Part of the guide: Network Marketing Lead Generation
Most people pick their network marketing company backwards.
They meet a person they like. That person shows them a compensation plan. The compensation plan looks big. Somewhere near the end of the presentation, almost as an afterthought, someone mentions what the company actually sells. And that’s the part nobody examines — even though it’s the only part that determines whether you have a business or a recruiting treadmill.
I’ve been in this industry part-time since 2002. Over twenty years of watching launches, watching companies die, watching people who were “all in” go quiet. The single clearest pattern I can give you: the people who lasted were selling something people would have bought anyway. Everyone else was selling an opportunity wearing a product costume.
Here’s the filter I’d use today, in order.
In this guide
- Step 1: Find out if anyone buys it who isn’t in the business
- Step 2: Would you buy it at that price if there were no comp plan?
- Step 3: Check the consumption rhythm
- Step 4: Look at the retail price against the open market
- Step 5: Verify the claims you’d be repeating
- Step 6: Check the starting cost against what you actually get
- Step 7: Ask whether a professional could sell this without flinching
- Running the filter honestly
Step 1: Find out if anyone buys it who isn’t in the business
This is the first question because it’s the one that eliminates most companies before you waste six months.
Ask your prospective upline a plain question: what percentage of monthly product volume comes from customers who are not distributors?
Not “we have customers.” A number. A real one.
If a company can’t or won’t answer that, you’ve learned something. The FTC’s own guidance on multi-level marketing is direct about why this matters — its Business Guidance Concerning Multi-Level Marketing explains that in a legitimate MLM, participants’ income comes primarily from sales to real customers, not from recruiting. The FTC has also published guidance for MLM businesses stating that compensation should be based on actual product sales rather than wholesale purchases by participants.
So this isn’t my opinion about business quality. It’s the regulator’s own dividing line, and it starts with the product.
I wrote about this at length in the complexity trap and the real customer, because it’s the thing that quietly decides everything downstream.
Step 2: Would you buy it at that price if there were no comp plan?
Answer honestly, alone, before you talk to anyone.
Take the compensation plan off the table entirely. Take the trip, the rank, the recognition, the group chat. Now: is this product worth what it costs, to you, as a consumer?
If the honest answer is “well, once you factor in the residual income…” — you’ve already failed the test. You just priced in the opportunity. Your customers can’t do that. They’re paying retail for a product, full stop, and comparing it to whatever they can buy in a store or online.
A product that only makes sense with the comp plan attached is a product with a customer base of exactly one type of person: people who want the comp plan. That’s a recruiting business.
Step 3: Check the consumption rhythm
Some products are naturally repurchased. Some aren’t. This is a structural feature, not a marketing problem you can fix with better follow-up.
Ask:
- How often does a real customer run out? Monthly is workable. Quarterly is harder. “It lasts a year” means you’re starting from zero every year.
- Does it get consumed, or does it sit? Things people drink, eat, apply, or wash with get used. Things people own — a device, a course, a subscription they forgot about — get abandoned.
- Is the reorder automatic or does it require a conversation? Every reorder that requires a conversation is a job you’ve just given yourself forever.
The math here is unforgiving and nobody talks about it. If your product has a 40% monthly churn, you’re not building — you’re refilling a leaky bucket at full speed. The product’s natural repurchase rhythm sets the ceiling on how big your business can get before it starts eating your time.
Step 4: Look at the retail price against the open market
Open a browser. Search for the closest comparable product not sold through a distributor network. Compare price per unit, per serving, per ounce — whatever the honest unit is.
You’re not looking for “cheapest wins.” You’re looking for defensible. A 20-30% premium for genuine quality, sourcing, or formulation is a story you can tell a customer with a straight face. A 400% premium is a story you can only tell someone who’s already emotionally committed to the company.
If you can’t explain the price gap to a skeptical friend in one sentence, you’ll be apologizing for the price in every single conversation for as long as you’re in the business.
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.
Step 5: Verify the claims you’d be repeating
Whatever the product does, you will be the one saying it out loud. In writing. On the internet, where it stays.
Before you attach your name, check:
- Are the health, income, or performance claims something the company can substantiate — or is the substantiation “testimonials”?
- Does the company’s compliance policy tell you not to say things that its own top earners say constantly on stage?
- Is the science real research, or a study the company paid for and never published?
