MLM COMPANY TEST: PART TWO
TEST #4 Selecting the Correct Timing
I ranked compensation plans with the following values. The point spread is varied based upon the many variations within each pay plan. For example, a high-ranking breakaway plan will score a B grade based upon maximum benefits and limited restrictions within that plan. Another breakaway plan can score a C- grade based on limited payout, limited levels, or high quotas. Top pay plans ranked high based on fairness to distributors, immediate and long-term payout potential, and the team-building incentives built into each plan. Remember, no pay plan is perfect. You won’t see any pay plans that score a perfect A+ grade. However, some plans are better than others. I assigned the average of the high and low score as an overall grade for the plan. Here are the six plans and how they scored.
Compensation Plan Report Card
Name of Plan Grade Variance (low/high) Average Grade/ Points
| Binary |
Low = C |
High = A- |
B |
(8) |
| Breakaway |
Low = C- |
High = B |
C+ |
(6) |
| Unilevel Hybrid |
Low = D |
High = B- |
C |
(5) |
| New Binary Hybrid |
Low = B- |
High = A |
B+ |
(9) |
| Matrix |
Low = D- |
High = B- |
D+ |
(3) |
| Two-Up |
Low = F |
High = D |
D- |
(1) |
| Unilevel |
Low = C |
High = A- |
B |
(8) |
Points Subtotal (9-10 points possible):
TEST #5 Selecting The BEST MANAGEMENT TEAM
Management Team Report Card
Test 5.1: Things to look for in a company and management team
In the “things to look for” category, all management teams and companies can earn half their points (6 points) towards a perfect score of 12 possible points. We proceeded to take points off if the company lacks any of the following positive features. Below is a listing of the features or benefits all companies should have. Start with 6 points and take off points for every feature or benefit listed below that is not present in your company.
Look for visionary leadership, extremely high integrity, mission-driven company and management, corporate business experience, network marketing experience, field experience, great track record, great credit, strong financial backing, professional and functional facilities, long-term vision, strict compliance to MLM laws and regulations, proactive regulation of company and products, distributor recognition program, responsive and courteous customer service, drop ship capabilities, a variety of product order options (phone, fax, Web site), prompt shipping (delivered two-four days in most countries), timely commission checks (never late), moderate business start-up and maintenance requirements, professional packaging, well-researched product line, quality control program, continuing product research, product enhancement, verification on company headquarters building, and sufficient employees and management to run the company.
Also look for the following business building tools: High-tech computer system (shipping, commissions, downline tracking, order tracking); weekly conference calls; corporate-sponsored national and regional conventions, trainings, distributor retreats, and vacations; professional promotional materials produced by the company at reasonable prices (audios, videos, brochures, magazines, and newsletters); professional Web site with full company contact information and corporate officer profiles; online ordering; product profiles; and more.
Test 5.2: Things to avoid in a company and management team
In the “things to avoid” category, all management teams and companies were given 6 more points. Then we proceeded to take points off for any of the following concerns. Below is a list of the concerns that resulted in a loss of one or more points. Start with 6 points and take off points for every negative feature.
Watch out for past or present criminal activity, numerous bankruptcies, inexperienced management team, lack of past successes, unethical activity of any kind, tolerance of unscrupulous staff or distributors, unprofessional conduct (foul language, harassment), poor personal money management, poor communication, dominant personalities (meet the founders and interview people who have worked with them), apathy, short-term vision, company association with unscrupulous activities or people, excessive hype, false science/product/health/medical claims, no ownership of products (some other company owns the brand), overemphasis of compensation plan over products, company endorsed slandering of other MLMs, unethical company recruiting campaigns, income claims, one time pay plans, paying on product vouchers/down payments, the promotion of “no sales”, extreme start-up expenses (too high/ too low), constant backorders, high attrition rate, low re-order rate, low start-up capital, high start-up capital (front-end loading), heavy debt, poor money management, stagnant growth, drastic changes in product line, drastic changes in compensation plan, sweetheart placement deals and/or special favors/privileges/rewards to distributors that are not directly tied to performance, corporate employees with downlines, promises from upline to build your downline, promise of spillover from upline, promise of free leads, lack of professional-looking promotional materials such as audios, videos, brochures.
Points Subtotal (12 points possible):
TEST #6 Selecting the Best Product or Service
This test is divided into two categories for each of the four industries: nutritional supplements, personal care, household products, and telecommunications. The two categories include “things to look for” and “things to avoid.” On the “things to look for” side, I gave each company points for every criteria that was present in that program, with a maximum of 12 possible points (A+). On the “things to avoid” end, I started each company with a perfect score of 12 points, and then I began eliminating points as I ran into concerns. Add up points from all eight categories and average them at the end. Please review each category.
Selecting a Product Report Card
Test #6.11: Things to look for in a nutritional product line
Product potency (combination of strength and freshness)*, synergy (ingredients work together as a team)*, solid research and documentation on product, simplicity (easy to take, simple dosages), strong nutrition focus (not just herbal), focus on immune system, 90–100 percent unconditional return/refund policy, solid sales growth from month to month and year to year, solid retention and reorder rates.
Test #6.12: Things to avoid in a nutritional product line
Incomplete line, herbal medicine focus rather than nutrition focus, undocumented product claims, exaggerated testimonials, inexperienced scientists formulating products, unsafe ingredients, no result using products, bad results on product, inaccurate labeling*, too much or too little of key nutrients*, low quality/cheap ingredients and formulations*, complicated product line, no return/refund policy, lack of sales, poor customer retention, products proven to be gimmicks (thigh cream, Ma Huang weight loss pills, diuretics, spray vitamins, parasite cleansers, etc.).
