Wednesday, May 28, 2008

MLM Lead Scam Revealed - Part 2

In "MLM Lead Scam Revealed" I showed what's really been going on in the leads sales industry. Now I'll share my own story into this shadowy under world.

Since the dawn of the internet age the MLM lead sales industry has built fortunes by bamboozling would-be entrepreneurs into believing the only proven system for success in network marketing is buying leads & then making hundreds of calls a week to get new people into their deal. And some industry leaders have joined the fun by making "deals" with those leads companies.

Here are two truths about MLM & the leaders in it.

1. You must have a proven system for success to build your business & team. Contacting over-sold leads is a proven system for failure for most in MLM.

2. A MLM "leader" has experience with integrity. Even super recruiters can't duplicate their success ... but they won't tell you that.

My personal MLM lead scam story.

After I joined a MLM company a fellow rep, living in my area began promoting a lead sales & auto-responder system. She was having "success" with this system so many of us started using that system. Let's call that system BamboozleBiz.com.

What few in our company knew at the time was BamboozleBiz.com had discretely contracted this woman as a spokes person & trainer.

Many reps in our company bought hundreds, even thousands, of dollars worth of BamboozleBiz.com leads& spent countless hours training to learn how to use the auto-responder system & the phone scripts. Some even went to high-ticket seminars for additional training.

I never had any success recruiting with these leads & had come to the conclusion I'd just not spent enough time & money on the training to make this system work. And of course, I hadn't even considered going to those seminars for that additional training the "real leaders" participated in.

This lead system trainer had set up a weekly training session at a local restaurant. One day while at one such meeting one of our number showed up late only to announce he was dropping out of the company.

When asked "Why?" he told us he'd spent more than he could afford to & was there to sell off the last of the BamboozleBiz leads he had in an effort to cut his losses.

Needless to say those leads were bought up immediately by one of the "real leaders" at our table. I still remember the look of serene resignation on the face of that trainer as she bad this poor fellow good-bye & good luck.

As the man walked away, his shattered dreams leaving a pool of blood all over our table & our hearts, an uneasy feeling began to grow in the pit of my stomach.

Time passed & I dropped my BamboozleBiz subscription & that MLM company to follow my sponsor to something else. Then my sponsor told me that the woman who had set up those local area meetings to help us learn to use the BamboozleBiz.com system had made a deal with that leads company.

That knot in my stomach exploded into vapor! To put it mildly I felt betrayed.

While it was true this woman did build a team of her own within the MLM company my sponsor & I had just left, it is also true that she was passing herself off as a mentor who was helping anyone she could out of the goodness of her heart.

What an actress!

The truth is that woman was raking in a handsome income from the sales of BamboozleBiz.com leads. And at the same time she was stepping over the carcasses of those who could not duplicate her success as they could not duplicate that "deal".

Several years later I heard that this same woman who had made that "deal" with BamboozleBiz.com had started her own MLM business. I couldn't help but wonder how big a factor that "deal" played in helping her fund that new company. Hmmm ...

So, do you think hers is a 5 Pillars company?

HINT:

Pillar #1 is "Company Management Experience With Integrity", and Pillar #5 is "A Proven System For Duplication."

You do the math.

I appreciate you,

Bill Tessore

Monday, May 26, 2008

Your Dream - It's More Than Just YOUR Future.

The author of "Think And Grow Rich", Napolean Hill, once said, "Thoughts are things." Throughout millennia people have used the power of thought to develop visions of the future (dreams) as they saw it to speak that reality into existence.

Dreams are powerful things. You want examples? Look at the lives of these dreamers:

The men who signed the Declaration of Independence
Dr. Martin Luther King Jr.
Jesus Christ
Gahndi
Henry Ford
Howard Hughes

I could go on, but I think you get the picture.

A vision to change the world has common roots.

There are 3 things each of the above shared in common:

1. They had a dream, a huge dream that reached far beyond the self.
2. They never allowed their dream to be stolen by anyone or anything.
3. These first two acts empowered them to impact countless millions ... even after their deaths.

Will you hold on to your dream? If not, if you let someone or something steal your dream from you, then rest assured you will not be the only one to lose.

Listen to Will Smith in a clip from "Persuit Of Happieness". I think Will puts it very well.

