Are Top Tier Programs a Viable Alternative to Traditional Network Marketing?
This is a tough one. Ninety percent of sales in the direct sales arena flow from traditional network marketing companies. Yet in recent years we’ve seen the growth of non traditional so called top tier programs.
Before I continue let’s have a look at the 2 types of programs.
Traditional MLM Explained
When I say ‘traditional’ MLM I mean it both ways:
Traditional Product Offering. Invariably a traditional mlm company will market a product that is consumable. It will also be priced in the lower price range, typically under $100 for a single unit.
Traditional MLM Commissions. You don’t have to be a genius to know that a product that sells for say $50 is going to require a lot of sales in order for a rep to make a full time income. But it’s not just the low unit cost of products that affects a reps ability to make money fast. It’s also to do with the nature of the compensation plan.
A true mlm structure splits the available margin amongst many people in the upline as well as, of course, the person who actually did the business. The emphasis is on override style commission rather than ‘retail margin’, therefore the bottom line is that unless you build a large network of reps you ain’t gonna make big money. It takes time to build a network of thousands of people – which is a process that can’t be rushed.
Traditional Marketing Methods. Traditional mlm’s will typically also endorse and teach traditional offline sales methods such as make a list, networking, bumps, flyers, sizzle cards and the like. Life for a traditional network marketer revolves around face to face presentations and weekly meetings.
Some online marketing gurus such as Ann Sieg and Mike Dillard have said in the past that these offline marketing methods are dead and that online is the only way to go. But nothing could be further from the truth. If 90% of total sales volume derive from trad mlm companies, then we can safely assume that 100% of that volume has come from offline methods. Just do the maths!
So offline still works great, but the point is that not everyone likes the offline ways. In fact some are repelled by it!
However, here is the reality. Many of the traditional companies frown on the use of online marketing methods, although some are ok with reps using social media sites such as Facebook to locate prospects.
Some reps can’t understand why their company does not allow online marketing methods to be employed. They think their company is wrong and sometimes try and fight it. So who is wrong – the company, or the headstrong rep who think his company is behind the times?
Well if you are one of those reps I have bad news for you. You are wrong, the company is right.
Here is why:
Online does not duplicate. Pure and simple. Online is complicated and complication is the enemy of duplication. On the other hand, offline – though sometimes ‘hard’ – satisfies the simplicity test no problems. Simplicity rules – EVERYTIME.
(Clarification: when I say online does not duplicate, what I really mean is that it does not duplicate as well as offline methods)
I know I am rambling a bit, but read on, and see the method in my madness!…………
Top Tier Explained
Top Tier Products. Top tier programs offer products that are by definition ‘top tier’. In other words they’re priced in the upper range. These big ticket product are one offs – no consumable aspect. Main product categories that top tier programs occupy are personal development, wealth education, and travel (my fav). Entry level products in top tier might be $500 to $2,000, with the top of the range variants coming in at $10,000 – $15,000.
Top Tier Commissions. The downside of marketing top tier big ticket products of course is that you cannot typically expect to build a residual type income. But here is the good news – the commission for the here and now sale can be spectacular. For example if someone was to purchase a home study program from a personal development company, the commission for the rep might be $1,000.
Moving further up the scale if someone was to buy the full box and dice (that is, all the products on offer), the commission might be as much as $15,000!
A key point is that – unlike mlm – the person who does the business gets the lion’s share of the margin – typically 50% or more. In my top tier company, the margin is split 3 ways – 50% for the seller, 25% for the upline, and 25% for the company. Simple.
Some say that making a big commission now is a poor substitute for building a long term residual income. But the counter view is that few people EVER build a significant long term residual income, so why bother?
Another point is that by you working with a traditional mlm you are taking a punt that the company will be in business in 5 years time. If the company goes bust, all that work you put in to build your hoped for residual income, will be lost for all time. So sad.
In a nutshell, top tier is all about Get Paid Today (GPT), whilst trad mlm is very much a delayed gratification type of deal.
Top Tier Marketing Methods. One of the nice things about top tier is that top tier companies will invariably allow, indeed encourage, reps to embrace online methods.
As duplication with top tier is typically not as good as it is with trad mlm, the duplication issue with online is not so much of an issue – but get paid today makes up for lower duplication rates anyway!
Top tier is more like a direct sales/affiliate marketing program than it is a network marketing program.
I’ve been working in the top tier arena since 2006, and during that period have generated thousands of leads online. If I had joined a traditional mlm program it is probable that I would not have been prevented from used online methods, which would have meant reverting to old style methods. Yuck.
Another Advantage of Top Tier. Top tier programs do not demand unswerving loyalty to the trad mlm company god. They are usually comfortable with the rep developing other income streams – online of course! In fact some of them encourage it. This is very good news – it’s jot healthy to put all your eggs in one income basket.