“They all pressure me to sell it wholesale to my customers, but there’s not enough money in the product sales at that price to make it worth the effort. My upline and everyone around me tells me if I don’t do that, someone else will undersell me. So I don’t know what to do. I really don’t want to recruit. And I love the product.”
Lulu was telling the group today why she couldn’t get herself to do customer acquisition in her company, as a strategy for regular, residual income. No money in it.
She hadn’t reached a high enough level to earn enough off the wholesale customers yet, so the margins on her wholesale product sales go to her upline.
What would you advise Lulu?
I would make her realise that Network Marketing is not about selling, its about making people realise the value of the product and how it can be beneficial for them. Key to success is not convincing but making them realise. Thank You!
Tarun Trikha
President
http://www.cashyourpassion.com
Interesting dilemma. My thoughts:
* Reps always have the flexibility to sell at whatever price they choose. If a MLM company mandated what their reps sell at, it would be considered price fixing.
* The upline has a good point, though. If one rep sells at $50 and everyone else is selling at $40, it might be difficult for the $50 rep to maintain long-term customers.
* Ultimately, if people are willing to pay retail from a rep (because of great service, etc.) then what is the problem with that? Did Mary Jane Medlock sell at retail or wholesale???
* I don’t understand why an upline would be concerned about a rep selling at retail. Are they worried the rep won’t sell as much?
* Just because someone loves the product madly, doesn’t mean it is the right MLM company to be in. If the pay plan is not aligned with how you can or want to operate, it will be very difficult to be successful. For example, I’ve be a loyal Shaklee product consumer for about two decades, but I’ve never been interested in the company as an opportunity.
* If I were the CEO and heard about this situation, I probably wouldn’t do a darn thing. A CEO is going to cater to those reps who bring the most volume to the company, and those area almost always the aggressive business builders.
— Walter (from Appleton, WI)
Walter@NMC
http://www.NuOpportunity.com
I always give the person who wants to buy the products three options:retail,wholesale,and auto-hip.
I let them decide what is important for them.
I am the CEO of my business, I am my own upline.
em99_9@yahoo.com
Like we teach at Mentoring For Free, Business Models Drive the Behavior in the Field. When a company charges $39.95 wholesale and $79.95 retail, this drives the behavior of recruit, recruit, recruit. Ask your company to provide numbers. What percentage of people are actually retailing the product? If the retail price is so much higher than wholesale, do YOU make more money on retail customers? You should.
Most NM companies charge a higher price for retail. Not all, but most. Unfortunately, if your retail price is close to double the wholesale price or more, the behavior that your upline is promoting is what works with your business model. I know of quite a few NM companies where no one ever buys retail. That is because the company is structured so you can’t really sell your products. You must get them “into the deal” to be a rep.
Lulu needs to look at what SHE wants to do. If the company she is in is not structured properly for her to retail and she wants to retail, maybe it’s time to look for a new home that will allow her to do her business the way she wants to do it.
Roxanne
If you can’t sell your product at the retail price, then you don’t really have a marketable (remarkable) product.
If Lulu is getting pressure to sell at wholesale, then Lulu is probably with the wrong company.
If you can’t sell your product at the retail price, then you don’t really have a marketable (remarkable) product.
That’s not necessarily true. Retail is often used as a mechanism to “create value” for the customer. For example, clothing is almost always marked down. I can’t remember the last time I paid retail for a pair of pants.
When a customer buys from me at wholesale, it is a win-win. They get a better price and I still make a good commission.
The problem is when you can’t find someone to buy at retail and you don’t make much of a commission at wholesale.
— Walter (from Appleton, WI)
Walter@NMC
http://www.NuOpportunity.com
Walter said:
When a customer buys from me at wholesale, it is a win-win. They get a better price and I still make a good commission.
And in my opinion that is the key to a good marketing plan.
There is a good (say 20%) margin for a retailer AND a decent margin (preferably on all sales) for where it is more appropriate for the customer to buy at wholesale.
In our company we differentiate between retail and wholesale customers by connecting the wholesale customers directly to the company.
And there is no pass up of commission upline.
If there is no money at all in selling at wholesale because of volume requirements, and there is a company ethos of selling at wholesale to what are in reality retail customers, then that seems like a plan to be avoided.
Shelagh Jones
http://www.ilovenetworkmarketingnow.com
I agree wholeheartedly with Ty’s comments.
If NO one would buy your product at the retail price – then it may be time to reevaluate her company and the products.
One of the downfalls of most product based companies is that the average joe on the street wouldn’t walk in to a retail store and pay the $79 for that widget. He MAY pay the wholesale price of $49 – but he doesn’t want the committment, etc.
With each retail customer that I get – I am more and more thankful that my company has the wisdom to price our RETAIL in line with other gourmet candles on the market. I give my customers the option of purchasing wholesale too – but it is THEIR choice. They know they are not getting gouged on my retail price and are quite happy.
The retail proft is almost 100% with my company – so the benefits of selling retail are fabulous!
Having a fantastic product, at a fair price, with honest distributors is what will keep this industry thriving for years to come.
I gotta go with Ty. If you have to “Achieve” a certain level within a company to maximize your own retail capability, RUN FAR AND RUN FAST!
That company is NOT meant for the 80% that typically make up a Network Marketing sales force. It’s way too top heavy!
Jackie Ulmer
http://www.streetsmartwealth.com