Bill Tessore

Thursday, May 22, 2008

MLM Lead Scam Revealed!

Have you ever bought leads before? Did you spend hundreds or even thousands of dollars, and countless hours setting up an auto-responder and learning scripts with endless scenarios designed to "lock them into your mlm business quickly"?

How'd that work for you?

No, don't tell me. Let me guess.

You spent more than you could afford because your sponsor told you that one such batch was just not enough. You had to go for the big numbers.

To justify this you were told those were "top quality leads", or "highly qualified opportunity seekers".

Then you spent hours on the phone, script in hand, only to find out 99% of them didn't have a clue what you were calling them for.

Worse yet, some knew exactly what you were calling for and had a script of their own to blast you with because 12 other people just like you had already called them that day.

Or maybe you used an auto-responder, plugged those thousands of leads into it and then waited for the flood of responses.

Yah, you got a flood of responses alright … mostly bad emails and irate "REMOVE ME" messages. Maybe you were even threatened with a spam charge or two.

Finally, in frustration you called your sponsor, or the lead company to see why this wasn't working only to be told, "You didn't buy enough leads", "You didn't call enough people", or "You didn't follow the script closely enough".

The bottom line is it was "all your fault".

Sound familiar?

Well, let me assure you it was not your fault. You were lied to.
How does that make you feel?

You're not alone. I know 11 people just like you that went through the same thing.

Listen to what they have to say about the MLM Lead Industry Scam.

They're just not worth the price.

Here's three facts you can count on about purchaed leads.

1. Buying leads is a sure fire path to failure in MLM.
2. No one but the lead company and the jackals they get to promote them makes moeny from MLM leads.
3. Very few people ever sponsor anyone using purchased leads, and they can't find anyone to duplicate what they do.

To survive in MLM you must generate your own leads, build a relationship with those people, and teach them to do the same.

Are you one of the 2% that likes selling? Keep dialing for dollars. Maybe you'll get lucky.

If you'd rather talk to people who want to talk to you, then you need a system that brings them to you and won't break your bank account.

I appreciate you,

Bill Tessore

Tuesday, May 20, 2008

6 MLM Business Mistakes The IRS Loves

The IRS lives to find money people leave on the table. You know it, I know it, the IRS knows it. Unfortunately, some folks in the network marketing industry claim deductions they think takes that money off the table.

As they say in the Hertz commercial, "Well … not exactly."

The problem here is this usually gets the IRS' attention and the home business owner gets a love letter inviting them to sit down and talk about those "disallowed deductions" over a nice hot cup of anxiety.

You need a top tax guy.

In MLM many people, who are in a home based business to make extra money, rely on their sponsor or a relative "who did it once" for tax deduction tips. The fact is their information rarely qualifies as professional tax law info.

For this reason it's critical for anyone in MLM to know how to present their tax information to the IRS in a way that is both legitimate and most advantageous to their home business income bottom line.

So, the smart entrepreneur looks to experts in the tax industry to fill that need. And, of course, I rely on just such a "tax guy" for my tax information needs.

In his May 16, 2008 issue of "Tax Tips You Can Bank On" Mr. Mueller shared his thoughts on the tax deductions that scream to the IRS, "I want to be audited!" Here they are:

The Top-6 "Audit-Attracting" Deductions

1. The IRS hates estimates:
Even if a tax deduction actually does come out to an even $500, you might want to change it to $497. Even though $500 may BE precise, $497 LOOKS more precise.

2. Your "Business Use of the Home" deduction:
This should include ONLY the portion of your home used regularly and EXCLUSIVELY for business. If you claim your bedroom, be prepared to prove that you don't sleep. If your Business Use Percentage (BUP) is greater than 10-20% you might want to attach an explanation, using IRS Form 8275, "Disclosure Statement."

3. Personal vehicle used 100% for business purposes:
If it's true, claim it. But if you claim it because you have a sign on your car, that does NOT make it automatically 100% deductible. A "wrap" doesn't do it either.

4. Paying your 8-year-old $100 a week wages as a business employee:
A minor CAN earn up to $5,450 tax-free, but the wages you pay must be "reasonable and appropriate," given their age and type of duties they are performing. (Also, be sure you are following all the steps listed in Chapter 6 of "It's How Much You KEEP, That Counts! Not how much you Make.")

