It’s difficult to overstate the importance of the actual product in any MLM company. Every company with long-term success was built on great products and on customer loyalty to those products. Any success a company achieves without both of those things is fleeting at best. But it’s not enough for a direct seller to have a great product. The product also needs to be a good fit for MLM. Certain kinds of products are suitable for network marketing and others are not. And regulatory bodies like the FTC are driving the industry toward a customer-focused future. Whether due to market forces, regulatory forces, or both, the companies that survive have great products and a great product strategy. So, whether you’re looking to launch an MLM or sign up as an MLM distributor, you need to evaluate the product before moving forward.
The basic importance of value
Good MLM companies market products their people believe in and feel proud of. This is a cornerstone of how the direct selling business works. If no one believes in the product, no one will buy or sell it long-term. When someone says, “the product doesn’t matter,” they’re either pitching a scam or they’re revealing their willingness to pitch a scam. Of course, the product matters! If a company doesn’t provide customers with real value, they won’t be able to sustain any growth they might achieve. And setting aside the practical need for a customer base, there are also legal ramifications for companies selling products nobody really wants. Legitimate company founders want to contribute to the welfare of the society they live in by selling products that have real value.
What is product strategy?
A company’s product strategy is their plan for how their product will fit into a given market. So, what products fit in the direct sales market? Good products for direct sales are products for which the salesperson has an active role. Without the salesperson, the consumer wouldn’t know why or how to use the product or wouldn’t be able to use the product correctly.
The METS formula
In my experience, the products or services that are best suited to network marketing require one or more aspects of what I call the METS (motivation, education, training, and support) formula:
Motivation. For some product types, such as diet or health products, distributors may need to spend time motivating consumers to start using them and to stay with them.
Education. Some product types require your distributors to educate the consumer. Why is your product better than competing products? Or, why do your consumers need this product at all?
Training. Some product types require training for the consumer to use them effectively.
Support. Some product types require ongoing support from the distributor for the consumer to troubleshoot issues, find the right product, and use it consistently.
When you’re evaluating a product, it is important think about how much motivation, education, training, and support a salesperson will have to provide to the average consumer. You need to take this into account because it affects earnings. The more time and energy it takes to make a sale, the more money the salesperson can expect to make. This means that less money will be available for sales leader commissions.
Let’s look at these METS aspects more closely.
Motivation and Support
Motivation and support are often vital for personal care, diet, and health products. In each of these categories, consumers tend to be overwhelmed by the many choices available. Average people have a difficult time sticking to health regimes, and even following doctor’s orders. But if you’re embedded in a social group that motivates you to keep going, your adherence might be better.
Diet products are an especially good fit in network marketing because social support measurably improves weight loss regardless of diet method. MLMs are communities. Dieters may be more likely to succeed with that MLM meal replacement shake than they would be with a virtually identical shake from the grocery store.
Education and Training
Teaching consumers how to use products and services builds loyalty. Sellers of health products often need to teach their customers which products to use for their specific needs and how to use those products correctly. Beauty consumers also benefit from training. If a consultant can teach her customers make-up application techniques that save them time or improve their style, she can foster real loyalty.
Jamberry’s nail wraps are a good example of a product that requires training and education. A quick search on YouTube for “Jamberry application” got me about 26,500 results. The idea behind Jamberry wraps it is that you can get what looks like a salon manicure in a few minutes in your own home. But if you apply the product incorrectly it won’t look professional and it won’t stay put very long. The consumer needs the salesperson to teach them how to use the product.
The education and training component of direct sales isn’t limited to customers. Often distributors need some education too. For example, a distributor needs some training if she wants to hold a successful home decorating party. But such training generally requires only a few hours a month.
Often, MLM companies assume some of the task of educating and training consumers by producing videos and other training materials. This frees up distributors to concentrate on building relationships and offering motivation and support.
The importance of innovation
Innovative products are often suitable for MLM. The sales process for any product that people are not yet familiar with usually involve METS. For example, there’s no reason to build an MLM company to distribute a run-of-the-mill toothbrush. Anyone can walk into a store and purchase one, not to mention the free one the dentist gives you when you get your teeth cleaned! Your mother or dentist has already taught you how to use a toothbrush. You don’t need a distributor to bring one over and demonstrate it.
If consumers already have all the info they need about a product, it’s probably not suitable for network marketing. You need to sell a product with differentiation—something that makes it stand out from other products.
Intellectual distribution of product
The book, The Next Trillion, by Paul Zane Pilzer provides an overview of the economic realities responsible for the explosion in direct sales during the past thirty years. The book introduces the concept of intellectual distribution, which is one of two elements of the sales process: 1) physical distribution and 2) intellectual distribution.
Physical distribution is simply getting the product into the hands of the consumer.
Intellectual distribution requires teaching potential consumers what the product does and how it can help them. In other words, intellectual distribution is education.
Throughout history, education was part of the sales process—almost universally—but that is no longer the case. Beginning in the 1960s, Sam Walton discovered that physical distribution was a good deal easier and much cheaper than intellectual distribution. To capitalize on this discovery, he concentrated on lowering the cost of physical distribution and stopped selling products that required intellectual distribution. Thus Walmart, one of the largest corporations in the world, was born. This led to the rise of the “discount superstore” which decreased the cost of everyday items but also decreased the outlets for innovative, new products.
As the outlets for innovative products decreased, the rate of invention rose. Given the ever-growing number of new products that require motivation, education, and support, it became essential to carve out new channels of distribution—like network marketing—or expand old ones.
What doesn’t work?
Typically, with some notable exceptions, insurance, financial planning, and computer sales have not worked well. Why? Because the parts of the METS formula you need most in order to sell these products are education and training. The markets for these products change rapidly; a salesperson must spend so much time obtaining the knowledge necessary to provide education and training that it becomes impractical to have part-time distributors do it. Often, you need a license to sell these kinds of products, and part-time distributors don’t typically have time to invest in this kind of intense training.
Over the years, it has become increasingly clear to me that it’s important for distributors to learn the basic concepts of the MLM business because they invest their heart and soul in building a downline, often working night and day for years. I believe that if distributors understand these concepts—including the essential role of the MLM product—they can make better choices about the companies in which to invest their time.
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