How to Choose a Network Marketing Company and Sponsor

Sponsorship is very important in Network Marketing. This is especially true if you're new to the industry. You need someone who will mentor you and help you overcome the challenges that you will surely face along the way.

You also want to know that your sponsor will be an active builder of the business along with you. Just as you should not rely on your upline to build your business, you don't want an upline relying on you to build theirs.

Whoever you choose as a sponsor will most likely be working with you on a regular basis, at least in the beginning. Do your best to choose a sponsor that you will be comfortable with and has something real to offer you, in terms of support.

Compensation plans vary greatly from company to company, and in an attempt to WOW new prospects, they often have a lot of clever ways that you can make money. The problem is, people need to be able to understand how they can use the compensation plan to maximize their earning potential. If it gets too complicated, people get confused, and they lose interest.

Ask your potential sponsor to summarize the compensation plan for you. They don't have to give you every detail, but they should be able to highlight the main points in a minute or two. If they can't explain it to you, then you will probably have a hard time explaining it yourself, or at least your prospects will.

A distinguishing feature between pyramid schemes and legitimate network marketing companies is the Commission structure. Legitimate companies only pay commissions on the sales of products and services. Pyramid schemes will pay a percentage on a starter or enrollment package. In other words, new distributors pay a fee to join the opportunity, and their sponsor earns a percentage on that fee.

The danger of this is that the company and the upline can make a considerable amount of money off nothing more than the promise of a product. People eager to get in on the ground floor will sometimes pay hundreds of dollars to get started. This sustains itself as people begin to build large downlines and make a lot of money, but it eventually falls apart when no product sales are ever realized, and the people on the lower levels fail to recoup their initial investment.

It is important to note that it is perfectly acceptable for a company to charge a sign-up fee. It will generally pay for an introductory packet of materials, and it should be less than $75. Above all else, NONE of the starter fee should go to the sponsor responsible for signing up the new distributor.

It's also important to note that there are various ways to pay a commission on product sales, and many of them might be incorporated into the compensation plan. For example, a plan might pay a bonus on the initial product order of a new distributor, and a different percentage of ongoing sales. As people pass certain qualification guidelines (which should also be based on product volume), they might start to earn a percentage of company sales set aside for high level distributors. All three of these examples are based on the sale of product, though they apply in specific situations, so that a distributor might enjoy the benefits of one or all them, depending on their involvement with the company.

When you ask your potential sponsor about the price of their company's product or service, you'll often get a response laying out all the reasons why the price is more reasonable that it appears. If they end with a statement about how the opportunity adds to the value of the product and actually brings the price down, you should challenge them on this.

If the only way to justify the cost is by mentioning the opportunity associated with it, there is a big problem. A good network marketing company should have both consumers and business builders. If the pricing would be too high to appeal to anyone but the business builders who know they can offset the cost with a downline, you have a recipe for failure in the long run. The product or service has to be priced so someone would happily buy and use it, and consider it a fair price. Since this is somewhat subjective, you have to decide if you think the price is reasonable or not. If you can't justify the price to yourself, you'll have a hard time convincing your prospects.

Keep in mind that a consumer can be someone who signed up as a distributor to get distributor pricing. There is nothing wrong with buying wholesale (it's a smart thing to do!). What I am referring to is when you have to build a downline to offset the cost of your own product to make it worth it.

The company may be fantastic. The product might be the best you've ever seen. The comp plan looks fair and balanced. These are all important factors, but you need to know how you're going to build your business.

First, pay attention to how you came into contact with your potential sponsor. Did you approach them, or did they approach you? Would you be comfortable with this arrangement as you try to build your own business?

Many sponsors use more traditional network marketing strategies, some use InterNetwork Marketing principles, and some use a combination of methods. The bottom line is, do you feel you would have the proper support to build your business effectively using strategies you would be comfortable with?

Remember, if you don't like the method you use to build your business, chances are most of your downline won't like it much, either.

Many people think that the only time to get involved with a network marketing company is when it is first being launched, because that is when you can make real money. There is some truth to that, but not as much as you might think.

