Which Comes First? Product or Opportunity?
A debate has long raged in the direct selling world: lead with the product vs lead with the opportunity. To better address which is more important, let’s first review the regulatory environment, because this has a direct impact on the issue.
The Pyramid Trap
Pyramid schemes have always been both unethical and illegal. They all have the same basic logic: people being paid to recruit people who recruit people. Revenue at the top depends on money taken from the latest to come in. Eventually, these schemes always collapse, leaving the last (and largest) generation out of pocket. Unfortunately, some MLM companies in the past have adopted a method that either functions as a pyramid, or appears to. This has resulted in a confusion in some people’s minds between a pyramid scheme and a legitimate direct selling opportunity. In reality, they are quite different.
A true MLM is driven entirely by product sales. No one is paid a cent to recruit another distributor. Commissions are earned on the sales you make directly as a distributor, and bonuses accrue from sales made by those you’ve recruited. The key is: all the income comes directly from product sales. So long as this principle is honored, it is safe and honorable to promote your business opportunity.
The question of product vs. opportunity is therefore not a structural one: it’s a marketing issue. Which do you promote first and more vocally?
Even though your compensation structure may be totally legitimate, and you have the right ratio of customer to distributors, leading with the opportunity in your marketing poses risks. It can give the appearance of a pyramid — especially in today’s environment, where regulators are far more aggressive in their pursuit of non-compliance, and where the media has become more critical of the direct selling industry.
Passion for Your Product
In almost every case, the surest and most sustainable strategy is to lead with your product. That requires you to have a product that consumers love and keep buying. Their passion for the product may never quite match yours but it should come close! In the best case scenario, the customers’ enthusiasm for the product inspires the distributors, just as much as theirs inspires the customers. Over the long-term, the most successful direct selling companies encourage a culture of passion of products and bonding of people.
The best MLM products are perceived by consumers to be unique in the marketplace and unobtainable anywhere else. Originality and quality are key. Pricing should be seen as fair, but in direct selling it is legitimate to charge a premium for a truly innovative product that delivers exceptional value. Needless to say, overpriced products of dubious worth have no long-term future.
As you form or review the most important aspects of your direct selling company, be sure that your product will be consumed and loved by the end-user. Your compensation plan should be competitive in the marketplace, fair to your distributors, and provide them a realistic opportunity to earn at every level of the business. However, when choosing what to focus on first, the product is your driving force. A great opportunity rides on the success of a great opportunity.
And check out Sheffield Global Academy, the only online course for founders and executives of direct selling companies. Or call for a free consultation: 480-968-6199