A good MLM company, seeking longevity in the marketplace, will put a lot of effort into training their distributors on how to manage and build their business. Businesses will provide online training, event training, and incentives.

Not every MLM company has the same opportunity, or compensation plan. There are many types of compensation plans and many variations on the original compensation plans (stairstep, unilevel, breakaway, matrix, binary). Each compensation plan and MLM company is unique in how it approaches consultant training.

Regardless of what compensation plan you’re using, there are common distributor training techniques among all companies and compensation plans. From a legal perspective, MLM companies must be realistic about their distributors’ statistics for success. It is not easy to become a MLM multimillionaire. Only a small percentage of distributors achieve such high success. Therefore, when legitimate direct selling companies present their training, management and support programs to encourage and train distributors they use some (or all) of the techniques in the list below.

If distributor training in your company sounds a little like this list, then it is likely looking good from a legal perspective. A MLM company opportunity should prioritize some or most of the following:

1. Enhance distributors’ self-image.
2. Enhance the image of the network marketing industry as a whole.
3. Educate distributors about the direct selling, MLM industry.
4. Create a realistic picture of what it takes to succeed in operating a network marketing business.
5. Help distributors understand the responsibility of being in business for themselves.
6. Make product education paramount in training programs.
7. Develop business management skills.
8. Help consultants understand the dynamics of people-interaction or person-to-person relationships.
9. Teach (or encourage the learning of) new business technology application to the business, such as computer software programs and website platforms.
10. Help distributors understand the basic concepts behind the network marketing method of distribution.
11. Create an appreciation of ethical standards.
12. Teach distributors how to run a small business, such as managing taxes, distributor networks and accounting.
13. Work on goal-setting and planning; develop one, two, and three plans, rather than promote unrealistic instant success schemes.
14. Develop the art of prospecting (finding and recruiting new distributors for your downline).
15. Help distributors understand the concept of commitment.
16. Learn to value the contribution of others in their home business.
17. Prepare to give effective presentations.
18. Learn how to deal with objections, rejections, and discouragement; helping distributors understand that an objection is nothing more than a question in disguise.
19. Develop an understanding of the legal issues impacting the network marketing industry and the individual distributor business owner.
20. Help distributors understand the art of duplication and the power of setting an example (in recruiting).
21. Help consultants understand that people are involved in network marketing for different reasons; allow those who are interested in the business opportunity to develop at their own pace and resist the urge to pressure satisfied consumers to engage in the business opportunity if they simply want to remain customers.

When MLM companies work to encourage their distributors to work hard, learn about the business, and have realistic expectations, then they are working to support a network of distributors that will last a long time.

If a direct selling company tells you that you’ll become a millionaire in a month then the chances are likely that they are not operating a legitimate business. Remember, if it’s too good to be true, then get out quick!

Would you like to learn more about distributor training, legal MLM compensation plans, or the MLM industry in general? Watch some of MLMLegal.com’s videos, presented by MLM Attorney, Jeff Babener. Visit MLMLegal.com for the most trusted MLM legal information on the web.

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1. You must be able to meet people! This is a people business. The only way you’ll find recruits and customers is by getting out there and marketing! If you’re not a people person, this business likely isn’t for you!

2. Do you believe in the products you’re selling? You must be excited about the product you are selling. If you don’t believe in the product it will impact your sales results. You must be the type of person who gets enthusiastic about sharing your product with others. Excitement plays an important role in a purchase decision in the network marketing business!

3. Have patience. It takes time to grow your business, as it does with any other business. Give yourself at least two years to succeed. Try. Try. And try again. Create goals lists. Take small goals and turn them into huge goals. It make be slow, but you can grow!

4. Attend company training programs. Network marketing / MLM companies often offer training programs to help you succeed in recruiting and training new consultants. Take advantage of the training programs your company offers. Don’t let those valuable networking opportunities go to waste either!

5. Work with your sponsor, and work with those you sponsor. You should soak up as much experience as you can from your sponsor and pass that knowledge down to those that you sponsor. A successful sales organization has successful distributors. If you’re not willing to help others and be helped, this business is not for you.

6. Think positively. Remember, the MLM business will subject you to a lot of motivational speakers, sales and promotional materials. Some of it will be useless, while some of it won’t. When things don’t go smoothly keep yourself in a positive frame of mind. On average, you’ll have to make ten presentations to make just one sale! You need to be able to positively deal with rejection. Maintaining a positive attitude will go a long way in keeping you motivated and encouraged to succeed!

7. Get organized. Set aside a place in your home that is used just for business. Make good use of the incredible amount of free computer software and apps. Keep a daily planner. Keep track of customers, prospective customers, etc. Send out those emails and reminders. Stay organized!

