We continue our series with network marketing millionaire and author Pat Petrini on how to “reinvent network marketing” to make it an even more effective and sustainable business model.
Read the previous posts:
– What’s Wrong with Network Marketing – and How to Fix It
– Reinventing Network Marketing – Part 2: The P-Word
Pat says, “My goal with these videos is to add to the discussion of what the network marketing business model should look like. It’s an outline of what marketers should look for before joining a company, and what founders and executives should consider when building one.”
In Part 3 of the video series, Pat talks about the Marketer-Centric Model & the Boom-Bust Cycle.
Main takeaways from this video:
- Most network marketing companies design their entire model based on attracting marketers instead of customers. They create products and a compensation structure that competes against other network marketing products/companies, instead of competing against other products in the global market.
- Before joining a network marketing company, we should ask leaders in that company, “What percentage of your check is coming from real customers versus ‘failed marketers, meaning people who purchase in the hope to get their product for free or make money from the compensation plan, but never did?“
- Other businesses know they need to have way more customers than sales people.
- The boom-bust cycle: a company hits momentum, more people are earning more and more quickly… until momentum slows down and the story loses its luster. Now the brand new person is having a hard time reaching their goals, attrition sets in, it’s harder to get customers, people start leaving … the whole house of cards collapses. The only buyers the company has left now are the customers, who just keep buying the product because it’s good and priced right. That’s your true customer-base. If you have no one left, that tells you your product isn’t good enough and/or isn’t priced right.
- What if the company had 80% of its volume from customers and 20% from its salesforce? Even if it goes through a down cycle and loses half of its sales force, it will be doing fine! Stickiness comes from customers. True stability comes from real customers. Companies take the easy way out, go for the low hanging fruit, and trade short-term gain for long-term instability. They are lazy and don’t want to compete in the real marketplace.
Bottom line: Don’t use the opportunity as a lure to get customers, it’s not sustainable!
Join the discussion: let us know your thoughts in the comments.
Part 4 is actually the Intermission. Pat goes over some resources and examples of companies that got in trouble with the law. Since this blog never mentions company names. we’ll let you check this out for yourself.
Coming Up Next! Part 5 – How to avoid instability and end the boom-bust cycle.