5. Claiming a home-office for a W-2 job:
This can work, BUT it has to be for the convenience of the employer (your boss), not the employee (you). To survive an audit, have a written,signed statement from your employer (on letterhead) stating that you are REQUIRED to have a home-office.

6. Auto-ship or ADP:
If your company's product is nutritional, claiming that you must be a "product of the product" won't pass muster with an auditor. There are other ways to potentially deduct autoship, so don't use this "product of the product" one.

This is just as important as any mlm training you can offer.

In MLM it's important to know how to build a team, train them, and retain them … but unless you're a tax expert willing to give away your time and knowledge to that team, then you also need to give your team access to real professional tax help.

There are a few experts in MLM tax law, and you may want to look for them too, but here's a really good place to start.

Ronald R. (Ron) Mueller, MBA, Ph.D.
Author of "It's How Much You KEEP, That Counts! Not how much you Make".

If you've always dreamed of getting up-close and personal with an IRS auditor, then just ignor the above. Who knows, you might make a friend.

However, if you want to be sure you're IRS bullet proof, then you must make sure you know what you can and cannot deduct. Folks like Mr. Mueller can help you and your team with that.

I appreciate you,

Bill Tessore

Tuesday, May 13, 2008

MLM Comp Plans - Aussie Two-Up Breakage

In MLM Comp Plans - The Beloved Aussie Two-Up we saw why this compensation plan is so popular with some network marketing companies. Now let's bounce on over and take a look at how they create breakage down under.

I tell ya kid that Joie is a wreckin' machine!

The two forms of breakage in the Aussie two-up makes this comp plan as brutal as boxing with a kangaroo.

The First Two Rounds
Your first two recruits automatically go to your up-line sponsor who talked you into getting into the ring. Oy! Score two rounds for the 'Roo!

The High Entry Fee
Naturally you have to buy the product to qualify to get a check. So besides going the distance with that slap happy marsupial you get to pay really big bucks for a product or service that can often be found elsewhere for much less … if not for free.

What are your chances of going the distance?

Most folks who choose a company with an Aussie two-up comp plan hear about the big commission checks and jump right into the ring. They don't know that kangaroo is the champion because 97% of all contenders rarely go that third round and get a personal downline recruit of their own.

The would-be entrepreneur who finds herself facing this brute from the Out Back now must try to get to that coveted third round because that's the only way for her to make a profit.

There are many network marketers out there who faced Joie and have only scars, empty wallets, and broken dreams to show for it. For those who survive this mlm nightmare with big Joie it's still a tough fight because now they have to find another hungry kid eager enough to face him in order to get a check.

Are you a network marketing Muhammad Ali? Then good luck kid, you'll need it. If you'd rather avoid a beating, get all the credit (and money) for your efforts, and not pay a fortune, then look for a company that will treat you right and help you go the distance for that long-term residual income you deserve.

I appreciate you,

Bill Tessore

Monday, May 12, 2008

MLM Comp Plans - The Beloved Aussie Two-Up

In MLM Comp Plans - The Stair Step Love Affair we saw what MLM companies find so attractive about the stair step breakaway compensation plan. Now let's see why some network marketing companies wish they could all be Aussie Two-Ups.

How an Aussie Two-Up works.

Let's say Bob is building his team with this comp plan and he recruits Sue. Sue's first two recruits go directly to Bob along with the commissions earned by Sue's sponsoring efforts. From there on Sue can start to earn a check and fill her own downline group in the same way.

So why are companies wall-eyed over the Aussie Two-Up?

The Big Ticket
Generally there is only one product or service with an extremely bloated price tag. (ex.: a marketing course sold for $2,000, and the company keeps half of that)

One-Time Sales
There's no pesky residual income to pay out.

Companies using an Aussie comp plan lure prospects in with large sales commissions, but they usually offer only one very high ticket, one-time purchase product. And since few people recruit more than 2.7 team members in their network marketing career it's easy to get upside down trying to work with this type of comp plan.

Do you live to recruit? No worries mate. Go beat the bush and have fun!

But if the Aussie Two-Up comp plan is too Out Back for you, then look for a company with a comp plan that won't kick you in the face and expect you to come back for more.

