Part of the guide: Network Marketing Lead Generation
I’ve been part-time in this industry since 2002. Over twenty years of watching companies launch, peak, and quietly disappear. And in all that time, I’ve never found a faster filter for “is this thing real?” than one question:
If the compensation plan vanished tomorrow, would anyone still buy this product?
That’s the end user customer test. It sounds simple. Almost too simple. But most people never actually run it, because running it honestly means admitting things about the opportunity they just joined — or the one they’ve been building for three years.
This guide walks through how to run it properly on any opportunity: network marketing, affiliate, high-ticket coaching, a token, a trading tool, a prediction market. The mechanics are the same. Only the costumes change.
In this guide
Why regulators care about this exact question
This isn’t a philosophical preference of mine. It’s close to the legal center of gravity.
The FTC’s staff guidance for multi-level marketing puts it plainly: a company’s compensation structure matters more than whether it has a product. In their Business Guidance Concerning Multi-Level Marketing, staff note that having real products — and even many actual retail customers — doesn’t automatically mean a company isn’t a pyramid scheme. What they scrutinize is whether rewards flow from genuine demand or from participants buying to qualify.
The guidance specifically flags patterns where upline participants get paid for downline purchases “without regard for whether the product was consumed, retailed profitably, or discarded,” and where participants can hit mandatory volume targets through their own purchases alone.
The FTC’s consumer-facing page on multi-level marketing businesses and pyramid schemes makes the same point in plainer language for the person considering joining.
Federal courts have leaned the same direction. In the BurnLounge case, the Ninth Circuit looked at whether participants were buying packages because they wanted the product or because they wanted the income opportunity — and found the motivation behind the purchase was the thing that mattered.
So the end user customer test isn’t me being difficult. It’s roughly the question a regulator would ask, applied by you, before you spend two years of your life on something.
The five checks
Run all five. Passing one or two means nothing; the weak opportunities always pass a couple.
1. The stranger check
Find a person who has zero interest in making money with the company. Not your downline. Not your upline’s wife. A stranger who would never in a hundred years attend an opportunity call.
Would that person pay full retail for this product, more than once, if they’d never heard of the comp plan?
If you can’t picture that person clearly — name, situation, why they’d buy — you don’t have a product. You have a qualification fee wearing a label. I’ve written more about this failure mode in the complexity trap and the real customer, because it’s the single most common place people get stuck without knowing it.
2. The price parity check
Take the product to a search bar. Find the closest functional equivalent sold by a normal company with no distributor network.
You’re not looking for identical. You’re looking for the ratio. If the opportunity’s version costs three or four times what a comparable product costs on the open market, the difference isn’t quality — it’s the commission structure baked into the price. Somebody has to absorb that, and if it isn’t a genuinely enthusiastic customer, it’s your distributor.
A premium is fine. Premiums exist everywhere. But a premium a stranger would knowingly pay is very different from a premium only an insider tolerates.
3. The requirement check
Read the compensation plan and answer one question: can I earn commissions without personally purchasing anything?
Then the follow-up: can I hit rank and qualification thresholds using only customer volume, with none of my own?
If the answer to either is no, the company has structurally guaranteed that a chunk of its “sales” are participants paying to stay eligible. That’s the exact pattern the FTC guidance singles out. It’s also the mechanism that makes people quietly go broke while their “volume” looks healthy.
Many companies have improved here over the last decade. Some genuinely let you build on customer volume alone. Check the actual documents, not the stage talk.
You have been paid late before
You have watched the number on the dashboard not match the number in your account. What is different now is simple: it settles on a public contract you can check yourself, not a dashboard I control.
Read the contract →Most participants earn little to nothing. No income is guaranteed. You can verify every payout on the public smart contract.
4. The quit check
This one is my favorite because it’s unfalsifiable by marketing.
Look at people who left the company twelve months ago. Are any of them still buying the product as regular customers?
Real products retain ex-distributors. When somebody quits the business and keeps ordering because they like the thing, you’re looking at genuine demand. When 100% of departures also stop purchasing, the product was never the reason anyone was there.
You can run this informally — reach out to a few former reps, ask politely, listen to the answer. It takes an afternoon and it will tell you more than any convention.
5. The friction check
How hard is it to cancel an autoship? Return an unopened order? Get a refund inside the stated window?
Companies with real customers make leaving easy, because they know most people won’t. Companies dependent on qualification volume make leaving hard, because the volume is the business. Call support as a customer and find out.
Applying it outside network marketing
The test travels. In 2026 the same structure shows up wearing very different clothes.