The FTC’s guidance on health product compliance sets out what’s required to substantiate health claims in advertising — competent and reliable scientific evidence, not anecdote. If the product’s entire case rests on before-and-after photos and a founder’s story, you’re the one holding the liability when someone repeats it wrong.
This is also where a lot of the industry’s ugliest patterns show up. I’ve catalogued the ones I watch for in MLM red flags, and the same playbook keeps migrating into new categories — most recently into crypto and prediction markets wearing a different suit.
Step 6: Check the starting cost against what you actually get
There’s a difference between buying inventory you’ll use or sell, and buying a rank.
Look at the required entry cost and separate it into two buckets:
- Product you’d want anyway at a fair price
- Everything else — position fees, qualification volume, “founder” packages, monthly autoship you don’t consume
Bucket 2 is the number that matters. If the majority of the entry cost is bucket 2, the company is monetizing distributors, not customers.
Also look for a real buyback policy. The FTC has repeatedly treated generous refund and inventory-repurchase terms as a marker of a company that isn’t relying on distributor purchases to survive.
Step 7: Ask whether a professional could sell this without flinching
This is my last filter and it’s the most practical one.
Picture the most credible person you know — a nurse, an accountant, a small business owner with a reputation in town. Could they represent this product to their existing network without damaging how people see them?
If the answer is no, you have a ceiling problem. You’ll only ever be able to recruit people with nothing to lose, and those people leave first. Everything I’ve written about recruiting professionals starts here — you can’t attract credible people to a product that costs them credibility.
Running the filter honestly
Seven steps. Most companies fail at step one or two.
That’s not cynicism. That’s the whole point of having criteria: they’re only useful if they can actually disqualify something. A filter that passes everything isn’t a filter.
I’ll be straight with you about my own position — I stepped back from network marketing seriously in 2017, and this list is a big part of why. Once I started applying it rigorously, the number of companies I could recommend in good conscience dropped hard.
But the ones that pass are real businesses. Product people want, at a price they’d pay, that they buy again because it ran out, sold by someone who doesn’t have to apologize for anything.
If you’re evaluating a company right now, run these seven steps before you run the compensation plan. The comp plan tells you how you’d get paid. The product tells you whether you’d get paid at all.
If you want to see what makes it through this filter on my end, everything I actually use and stand behind is on my recommended products page.
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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.
Small correction worth making since it changes what you actually search for: the FTC guidance the article cites uses “inventory repurchase” for step 6, not “buyback” — the two get used interchangeably in this space but the regulatory language is specific, and it’s the phrase you want if you’re trying to find a company’s actual policy rather than a marketing summary of it. Beyond that, step 6 splitting entry cost into product-you’d-want versus everything-else is the sharpest single filter in the piece.
Priya’s terminology point is useful, but the step that actually stops people isn’t step 6’s fine print — it’s step 1, which assumes you’re comfortable putting a stranger on the spot on a phone call. Some of us would rather write the same question by email and wait.
Ran step 4 on the last product I looked at seriously. Found the closest comparable at a health food store, worked out price per serving, wrote both numbers on a sticky note. Forty percent premium. Could explain that in one sentence — different delivery form, faster absorption, checkable claim. Passed. The company before that was closer to 300 percent and the only explanation I got was “you get what you pay for.” Took maybe twenty minutes each time. Priya’s right that step 6 catches a lot, but step 4 is the one I could actually finish without anyone else’s cooperation.
I could spend a genuinely worrying number of hours on steps 4 through 6 — pricing comparisons, bucket 1 versus bucket 2 math — and it would feel like progress. Four unlaunched projects say it isn’t. The seven steps are good. My problem was never going to be step 1 or 2 like the article assumes. It was always going to be step 4, forever, without reaching step 7.
This reads exactly like vendor due diligence from my old corporate life, and I mean that as a compliment — step 6’s bucket split is basically a procurement team asking what fraction of a purchase order is actually deliverable goods versus overhead dressed up as inventory. The difference is a procurement team has a deadline forcing the analysis to end. Davey’s four unlaunched projects are what happens when nobody sets that deadline for you.
Had a supplier once who couldn’t tell me why their coffee cost forty percent more than the wholesaler down the road — just kept saying premium roast, premium roast, like repeating it made it true. Switched inside a month. Graham’s right about the deadline. In a restaurant the deadline finds you whether you set one or not; the coffee runs out and you have to decide.