Original post can be found here.
Understanding the difference between Pyramid Schemes, Muli-Level Marketing or MLM’s, and Affiliate Marketing is crucial for anyone wanting to add an additional income stream or starting their own business.
In this weeks show we cover:
The Alternative Business Model
Starting a Business
- How to start a business without large investment capitol or grow new revenue streams for your existing business.
- We’re covering this first so you can recognize them, stay clear of them, or make sure you are not creating one.
- What is a Pyramid Scheme?
- Why are they illegal?
- Warning signs to stay clear and questions to ask.
MLM, Multi Level Marketing
- What is the difference between a Pyramid Scheme and an MLM organization?
- The idea behind MLMs
- How bad MLMs are run
- The problem no personal reputation control
- How good MLMs are run
- What to watch out for if you start you’re own MLM
- The principle I disagree agree
- What is the difference between Affiliate Marketing and an MLM organization?
- What really is Affiliate Marketing?
- What to watch out for.
- What to look for.
- The best service to market
- How to establish and grow your portfolio.
New York Shop Exchange Affiliate Program
Male: Preparing Business for Business is on the air. Join hosts Marcia Hawkins, President of the New York Shop Exchange and Kyle Clouse, Vice President for insightful and creative strategies to prepare your business for business. Listen in for great guests and great offers from our guests and sponsors, as well as thought-provoking dialogue. Preparing Business for Business offers usable content, insightful ideas and resources to jumpstart your business in an effective, economical manner and to prepare your business for growth and challenges. And now, your hosts for Preparing Business for Business, Marcia Hawkins and Kyle Clouse.
Marcia Hawkins: Good evening, everybody. Welcome to the Business Preparing for Business program on the Preparedness Radio Network. I’m Marcia Hawkins along with my co-host, Kyle Clouse. Today is Wednesday, December 21, 2011 heading in to the last weeks of December and rounding the corner into the final weeks of 2011. On this week of holiday celebration, lots going on this week for sure.
I want to welcome you to the Business Preparing for Business radio program tonight. The theme of our show is to provide you tools, contacts, products and services to best prepare your business for more business or to assist you in challenging times.
Now we invite hosts on our program that through experience, problem-solving, they can share with you their methods or ideas and their strategies that have worked for them and allow you to apply them in your business. Now, many preparedness listers tune in to hear helpful tips on natural disasters and so forth and information on Preparedness products. We essentially do the same thing, the difference is we apply ours to business. Whether you’re starting a business or trying to expand and grow your business. Our needs – are helpful needs during challenging times with running the business.
So Kyle and I do welcome you to our program and invite you to e-mail us at firstname.lastname@example.org if you have any questions or comments or if you want to share some ideas with us, we’d love to hear from you. Again, email@example.com. Now, without further ado, let’s bring in Mr. Clouse. Hi, Mr. Clouse. How are you?
Kyle Clouse: Hi. I’m doing great, Marcia. How about yourself?
Marcia Hawkins: I’m pretty good. Now, I’m going to have you tell the listeners about our guest tonight, would you like to introduce…?
Kyle Clouse: Well, first I want to start off by saying that you did not mention and probably don’t want to be the star on a tree but you did not mention that your son is home for the holidays, he’s been away for a couple of years. And I just want to recognize you as a military mom, you did serve a couple of tours in Iraq, and how is that having him home?
Marcia Hawkins: Oh, unbelievable! I was so excited, I was squealing. And yes, I was very, very excited. It’s been too long and he looks great and yes it is, it is wonderful to have him home so thank you for mentioning it.
Steve Mistretta: Marcia?
Marcia Hawkins: Yes?
Steve Mistretta: This is Steve. I’m just checking in on the show and I would also like to say thank you to your son. I did fours years active duty army and it’s people like your son that give us – well, quite frankly, that protect us and allow us to have the freedoms that we have. So a warm welcome home to him and safe travels.
Marcia Hawkins: Oh, Steve, thank you so much. I’m glad that you came on to the program to say that, that means a lot to me. I thank you and I will make sure I pass it along to him. Quite an exciting hour, he showed up about an hour before the show. It’s been emotional to see him so thank you, thank you both.
So Kyle, let’s move on to tonight’s guest, we have Paul Koenig who’s been on our show before. Would you like to give the listeners a little background about Paul?