*Please note: Without becoming a microbiologist, it may be difficult to evaluate some of the criteria for selecting a high-quality nutritional supplement. Therefore, you must rely on documentation provided by the company and from independent sources to determine the effectiveness of these products.
Test #6.21: Things to look for in a personal care product line
Quality ingredients, such as aloe vera, alpha-hydroxy acids, antioxidants (vitamin A, vitamin D, vitamin E), botanicals (most popular: chamomile, fennel, ginkgo biloba, ginger, ginseng, gotu kola, hops, sage, rosemary, St. John’s wart), essential oils (most common: rose, lavender, mint, chamomile, calendula, and tea tree oil), natural ingredients, unique formulations, unique scents (not too overpowering), hypoallergenic, consistency from order to order, appealing packaging, functional packaging,
Test #6.22: Things to avoid in a personal care product line
Harmful ingredients, such as beeswax, collagen, harmful artificial colors and fragrances, lanolin, mineral oil, petroleum (or petrolatum), propylene glycol, sodium laurel/laureth sulfate, sharp exfoliants that cut the skin, anything causing an allergic reaction, anything causing breakout or acne, anything that causes pain or itching.
Test #6.31: Things to look for in a household products line
Quality, environmentally friendly, highly consumable, good pricing, safe, traditional product types, unique formulations, quality packaging
Test #6.32: Things to avoid in a household products line
Extreme pricing, requirements for quantity or bulk purchasing, “concentrated soap” gimmicks (justify high pricing by claiming that soap/detergent is concentrated), false science (like the laundry ball/disk, proven to be hype), cheap quality, ineffective products, cheap packaging
Test #6.41: Things to look for in a telecommunications service MLMs
Company provides monthly statement, accurate billing, prompt billing, flat-rate service at competitive market pricing, calling cards with easy calling requirements and competitive market pricing, good international rates, financial commitment to hardware (not just reseller), cell phone packages with current models and plans.
Test #6.42: Things to avoid in a telecommunications service MLMs
Large monthly billing charges, high activation fees, circuit’s busy signals, drop outs, static or noise on calls, programs dedicated mainly to marketing pre-paid calling cards, one minute or thirty second billing increments, coding bonuses and/or large training fees, Only take the test for the primary product industry represented in the company you’re evaluating.
Points Subtotal (12 points possible):
Overall Company Grade
Test #1
Test #2
Test #3
Test #4
Test #5
Test #6
TOTAL ÷ 6 = GRAND TOTAL
Now take the grand total and apply the following grading scale to give the company a letter grade:
12 points = A+
11 points = A
10 points = A-
9 points = B+
8 points = B
7 points = B-
6 points = C+
5 points = C
4 points = C-
3 points = D+
2 points = D
1 points = D-
0 points = F
Overall Company Grade:
About the Author
Daren C. Falter is the author of the network marketing industry-wide best seller How to Select a Network Marketing Company. Daren has been a consultant to the network marketing industry for over 12 years and a student and participant for over 20 years. Daren has built downline organizations into the tens of thousands of distributors with several different companies. Daren is a popular convention speaker and trainer. You can visit Daren online at his blog at www.networkmarketingreview.com. You can also order Daren’s best-selling MLM book at www.networkmarketingbook.com.
Daren recently launched a new network marketing company, Yoli, Inc., near Salt Lake City, Utah. Daren and his four partners are excited to introduced the worlds most nutritious beverage using patented BlastCap™ Technology. For more information about Blast Cap Technology, Blast Caps, or Yoli, visit Yoli at www.prelaunchinsider.com.
Copyright ©2009 DC Falter Marketing, Inc. ALL RIGHTS RESERVED
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Have you heard of these companies? Monavie, Xango, Nuskin, Usana, Tahitian Noni, Freelife, Melaleuca, Max International, Agel, Send Out Cards, Vemma, Scent-Sations, Forevergreen, Pharmanex, Isagenix, Univera, Herbalife, Amazon Herb, Arbonne, Mary Kay, Vitamark, New Vision, Unicity, Mannatech, Oxyfresh, 4 Life Research, Longevity, Life Plus, Forever Living, Forever Green, Youngevity, Nikken, Immunotech, Reliv, Shaklee, Nature’s Sunshine, Pre-Paid Legal, NSA, Amway, Quixstar, Cyberwize, Gano Excel, Genewize, Goyin, Kiiera, Legacy, Life Force, Market America, Matol, Neways, Nuriche, Ocean Grown, Qivana, Sibu, Sisal, Stemtech, Visalus, Waiora, Young Living, Zurvita, Trump Network. Visit www.networkmarketingreview.com for commentary and reviews.
beating for this when, in fact, it was us darn Yanks who introduced the 2-up plan in the United States in the mid-1980s. The 2-up, like the matrix, looks fantastic on paper, but when you put it into practice, it’s a disaster. The Australian 2-up is considered a gimmick compensation plan for reasons that are quite obvious to intelligent network marketers; no company has ever survived this plan. For this reason, we will not spend any time on this plan other than to describe what it looks like so you can avoid it. Only 2 percent of the companies I researched use the 2-up plan. The most common form of this plan is the 2-up, but there are also variations called the 1-up and the 3-up. All of these basically behave in a similar manor.