<img height="1" width="1" style="display:none" src="https://www.facebook.com/tr?id=1960079364075836&amp;ev=PageView&amp;noscript=1">
Reducing Risk in Multi-Level Marketing
Back to all posts
MLM Industry
Share post

Reducing Risk in Multi-Level Marketing

If you work within the multi level marketing or network marketing space, or are considering creating your own MLM business, you are probably not a risk-averse individual.  While the business model continues to thrive globally (generating billions of dollars for the most successful companies), the high rate of failure remains constant.

Banks and credit-card processors, on the other hand, are not known for taking risks.  Aside from loans and financing, the high-risk nature of the industry can impact daily operations such as processing credit card payments, both online and in person.

Where is the Risk?

As with most modern businesses, network marketing companies rely on credit card processing to facilitate the majority of payments. Whether for card-present sales such as at a hosted party, or online sales via affiliate links, providing your customers with multiple payment options is critical.

We usually think of a credit card transaction as a single event - a card is swiped and funds flow from the consumer’s account to the seller.  However, as a protection for the consumer, this is not always the case.  For any number of reasons, the consumer may initiate a chargeback  – the reversal of a previous charge.  Multi level marketing companies often suffer from higher than average chargeback ratios, and this represents a risk to the financial and processing companies involved in the transactions.

For credit card processing companies in particular, the chargeback ratio is a critical measurement in determining the credit worthiness of a client. Even a small number of chargebacks in a month can lead a credit card processing company to cease business with a client.

How to Limit Risk

Even in a volatile industry, there are a number of steps you and your business can take to limit your perceived risk in the eyes of banks and financial partners.

Great Customer Service

It goes without saying but in a competitive industry – stellar customer service is very important.  In a rush to create a new customer, it’s easy to overlook the potential for a repeat customer.  Keeping existing customers happy and active is significantly more profitable than finding new customers.

Be sure to keep the lines of communication open with all your customers.  Follow up with them after a sale, and make it easy for them to contact you if they have any problems with your merchandise.  If there is a problem, work with the customer to solve it before they request a chargeback on the sale.

And don’t over-promise and under-deliver.  It’s tempting to promise the earth, moon and stars when attempting to close a sale.  But if the customer feels the product does not live up to the hype, the chances for returns and chargebacks increase.

Clarity

Your customers will often review their credit card and bank statements to ensure no fraudulent or erroneous charges have hit their account.  If they see a transaction that doesn’t look familiar, there’s a good chance they will initiate an investigation or chargeback - even if they are happy with the product.

Make sure your customers know your trading name, and work with your credit card processor to ensure this name appears clearly on bank statements.

Security

As mentioned earlier, a primary goal should be to create repeat business.  And repeat business requires trust.  Ensuring your customers’ payment details are handled securely is a building block of that trust.

Work with your chosen credit card payment processor to understand best practices.  Make sure payment details such as credit card numbers are handled properly.  When possible, create recurring payments for your customers so that you only need to handle their credit card or payment information one time.

Work with a Partner

As highlighted above, there are many ways to reduce your exposure to risk in a volatile industry such as multi-level or network marketing.  Perhaps the simplest is to work with a payment processing company that will help you to understand the risks, eliminate some for you, and work with you to minimize the rest.

At CardConnect, we work with high-risk industries such as those in the multi-level marketing space to simplify the process and reduce the risk.  Just like your business, we strive to create long term partnerships with our clients, and provide a number of benefits to those in the network marketing business:

  • Industry-low processing rates (even within high-risk industries).
  • Best-in-class security regardless of where or how you’re processing payments.
  • Dedicated on-boarding team to get you established.
  • And long term assistance in leveraging our established network to create new sales.

Partner Program

by Grace Otaiza

VP of Operations at CardConnect FL. CardConnect is an innovative and rapidly growing payment processing company providing a suite of services to the HVAC sector. Since its inception, CardConnect has quickly grown to process billions in transactions each year for more than 60,000 businesses across the U.S., ranging from Fortune 500 companies to local SMEs. Our mission is to make accepting payments as simple and easy as possible while providing unmatched security for our customers. Give our gateway a test drive and enjoy all of our out of the box solutions, all in one place and at no additional costs. Store, process and protect. We put all of these solutions at your fingertips.

Connect with us