Kyle Clouse: Paul Koenig, he is a co-founder of GoMarketer, one of the co-owners and on the last show that we had him on it was back on November 9. We went over exposure Marketing, self management and coaching. And you know, people are also welcome to look at our past shows, I mean, if you will go to PreparingBusinessforBusiness.com, we have an archive of our past shows. He was on November 9, we went over exposure Marketing, self management and coaching. Paul, he has a very keen understanding of branding and you know, that’s powerful impact on a plants customer base. And especially in today’s business environment, every company needs to drive more customers to their business and Paul is very proficient at attraction Marketing, driving new – sales to new customers and making sure that businesses succeed in what they do.
Marcia Hawkins: That’s so important to – you know, people do need many avenues in which to grow their business and you know, just service a business. And I think Paul, after we had him on our show last time, I was just so impressed with the level of tools that he was able to download for listeners and things that they – just useful, useful tools.
So let’s bring him on. Hi, Paul! How are you tonight?
Paul Koenig: Oh yeah, I’m doing great. How are you guys? And thank you again, Marcia and Kyle for having me on the show again.
Marcia Hawkins: Absolutely, absolutely. So I know Kyle’s got a laundry list of questions that we prepared for you so I’m going to let Kyle take his first crack.
Kyle Clouse: Well, tonight’s show you know, we’re going to be talking about alternative business models that I think that especially today in economic times and we’re seeing kind of the crunch of the economic market right now, it’s important that we recognize – that people recognize the alternative business models but more so, you know, when the economy is in a slump like it is, people start looking for additional ways to earn additional income or to supplement their income. Maybe they’re only able to work a part-time job at this point so they have to supplement that. And they start – you know, they hit the path on looking for other means of income and how to generate additional income and kind of fill in those gaps. And along with that comes you know, there’s people out there and companies out there that kind of don’t practice – don’t have the best ethical business practices and they prey on the weak and so it’s important that we expose some of that and talk about what people should ask or looking for to increase their income and to supplement their income, that they understand the different models, the negative of some of the models and can really make an educated decision as they look for ways to which they can supplement their income. And that’s what we’re going to be talking about with Paul.
So Paul, if you’d like to first off, let’s get into the first area of topic that we have down which is pyramid schemes.
Paul Koenig: Oh yeah, absolutely. Now, pyramid schemes as everyone know is a very negative way for a business, it’s also very a big thorn of almost every single country in the world and it’s something especially economic times like this, you know, they tend to crop up and one other thing that we’re going to do is find that for you so you can look to stay clear of it.
Now the definition of a pyramid scheme is a business that’s based off of recruiting other people for that business. So by definition, what it means is say, you got a ABC pyramid scheme and you’re showed to talk about oh, you got a great business opportunity, you can make a lot of money and you came on it to join up in the promise that you can eventually get a lot of money promoting it. But filing a claim with them in the – what actually is a kind of self-destructive is business model itself and what a pyramid scheme is a business that is set up where the only way to make money or the primary method is to recruit other people to promote the business rather than an actual product or service.
Marcia Hawkins: It’s so funny because I’ve been approached many times, people wanting me to get involved in these types of programs and what has struck me about it and I think that most people really don’t – really identify with is when they’re pitching it to you. What I find interesting and I’m sure you can expand upon this, is the fact that they want you to pay them to sell their products.
Paul Koenig: Exactly. And what’s even worse with the pyramid scheme is usually they’ll try to mask exactly what it is you’re doing. You know, they’ll try to make it into like oh yeah, you’ll be selling this product or this service, it’s just so much to sign up, so much a month and then you can end up making a lot of money and they try to really get around the fact that you’re paying money, a, to be able to sell the service or product, b, you’re paying it every month and then c, the only real way to make money in it is to recruit other people and of course the big problem with that is eventually, you run out of people and then it collapses upon itself. And the unfortunate thing for people that realized that when they get in to one of those or involved in one of those is that everybody ends up really getting hurt by it. Even the people that is running it almost everytime that happens, they get caught. There’s a collaborative effort with all the countries or the majority of the countries around the world where one of those is identified, they will go after the people who were running it, whatever country they were from.
But not only that, if you’re in business, if you’re a marketer and you start promoting your scheme and then it ends up being exposed as such, it’s really, really detrimental to your own reputation as a business professional. And on top of that, all the lives that they can hurt and that’s one of the reasons why it’s really important to stay clear on those and I would not ever recommend getting involved. And again the main thing is if you’re looking at a business model and somebody approaches you with this, hey, you can make a lot of money doing this, you know, costs money upfront and if you look at it, the only way to make money is really by recruiting other people, chances are it’s a pyramid scheme and I would stay clear of it.