8. Be loyal. Don’t become a “multilevel junkie!” Some distributors fail because they bounce from one network marketing opportunity to another – again and again. This is a prescription for failure! While many successful distributors may be involved in promoting two or three direct selling product lines at once, the most successful distributors are those who focus on promoting the products or services of a single network marketing / MLM / direct sales company over a long period of time. Find the right company for you, and then stick with it! Loyalty pays.

9. Work hard! Network marketing is not a quick, easy path to a lifetime of prosperity. Nor is it a free ride to wealth that requires absolutely no effort on your part. It doesn’t work that way. In fact, it doesn’t work at all unless you do! You have to devote time and effort to it especially in the very beginning. It can pay out huge rewards. But regardless of what everyone tells you, you must work for those payoffs! Work as hard as your competition is working – then harder!

Want to learn more?

MLMLegal.com has tons of resources to help and motivate successful distributors. Here are just a couple of videos out of the Video Library that you may find helpful!

What is the Benefit of Recruiting Experienced Distributors?

Tips to be a Successful Network Marketing Distributor

What do I do with Distributors who go “Passive?”

Visit us at www.mlmlegal.com to learn more.

1) In your first year, what is your objective as a distributor? It is important to establish long-term goals and remind yourself of them frequently. If your objective is to sponsor 25 distributors in the first year, then you must recruit an average of two people each month. Once you develop long-term goals it is easier to see, and therefore reach, the short term goals.

2) How many people are you going to need in your organization? If your answer to the first question is monetary, then you will need to determine how many people you will need to recruit in order to meet your sales goals. Be sure to study the company’s compensation plan to understand what you need to do in order to succeed.

3) How much time do you feel it will require each week? Depending on your objectives, you may decide to spend ten hours a week or 30 hours a week recruiting, advertising, and selling. Keep in mind that most companies state that home parties average around 1.5 hours. 

4) What strengths do you have that will assist you in reaching this objective? Whether you are part of a community group or church or are great at approaching people, realizing your strengths will contribute to your success.

5) What weaknesses do you have that might inhibit you from success? Knowing your weaknesses are just as important as knowing your strengths. If you are honest to yourself about your weaknesses then you will be able to improve on them. Late-risers wake up earlier, the unorganized get organized, and the shy become speakers, for instance.

6) Do you have realistic objectives? If you plan to make $100,000 the first year and don’t know any people that may be willing to attend a party, then is a $100k sales goal realistic? Be realistic and start with goals you know you are capable of achieving.

7) Ask yourself how you would feel if you failed to reach your goal? It’s okay to fail; the key is to restructure your objective list and retry until you’re successful.

8 ) Vividly imagine yourself reaching your objective? How does it feel? Remind yourself regularly of that feeling.

9) Are you going to need the assistance of significant others in your life? What steps can you take to ensure their assistance? Remember to consider each individual’s strengths when you answer this question.

10) What will you need to invest in sales aids and inventory to do business? Be sure to budget sales aids, inventory, office space, gas, travel, and other expenses into your overall budget.*

* This is an excerpt from the book The Network Marketer’s Guide to Success available to order here.

Watch the related video by expert MLM Attorney Jeff Babener: Do You Have Some Tips to Become a Successful Network Marketing Distributor?

Visit www.mlmlegal.com for the most reliable, credible legal information about the MLM industry.

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It is often said that direct selling/MLM/network marketing is about sharing your product and services first within your spheres of influence, i.e., first harvest the low lying fruit. This means calling upon your friends, family, social acquaintances, co-workers, members of your church or other religious group, fraternal organizations, etc. In other words, sell where you are most comfortable. Generally, this means territory close to home or, if at a distance, it is because you have connections. As you mature, you may venture into other territories, but it will likely be first through social networking.

Are you interested in attending the Starting and Running the Successful MLM Company conference? Visit our conference page, view our speaker list, or get more details. All executives/owners of direct selling companies are welcome to attend. Call 800-231-2162 to register.

For more encouraging words to achieve success in network marketing, visit Attorney Jeff Babener’s websites: www.mlmlegal.com and www.mlmattorney.com.

Our next Starting and Running the Successful MLM Company Conference takes place October 22 and 23, 2015 in Las Vegas. View our conference flyer and speaker list online. Participate in our Innovation Campaign for your chance to receive TWO FREE TICKETS to attend our next conference.

If you’re reading this blog post and the conference dates above have passed, check our website for the current conference dates.

