Sunday, January 31, 2010

Evaluating the 5 Pillars of Success

Michael Dlouhy, a charismatic salesman and seasoned network marketer, created a program called Mentoring for Free to help potential network marketers understand the MLM business. It includes an ebook called Success in 10 Steps with advice from his many years in the business along with weekly phone calls to keep his followers on the right path.

His devotees worship him as the modern day prophet of MLM success and they blindly follow every word he utters as if it is the word of God never straying from what they believe to be absolute truths about the network marketing business. Such cult-like devotion has been very profitable for Michael Dlouhy since he has been able to convince about 80% of his followers that the best network business for them is his own company, Vitamark, which sells vitamins, weight loss products and skin care products.

One of the tools he uses to funnel people into his business is called the 5 Pillars of Success. I decided to take a look at each of these “pillars”.

Pillar #1 is look for a company whose management has experience and integrity. That sounds reasonable enough yet how are you supposed to check this. It makes common sense that a network marketing company should have a team with experts both in network marketing and in running and funding a large business. Unfortunately, there is no way of knowing from looking at a company prospectus if there is the proper synergy for success. I doubt that the average person thinking about starting a home-based business has the qualifications to do this evaluation.

Pillar #2 is to pick a company that has been around for 2 to 5 years because it has a better chance of succeeding. This seems like a reasonable recommendation. Yet by doing so, you may miss out on an opportunity to get onboard with an exciting company whose products or services you really believe in and with which you can make a lot of money. Longevity does not guarantee continued success. Consider the demise of seasoned companies like Arbonne and Excel Communications. Also, just because the company is successful, does not guarantee that YOU will be successful in it.

Pillar #3 is to pick a company with a remarkable product that stands out. This seems like a tall order for any company. Even Michael Dlouhy’s company has trouble meeting this pillar. What is remarkable about vitamins and skin care products? It seems like every other network marketing company is selling these same types of items. It is difficult to sustain retail sales on items such as vitamins, skin care products or exotic juices when people can go to their local store and get comparable items for a lot less money. The only way these MLM companies thrive is by requiring each distributor to purchase a quota of product per month.

Pillar #4 is a compensation plan that rewards part-timers. I don’t know enough about Vitamark’s compensation plan to evaluate it. From my years in network marketing I have found that there are very few compensation plans that reward part-timers. Most plans require people to recruit a downline of 1,000 people or more before they make any real money. This is not easy to do part-time. The best compensation plans I have seen recently are of a matrix type where people get paid if they reach the top of a matrix. This requires fewer recruits to have a good pay day. With any other compensation plan, the best chance for part-timers to make money is to find a company where they can move a certain amount of retail product each month.

Pillar #5 is to have a proven system of duplication. This last pillar is how Michael Dlouhy captures the true devotion of his followers. The truth is that only about 2% of the population have the sales skills to build a huge downline. The rest of the people who start a network marketing business never succeed. This is one of the biggest reasons that network marketing gets such a bad reputation which makes it difficult to recruit people. Michael Dlouhy allows his followers to bring others onto his weekly phone calls so he can do the recruiting for them. He has them ask everyone they meet if it would be okay if they share the ebook Success in 10 Steps. They all believe that sharing this book will make others want to go into business with them. The problem is that people join people they view as leaders, not someone who shares a book with them. If they can get people to the phone call and the prospect connects with Michael Dlouhy, they have a shot at recruiting them since Michael Dlouhy provides that leadership. The problem is that without Michael Dlouhy’s skills, duplication is difficult.

The truth is that there are no guarantees. When evaluating a network marketing company to join consider the product or service offered and if you can give 100% effort in promoting it. Look at the compensation plan and see what it will take for you to make the amount of profit you desire. Can you do it? What seems great at first glance will many times become much harder work when actually put into practice. Look at the people involved with the company both at the top and in the ranks. Do you feel comfortable around them? Do they share your values? Do you want to associate with these people to build your business even if something should happen to the company? Remember that your relationships with other people ultimately will be more valuable then any particular opportunity. If you build a great team, you can take it to any company.

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