Marcia Hawkins: Right. And I do know that there are several companies out there that their business model may mimic these types of organizations and I do want to stress and I’m sure you’ll chime in and let me know if I’m off base here but I really do believe that there are some bonafide businesses that are set up very similar but the difference is in my opinion, and I’m sure you can clarify this, that most of those businesses that we’re referencing are the ones that are looking for a rags-to-riches type thing where they’re telling you you’re going to go from making nothing to making $10,000 a day or whatever and they always say that they’re not supposed to talk about how much money they make but they’re quick to photocopy checks and show you them. As opposed to a slow growth company where it may be modeled that way but they’re actually pushing the products, not the people.
Paul Koenig: Yes, exactly and yet – the difference is that, and similar – and this brings me to the second alternative business model. And this one is a legal business model, would be MLM which stands for Multi Level Marketing. Now with this business model, it is similar in the fact that you can recruit people and if you recruit people, those people can sell the product, you get a percentage of what they make, if they recruit more, you get a small cut on that. And the idea behind it, with that structure is set up like – a sales structure that you may see in some organizations like in the cellular industry and other types of marketing we have like a regional manager, district manager, you know, manager of the territory and it kind of filters down to the levels. But you know, again, it is based in a pyramid type of build which is why sometimes those are mistaken for – but sometimes they also disguise them as well. But with the MLM, you still are going to be paying money upfront to build a product or service unlike a pyramid scheme though, you can make money and build a living by selling the product or service exclusively and not recruiting other people.
Now one of the things I wanted to mention is the idea behind Multi Level Marketing is a good, genuine idea and we’ll get into this more a little bit, but the main idea behind it is that say I’m subscribed to a service or maybe this is a product that I get and maybe I have an honorship that come in or something, you know, every month. A lot of times it could be like a health product, you know, vitamins, something like that or maybe an interesting service or something to help with like financial stability, something like that.
Now the idea is that – okay, I’m a customer, I’m really happy with it and you know, I’ve talked to other people by word of mouth but wouldn’t it be nice if I could make a little bit of money by referring my friends and family to it? And that’s the idea. What I’ve seen happen a lot with those types of organizations though, and don’t get me wrong, there are good ones but a lot of them still focus on the recruiting and not actually the product selling. They’ll say, oh yeah, you can sell this product but you know, the real way to really make it big in this is to grow a team, recruit other people – and they try to you know, instead of saying recruit, they usually paraphrase that with, you know, team building and team growth but what it really – what a lot of them really try to teach is growing a team. And I’m sure, Kyle and Marcia, you’ve had experiences with that. Somebody coming to try to recruit you to one of those in the past.
Marcia Hawkins: Oh, yes.
Kyle Clouse: I wanted to jump back really quick, Paul. And you know, we’re going into Multi Level Marketing right now but I wanted to step back and one of the questions that I had on pyramid schemes and maybe this will help differentiate the two between a pyramid scheme and an MLM. But what, specifically, what are some key indicators or some warning signs that people should watch for and what makes a pyramid scheme illegal?
Paul Koenig: The precise thing that makes a pyramid scheme illegal is that you can only make money by recruiting other people. And in the United States – in the U.S., there actually is a doctrine where – and this is applicable to an MLM but it relates as that at MLM, you have to have more customers sales that sales from recruits. And if you don’t meet that then you could be classified as a pyramid scheme. And the warning signs with a pyramid schemer, if it’s an offer that seems too good to be true or if there’s really outrageous bonuses for recruiting people like if you recruit five people, you get $1,000, stuff like that are usually a red flag.
It doesn’t always necessarily mean that that in fact is a pyramid scheme but if you hear something like that, chances are you want to stay away from it especially if it’s based on recruiting other people to sell it. And that’s the main distinguishing factor.
Kyle Clouse: Right. So one of the things that you mentioned on that as well, I guess on that same vein is that you know, as it grows, it eventually ends up collapsing or falling apart and so it sounds like it has some of the appearance of a Ponzi scheme as well.
Paul Koenig: Yes, exactly. It can very well have and there – many times they are very similar as well or can be one and the same depending on the definition. But yeah, that is the main thing, the main thing with the pyramid scheme is usually, you’re really not selling a product at all and/or it’s a product or service that’s really useless and it’s – everything is really about recruiting to make money and that’s it. And you know, as you stated, that business model isn’t going to last, once it gets recognized it just falls apart from the bottom up.
