How do people make money in network marketing? What is the differentiator? That special element? The secret sauce? The magic bullet? Why is it that some people achieve high levels of success in direct sales but so many do not? Is network market just for the chosen few? Well, if you ask the vast majority of the population, mostly the uninformed/ignorant, they will tell you that the only people who make money in MLM are those who get in early. And popular opinion among the masses also believes that only the “chosen few” make it to the top. Now, there is “some” truth to both statements but remember that truth can be distorted to perpetuate a narrative. Satan, himself, misused the scriptures in his pursuit to tempt Jesus.
When a company is in pre-launch, it is exciting to get in on the ground floor. If you are able to plug-in early to a great concept, there is certainly an opportunity to build something quite massive. Now, the dilemma is trying to discern what’s real and what’s hype. We’ve seen lots of great companies come in with great anticipation and build up.
Remember Solavei?
I had a buddy of mine tell me this company was going to revolutionize mobile technology. Solavei emerged on the scene with quite an impressive list of investors and celebrities who were endorsing the company. The CEO, Ryan Wuerch, had put together an incredible team, and they had a lot of momentum coming out the gate. As I was working and building my own business, my friend kept dripping the Solavei idea, and I must admit, I was curious about the whole social commerce platform that included the rollout of the Solavei Marketplace.
What Was the Solavei Marketplace?
To be eligible to benefit from the Solavei Marketplace, you just had to be a customer of Solavei’s Mobile Phone Service. You, then, just needed to sign up to be a Social Member (No charge) and you were all set up and ready to go shopping with your Solavei Card to benefit from Solavei’s Marketplace Rewards, It was really that simple.
Then the savings were supposed to begin, When Solavei social members used their Solavei Card to make purchases at local participating retailers, they were supposed to receive cash back on their Solavei Card to be paid out the following month. The cash back savings would then be put on their card every month as long as they had at least $5.00 in cash back savings for that month’s pay distribution. The concept sounds very appealing to people who are simply trying to figure out a way to monetize what they are already spending. The holy grail of residual income is just that. Start earning money from your own every day purchases but also create an eco-system that allows you to receive override commissions from everyone on your team and in your customer data base. That was the idea, and it was a good one. One year after the launch, Solavei posted impressive growth numbers, attracting 250,000 members while running on an annualized revenue run rate of $67 million as of October 2013. So, why did Solavei fail?
When a Company Over Promises
Businesses often make the mistake of over promising and under delivering. Sadly, we have seen this play out in network marketing many times, and we saw this with Solavei. Ryan Wuerch the company founder and CEO made this statement back in 2012 when the company launched. “We are going to make a difference in people’s lives by shifting billions of dollars from traditional mass-media advertising into the greatest advertising vehicle today – people. Solavei is the first company to create an economic linkage between mobile service, social commerce and social-networking technology.” Solavei had an ambitious and laudable plan. The company founder had great ideas and made promises to add services in the coming years, but he simply was not able to deliver on what he promised. Then, Solavei went down the road of no return in direct sales when they changed the compensation plan several times to the detriment of the representatives.
The Future is not Bright
When a company talks about the upcoming launch of a product or service, this is called futuring. Many successful companies use this marketing strategy. Apple, for example, is constantly selling its customers on what the next iPhone is going to look like and offer. Apple has earned that trust in the market place because they have a positive track record of delivering. There’s nothing fundamentally wrong with futuring if your company can deliver. Unfortunately, I have witnessed, first-hand, companies in network marketing hype up the launch of a product, service, or initiative to drive the behavior of the field reps. Representatives go out and recruit other distributors and customers based on the promises of what’s coming down the road. In essence, these reps put their own reputations on the line because they are validating the integrity of the company and its leaders. When a company’s leaders go on record and talk about where the company is headed, and then they fail to deliver on those promises, this is, most often, the beginning of the end. We witnessed this with Solavei.
The Trust Differentiator
Stephen M.R. Covey author of the book Speed of Trust, which I highly recommend, talks about what I refer to as the trust differentiator. Businesses achieve success because they are able to cultivate a climate of trust in the market. Chick-fil-A is a trusted brand. No matter where you travel in America, if you drive into a Chick-fil-A, you will get high-quality food and friendly service in a timely manner. I’ve never been to a Chick-fil-A that didn’t deliver, and that’s why the company is successful. Dr. Covey refers to this intangible as the trust dividend. When trust goes up, speed goes up, and costs go down. In other words, when your company builds itself as a trusted brand, the people in the organization work harder to build and expand the brand, and that in turn, makes the company more successful and profitable. When trust is compromised in the market, it’s difficult to rebound in this 21st century instant information age.
I’ve never met Ryan Wuerch, but to be fair, I believe he is a good, honest man who sincerely wanted to impact people in a positive way, and it just didn’t work out. In a video he recorded to announce that Solavei was shutting down, he stated, “I wanted to build a company with people that I like, love, and trust.” To Wuerch’s credit, Solavei built a company to over 400,000 customers and paid out over $35 million in commissions.
The purpose of me writing this article was not about rehashing the past or impugning the reputation of anyone. It was simply to point out how critical the commodity of trust is. As I have witnessed the rise and fall of numerous companies over the passed 10 years, the common denominator of every company that failed was the same–trust was broken. Either trust in the market place with consumers, trust in the field with the represenatives, or trust with regulators. As Dr. Covey stated in his book, when trust goes down, cost goes up.
Before plugging in with a company, make sure you are in a community that, above all else, values cultivating a climate of trust and transparency. Because at the end of the day, your network is your net worth.
To your success!
Bill Garner
Founder Abundant Path Consulting