A token whose primary utility is referral rewards fails the stranger check instantly — nobody buys it for what it does, they buy it for who they can bring. A prediction-market “opportunity” where the affiliate payout dwarfs any realistic trading edge fails the price parity check. A $5,000 coaching program whose curriculum is mostly “how to sell this coaching program” fails the quit check by design. I’ve unpacked how these structures migrated into crypto and prediction markets in the MLM playbook didn’t die, it bought crypto.
Ask the same five questions. Change nothing.
How to score it honestly
Don’t average the results. Weight them.
Checks 1 and 4 — stranger and quit — are close to disqualifying on their own. If no non-participant would buy it and no ex-participant kept buying it, you’re done. Nothing in the comp plan fixes that.
Checks 2, 3, and 5 are severity dials. They tell you how much friction you’ll face and how honest the company is being about the economics. A company can fail the price parity check and still be workable if the stranger check is strong — luxury and premium categories do this legitimately.
Where this gets uncomfortable is when you’re already in. There’s a real psychological cost to running an honest test on something you’ve defended publicly. That resistance is worth naming rather than avoiding — why successful people self-sabotage covers the same pattern in a different context, and the mechanism is identical: we protect the identity, not the outcome.
For a broader vetting checklist that covers the things this test doesn’t — leadership history, income disclosure quality, sudden compensation changes — see my writeup on MLM red flags.
The version I’d want a friend to use
If you only remember one line from this, make it this one:
A product needs customers who would be sad if it disappeared.
Not customers who’d be sad if the income disappeared. Customers who’d be sad if the product did. Everything above is just five ways of checking whether those people exist.
Find that group before you build. If they exist, the business gets simpler — you’re selling something people want. If they don’t exist, no amount of activity, mindset work, or team building will manufacture them.
If you’re early and trying to figure out what to build on, start here — it’s where I’ve put the foundational pieces in the order I’d actually want someone to read them.
Three posts a day. One email a day.
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Get paid 100%, on-chain, the second the sale clears
Most affiliates earn little, and that is disclosed up front. The difference here is not a promise about what you will make. It is that you can verify every payout yourself, on a public contract, in about twelve seconds.
See how the payout works →Most participants earn little to nothing. No income is guaranteed. You can verify every payout on the public smart contract.
The BurnLounge citation is doing real work here, courts asking about the buyer’s motivation rather than the product’s existence is a genuinely different legal test than ‘does a product exist,’ and stricter than most of this industry seems to understand. I’d push on the scoring section though: treating checks 1 and 4 as ‘close to disqualifying’ without a threshold is doing the same fudge the piece criticizes in other people’s due diligence, it just moved the fudge from the comp plan to the checklist.
Twenty-two years in corporate insurance and I never once saw ‘would a stranger buy this’ asked in a strategy meeting, which in hindsight explains several products I watched fail expensively. Raj’s point about the scoring being fuzzy is fair, but I’d say the corporate world doesn’t even have a fuzzy version of this test, it has quarterly targets and the assumption that if sales happened, demand must have caused them. This piece’s five checks are cruder than a corporate framework and more honest than one.
Reframing Graham’s point as a process: Corporate -> revenue happens -> assumed caused by demand -> no falsification step. This test -> revenue happens -> five checks -> falsification attempted. The difference isn’t that one industry has motive-checking and the other doesn’t, it’s that this framework makes falsification a required step instead of an optional one. Failure point in the piece itself: no weighting given between check 2 and check 3, so two people scoring the same company honestly could land in different places.
Tomas’s diagram is exactly what I’d spend three weeks building instead of running the five checks in an afternoon. Noticing that about myself as I type it.
Graham says corporate doesn’t have even a fuzzy version of this. Doesn’t it, though? Ever sat through a renewal meeting where the client only stayed because switching cost more than staying? That’s the friction check, check five, wearing a suit. Look, of the five, the quit check is the only one I’d trust without a witness in the room. The rest bend under a good enough story.
I ran something close to check four, the quit check, without knowing it had a name. Four years into building online, I went back and messaged eleven women who’d left the same company around the time I’d started. Nine of eleven had stopped buying the product entirely within about two months of quitting. Two still ordered here and there, mostly the one item they’d genuinely liked before any of it started. That ratio, nine against two, is the number that would have told me everything I needed to know, and it would have cost me an afternoon of messages instead of the four years it actually took me to notice the pattern myself.
The part that stayed with me is the line about the psychological cost of running this test on something you’ve already defended publicly. That’s not really a business question, it’s a character question, whether you’re willing to know something inconvenient once you’ve told people you already know it. Most of the five checks are just arithmetic. That one paragraph is the harder ask, and it’s the one most likely to get skipped.