Kyle Clouse: Well, I think that’s very important information to get out to the people as they’re looking to supplement their income, you know, scaling any loose gaps or – that they might have on their income portfolio that they’re aware of these types of danger that are definitely out there.
Let’s go back a little bit to Multi Level Marketing and the MLM. Now, what is it necessarily behind the idea of MLM?
Paul Koenig: The idea behind an MLM is that say, if I’m subscribed or have been buying a product for a while rather than just promoting from word of mouth, I can get an incentive to encourage friends of mine, encourage relatives you know, word of mouth people, to purchase or subscribe to a product based off of my recommendation from having used it and being satisfied as a customer. And so that’s what the idea is. The idea is an incentive-based Marketing, cater to the word of mouth to people that you know, people that you’re kind of in league of and that sort of thing.
Unfortunately, a lot of people miss MLM’s tend to kind of disguise what it is exactly you’re doing. And that’s why things look for in a bad Multi Level Marketing organization if that’s somthing that you’re looking to pursue is that a lot of bad ones, they’re still going to focus on like a team building and the recruiting other people, you can still make money selling the product but they’re not going to really tell you that you’re in sales. Multi Level Marketing is always 100% about sales and Marketing but a lot of them will say, oh yeah, you don’t have to do any cold calling you know, you don’t have to do any prospecting or any Marketing, all you have to do is tell some friends and family, get them to sign up and then kind of filter them. They try to make it sound so easy to make a lot of money and they also try to promote to people that they’re kind of lazy and not really aggressive in Marketing. They’ll say, hey, you know, you sign up a couple of people and then if one person signed up a thousand, you’ll make a lot of money which can very well happen but the thing is if you’re signing somebody up on the idea that you’re not going to have to do a lot of work to get a lot of sales – well, sales as everyone knows, you know, sales and Marketing is a ton of work and you’re not going to get those results, those are really very unheard of and very rare expectations.
Kyle Clouse: Now, this is too funny that we’re talking about this because Marcia and myself, we were actually looking at a company that’s an MLM company or a network Marketing company and they offer a Marketing product. So it’s a product that markets that’s supposed to market businesses. But what we’ve noticed is that their – I want to say the members of that network Marketing company, from what we’ve been able to gather, all of them are more focused on recruiting other people versus selling the actual product or service. And as I look at that, I have to ask myself, okay, so these members of this company, if they actually sign on a business, that’s their reputation.
Whenever I help someone with Marketing, I’m putting my personal reputation on the line and I want to make sure that I’m fulfilling what I said to that client that we were going to fulfill. Though as I look at this other model, their focused on simply recruiting other people to do the same thing that they’re doing and they happen to bring on business for the products and services in the interim, how easily that business can get lost or pushed to the wayside and the fulfillment never really happens.
Paul Koenig: Oh, absolutely and that is a problem with those types of organizations that run quarterlies that people focus so much on recruiting they put the actual sale of the product or service on the wayside. And that has a detrimental effect because a, your customer base isn’t going to be happy if they’re not getting support that they believe they should be getting and b, it’s also not good for the MLM organization as a whole because if you do have more people recruiting, then you have actual customers. Again, you can be classified as a pyramid.
And I want to dig in into a little bit on what to watch out for with someone that’s actually interested in starting an MLM organization. I’ve had people asking about that sometime and what I find is a lot of people that want to start an organization like that thinks it’s really good because a, other people will sell my product who could recruit other people to sell my products so it’s really good way to really push it out really fast and make a lot of money really fast. Well here’s the big three problems with that. The first problem is that everybody can smell and just has like a sense that you know that this person is recruiting just to make money or to recruit as a people if that’s the setup. Sales and Marketing it’s a very difficult thing and it’s really, really rare to have somebody that’s experienced in sales and Marketing joining an organization and really exploding a lot of sales growth. You’re not going to have the same level of benefit as you would if you hired a professional or a career salesman. And the second thing that a lot of people don’t realize is that because of how close MLM can be sometimes to pyramid schemes and pyramid schemes is disguising themselves as MLM’s especially in the U.S., the Federal Government will actually do multiple audits throughout the year and usually once or at least once every other year, they’ll actually send the Feds to the headquarters of the organization to investigate and make sure that everything is done the legal way. And I believe a lot of people aren’t aware of that when they go in.
