Product-driven Companies

Network marketing companies can be split into those that provide services and those that sell products.  There are benefits and drawbacks to each, in my opinion.

If you’re selling a product via network marketing, the chances are it’s health-related or appearance-related. Most of the NWM businesses I’ve come across have sold something like pills and potions, diet stuff, vitamins, perfumes, cosmetics, etc. I think that’s because the margins are very high and there’s enough profit for them to pay out big bucks to distributors.

But these products can be very pricey and are not always easy to sell. Sometimes something special comes along that has a really unique selling point and makes it worth the price. But I’ve found that although most NWM products are high-quality, they can over-priced and there is quite a bit of price resistance.

The result of that is that most of the sales may be to distributors – ie each distributor has to buy a minimum amount of product a month in order to qualify for their bonuses. So most of the sales come from inside the organisation and that doesn’t make for a stable and sustainable business.

This can lead to stock-piling, the garage filled with unused and unwanted products.  Not a good way to go.

So I’d say that if you’re joining a product-driven company, make sure the products are very good and reasonably priced so lots of people will want to actually buy them.

The other thing with products is you want something that is consumable – that is you want repeat sales. Otherwise you’ll spend every month trying to find new customers.  You want a customer base that keeps coming back for more, preferably on auto-ship.

On the plus side, products are usually easy to understand, so you probably won’t need a lot of training.

And if you find a company with the right products, you can build a very loyal base of happy customers who keep buying from you on a regular basis.

There are some companies that have built in their own unique way of selling through NWM. For example Kleeneze, who have grown by showing their distributors how to sell by dropping off brochures and picking them up with orders. It’s a virtually rejection-free business model and one that has done well for many years.  I think it’s feeling the pinch now though, as it feels competition from the internet.

So there’s nothing wrong with product-driven companies, but be sure to pick the right company with the right products. I’ve heard many times that the product is irrelevant – but I strongly disagree. How can you expect a network of non-sales people to sell something that isn’t instantly attractive to a large percentage of the population?