In the previous posts I shared with you our experiences with our second network marketing (MLM) home business we operated under the name of Ocean View Marketing in 2007 and 2008, from Loveland, Colorado.
In this post you will read a little more about direct selling in an MLM, some characteristics that made our upline sponsor, Merrill, extremely successful in the business, and the outcome of our side arrangement with Merrill whereby we became his “affiliate” and generated sales prospects for him to contact and close.
Please allow me fill in some background information that will help develop my little story.
As you might recall from reading previous posts, the reason I continued to start home businesses was to find a way to become financially independent, and as I became increasingly specialized in my technical career, not have to travel away from Nadine, Jenna and Stevie on contract assignments.
Like nearly every other business, in network marketing, profits depend on sales of products or services. Unlike other businesses, highly motivated network marketers have the opportunity to recruit, organize and train a sales team, and under the business opportunity’s guidelines, share compensation.
Due to Merrill’s placement as a top producer in Wealth Miners and booming sales volume, he had a very large ad spend. That is to say, Merrill was able to direct thousands of dollars each month to marketing. And although I do not recall for sure, I think I responded to one of Merrill’s advert’s on Google and ended up calling him.
That is how Merrill became our upline sponsor.
Merrill did all the right things to become a top producer with Wealth Miners. To achieve this status within the company, it was necessary to excel at one or both of two activities; either sell a ton of memberships (financial information products and seminars known as M1, M2 and M3 programs), or recruit others and teach them to do the same.
Merrill was, at his core, a very effective salesman. So selling M1, M2 and M3 programs over the telephone was the way he made his mark.
It was also the way he attempted to teach others to be successful in our network marketing organization. In Merrill’s mind, as a former Marine, the automated marketing system touted so widely on the organization’s duplicated websites, was just brand positioning – a gimmick, if you will to get the attention of opportunity seekers.
The real sales were happening on the phone, just as it had with me. And what I was beginning to learn, when I enrolled under Merrill, then made a side arrangement with him were Nadine and I stood to make or lose thousands each month, that we had entered The Lion’s Den – where it was either kill or be eaten alive.
In the meantime, during the months of February and March of 2008 our marketing budget was exceeding $7500 per month – a lot of money for us, especially since it was on credit – on Google’s pay-per-click.
“It will usually take a few weeks before we will see any sales,” Merrill proclaimed. “It’s the pipeline effect and we have to fill it with leads that I will sell at some point,” he continued.
“That’s reasonable,” I said. From the beginning, Merrill had made no guarantees. He also didn’t want to put our affiliate arrangement in writing and didn’t particularly want our deal getting back to the parent company. Instead of being suspicious – at least at this point – I told myself I was being open-minded. This is how the real money is made on the internet, affiliate marketing between the “top players”. I flattered myself.
Under our arrangement, Merrill would KEEP all of the sales leads I was directing to his website. I felt badly about this but accepted it as a condition of our deal to rescue Ocean View Marketing. Besides, if the cash started coming in, I didn’t particularly care, whose list was being built. I only knew this was my last option to save our business.
Then in March, Merrill sold an M1. With this one sale I began to get the sense our arrangement WAS going to work. Merrill said he was very close to selling this individual an M2. If so, each of us was on our way to several thousand with this one person entering Merrill’s downline.
Obviously, I wouldn’t have to go on the road anymore to Rochester, Minnesota in November or Phoenix in July. We could pay Stevie’s outstanding medical expenses. And Nadine might be able to quit her job. Anything was possible. I was so excited I didn’t sleep that night.
By sending sales leads to Merrill, someone who closed 50% of the prospects he spoke to over the phone, I had invented my own automated marketing system – although an expensive one.
By the end of March Nadine and I had burned through another $7500 (making a total of $15,000 of new debt) and the person who had purchased the M1 had not only decided to hold-off on buying the M2 but had demanded a refund on his M1.
Two months into our three-month affiliate arrangement we had no sales.
“Things are a little slow right now for some reason,” Merrill told me. “I think people are beginning to worry about the economy more and more.” he concluded.
Indeed. I was now scouring the country for chip design contracts and could not find a single one, either through my network of technical recruiters or other mask designers I knew.
The global economic collapse of 2008 triggered by Lehman Brothers, wouldn’t take place until September 15th but a bad economy had never tempered my optimism in the past.
“I do what others won’t, so I can have what others don’t,” I kept telling myself. This included, I now realized, taking this biggest of risks and trusting Merrill with money I had put on our credit cards.
During the first week in April, with still no sales and communications with Merrill becoming less and less frequent I was clinging to the idea of being surprised some afternoon by a Skype message email from him, that just as he had said, the pipeline was now full and things were beginning to click. Nadine and I weren’t talking much about it. Somehow, we both knew.
April came and went and we were $22,500 in the hole and Merrill wasn’t returning our calls.
“I tell them I can get them to $10,000 per month in three months and they eat it up,” Merrill had once told me.
When I recalled that conversation, a lot of things became clear to me.
Merrill had burned through hundreds of leads I had sent him, without a single sale.
At least not a single sale that was marked with our code.
Our luck had gone really bad.
But Merrill had added a lot of our new prospects to his big list.
Next – Losing Everything