On a recent training call, one of my mentors spoke of a gentleman whose business keeps falling apart. He builds it up, then it falls away. He builds it up, then it falls away. He was baffled as to why this was happening. The company had a great product, and he a great marketing and training system that allowed him to work with targeted prospects.
He couldn’t understand why the people who had dreams of become of being financially free would quit the business. So he picked up the phone and asked each of his former distributors about why they quit. The number one answer he got from his people was, the product is too expensive.
Hardly anybody in his downline could sell the product to end consumers, or break even on their own autoship orders. It’s pretty hard to retain people when they’re not making money. Understanding what the problem was, he expressed his concerns about the price of the product to the company.
The company didn’t listen. They arrogantly told him it was his fault. They told him it was the best product of its type on planet earth, every household should have it, its quality demanded a high asking price. They told him didn’t recruit enough people, didn’t train his downline properly.
Well, it’s no surprise that this company is falling apart. They are greedy, and they won’t listen to the concerns of their own distributors.
Some (not all) MLM industry trainers will tell you that price doesn’t matter. They say if you think your product is too expensive, you will project that reality onto everyone you share your product with, and they will think the product is expensive as well and therefore, won’t buy it. On the other hand, if you think your product is great value, despite its cost, you will attract customers who think that the product is great value too.
While there is an element of truth in that, I fundamentally have to disagree.
First of all, these “gurus” are not in the same market place as the vast majority of network marketers. Most network marketers are distributors for consumer goods and services, and many, many of those are in the health and wellness industry.
These top earners are distributors for companies who sell training programmes that cost thousands of dollars. It is difficult to measure and compare the tangible value of information products and therefore, that philosophy of “believing your product is great value” may work for these types of products.
However, for the vast majority of networkers who are distributing tangible products such as vitamins, health juices, skin care, energy drinks, mobile phone plans or legal services, it’s a different story.
As an example, let’s say MLM Company A and MLM Company B both sell nutritionals. They each have a product that’s almost identical in terms of the quanity and quality of the ingredients (probably came from the same manufacturer). Company A sells its product, at retail, for $120 for a one month supply. Company B sells its product, at retail, for $40 for a one month supply!
Who’s going to have a harder time selling the product to the end consumer? Distributors for Company A? Or Distributors for Company B? Which company is going to have people who buy the product more regularly?
You can have as much belief in the value of that product as you want, but there’s no denying that you’re going to have to justify why Company A’s product costs 3 times more than the competition. You’re going to have to spin it, so it sounds good. You’ll have to become a salesperson. (MLM is not a sales business, it’s a people business.)
Also, is there anybody in Company A retailing the product to end consumers who are not part of the business? Highly unlikely. Almost everybody in Company A is going to try to recruit their prospects into the deal so they can buy it at “wholesale.” That’s NOT a sustainable business strategy.
Moreover, if you’re working harder to try to recruit as many people into your deal and then having to contend with the high drop out rate (which is a common thing in recruitment driven companies) because your product costs 3 times more than the competition, is that your fault? Of course not.
Get this: Price DOES matter! Price has a very strong influence on your LONG TERM success.
Walmart figured this out a long time ago. It is absolutely no accident how Walmart became the biggest retailer of consumer goods in the world. If you hate Walmart, that’s okay, I’m not advocating it. But you can’t deny this mantra: whoever gets the same product to the end consumer at the best price, WINS.
To your MLM success,
Wayne Wu
P.S. I would love your input! If you have an opinion that would contribute to this discussion, please leave me a comment below.
P.P.S. Share the love. If you enjoyed reading this article and think others will get value from it, please share it on Twitter or Facebook by clicking on the "Tweet" or "Share" buttons at the top of this post. Thank you.
Related posts:
{ 1 comment… read it below or add one }
In my mind price is everything for prospects looking to make a decision. They are always looking forward and thinking about when selling this product will I face resistance or not. And if the value is good it becomes easy to recruit them as a distributor. If the value is missing the business will struggle. Good post.
Rodney@new home building guru´s last [type] ..Planning Your Needs and Wants in Your New Home