Okay, now that we got that out of the way, what is an MLM One-up plan? Here's how it works. You come across a site: say a guy sitting in a lawn chair at the beach sipping his cocktail, and the site claims limitless wealth is yours for the taking. But this is only for the real serious people who are willing to prove they're worthy of this information.
How do you prove your worth? You shell out $50 dollars right from the get-go to "read all about it". One-up plans require that you first pay to receive information and/or enroll.
I've already eluded to a prime example, known as Ty Coughlin's "Reverse Funnel" system i.e. the One-up plan.
After you pay your initial $50 just to read all about it, you then discover that you are being sold a lifetime membership with a timeshare vacation company known as Global Resorts with a hefty price tag of $2995.
You are paid for every new membership you sell, in this case $1000. Here is why it's referred to as the "One-up" plan. The royalties on your first sold membership, skips you, and goes to your sponsor. Every membership you sell after that goes to both you and your sponsor.
"It's Elementary, My Dear Watson..."
Now you're thinking, “wow! $1000 for each membership I sell, that's pretty good”. Wait a minute, do you really believe that selling $3000 memberships will be easy? One-up plans have one big flaw in that they are not duplicable. Your ability to earn money is directly proportional to the degree in which the product or service is duplicable.
Meaning, the greater the number of people who can copy exactly what you do and succeed at it as well, then the greater wealth you will all achieve. So then, a successful MLM will offer a product or service that the common man or woman can easily afford and utilize. You don't want to sell to the top 10% and ignore the remaining 90%. This is unreasonable and makes your job a whole lot harder.
Each member is required to set up a website using the system at a cost of $100. They give you all you need to do that, but it will cost you an additional $30 (very unimpressive and basic) up to $300 every month for the Rolls Royce version.
How are you going to get visitors to your site? You advertise. The Global Resorts Network does provide you with many different types of ads but that's extra. I can tell you from experience, effective advertising is not cheap. You must budget a certain amount every month for advertising. Let's go really conservative and keep it to $100 a month.
Ready, Set…Gotcha!
Okay, so you will undoubtedly get a few curious enough to pay the initial $50 for information. What happens next? They drop out because they can't afford the $3000 price tag and/or are just not interested in getting involved in a timeshare vacation program. Again, it's not duplicable if its too expensive.
Most people today have little left for "extras" and so will not go any further. Many will leave you behind as they go searching online for more information and find more expensive and alluring sites that offer them a little more than you do. This will likely account for a good 75% - 90% of people who walk away.
In the various different sites and sources I've researched, I have not seen any mention of a refund for the initial $50 so I don't know if they offer one or not.
I've been involved in timeshare program before. Let me tell you that just trying to reserve one vacation week anywhere is very difficult. As the number of members increase, availability decreases. Thus, when availability decreases the value of the product also decreases. So , the more memberships sold, the less they are worth. Try selling that.
The Reverse Funnel marketing system is not alone in its efforts. Currently there are at least three different marketing systems out there promoting the same memberships to Global Resorts. Carbon copy marketing, I believe is another one. Since they are all promoting the same product to the same few who have money to spend, you are now competing against each other.
The Nitty Gritty
Okay, now let’s talk numbers. Now that you are much better informed, how long do you think it will take you to sell two memberships (remember, you don't get paid on the first)? Let's say three months if you're really lucky. So, in your first three months you've spent:
• $50 initial fee
• $100 for the website
• $3000 membership fee
• $90 for the basic network fee ($30 x 3 months)
• $300 in advertising costs ($100 x 3 months)
Your total expenses for your first three months add up to $3540. So having sold two lifetime memberships during that time, you've earned your first $1000. That still leaves you $2540 in the hole. Of that, I estimate Ty has made approximately $540 from you just for starters.
Okay, lets give it another three months during which time you've sold another two memberships. Add to your still outstanding $2540 three more months of advertising expenses ($300) and three months of network fees ($90). Now your total expenses have increased to $2930.
Since you've sold two more memberships, you also receive $2000. Now you've reduced your expenses to $930 but you still cannot claim a profit, can you? On the other hand, you have added a grand total of $930 to Ty's bank account. He smiles and waves.
Another three months go by, nine in all, and you’ve sold two more lifetime memberships. You’ve also added another $390 to your expenses which totals $1,320. Finally, after nine months you make a profit of $680.
Congratulations! Your told now is the time to capitalize on your success! If you really want to increase your numbers, spend more on advertising and upgrade your web site. Where do you think that will land you?
This example is very basic and very conservative to prove a point. I'm not saying there's no ability to make a profit with the Reverse Funnel system. What I am pointing out is it's not as easy as it sounds. Even if you do stick it out this far, statistically over 60% of those under you will not. It's also very likely that it will take your own recruits a lot longer to build their network.
In the meantime, Ty Coughlin is sitting pretty as he makes money hand over fist on each person's monthly fees and charges for using his system. During your nine months of hard work, you've given him at least $1320 of your money.
If you're still interested in pursuing the program, at least you are now going in with your eyes wide open. Keep in mind, this example did not account for "Uncle Sam" which will take a bigger bite of out of every check you receive, further delaying the time you finally break even and go beyond. Just make sure you’re in it for the long hall.