And I – you know, how I ended up learning about that is a good friend of mine, his cousin owns the MLM organization, a financial destination and he was telling me about that. He used to work for them for a time and they’re actually an example of a good one and then because they help, they had some useful services, useful products, generally they do things the right way. But even if you’re doing everything by the book, you’re still going to have to deal with unnecessary audit. I mean typically, a regular business, you might get audited once every three years, once every seven years. If your doing an MLM organization, you can expect that at least once a year if not more frequently and you get checked out by the Feds too, which is quite a lot of pressure for a business.
Kyle Clouse: So one thing that people can look for is to make sure that they’ve passed through some type of FTC audit?
Marcia Hawkins: Why don’t we actually take our quick break and then we’ll get back to that question? As I said we’re going to take a quick break from our fine sponsors. This is the Business Preparing for Business radio show on the Preparedness Radio Network. I’m Marcia Hawkins along with Kyle Clouse. Please stop by and visit us at newyorkshopexchange.com and we’ll be right back.
Alright, everybody. Welcome back. We have Paul Koenig of GoMarketers and we’re talking about Multi Level Marketing tonight as well as pyramid schemes and we’re going to be segueing into a couple of different aspects of a business. Before the break Paul, you were answering a question, we had to take a quick break. Would you like to follow up with that?
Paul Koenig: Yes, absolutely. And mainly with the question in audit is the main thing with Multi Level Marketing if you’re starting a business is it’s generally not a good idea to start one that way because you’re going to end up with a lot of extra work. If you are starting a business, your financial situation might be a little bit tight in terms of your budget for the business and you may not have the resources necessary to have a really good accountant and that sort of thing, which is a very big necessity when starting a Multi Level Marketing organization because a, you’re going to have that audit at least once a year if not more often than that and you will be periodically investigated by the Feds just to make sure everything’s running legally.
Now to segue from this to our next topic, one thing that I find that people are drawn into with Multi Level Marketing is that a, you can start a business or start a business selling, making sales to make money usually for a pretty low cost compared to actually starting a franchise, starting a retail center or starting your own business and developing your own products from scratch. Now there is the idea that is the one thing that I really disagree with with those types of organizations and again there are good ones like Financial Destination, Market America and others and I’m sure everyone’s heard of MYMOS. But my main problem is the principle behind it. If you’re Marketing somebody else’s product, you shouldn’t have to pay to market their product. They should either be paying you if you’re an employee on salary or you should work out a deal with the commission structure where you get a percentage or so much money for every sale that’s generated. And I think you might agree.
Marcia Hawkins: Can I just ask you a quick question before I forget? I’m really – and I know you’re going to be able to really jump on this. What I find interesting about it and it really kind of just rubs me the wrong way is that you have to order a minimum amount every month in order to get your check and that’s what makes me step back and say, wait a minute because I do know that there are very reputable companies that are set up to be paid on word-of-mouth distribution by you Marketing them and you receive a check from that for that. But can you just talk a little bit about that? And to me that’s the fundamental difference, it’s paying them to sell their products and then having to pay and buy their products in order to get paid by them.
Paul Koenig: Yeah, absolutely and with almost every single Multi Level Marketing organization, what really builds the foundation of it is what Marcia just mentioned is that in order to be able to sell it, in addition to a one-time fee, which is sometimes yearly, you also had to either subscribe to the service and pay so much a month or you have to be ordering auto shipment of the product every month. And the problem with that is if you don’t have a lot of money and you’re looking to add another revenue stream, this is an immediate deficit for you and especially with the auto shipment of products. You know, if you Google on the Internet, you can find videos of people that have full rooms and warehouses of products that they weren’t able to push. And you shouldn’t have too get in my opinion, if you’re selling a product yes, it’s great to have samples of it if it’s a physical product. But you’re not going to want to have samples to that, so to speak. You shouldn’t be forced to have to get them every single month. It should be something that can be ordered when it’s needed. You go to – say you’re selling to a retail store or a gas station, you’re trying to market a new widget. You should be able to go in, the order goes through the main company and then you got a cut of the sale, it shouldn’t be that you have to buy all the products ahead of time and the market to it. Of course that would be different if you are a distributor but that’s a whole different type of ballgame if you’re like a fuel distributor, something like that.
Kyle Clouse: What I’ve seen is what – Paul, you have someone that will end up with a garage full of product and an empty bank account. And it’s just important that people take a hard look at the entire business model, the commission structure and make sure that what they are getting into is going to be something that they can turn a buck at and not be stuck with a bunch of product and an empty bank account.