I appreciate you,

Bill Tessore

Friday, May 9, 2008

MLM Comp Plans - Revealing Stair Step Break Away Breakage

In "MLM Comp Plans - The Stair Step Love Affair" we examined why some companies adore the stair step break away comp plan. Now we throw back the covers to divulge the nasty secrets MLM companies don't want you to know about the breakage in their comp plan.

As mentioned in my previous post mentioned above there are non-manager and manager type distributors in this form of comp plan, and neither one is left out of the fun when it comes to breakage.

Here's how the company lays out their breakage fun house.

#1 and #2: Product Pricing
Companies make sure they pay as little as possible for materials and manufacturing. So the first form of breakage is in the "wholesale" distributor cost. Then distributors are given a "retail" cost for customers (usually 2 to 4 times higher than for the same product available at traditional stores like Wal-Mart).

#3: Qualification Hoops to Get a Check
I call this the "double work load" approach to breakage. Usually you need a minimum monthly volume (often called personal volume “PV” and group volume “GV”)

#4: Unrealistically High Bonus Qualification Requirements
Also known as "nose bleed" requirements, top recruiters get light headed keeping up with them.

#5. The “Break Away”
This "wife beater" is portrayed as "a good thing" because now the manager gets to continue earning on a whole new group's volume. Never mind the fact that this new override percentage can be as much as 50% to 60% smaller than the override on a non-manager's volume. People who's whole team have broken away simultaneously know the kind of "beating" this can deliver.

Here Is The Bottom Line.

The only one who comes out ahead with a stair step break away comp plan is the company owner. A few sponsor monsters make some money, but that's mostly just bragging rights. Outrageous prices, unrealistic bonus qualification requirements, and the “break away” feature all serve to choke out the rest of the field.

The only way to survive this type of comp plan is constant recruiting. The fatal flaws with constant recruiting are:

A. No one has ever had a team that can duplicate, and
B. Constant recruiting means residual income is impossible.

Can you recruit 3 people or more a day blind folded with your head under water? Great, then have at it.

On the other hand, if you’re one of the 97% of the world that thinks that's nuts, then I suggest you leave the self-abuse to those who like it. After all, there are a few companies out there that look for ways to reduce breakage so you can get a bigger check.

I appreciate you,

Bill Tessore

Thursday, May 8, 2008

MLM Comp Plans - The Stair Step Love Affair

In my last post "MLM Comp Plans - Uni-level Breakage" I revealed where breakage is in a Uni-Level comp plan. Now we’ll venture into the tawdry romance between MLM companies and the Stair Step Break Away compensation plan.

The early years of the twentieth century gave rise to many innovations; among them was the marketing concept of multi-level marketing. This brave new adventure gave birth to the granddaddy of all network marketing industry comp plans called the Stair Step Breakaway.

Here's how the stair step breakaway works.

A Stair Step Break Away comp plan has two types of distributors: managers and non-managers. Whatever the title, when a distributor achieves a certain performance level, he becomes a manager and “breaks away” from his original manager. Now the original manager receives a percentage override from the sales of the entire breakaway organization in place of her original managerial overrides.

How do companies love the stair step? Let us count the ways.


1. Retail vs. Wholesale
Up to 4 times what you'd pay at a place like Wal-Mart.

2. Qualification Hoops to Get Paid
A dog and pony show generally requiring 2 forms of volume (ex.: personal and group volume).

3. Astronomical Bonus Qualification Requirements
Titanic burdens that would bring even Hercules to his knees.

4. The "Break Away"
Almost like starting over from scratch, the override of a new manager's group volume can be up to 60% less than that of the personal volume override from a non-manager distributor.

MLM company owners love the Stair Step Break Away comp plan because the many forms of breakage makes it a very lucrative plan for them. The effect of the "break away", unrealistic qualification expectations, and ridiculous retail rates spells failure for all but the elite recruiting machines. Oh, and lest we forget, super recruiters never see duplication in their teams.

Are you a robo-recruiter? If so, then never mind.

However ...

If you’re one of the 97% of the world that can’t recruit at will, then I suggest bypassing the Stair Step comp plans in favor of something that rewards you for all your hard work instead of swatting you in the nose, throwing you out into the cold, and then tossing you a bone.

Bill Tessore

Thursday, May 1, 2008

MLM Comp Plans - Uni-Level Breakage

In "MLM Comp Plans - Why Companies Love Uni-Levels" I revealed why companies find uni-level compensation plans so attractive. Now let's move on to the breakage in a uni-level compensation plan.

