Reality check – Most network marketers fail.
Do The Math
How Network Marketing Companies do the math: Sign up 4 friends the first month and make $200. Your 4 friends each sign up 4 friends the second month and you make $1000. Each of their 4 friends sign up 4 friends the third month and you retire.
How the math actually works.
Can you sign up 4 friends the first month?
How big is your audience? If you have 100 friends and family, that is your audience.
How many in your audience are your target market and are receptive to your offer? Depending on the product or service you are offering, it’s safe to assume 1 out of 10 will even be interested. So, we’re down to a target audience of 10.
How much time will you have to contact your target audience? Let’s just assume that you contact all 10.
How many potential customers/distributors will respond positively to your pitch?
Whether from receiving an unexpected bill to having a bad reaction to their lunch, to a point of resistance you did not anticipate, expect about half your prospects to loose interest after hearing your pitch. That takes us down to 5.
To effectively pitch a product/service/business to people takes effort, time and often comes with a $ cost. Did you have to drive to a meeting? Did you pay for lunch?
How many who intend to sign up complete the sign up process? (This is a HUGE unanticipated point of loss for network marketers.) The online signup form you sent was confusing, they accidentally signed up under another distributor or they found a similar product on Amazon. Depending on your product, service or the savvy of your network marketing company, expect to loose 10% to confusion, 10% to competition and spend a couple hours a month trying to get errant signups placed back under you.
So, yes, if you start with 100 friends and family, determine exactly who is receptive to your offer, have reasonably good luck with a positive response, limit the amount of sign up confusion and don’t get robbed by the competition, then you can end up with 4 signups your first month.
To contact your interested prospects about through the sign up process
Now’s where the math gets fun and you find out why only 1 in 100 Network Marketers make it through their first year.
Your second month begins with 4 customers/distributors. What is the probability that it will end with 4 customers/distributors?
Here are some obvious reasons it might not:
– People die or move to other countries
– Credit cards expire and are not updated
– They get a new job that takes up 120% of their time
– They don’t like the products or services
– (And here is the big one) You didn’t train them well enough
The rate at which customers/distributors no longer participate is called your “Rate of Attrition”.
Often, the rate of attrition is as much as 50% per month.
So, if you sign up 4 people the first month, you will have 2 people the second.
Likewise, did your 4 customers/distributors manage to sign up 4 more customers/distributors each?
All of the Marketing and Sales factors we assumed earlier with come into play.
From personal experience, 1 out of 10 distributors will sign up one other person in their first 3 months.
So the actual equation is not sign up 4, then they sign up 4, then they sign up 4 etc.
The actual equation is much more complex and much more challenging.