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It has long been recognized that there is high attrition among network marketing consultants, perhaps as high as 80-90%! The vast majority of MLM distributors are part time and they join and leave for many reasons. The fault is not necessarily with the company. In fact, a direct selling company is competing for their time. MLM companies are competing for time with consultants who may be involved in the PTA, little league, another part time job, family demands, shifting duties as work, etc.

What is most important is that a MLM company use its time with its consultants to demonstrate great products and great service. Surely, it is important to try to keep distributors active; but if they do go passive, hopefully they will continue to buy products and services in the same fashion as preferred customers. Whether or not that happens is dependent on whether the distributor has truly bonded with the quality of product and service. At that point, MLM companies should take a lead from online sellers such as Amazon to determine what drives customers to continue coming back again and again. And at some point in the future, when the time is right, the passive individual who has a continuing positive experience, may well be back again as an active distributor.

For more tips on being a successful network marketing company owner, visit expert MLM Attorney Jeff Babener’s websites: www.mlmlegal.com and www.mlmattorney.com.

In addition, our next Starting and Running the Successful MLM Company Conference takes place October 22 and 23, 2015 in Las Vegas. View our conference flyer and speaker list online. Participate in our Innovation Campaign for your chance to receive TWO FREE TICKETS to attend our next conference.

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In this case, an enroller is a sponsor that places a downline distributor into the downline, but not frontline.

Most modern direct selling plans offer enroller coding bonuses. Historically, a sponsor enrolled a new distributor frontline and was deemed the sponsor. Commissions flowed from this relationship.

However, as sponsors became busier and busier, companies concluded that it was beneficial to all parties to allow a sponsor to place a newly-sponsored distributor into the downline, but not necessarily frontline to the sponsor.

This approach allowed top distributors to recruit, but assign the new distributors to downlines that would be better able to work with the new recruit. In addition, this approach allowed a top distributor to reward individuals in their sales organization with some of the benefits of top distributor’s recruitment efforts.

And thus the concept of an enroller developed. In this case, an enroller is a sponsor that places a downline distributor into the downline, but not frontline. The sponsored individual is placed underneath a “sponsor” and is tied and coded to an enroller or “code sponsor,” with the enroller or “code sponsor” receiving a specific “coding bonus” which is associated with sales volume of an enrollee or “coded sponsoree.” This “bifurcation” of commissions allows for a reward to the efforts of both the “enroller” and the support efforts of the downline distributor who becomes a sponsor.

For more information on any topic on network marketing that comes to mind, please visit www.mlmlegal.com and www.mlmattorney.com.

MLMLegal.com is bustling with educational content for direct sellers and startup/existing MLM companies! Be sure to visit us often!

If you are interested in attending the Starting and Running the Successful MLM Company conference visit our conference page, view our speaker list, or get more details. All executives/owners of direct selling companies are welcome to attend. Call 800-231-2162 to register.

Our next Starting and Running the Successful MLM Company Conference takes place October 27 and 28, 2016 in Las Vegas. View our conference flyer and speaker list online. Participate in our Innovation Campaign for your chance to receive TWO FREE TICKETS to attend our next conference.

If you’re reading this blog post and the conference dates above have passed, check our website for the current conference dates.

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Most companies will allow consultants to join downlines with multiple companies so long as they don’t raid the sales organization.

Some companies state that you can’t recruit people that you didn’t personally sponsor. If you personally sponsor a friend or family member then why can’t you recruit them to join you at your new company?

The short answer is that company policies have evolved over the years, resulting firstly from a combination of increased raiding by distributors who switch companies. And secondly, direct selling companies have become more rigid in trying to retain their sales force, sometimes with good reason, although they sometimes appearing to be “overreaching.”

For instance, around 20 years ago, leading direct selling companies maintained a policy that required consultants to only offer the opportunity to people who they personally sponsored. Twenty years ago, this was a common policy.

Over time that policy changed. With the increased ease of communication due to technology, many companies asked that consultants not participate in raiding anyone in their organization while they were active with a company. The policy later morphed again to require consultants not to sponsor anyone in a new opportunity except for those that they personally sponsored upon leaving for a new company. Then the policy changed once again to where companies required that consultants who left a company not sponsor anyone into the new company.

In a few instances, some companies have provided non-compete agreements, which aren’t considered fair and are not even enforceable as a matter of policy in the state of California. Some companies have gone so far as to tell their distributors that they cannot participate in any direct selling activity for a certain period of time after leaving the company. Almost all states frown on non-compete agreements because they inhibit people from conducting their livelihood. Compared with the policies of twenty years ago, the extremities in policy have morphed extensively in terms of restrictions.

