The distinction worth discovering is Residual or Asset Income.Residual Income is defined as income that flows long after the creation work is done. If you spent 10 years inventing, patenting and creating sustained sales for a product, then you might have residual income from the “long tail” of the sales. We can think of many products that we would continue to buy even if there were no marketing efforts. Think iPhones, Teslas, Kleenex, and French’s Mustard. The income these brands earn could be considered residual. Therefore, the owners of the brands have an Asset … worth a great deal. Ergo, Asset Income.
Here are some conditions that create only Linear Income in Network Marketing:
- The products may attract first-time buyers, but sustained sales are fleeting.
- Maintaining sales requires constant recruiting, promotion, and management.
- Sales maintenance and growth only occur with contests and promotions.
- Sales fluctuate significantly month to month.
- Sustained sales require the company to always be introducing new products.
- If you “take off” for a month or more, your sales start declining.
- Your company has not proven that it is married to the Network Marketing model for life. It may not be capitalized enough to persevere in the case of adversity or may just not have the ownership resolve to be here paying you 50 years from now. Some owners bail at the first sign of tough times. Some owners bail at the first signs of the ability to “cash out.”
What leads to a Network Marketing income being RESIDUAL?First and foremost, the host company that has created the products is paying you to promote them. You can never have Residual Income if the host company is not around to pay you. Residual means virtually forever. And while no company has yet to be in business “forever,” some have proven to be good bets. Sharing the spot for “most important” is the product line. Legitimate Network Marketing income only comes from product sales. We do not earn anything from recruiting people, holding events, social media efforts, or recognizing the successes of our teams. We only get paid when people buy our products.
There are two categories of product sales:
- New product sales to brand new customers.
- Repeat sales to customers that buy again and again.
Here is a list of conditions that lead to Asset Income:
- The sales culture is “quiet.” Specials, promotions, new products, discounts and contests are exceptional events rather than constant white noise.
- Sales are predictably constant from month to month.
- Sales do not depend on any one sales leader or system. The sales are effectively spread out amongst a large database.
- The relationship between Retention and Recruiting are high enough to create sustained growth.
- Repeat customers are 90% of sales, demonstrating that the products are carrying the day.
- Sales leaders (those who are successfully engaged in building their own teams) make up 5% of your total team, including customers. Sales leaders are the only members of your team/customer base that intentionally create growth.
- The company has proven that in its DNA is to pay, and pay you forever. They bleed Network Marketing. They have proven they can and will persevere through tough times and will not lose focus or their commitment to you during bonanzas of success.