Paul Koenig: Yes, absolutely. And to segue, the better option is what if they take a product or service that you want to sell and either pay one little time fee for like exclusive Marketing rights for a region or not pay anything up front at all and be able to sell it to whoever you want without necessarily a rigid structure of how you sell it. A lot of MLM organizations are really stringent on how you’re able to market and they want you to do it a certain way.
And this segues into what’s called Affiliate Marketing. So what Affiliate Marketing is and how it’s different with an MLM organization is you’re still Marketing a product or service but you’re not focused at all on recruiting anybody to also sell it. All you’re doing is selling it to customers be it business, businesses, business owners, retail or people that you know or individuals. And there’s a lot of different ways you can do it and with Affiliate Marketing, the great thing about it is you don’t need to pay monthly to be able to sell it and it’s one thing – if somebody joins an MLM organization, one thing they’ll be able to, if they’re looking for another product to sell my question to them is well, why don’t you find a similar product that you don’t have to pay money for to be able to sell? And I’ve stumped a lot of people with that question in the past because it’s like what Marcia was saying, the main principle behind it is you shouldn’t have to pay monthly to be able to sell a product. You should just be able to sell the product and get money for it.
Marcia Hawkins: Oh no, it’s great because it’s true. Imagine using a product and I’m telling you when I love something, you won’t shut me up about it. And it’s so great that you would be able to have an avenue that you’ve either used a product or service, you love it and you know you’re going to be telling everybody about it, why not receive a commission for that?
Paul Koenig: Exactly and that is what Affiliate Marketing is. Affiliate Marketing and generally there’s two types of programs, they can be a close program or an open program. A close program would be only a select few have the privilege or are allowed to sell it then an open program would be anybody who’s interested in selling and Marketing it, can give it a shot and go in and get some sales even if it’s not a huge volume of sales, you can get yourself some more revenue.
Now with Affiliate Marketing, again with any type of other sales product, organization that you’re starting, there are good ways and bad ways to go about it. And the first important thing is to check the reputation of the company, whose product or service you are selling.
One big example of that and I’m going to use this as an example, just through personal experience. There’s a – well, I’m not going to mention the name of the company but there’s a company, it’s not GoDaddy, it’s another one that does web hosting and you can buy domain names from it. My organization purchased a domain for about $5 on a sale, way really early in the year. And then out of nowhere in the middle of the summer, we got hit with a $70 charge that happened again in the next month. And I had no idea where that was coming from. I ended up having to call, dispute it, go through all that effort, stop payments from the bank and that sort of thing, which is a real hassle. Well, what I discovered is that that particular company does things in unethical manner and they would just subscribe customers to services that they didn’t even asked, which isn’t a good way to run the business. But had I checked the ranking on a Better Business Bureau or checked around on the Internet, I would’ve discovered all the components and this particular business have an F ranking on the Better Business Bureau, which is all an achievement but not in a good way.
But the reason I mention this is that that company did have an Affiliate program and imagine if I had been promoting that company. Imagine if I had put my reputation on the line and sold that to 50 or 10,000 customers and they all ended up with that same issue. That would’ve completely destroyed my company’s reputation and not only that, they might have been coming after me for the money or just angrily if they were getting put off from that original one.
So the one thing that’s really important is to check out the reputation of the company, do your homework. If it seems like it’s good or a great service or product, that’s awesome but just make sure that the company’s doing things the right way, check in, make sure they have good customer support, they’re willing to answer questions when you call in, you can even fake calling in that you have a concern with something, see how they handle you. And the one big distinguishing fact with the company is what happens when you sign up if you have a question or an issue, how good is the customer service? How good is the bottom line? And that you know, that’s something that applies to all business as a whole. If you’re starting a business and not just looking for an extra revenue stream, you want to make sure that you put your customers ahead of yourself because that’s going to build a great word-of-mouth reputation for you and people are going to talk about it. And if you’re not doing a good thing, if you blow people off, ring people out of the phone, so on and so forth. They won’t beat to it but it has the same effect, only in the opposite way because people are going to say, oh I had this, you know oh, I had to go to this dispute, I had to go to the Attorney General over to this charge and they didn’t help me on this. What happens is it destroys your company reputation if it’s set up that way, which will have a negative impact on customer growth and retention.
Marcia Hawkins: I’m so avoiding that.
