Philippines is currently one of the hottest spots for Network Marketing nowadays, with a lot of new MLM companies being created and marketed through offline and online platforms. In line with this, there are scams here in the Philippines that's most commonly called fly by night MLM companies. What they do is they create a Network Marketing company, get people to join, and once they have collected a lot of money, disappear as if they never existed.
For that not to happen, I will provide some insights here to identify if a company has that kind of strategy. Always take note that researching and understanding everything about the industry is a necessity for all network marketers because knowledge will be your only defense against scams that are happening in our industry.
In order for you to know if it's a fly by night company, here are some pointers:
1. Most companies without SEC (o kaya pag sinasabi nila na to follow nalang ang SEC) are probably going to disappear once they have achieved a certain amount. That is because they did not even bother getting proper legal documents. This means that they are really not going to last long.
2. Companies that move their soft launch / official launch around 3 times or more are most probably going to scam everyone. They move the launch date because they have not met the required amount of money before they plan to disappear.
These two pointers will help you determine if it's a good idea to join a new MLM company or not. I hope this helps those who want to join new companies.
What I will say next is basically my opinion about Network Marketing. This can also help in identifying if it's a good time to join a specific MLM company or not. I believe that there are 4 stages in a Network Marketing Company.
1. Pioneering Stage
The Network Marketing Company has just started and they are currently working everything out like the company's documentation, the management, the website, the leaders and more. For experienced network marketers, they would immediately jump in if an MLM company is in this stage because joining early will reap out big rewards for them. It is still considered quite risky to join during this stage because there is a possiblity that the company might be bogus. I can honestly say that this phrase really fits this stage, "High risk means high reward." If you are a new blood network marketer, I suggest that you wait until the company has progressed to the next stage. For other network marketers, as long as you have a solid team with you, it is really a great idea to join as early as you can but make sure that you have research everything about the company before joining.
Risk Factor: 50%, but if you have a solid team and you know the people behind the management or administration, I'd say it's 20% Risk!
2. Production Stage
The MLM company has finished their soft launch and is currently dispensing payouts to their members. This is the perfect time for new blood networkers to join the company. At this time, the products are already being marketed online and offline and when it comes to the earning opportunity, there will be a lot of proofs that will circulate online. This is the best time to join because everything is prepared for the upcoming distributors of the company. Here are the reasons why:
- Marketing tools are ready for distribution which will make it easier for Network Marketers to share and advertise the company.
- A lot of proofs are available for MLM marketers to use in times of assisting their prospects.
- Products are already being marketed and advertised.
- Product testimonials are available and you can use this to improve your sales.
- A lot of people will be marketing the company so it would not seem that the company is relatively new.
- A lot of distribution offices (Stockists, Depots, Training Centers, Business Centers, etc.) will be opening at this stage and this will boost the company's reputation
Risk Factor: 10%, The only risk will be if the administration decided to pull the plug and disappear immediately.
3. Saturation Stage
The Network Marketing company is not able to meet enough sales that can sustain the members needs and the expenses of the company. There are a lot of things that can help everyone identify if a company is in this stage. Any one of these scenario can determine if a company is in this stage:
- The website is outdated or mostly offline due to maintenance, errors, non-payment of domain.
- Payouts have started to get delayed.
- The MLM company started a new compensation plan that's not going to affect the previous one. This means that old distributors won't benefit from the new compensation plan.
- Product stocks are not anymore maintained. The company has no more product stocks or most of the time, delivery is delayed.
- The owner or the admin team are not anymore present in most general meetings with distributors.
- Promises made by the admin team are not met.
- Incentives to be given to the leaders are delayed.
- Products are being sold at very low costs.
- The MLM company created a sudden hype, something that will catch everyone's attention, like a new incentive that is very easy to achieve.
This stage can last more than a month or even more than a year. It all depends on when the owners decide to pull the plug and disappear as if they never existed. When the are not able to recover from losses of profits due to inadequate number of sales, they will surely close in due time.
4. Closure Stage
This is the biggest and most problematic stage of a Network Marketing company. When everything fails, this is the only option for the owner to implement. Closure happens when the company is not able to sustain itself because of a lot of things:
- Sales are not sufficient
- A lot of negative feedback has arised and it completely destroyed the company's credibility
- No one is interested to advertise or market the company
- The admin team decided to disappear while they still have money
- A lot of scams happened and these scams are related to the company
- Distributors have decided to leave the company and join a new one
- They have been reported to the authorities
I hope this helps those who are aspiring to become network marketers. Always research and get a lot of information before joining an MLM company. Here in the Philippines, it's easy to create a company and you only need proper connections in order to do that. Let's always be vigilant and use your knowledge so that you can avoid getting scammed in this industry.
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