Over the past month or so I’ve been talking to people that are members of various network marketing opportunities. I’ve noticed a common thread in their situations that is directly related to their success, or lack of success. I’ll get to that soon, but first I want to explain how tiered commissions work with network opportunities.
With network marketing opportunities it’s typical for you to “buy in” at a certain level. The prices for these levels vary widely between the various networks. From trial subscriptions that cost just a few dollars per month, to top tiers that require investments of $30k or more.
The level that you buy in to is your “Position” and it dictates the commissions that you make when you sell a membership for your company’s network. Lower positions make lower commissions. Higher positions make higher commissions.
Does that all makes sense?
Most networks are also two- or three-tier networks. This means that you make some commissions when someone on your team (your customers) makes a sale.
Here’s where it gets interesting.
For you to get your sale, you need to bring traffic to your affiliate pages. Now, you could try to get organic traffic. Maybe from your blog or from Facebook posts. But that will take forever and may not work at all. So you do what we all do. You get paid traffic. Solo ads for example. To buy traffic like solo ads you need money, and you probably want to stay within a budget.
Still with me?
Let’s look at three hypothetical scenarios where you have a budget of $16,000.
- You position yourself for $15k and qualify for top-tier $3000 commissions. You spend your remaining $1000 on 1500 clicks. Assuming a 1% sales conversion rate you get 15 sales at various levels that you’re qualified for. Most will be the lowest level. Maybe some are mid-tier. There’s a chance that one or two could be top tier, but it’s not likely at that low volume. Just to break even on $16k investment you’d need to average $1066 per sale. (16000 ÷ 15) And since you’ve spent your budget so you can’t buy any more traffic.
- You position yourself for $3k and qualify for $1000 commissions. You spend your remaining $13,000 on 20,000 clicks. Assuming a 1% conversion rate you get 200 sales at various levels. Most will be lowest level, but since you’ve made 200 sales your chance of making the $1000 mid-tier commission is much higher. To break even on your $16k investment you need to average $80 per sale. (16,000 ÷ 200) Totally possible, if not very likely on 200 sales.
- You position yourself for $47 per month for three months and qualify for $33 commissions. That doesn’t sound like much. You spend your remaining $15,859 on 24,000 clicks. Assuming the same 1% conversion rate you make 240 sales. To break even on your $16k investment you need to average $66 per sale. (16,000 ÷ 240) Not possible since you only qualify for $33 commissions.
Now I want to you analyze these three scenarios. Which is the most likely to make you a profit? I don’t care about revenue or total sales. I’m talking about profit.
I know people in scenario 1. They’ve spent over $15,000 to position themselves with their company but have only sent 1500 clicks to their offer, and now they’re broke. They didn’t even break even, and are actually thousands in the hole.
I also know many people in scenario 3. They’re spending money on traffic, but they’re not making a profit because the commissions are small. But at least they aren’t over-invested and can stop their ad spend if they choose to.
My vote is for #2. This scenario is a balance between commissions and ad spend and has the highest chance of turning a profit.
Of course I’m making assumptions here about costs and commissions. But I hope you get my point.
Your position and commission potential don’t matter if you don’t have money to spend on traffic. And all the ad spend in the world won’t make you a profit if your commissions are too small.
Before you jump into an opportunity, or decide to upgrade in the network you’re already part of, put some serious thought into your choice.
Get all of the costs and commissions for the network. Research traffic prices. Run the numbers. Run them again. Make damn certain that your decision is the right one for you.
If you do all of that and it makes sense, then great! Go for it! At least you’re going in with your eyes wide open.
If you want to be in Scenario #2 I can help. I have access to the right networks, with good commission to investment ratios. I can help you get good traffic to make those commissions.
I can help you with your sales funnels, your pages, your email campaigns, tech stuff, and a myriad of other things that you need to make your business successful. Schedule a call with me and I can show you how it’s all possible.