Why Does the Company Publish $100 Billion Dollars in Sales
and I Am Making Peanuts?
Being a youngster in the 70-80’s, I thought it was pretty cool to wear
rose colored glasses (and sit on Santa’s lap). Though the time for
Rose Colored glasses is past, some still unknowingly wear them
when considering a Network Marketing home based business.
I was on a coaching call with a woman last week. Her issues were primarily centered around marketing her program, whether to pay for advertising or just use free advertising. (Let me say this right now, in my own experience, I have not ever found paid advertising to be any more successful than free advertising sources.)
However, as we talked, the conversation moved to income expectations. Though we never got down to just how much she expected to earn, and even though we were on the phone and I could not see her eyes, I could feel her eyes get bigger as she realized in one of her programs where she only earns $1.00 per person, she would need 10,000 people. Break that figure down to $5,000 a month, she would still need 5,000 people.
Some think getting 5,000 people will be an easy task, especially when, as she said, “Everybody needs this service”. But do they? Does everyone need the service? Does everyone want it? Probably not.
It’s the same with commodity type programs like Electric and Telephone… Everyone needs and uses these things. When we join, we just naturally expect everyone we know will want to convert… but they don’t. The problem with commodity type programs is that there is very little mark up available, much like travel programs. And if you crunch the numbers in the pay plan and look at the fact that you may only get paid 50 cents per customer, realistically, how many customers are you really going to need to make your desired income?
Let’s look at retailing versus selling at wholesale while we are here… Let’s say for easy calculations that Betty is encouraged to get her prospects to ‘join’ as affiliates to get the ‘wholesale price’ for the products. She receives 5% commission on the wholesale volume of 100 points in her company.
Joe’s company does not have a ‘wholesale’ price, so Joe does not have to encourage people to join his business, he just retails his products. Joe receives 40% commission on the retail volume of 100 points in his company. Betty is going to earn $5.00 per 100 points while Joe is going to receive $40.00 per 100 points.
Betty is going to end up working 8 times as hard, going to need 8 times as many customers as Joe. (Yes, I realize I have not addressed receiving benefits of building a team and earning on their efforts also, but when you consider the average statistics that those with no system for duplication beyond making a list of friends and family will only sponsor 2.7 persons into their organization, the bulk of creating that residual income is going to fall on the shoulders of YOU, the distributor, affiliate, IBO, IPC, etc….)
It’s easy to get lost in the big numbers at the bottom of the compensation chart. It’s easy to get caught up in the excitement more than the real facts. More times than not, we don’t consider HOW and WHAT it is going to take to get down to that level where those BIG $$$ are.
Though it may still be cool to wear rose colored glasses, when considering a Network Marketing home based business, best you take off the rose colored glasses while you do your due diligence. Determine your desired income and then crunch the numbers of your pay plan… at least you will have a realistic idea of how much work you will need to do.
~Jennifer Fisher
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