If you are considering starting any new business venture, or getting into MLM/Network Marketing in particular, you owe it to yourself to read this article — particularly if you are a newbie.
These days, most people are familiar with MLM/Network Marketing. However, most have never heard of Cooperative Marketing. Those that aren’t may find the content herein to be shocking and amazing, if not revelatory and potentially life-changing.
Cooperative Marketing has been around for a long time in the mainstream business world, but it is relatively new to the “home-based business” world. The term can mean many things, but in general it means that the retailer is receiving marketing assistance from the manufacturer, supplier or other large-scale enterprise. Such advertising “co-ops” are common in many brick-and-mortar industries, including the grocery, insurance and publishing businesses.
In the case of a home based business, it means the company you are working with is taking on a major burden that normally would fall to you: the marketing of the product. In fact, the better Cooperative Marketing companies do much more than this, including actual selling, distribution and customer service. To date, only a relative handful of companies use this business model (compared to the hundreds of MLMs out there).
More’s the pity, because a growing number of “work at home” authorities consider it the far superior business model — both for the companies in question and for their individual representatives. Though the two business models have many similarities, they are more clearly defined by their differences, which are explored in this article.
MLM (MULTILEVEL MARKETING)/NETWORK MARKETING
As you probably know, the MLM/Network Marketing business is a huge industry. Many household names (Amway, Avon, Mary Kay, Herbalife, Shaklee, etc.) have had tremendous success using this business model, and many thousands of representatives (also called associates or distributors) have built profitable businesses in the industry. A smaller but still sizable number have built successful enough businesses to live very, very well indeed.
The MLM/Network Marketing business is based on the idea that reps are responsible for just about everything in their business, other than producing the product and handling commissions and bonuses. The company does these last chores, while the representative must undertake tasks which many find difficult and even onerous.
First, reps must find their own customers. Second, they must find new people to join their businesses with them. This is known as building a downline, and great success in the industry is predicated on having a large and thriving one. Specific business plans vary from company to company, but generally speaking you will not reach the top of the leader boards by selling alone. Third, reps may be required to order certain minimal levels of product every month, warehouse those products, distribute them, handle returns, etc.
While it is true many people have had great success in MLM/Network Marketing, it is also true that a far greater number have had little or no success. The plain truth is, not everyone is cut out to be an entrepreneur of this type and/or is willing to make the necessary commitments and sacrifices. It takes time, patience, money and lots of hard work. Beyond that, not everyone who gets started in the industry is suited to its business model, which requires a tremendous amount of social network building and maintenance, among other things.
- Company produces the product: reps must sell it
- Rep does the marketing: must find customers and sell to them
- Rep does the warehousing: must often buy large quantities of product, store and deliver them, and handle returns
- Rep does the customer service
- Rep does the continuity: must keep in frequent touch with customers to keep orders coming in
- Rep does the recruiting: must personally find and sponsor people for downline
- Rep does the training: often involves hand holding, pep talks and panic calls at 3 A.M.
- Size of business limited by ability to recruit and/or controls put in place by company
As stated, the home business version of the Cooperative Marketing business model is actually quite different from MLM/Network Marketing, though there are surface similarities. This probably explains public misconceptions and confusion. For instance, in Cooperative Marketing companies, one can sell, sponsor and build a downline. The lingo and terms involved are, in many cases, identical. However, it is at this point where the similarities end, and the superiority of the business model begins to become clear.
In Cooperative Marketing, instead of the the majority of necessary business tasks falling on the shoulders of the representative, it is the company that handles them. Instead of buying products, investing in training programs (books and tapes), attending conferences and suchlike, the Cooperative Marketing rep simply buys lifetime profit sharing rights to existing customers. It is the company itself that does the marketing, acquires the customers, sells to them and services them. This is nothing less than the difference between starting a business that may or may not succeed, and having a profitable one.
In this regard, the representative is really more of a business partner whose funds help defray the costs of R&D, marketing and customer acquisition/service for the company. In return, the representative benefits from being in business with a successful company. In short, the company does all the “heavy lifting,” and the rep reaps a share of the rewards.
By being able to obtain profit sharing rights to existing customers, the rep’s job is enormously simplified (not to mention immeasurably improved). In fact, in some Cooperative Marketing companies, the lucky rep is not even required to actively build the business — though this is of course encouraged! This means that one does not have to sell, recruit or sponsor in order to succeed! By comparison to the poor overtaxed MLM/Network Marketing rep, the Cooperative Marketing rep can simply sit back, relax and take care of an existing, thriving business.
COOPERATIVE MARKETING CHARACTERISTICS
- Company produces the product, sells direct to consumers (reps can sell as well)
- Company does the marketing: finds and sells to customers via traditional means (print, TV, etc.)
- Company does the warehousing, shipping, delivery and handles returns
- Company does the customer service (though rep may help too)
- Company does the continuity: mail, email and even phone support (rep can too)
- Company does the “recruiting”: places new reps into existing reps businesses (!)
- Company does the training (though rep may help personally sponsored)
- Size of business only limited by profit sharing commitment over time
MLM vs. COOPERATIVE MARKETING: OTHER CONSIDERATIONS
The Cooperative Marketing business model recognizes that for the new representative — who most likely has no background in sales, recruiting or marketing — the best use of his or her time is in doing something that is easy, direct and natural.
Conversely, the MLM/Network Marketing business asks new reps to engage in a long, difficult process of learning new skills and doing things many (perhaps most) people do not like and are uncomfortable with. These include the “most obvious” ones: recruiting and selling. In addition to all that must be learned and mastered, the typical MLM/Network Marketing rep may be additionally burdened with product warehousing and delivery, attendance at meetings and training events, travel to same, additional ancillary costs for training and travel, and much more.
The Cooperative Marketing model asks new representatives to simply work with existing customers. It is a perfect fit, because this is the one thing that is not only difficult for big companies to do, but virtually impossible. At the same time, as mentioned before, it’s something most people can do with little or no training. The reps main job is simply building and maintaining personal relationships. And since the new rep is playing in a “warm market” (with existing happy customers) instead of in a cold one, there is considerably less stress and no brutal learning curve.
MLM vs. COOPERATIVE MARKETING: CONCLUSION
The Cooperative Marketing business model addresses all the aspects of MLM/Network Marketing that are so problematic for most people. By allowing the company to do what large companies do well, and allowing individuals to do what they are good at, a natural synergy occurs that is best of all possible worlds for all concerned (including the customers).
While MLM/Network Marketing reps are scrambling to learn all that they have to learn — at the very same time they are trying to prospect and sell as well — the Cooperative Marketing representative simply enjoys the benefits of partnering with a large, successful company. Instead of taking on the considerable financial and time burdens of building a business from scratch — not to mention all the associated risks — the Cooperative Marketing rep simply “piggybacks” on success and reaps the rewards.
This article has shown the glaring differences between MLM/Network Marketing and Cooperative Marketing. They are considerable, and the conclusion plain for all to see. Will Cooperative Marketing ultimately doom traditional MLM/Network Marketing? It is hard to say. Much depends on whether new companies are willing to adopt the business model. But one thing is absolutely sure — Cooperative Marketing is clearly the superior home business opportunity for all concerned.