Kyle Clouse: I’d just like to comment, Paul, that I know the company you’re talking about. They have two numbers on the ends of an ampersand sign and they look like the Eiffel Tower so I just think it’s important to put that out there and people can watch for that because we definitely don’t want people getting into business with an organization that takes advantage.
Paul Koenig: Oh yeah, absolutely. And then now that we’ve gone over – well, the first thing to look for, so the first thing to look for is the company itself, the reputation, are they in good standing, do they treat their customers well? The second thing is to make sure that you’re selling a really good product or a good service because I don’t know about you but if I’m promoting something, I want to promote the best thing that’s on the market for whatever niche it is that you are selling, the best project, the best widget, the best service. And the secondary thing to look for is if it really is a good service, if it is the best, how much is it going to make you? Are you going to get a certain percentage per sale? Or is it something that if it’s a product, you’ll get that percentage if the customer reorders? I don’t want to sell a product to a customer where they’re going to probably reorder where I just get a cut the first time and then I don’t get anything continuing because I’d like to build a revenue stream, not a one-time sale.
And then the part of Affiliate Marketing, if you own a business and you’re looking to create more revenue growth for yourself or if you do own the business and you’re looking to build another revenue stream, a revenue stream is going to be recurring income after a sale. Now the best type of product or service is a service with recurring billing. So if you’re looking to Affiliate market the company’s product, if they have a service that charges may be monthly, may be quarterly, may be yearly depending on how they’re set up, that’s the best type of service to market. You want to look at something anywhere from – payout might be 5% to 15% or so but if it’s residual and you’re going to get a percentage every time the billing gets processed for that customer, you saw the 10 customers this month and the next month and the next month, by the end of the year, you’re getting paid every month for 120 customers, not just the 10 that you sold for the current month. And that’s the big thing to look for because you can really build an extra revenue stream so you have more money for the holidays, for next Christmas or to kickstart the new year with growth.
And one of the things and this is something that I got some really good news for you guys. So what if you want to promote a really good product that you know, they’re really knowledgeable about their industry and it is residual income, would you guys want to promote it? And the answer is probably going to be yes. And I want to be as a holiday present for you guys, let you know that New York Stock Exchange we recently started our Affiliate program. We just launched within a few weeks and it’s something that we’ll be putting a link on so if you want to sign up on it and promote it, you can earn 10% for the lifetime of a customer that subscribes to New York Stock Exchange services. And I’ve been working a lot with back-and-forth with Kyle, with Marcia, with her team and I came on – I first, a back story. I met Marcia during the summer, I had some really good meetings with her, really good meetings with Kyle and I was really blown away with just the level of exceptional with their service they provide. There’s a lot of other companies that do business directory, none do a video. I haven’t seen one do the geo targeting, the local SEO, the guarantee that you have a really good ranking on Google and have really good feedback from customers.
Marcia Hawkins: And we’re very passionate about that, Paul. Kyle and I really pioneered what we do and by offering up our Affiliate program, it’s a way of us being able to have everybody be compensated for helping us grow the company. And that’s really, really important. And my sole mission and my whole desire in starting this search engine if you will, for small business is just finally being able to take back – the small businesses, 2/3 of the workforce and yet the economy being what it is, it’s just so difficult for a small business to spend or have the budget to spend their weight in the first page of Google. We said, you know what, if we all cooperatively band together, we can do it on our own. And that’s essentially what we’ve done. And I got to tell you, Kyle and I are all about the service.
Paul Koenig: Yeah, absolutely. And that’s one of the immediate things that blew me away with New York Shop Exchange and I approached them and was interested in working with them and as you may have known of what I’m doing is managing their Affiliate program form so I’m creating Marketing material, that includes e-mail – if you have an e-mail list with a lot of customers, maybe a membership site where people subscribed to you, you could shoot out a quick e-mail to them informing them of New York Shop Exchange’ great, exceptional service. If they click a link and buy it, it automatically gets tracked to you and you get credit for the sale. Likewise there’s about 25 to 35 images and banners that you can use and what I want to wrap up on is different ways that you can promote Affiliate Marketing.
So I’m like the typical business where you’re demanded, this is how you have to market, there’s so many ways you can promote it and a lot of them don’t take a lot of time. You could set it up in just a couple of hours really if you wanted to. The first thing is that if you own a website, all you need to do is put a banner up. Put a banner of New York Shop Exchange, describe what they do a little bit and if anybody clicks on that link, if they end up purchasing and subscribing to their service, then you’re going to get that checked, you’re going to get a cut every single time the billing cycle goes through.
