Which is Better, Product Or Service MLM Companies?
This is one of the fiercest (and most childish, in my opinion) debates in network marketing, and I feel the need to address it head on for two reasons.
The first and most important reason is that infighting between network marketers for the sake of making their individual home-based business opportunities look superior is silently one of the biggest cancers that attacks the credibility of all of network marketing as a whole.
The second reason is to provide some clarity for those unfortunate prospects and/or distributors who may have been confused, misinformed, or misguided (probably a mix of all three) by this catty nonsense.
Here’s the simple answer: it really depends on YOU. What inspires you, what jives with you, and what you feel most comfortable with.
Contrary to its notoriously cookie-cutter image, network marketing is one of THE most customizable home-based business opportunities —- or businesses period that has ever existed, which is one of the things that I absolutely love about it.
So now for the longer answer.
The first time I personally caught wind of this little debate was about 10 years ago when I had started my first home-based business in MLM. It was a well-respected service company that is still going strong to this day.
A leader from the front of the room was making a snide, tongue-and-cheek remark about how he didn’t want to “sell lotions and potions or fill up the trunk of his car with products”.
I really didn’t think much about it at the time. I was one of the flock, and what he said made perfect sense to me. The more experienced team members that surrounded me nodded their heads in agreement like pew-sitters in a Baptist church.
(It was much later that I would find out that almost NONE of them were making any real money after YEARS in the business—but that’s another article!)
So, my first impression on this whole issue was formed: service companies were the way to go, and product companies were absurd, laughable affairs where you had to carry a trunk full of stuff.
This was my way of thinking for years—until I joined a product company!
I can’t speak for ALL companies (neither product nor service), but here are just a FEW startling comparisons between my first two companies—one product, one service.
1) The biggest eye-popper was the fact that in my first product company, people were making bigger checks with much smaller organizations.
The #1 money earner (my upline) at that time was making about $100,000 each month (I saw his checks with my own eyes). He had 1,000 distributors and 10,000 customers in his organization.
The leader of my former team (in the service company) was making about $30,000 each month. This guy had at LEAST 10,000 distributors and tens of thousands of customers.
My jaw dropped when I realized this.
2) In my product company, it was easier for me to help others be successful.
In the first service company that I was in, you’d never make any decent money unless you were able to recruit large numbers of people into your business.
So what about people who weren’t that good at recruiting?
In my first product company, I noticed that each time me or one of my distributors got an additional customer, that equated in several additional dollars in RESIDUAL income.
In that company, I was making $100 per month in residuals with just 16 customers. In my service company, I had 20 customers and made about $5 in residual each month.
In my service company, your residual never amounted to much unless you had a huge organization that was at least 6 levels deep.
The problem with this is that most people will NEVER see 6 levels in their organization. And in home-based business it is critical that people make enough money to keep them in the game until they either “wake up” and start producing, or eventually recruit a superstar.
3) There was a huge difference in the attrition rate.
Because almost nobody made CONSISTENT money in my service company (recruiting bonuses don’t count. These are promotional. In network marketing, the only income that REALLY matters for longevity is a residual check from real customers), the attrition rate was the typical 90% that exists in MLM.
In my product company, that attrition rate was much closer to 50%-60% percent.
4) The people that I brought in made more money
This was what struck me the most. Due to where I was mentally at that time, I never had much success in that product company due to my own unwillingness.
However, I learned THE most valuable lessons of my entire network marketing career.
One of them was that I noticed was that due to the compensation plan, EVERY person that I ever brought in made money—that was not the case with my service company.
Because of this, even when people quit, none of them could say that they had not made money and this helped to not put a strain on my friendships as people decided not to do the business anymore.
Now, please understand that this is NOT a cheerleading article for product companies vs. service companies!
I am comparing two very specific experiences from two companies that I have personally done business with.
If you were to choose a random service company and a random product company and compare the two, you would find a great deal of variation as far as which one was “better”–and that is my point.
There is no “hard and fast rule” of “which is better” when it comes to the service companies vs. product companies debate.
As a matter of fact, as soon as I hear anyone, and I do mean ANYONE going in the direction of making the argument one way or another I immediately know that i am dealing with an amateur that does not get the bigger picture of the network marketing home-based business world outside of their company.
So should you.