Today, the most common clauses seen are ones in which companies have moved from the concept of “don’t recruit anyone unless you’ve personally sponsored them” to “during your time with our company, we ask that you not raid anyone in your sales organization, whether you’ve personally sponsored them or not.” Most companies today will also ask that former consultants not raid people in their organization and recruit them to another for a period of six months to one year.

Most companies will allow consultants to join downlines with multiple companies so long as they don’t raid the sales organization. In the party plan arena, companies will often implement restrictions based on product. If you are selling jewelry, for instance, then the company will ask that you not join another company which is selling jewelry.

What happens if consultants raid anyway?

As a practical matter, not a legal matter, if a distributor is affecting the entire franchise of the company – having a major impact – a company will not hesitate to file suit and to seek an injunction against the distributor. It is very rare to see a company pursue a consultant who is very low on the sales genealogy or who has a very limited sales organization. Legal action is usually reserved for consultants whose major raiding activities would take a good portion of the business away from the company. Often in situations, such as these, there has been a bad-faith decision by the distributor themselves, which isn’t fair to the company.

Is there a right or wrong? Probably not. However, it is important to the future of direct selling that companies and distributors reach some common ground on acceptable practices by distributors who leave companies and recruit their former colleagues to new companies versus reasonable expectations of companies in restricting distributor movement in a way that is not overreaching in the marketplace.

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Consultants are given replicated websites by established companies.

Many companies require their consultants to use replicated websites because they are rightfully concerned about unauthorized medical and earnings claims as well as confusion in the search engines. Therefore, many leading companies provide authorized replicated websites to distributors and prohibit individual-created websites.

There are three primary reasons for this, which include:
1. To avoid unauthorized medical and earnings claims
2. To assert control over the company’s trademark
3. And, to avoid distributor websites competing against the primary company website in a way that the company website gets lost or is displaced from the top of search results for the company or its products.

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Our next Starting and Running the Successful MLM Company Conference takes place May 15th & 16th, 2014 in Las Vegas. Call 503-226-6600 or 800-231-2162 to register. If you’d like to see how you can get free tickets to the next MLM Startup Conference, visit our Innovation Campaign page.

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Some network marketing companies get creative with their consultant titles by calling them coaches, chocolatiers, guides, and ambassadors.

Generally, distributors, consultants, representatives, independent business owners (IBOs), member, etc. all describe a salesperson who sells products for a direct selling company. Although, it is common for party plan companies to use more artistic names such as stylist, artist, beauty consultant, etc.

In typical network marketing companies, IBOs are generally titled more generically, with titles such as distributors, associates, and independent sales representatives.

Party plan companies usually use a group (or party) selling approach, whereas network marketing companies use a person-to-person model. 

Some MLM companies get creative with their consultant titles by calling them coaches, chocolatiers, guides, and ambassadors.

The title of a distributor doesn’t really matter; although it is important, from a legal standpoint, to use the term “independent” in front of the title, to assure proper independent contractor status.

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Apart from general pyramiding accusations, the direct selling industry can learn from the Federal Trade Commission’s (FTC) specific allegations of improper activity. The FTC includes front loading as inappropriate activity stating:

Front-loading or inventorying of product in which excessive product purchases are viewed as prohibited consideration for the requirement that individuals make an initial investment of product purchased to engage in the opportunity.

In the August 1999 case FTC v. Equinox the FTC accused the company of making recruits engage in the following inappropriate front loading activity:

New recruits were front-loaded with $5,000 inventory purchases by being encouraged to “buy-in” at the managerial level.

MLM marketing plans which result in inventory loading distributors should be taken very seriously and avoided. Here are five ways to tell if the direct selling company you are considering joining is reputable or perhaps may be operating as a pyramid scheme:

• Promotions where the business opportunity is the “product.” If there is no legitimate product or service being sold, but only the opportunity itself, then chances are that the promotion is a pyramid scheme.
• Products that are sold at inflated prices. Sometimes pyramid promoters try to mask their true intent by selling a product. Often, the product will be vastly overpriced and thus unlikely to generate much retail activity, thereby indicating that the real item being sold is the compensation plan.
• Programs that require inventory “loading.” A legitimate MLM opportunity doesn’t require you to buy unreasonable amounts of inventory to begin your business.
• Programs that require substantial initial cash investments. According to MLM Attorney Jeff Babener, many states consider a required up-front investment of $500 or more to be “substantial” and thus likely to attract the attention of law enforcement.
• Programs that require mandatory purchase of peripheral or accessory products or services. Some pyramids seek to hide their true face by allowing a minimum price for a “start-up” kit and then compelling the investor to buy more expensive items such as training or demonstration materials. Jeff Babener believes that business-start-up kits and selling aids should be sold at company cost.

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