The other thing is again, you know, e-mail, you don’t necessarily even have to have a full e-mail about it. You can just mention that that the end of the newsletter if you have one like, hey, here’s a great service that can help jumpstart your business, get you to the first page of Google, have a link that will be provided for you when you set up for the Affiliate Marketing program. If somebody clicks it and they sign up, you get a cut of the sale.
The other thing that was – this can also work really well in the business environment. Say you’re with the company and you do business to business sales and promotions or maybe you own a business and a lot of your business comes from other businesses, you have a pretty good network. New York Shop Exchange is a great cross sell. Say you provide like a CRM system, maybe cell phones for businesses. You can say, oh hey, you know, by the way, we’ve got this great service that we can offer to you guys right now. It’s New York Shop Exchange and it’s going to drive traffic to your website and get you more exposure and you can even include video in the listing which no other directory really does. And the great thing about it is those are all different avenues that you can promote and you can still promote the old-school word-of-mouth, cold calling, however it is that you prefer to do business.
And that’s the great thing with Affiliate Marketing is you can really choose how much you want to work it and how you want to work it you know, if you just want to throw in – maybe you read a couple of articles online, through a banner on a website, yeah, you can do that. But if you want to be really aggressive, do calling, Marketing, do business-to-business presentations, pay for advertisements, you have advertising on Facebook and stuff that link to your Affiliate link, you can do that too.
Marcia Hawkins: And there are many Affiliate programs out there that are just a great way for other businesses to augment their income.
Paul Koenig: Exactly, absolutely and that’s one of the things too. If you’re looking for an Affiliate program, you want to make sure that a, we’re wrapping everything up. It’s a good business, it’s reputable business, it’s a reputable company, b, the customer service is excellent and again one big sign of that is customer testimonials. If you’re on a company’s site, if you’re looking at a company, if they have regular customers, they should have spent some money some of those customers and with New York Shop Exchange, if you go on, you can see that they got some of their customers were so happy with the service that they actually shot a brief video to send over that they’ve got on their site including countless, I believe there is dozens of written ones as well.
Kyle Clouse: Let me ask you something really quick, Paul. The difference between Affiliate Marketing and Multi Level Marketing, now isn’t it historically, the commission payout on Affiliate Marketing much larger because with Multi Level Marketing, whatever payment or percentages left over to go to the marketer, it’s basically spread off – you know, spread out over a downline or upline or however else they have that structured?
Paul Koenig: Yes absolutely and that’s a great point that I had missed earlier and that’s true. With Multi Level Marketing, it’s the commission of the sale is broken down. However many levels the organization goes, so the same percentage may be going out to seven people or could be going out to 50 people.
With Affiliate Marketing, you get the full percentage and that’s the biggest difference. With Affiliate Marketing, you don’t have to worry about okay, I got to recruit a lot of people before I can really be making money from sales and just hey, I can just sell this, build that up, even a couple sales a month or more, you’re going to see a steady income increase for your portfolio and it really lets you build a customer relations portfolio.
And the other thing is that they can bring more business for your business itself, say you end up having somebody, they read an article that you wrote or they heard that you’re promoting New York Shop Exchange, they see the link, they’ll buy it, they’re really, really happy with the service, they’re going to think really highly of your business for referring you to your excellent service and that will be more likely to purchase your products as well.
Marcia Hawkins: Well Paul, I must say, we’ve had you on the show twice now and I think the common denominator that I absolutely love about you is the integrity that you have. You really do your homework, you have a very simple business model that you run your business by and I just so appreciate that. And I know why we get along because Kyle and I are of the same clock. We keep it simple and keep the integrity into the business and I just love that about you.
But unfortunately we are out of time and Kyle and I wish to thank our guest, Paul Koenig of GoMarketers and of course, you, our listeners. Please visit us at newyorkshopexchange.com and grab your video business channel to advertise your product or service. We would love to host your business video but more importantly, we promote you. We’re on a holiday next week but we will return the following week in the new year. But until then, I sure hope you have a wonderful, happy, healthy holiday season and of course, a great night.
Male: You’ve been listening to Preparing Business for Business with your hosts Marcia Hawkins and Kyle Clouse. Questions or comments? Email the show at firstname.lastname@example.org. Also, find them on the web at NewYorkShopExchange.com. Until next time for the best tips on how to manage and grow your business, tune in again for Preparing Business for Business with your hosts Marcia Hawkins and Kyle Clouse.