January 4

Network Marketing’s Dirty Little Secret!


One of the network marketing dirty little secrets, that KEO Smart Home Automation solves, is why the majority of the people who join the business don't make any money.

The reason is simple and I have been screaming about this for years, but just recently it has grabbed attention through recent actions by the FTC [Federal Trade Commission].

The simple reason is that the network marketing industry is distributor centric and not customer centric. The FTC recently closed down a company called Vemma because they had more distributors than customers and were making outlandish financial claims. Financial claims are made all the time, but the main focus in my opinion is the fact that it didn't have a large customer base Vs. distributor base. It was the other way around, more distributors than customers.

When the focus is mainly on getting distributors the revenue stream is compromised.

Here is why!

Lets look at it in a much more simpler way. If you were building a business and had your hard earned money invested in it you would want to sell as much of your product as possible. Lets call your product widgets! So you want to sell widgets to as many customers as possible. You will go out and get referrals or maybe get a hand full of sales people to help you find customers. You will pay your sales people to get customers but if your sales people go out and get more sales people then your revenue stream dries up. 

The life blood of any business is customers, and with out a strong customer base the business will bankrupt it self. 

So how does this relate to network marketing?

When companies put more emphasis on getting distributors than customers they have to charge the distributors money to join the business because the business will not support the financial drain. When distributors pay to join they don't always buy the product long term. They many times get discouraged for various reasons and quit, not being able to recover their money. 

If a distributor wants to make a lot of money they must have a large customer base. As they gather their customers the customers stick around because of long term loyalty. As you gather your customers some of your long term loyal customers will want to become distributors, and then you have a loyal distributor that will be always be a customer. Some customers will want to become distributors, but not all distributors will be loyal customers.

Most network marketing companies pay less for getting customers, but you will end up making more money because the revenue stream will build over time. Customers stick around longer than distriburtors when they love the product. 

The dirty little secret is that when you work in a distributor centric company the company will do ok financially, but the distributor will never get ahead of the financial curve because they will lose the distributors as fast as they bring them in. The life span of the average distributor is probably 6 months to a year, if that long. So unless you bring in a ton of distributors you will not stay ahead of that drop off curve. 

Focusing on getting customers is much easier because they don't have to shell out a lot of money to use the product, and they have no pressure to use the product, so they use it because they want to. Since there is no pressure the customer maybe a full time customer, part time customer, or a sporadic customer, in either case there is a sale at some point. Now, I know some customers will leave or stop using the product or service, but that attrition rate is less than distributors. 

In Conclusion:

You are going to see more companies moving to a customer centric model because they find that building a strong customer base is more lucrative. Companies will move to a distributor system that cost very little or nothing to join with every one only paid when they activate customers. So even though there is a distributor involved there is no money made or very little when you hire them. Everyone gets paid on customers only.

When this happens everyone makes money, but as I said before if you are with a distributor focused company now, you can personally turn it around and focus on getting more customers than distributors. Just hope the financial strength of the company is good. 

KEO Smart Home and Business Automation has broken the mold and is running a customer centric model with huge success. 

If you want to learn more about a true customer centric network marketing model click here and request the information. 

Dr. Raymond Jewell



















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