The reality is, start-up network marketing companies fail just like any other start-ups. The product and management team have not yet proven themselves, and sometimes there is a lack of experience or a misinterpretation of the marketplace that leads to a company's demise.

There is always a risk involved; but with great risk comes great reward. Successful entrepeneurs understand the mentality associatd with an MLM start-up, and they aggressively build their organizations to capitalize on that fact.

You might consider a company that has been around for more than five years. If they have, then it shows that they understand how to run a business, and you are a lot less likely to wake up to the news that your chosen MLM just shut its doors, and you will no longer be receiving a commission check. There is a danger here, too, though. Sometimes companies that have been in business a long time begin to take the distributors for granted. There have been notable occurrences where a comp plan is completely re-structured in order to make the company more money which ends up costing distributors a sizable percentage of their income.

If at all possible, try to find a company that has been in existence for a long time, and is launching a network marketing division (it is happening more and more). You get the benefit of stability that the parent company brings, combined with the growth potential of a start-up.

In this case, just be sure the management team of the MLM division has some experience in network marketing. It's a lot trickier than many people realize, and there are many laws and regulations to be aware of.

It is also absolutely essential to have a comp plan that encourages new distributors by giving some good start-up bonuses, but also has potential for large long-term returns for the business builders. An inexperienced team is not likely to know how to put a balanced plan together.

Remember, this is a question to ask your sponsor. This will help you get to know them better, and you'll be able to determine if you can relate to their motivations and convictions.

Were they interested in the huge profit potential they saw? Did they like the product? Were they impressed with what the company does for the community? Or was there another reason?

Don't give your potential sponsor too much information when asking this question. Just ask the question as it is stated in the title of this module. If you get too specific, you'll be guiding them on what is important to you, and you want to know, in this case, what is important to them. Then it's up to you to determine if their beliefs and values coincide with your own.

This ties in to question number 5, and the answer should support whatever answer was given there. You should find out what kind of training the company provides, and how much is left up to each independent distributor. Additionally, if the company does provide training, is there a cost associated with it, and how much?

What you are looking for is company-provided training at little or no cost, that will provide the necessary information to educate consumers and potential distributors about the company and the products. The company literature should be professional in appearance and validate your marketing efforts. Scientific publications and a clear overview of the comp plan are examples of what the company should provide.

Your sponsor can step in and let you know about their marketing and how it might complement what the company has to offer. A well thought out marketing plan will benefit not just you but your downline as well. Make sure it is something you could see yourself doing, and could expect your downline to be able to follow, as well.

You might think the best answer to this is that there are no restrictions, but the opposite is actually true. If the sponsor says you can advertise any way you want, run as fast as you can in the other direction.

Network marketing is going through a tough transitional period right now, where the FTC is doing its best to weed out the scams and the schemes. If distrbutors are making too many income claims and over-exxagerating the benefits of the company's products, the FTC will often step in and shut them down. This is good for the industry, and is necessary.

What you want to hear is that the company you are evaluating has very strict guidelines for marketing and advertising. On the internet, you should only be able to use the company name or refer to the opportunity directly through a company replicated site. Anything beyond that should have to go through a compliance department first.

You might think this really ties your hands when it comes to marketing the product, but it is actually in your best interest not to use the company name directly in your marketing. The reasons for this are too long to get into here, but you can get a more detailed explanation of this in The Renegade Network Marketer.

There are some issues that are beyond your sponsor's ability to handle. You might have an issue with an order you or your customer places, and need an exchange or a refund. You might want some information specific to the product line, and it is in your best interest that the information comes directly from the company. You want to know that the company has solid customer support, for whatever needs you may have.

Ideally, they should have divisions devoted to specific areas, such as order placement, affiliate questions, product information, etc. In addition, they should have a PR department to handle any media inquiries, and it should be company policy that all media related requests be directed to them. That is, when a local reporter wants to interview you, the best thing to do is to direct them to the company PR department, not conduct the interview yourself (for the same reasons given already).

The company should list email, telephone and physical addresses to get in touch with them. Obviously, dropping in to company headquarters unannounced might mean you'll have to wait a while before seeing anyone, but you should at least be able to find where that building is on a map.