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Product vs. Service Based MLMs: Which is Better?

Aug 20, 2008
What I'm about to tell you is extremely controversial and it might even make you angry. But if you are thinking about joining a network marketing business and you want to significantly improve your likelihood of success, you need to join a product-based company, not a service-based company. (Service-based network marketing companies sell monthly service subscriptions such as legal services, phone services, Internet services, medical services, etc.)

Service-based network marketing company associates may violently disagree with me and point to all the millionaires from their company. I'm not saying it's impossible to succeed in a service-based network marketing company. I'm saying that if you are selling services through MLM you're leaving hundreds, even thousands, of dollars on the table!

Why? Because for the same amount of effort it took you to sell a single $19.95 monthly service, you could have sold many hundreds of dollars worth of products. With a service-based business, your customers couldn't buy more of your services in any one month even if they wanted to. All services are a flat rate, usually monthly. With products, your customers can buy hundreds or thousands of dollars worth of products depending on their needs or desires. If you want the same amount of sales in a service-based business you'll need to find a lot more customers.

But not all products in product-based network marketing companies are created equal. Some products are much more consumable than others. For instance, there's a famous network marketing company that offers very high quality soaps and cleaners. "Where's the problem?" you might wonder.

Well, these products are so super-concentrated that it might take customers months or even years to consume one bottle. That's very economical for the customer but it's a disaster for you if you're interested in creating consistent monthly income for yourself. You need products that get consumed entirely every month--and nutritional supplements are the best products for network marketers because of that very reason.

Nutritional products are highly consumable and if they are effective your customers will want to buy lots of them to consume for themselves and share with others. That's probably why the company I mentioned before with the great soaps and cleaners focuses so much attention on their nutritional products!

Another advantage products have over services is your customers are much more likely to experience a dramatic and emotional response to highly effective products versus even the very best services. Think about it: if your customer takes a product and it makes them feel better, gives them more energy and even helps them lose a lot of weight, they're going to have an immediate positive emotional reaction. They'll tell their friends about the great new products they found which translates into more referrals for you or even a new associate if your customer is business-minded. Plus, that emotional response creates a pleasurable bond between the customer and your products, increasing the likelihood of long-term brand loyalty.

But let's say it's a fantastic service instead. It's a great legal service, or Internet service, perhaps. Your customer saves money and they get a service that would be very hard to find elsewhere. While your customer is very satisfied with the service and may even be proud of themselves for saving money, there's no emotional response. It's a lot less likely that your customers will go out of their way to recommend your services to others. As far as brand loyalty, without an emotional response your customers are much more likely to switch to another brand if they find one that can offer the same or similar service at a better price or with better perks.

To summarize, product-based MLMs are better because your customers can buy hundreds or thousands of dollars per month of your products plus if your products are effective they will create a positive emotional reaction with your customers. Neither of these are possible in service-based MLMs.

Being successful in network marketing can be challenging whether you're in a service-based or product-based company. And like I said earlier, there are lots of millionaires in service-based MLMs. But if you plan to join a network marketing company, you want as many advantages as possible. That's why you need to seriously consider avoiding service-based MLMs and join a product-based MLM instead.
About the Author
Marc Menninger is a professional networker. He runs the website Top Network Marketing, http://www.TopNetworkMarketing.com/ where you can read the free report: "The 7 Characteristics of a Top Network Marketing Company".
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