How MLM businesses grow
by John Counsel
Exponential growth is typical of network marketing, for both individuals and companies, for a couple of reasons:
- The more we do something, the better we get at it and the faster the results begin to happen.
- As we duplicate ourselves through sponsoring and training, we accelerate our rate of growth.
You can read more about exponential curves here.
Network marketing growth curves are invariably an “S” curve, like in this illustration. But there are two ways they can develop…
What tends to happen is this…
Stage 1: We start out slowly, getting used to the new business, the products, the reward plan, etc, finding customers, finding and approaching prospective distributors — all of which takes time and effort until we gather the knowledge and skills we need to do it all better and faster.
Stage 2: We hit “critical mass” — the point at which the growth curve begins to sweep upward at a steeper rate. This exponential rate of growth continues as our people also acquire the necessary knowledge and skills and begin duplicating.
Stage 3: After a period of exponential growth, we reach another point of critical mass where that growth rate becomes unsustainable, for any number of reasons, including drop outs, people losing their “drive” (usually because of either discouragement over not achieving their goals, or, if they do achieve them, they get “comfortable” and stop growing).
Stage 5: The growth curve settles into a lower rate of climb that reflects our continuing growth at a reduced, but steady, rate.
It’s not unlike an airplane’s take-off — the flat curve as it gathers speed along the runway, then the slow upward sweep as it powers its take-off, the steep rate of climb to cruising altitude, then the flattening out as it begins its journey to its destination.
Problem
Too often, that ongoing growth doesn’t happen. Instead, the curve turns into a classic “bell curve” reflecting a downturn caused by any number of possible reasons…
- Flawed compensation plans.
- Management inexperience or incompetence.
- Greed resulting in changes to the reward plan and distributor disenchantment.
- Manipulative methods used by network leaders.
- Realisation by the network that only “heavy hitters” can make really high incomes — that part-timers are being exploited to provide “leaders” with luxury lifestyles… that the “Dream” has turned into a nightmare.
Do your homework.
Check the patterns of growth for both the company and the distributors before you commit to join ANY network marketing opportunity.
©1998 The Profit Clinic. All rights reserved. This page updated 1 October 2005.