Basic uni-levels have two forms of breakage.



  • Limited depth.
  • Product price.

Here's how limited depth creates breakage.

Let’s say you’re in a company with a 3-deep Uni-Level pay plan. You sponsor Betty, Betty sponsors Jim, Jim sponsors Darla, and Darla sponsors George. In this case you get nothing for Darla's sponsoring efforts because breakage occurs with George (on level 4).

How about the price related breakage?

Most of the products marketed through a uni-level are either intellectuals (e-books), or some other one-time purchase item with little to no cost to the company offering them. These products offer the company a gigantic profit margin. Let's take a closer look at what this means.

Most MLM companies claim they need to maintain between a 55% to 65% profit margin to pay the bills and pay commissions. But is that really necessary? Take a look at the chart below for a $20 product to see where the money goes.














































Your% to% toYourCo.
TeamYouCo.ProfitProfit
Betty20%80%$4$16
Joe10%90%$2$18
Darla5%95%$1$19
Fred0%100%$0$20
Totals8.75%91.25%$7$80


As you can see from the example above the company is making an average of 91.25% profit from your team efforts compared to your 8.75%. Wow, they must have a lot of overhead! Oh, and check out how much the company values your contribution.

Network marketing companies like Uni-Level comp plans because they’re easy to explain and they're highly profitable (to the company). Plus there are plenty of folks out there who think they are in that 0.01% of MLMers that can recruit at will to keep making money.

Most networkers are in MLM to build a large, stable, and profitable income so they can retire. If you’re a super sales person or a sponsor monster that probably doesn't matter to you. You’ll do well with a Uni-Level, because you’ll just go wide.

However, if maintaining communication with your team and building depth for strength of long-term stability are important to you, then a uni-level plan will be the kiss of death to your financial independence.

Your dreams should not be limited by your company's comp plan. So look for a company that rewards well for building enough width to be able to keep up with your front line, while building maximum depth for team strength.

I appreciate you,

Bill Tessore

In "MLM Comp Plans - Why Companies Love Uni-Levels" I revealed why companies find uni-level compensation plans so attractive. Now let's move on to the breakage in a uni-level compensation plan.


Basic uni-levels have two forms of breakage.



  • Limited depth.

  • Product price.


Here's how limited depth creates breakage.


Let’s say you’re in a company with a 3-deep Uni-Level pay plan. You sponsor Betty, Betty sponsors Jim, Jim sponsors Darla, and Darla sponsors George. In this case you get nothing for Darla's sponsoring efforts because breakage occurs with George (on level 4).


How about the price related breakage?


Most of the products marketed through a uni-level are either intellectuals (e-books), or some other one-time purchase item with little to no cost to the company offering them. These products offer the company a gigantic profit margin. Let's take a closer look at what this means.


Most MLM companies claim they need to maintain between a 55% to 65% profit margin to pay the bills and pay commissions. But is that really necessary? Take a look at the chart below for a $20 product to see where the money goes.


==========================

Your % to % to Your Co.

Team You Co. Profit Profit

------------------------------------

Betty 20% 80% $4 $16

Joe 10% 90% $2 $18

Darla 5% 95% $1 $19

Fred 0% 100% $0 $20

------------------------------------

Totals avg. avg. $7 $80

7.75% 91.25%

============================


As you can see from the example above the company is making an average of 91.25% profit from your team efforts compared to your 8.75%. Wow, they must have a lot of overhead! Oh, and check out how much the company values your contribution.


Network marketing companies like Uni-Level comp plans because they’re easy to explain and they're highly profitable .. to the company. Plus there are plenty of folks out there who think they are in that 0.01% of MLMers that can recruit at will to keep making money.


Most networkers are in MLM to build a large, stable, and profitable income so they can retire. If you’re a super sales person or a sponsor monster that probably doesn't matter to you. You’ll do well with a Uni-Level, because you’ll just go wide.


However, if maintaining communication with your team and building depth for strength of long-term stability are important to you, then a uni-level plan will be the kiss of death to your

financial independence.


Your dreams should not be limited by your company's comp plan. So look for a company that rewards well for building enough width to be able to keep up with your front line, while building maximum depth for team strength.


Bill Tessore