My first network marketing adventure - Part 2

So we needed to figure out how to get more customers or bigger customers.

We looked at what our sponsor did - a number of shows every year. You know, tradeshows, where vendors pay to have a booth and people pay (generally) to get in, and the only people guaranteed to make money are the ones putting on the show.

Well after a few tries (OK, probably 5 or 6), we got fairly good at converting shows into customers, but those customers would not always make that first order. We found that once customers made the first order, they generally stayed around for quite awhile because most people really like the products

We also got a few accounts (places that did oil changes or sold oil products) both through the shows and by just calling on local businesses. These accounts made a difference to the bottom line faster just because AMSOIL pays better (initially) for these type of accounts.

So we plugged away, doing 5-10 shows per year, spending some very long hours at some of those shows. (I especially remember the 10 straight days of 12-13 hour days at the Kansas State Fair.) We eventually determined that our effort was perhaps not yielding the rewards we were looking for, and we began to look for other opportunities (especially my business partner).

At the end of the day, we also realized that an LLC was not the greatest structure for a network marketing business, we split up the customer base (which was already largely done anyway), and we went our separate ways.

I still love AMSOIL products but I really don't market them aggressively. My wife's car is still covered in AMSOIL propaganda, but only because I am too lazy to try and take everything off.

Our checks now run $100-$350/month on an average of an hour or so of work. Nothing to set the world on fire, but the money on top of a great learning experience has been very nice.

Let me summarize some of the key points of my first network marketing business:

What I love about AMSOIL1) Fantastic products
2) Reasonably priced (much more benefit than other synthetic oils for just a little bit more)
3) Once customers start using AMSOIL, they keep using AMSOIL (goes back to #1 & 2)
4) Ability to earn money a lot of different ways (different account types, etc)

What I don't like as much about AMSOIL
1) The compensation is not competitive with other network marketing companies. Most of this stems from prices being too low - seriously, prices per quart of oil are only slightly higher than they were in the 1970s. People generally don't buy AMSOIL because of the low price, but AMSOIL (corporate) thinks they do. This does not leave enough compensation for dealers to make it competitive with other network marketing compensation plans.
2) AMSOIL is somewhat embarrassed to be a network marketing company. I don't know why this is, but they push direct sales to accounts rather than sponsoring other dealers into the bsuiness. I understand there is some stigma associated with network marketing, but you ought to embrace it if that is your distribution method.
3) Oil is complicated! Unlike other products (like nutritional juices, for example) where there are only one or two options, for synthetic oil and filters you have to look up the vehicle type in order to select from several different grades of oil and many different filter types. This is not convenient for either the dealer or the customers. The dealer has to be an expert, which hurts the duplicatability (is that a word?) of the business - and duplication is the foundation of network marketing (of course, see #2 above).

Lessons from my first Network Marketing Experience
1) Have products that you love! It is no fun learning about products and talking to people about their applications if you have no interest in the product itself. People also buy based upon emotion and justify with logic, so the emotions you convey are supremely important.
2) Have products that people buy more than once a year! There are a number of reasons for this. It is good to have relatively frequent contact with your customers. It is
3) Have higher-end products available for your best customers. Most businesses have more expensive, more profitable products for those customers who want the best or just more. With AMSOIL, that is very limited - there is better oil that costs $2/quart more retail or there is transmission fluid, grease, etc, but these generally last even longer than the synthetic motor oil.
4) Have distribution that matches your products. When AMSOIL was the first synthetic oil for cars and cost $5/quart in 1972, network marketing was the correct distribution method. In 2007 when it is selling for less than $6/quart and other synthetic oils are selling for more than $5/quart, I am not sure network marketing is the best method.

(By products, I of course mean products or services, depending on your particular business.)

Hopefully someone got some value out of that long story. It certainly helped me to verbalize some of my frustrations with AMSOIL's business model over the past few years as well as review all of the things I still like (which is why I still sell the products).

I do not recommend AMSOIL as a business for those looking to earn a "rockstar" passive income. I estimate the top earners in AMSOIL make in the $300,000-$1,000,000/year range, where top earners in other network marketing companies make 10x that.

On the other hand, $300k+/year ain't too shabby, and this could be a great business for someone passionate about cars and interested in becoming an expert on the products.

Stay tuned for "My second network marketing adventure...", coming in a future installment.


PS - If you want to go check out the AMSOIL products, use this link to go to my store. Unless you're analytical and love trying to figure things out for yourself, though, it is easier to call (816-896-6566 cell) or email (sfweller@yahoo.com) me for the best solution for your particular situation, even if it does not involve AMSOIL! After having been very active in the business for 3 years, I know more than anyone should know about motor oil and filters :)