most countries outside the United States have EXTREMELY restrictive laws about what products can be sold within their borders.  This is especially true of nutritional products (which make up the bulk of the MLM industry.)   Each country is a little different but the basic idea is that you can’t sell a vitamin mineral product in many of these countries if the level of the nutrients is more than about 100% of the RDA (recommended dietary allowance.)

Here is an interesting side note: This restriction is the single most important factor in the rise in popularity of “functional beverages” in the MLM industry.  Functional beverages like Monavie, Xango, Fruta Vida, Tahitian Noni, etc are exempt from the restriction because they are classified as a food and NOT as a nutritional supplement.  So the good news is that nobody cares too much about what is in your fruit juice so you can sell it anywhere.  Of course the bad news is that it is pretty darn hard to keep people buying $40 bottles of fruit juice!

But back to vitamins and international restrictions…  The RDA was intended to be a general baseline of good nutrition for the majority of healthy people.  It is a conservative estimate provided by the government to give healthy people a guideline for what they need to include in their diet.

Multi vitamin mineral formulations with just 100% of the RDA are what you find in the “health” isle of the grocery store between the band-aids and the shampoo.  They usually cost less than $5 for a month’s supply.  Why would anyone in their right mind want to pay $30 or $40 for something they can get for $5 at the grocery store?  They don’t!  Especially in today’s economy!

What ARE people willing to pay more for?  People are willing to pay more for products that have an impact on their health.    Most people in our country have health issues that can be improved with powerful nutritional supplementation.  Life changing nutrition generates compelling testimonials and devoted customers.  But here is the problem: At a level of potency that will actually improve people’s health you run into the international restrictions.

So every nutritional company has to make a choice: They can either make a product that is powerful enough to impact people’s health and market it only in the United States OR they can make a weak product and market it internationally.  If they choose powerful they get a solid base of very satisfied and loyal US customers.  If they choose weak they get a big influx of inexperienced international distributors.  Which kind of company do you think is going to be around 5 or 10 years from now?

So remember, if you want a product that you can market globally it has to be so weak that it has virtually no effect or it has to be in a product category that is not significant enough to be regulated.

The important thing is to learn not to be distracted by the smoke and mirrors that unscrupulous marketers put up to lure you into a dead end opportunity.  In MLM the big money comes over time.  Stay focused to your long term goals and work with people you trust.

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