Launching a new Direct Selling Company (home party or MLM) and getting it off the ground can be a very complex and difficult process. Especially if you’re doing it on your own. Unlike many things, the world of Direct Sales is not something that you can just YouTube and find easy-to-follow tutorials on how to effectively build and grow a Direct Selling Company. There are many areas that must be considered, such as building your compensation plan (and keeping it legal), training your field, compliance, legal, your sales pitch, how to motivate your sales force, recruiting, retention, logistics, what software are you going to use, how do you keep a balanced budget, communication with your field, customer service, social marketing, and the list goes on and on. The best practices for each of these disciplines is truly unique for the world of direct selling. Much of what drives the peculiarities is the fact that your products will be demonstrated and sold by an army of independent field sales reps – who will make a decision each day whether or not to work their business and stay with your company.
Because of these complexities, only 20% of all direct selling startups are in business after one year. The other 80% have failed in their attempt to launch. However, what we have found is that if the entrepreneurs will take the time early to learn and follow proven best practices and processes for starting and running a direct selling company – that success rate is as high as 80% still in business and growing after one year.
We want more successes and less failures! We’re sure you do to! Failures are bad for the industry and leave thousands of independent sales reps’ dreams laying in the wake. Successes breed confidence and good will in the direct selling industry and help independent sales reps reach their dreams and aspirations. To increase success rates – YOUR success, we have brought together in one place, at one event, the industry’s leading experts in these different fields to educate you on Best Practices of Starting, Building, and Growing your Direct Selling Business.
The Direct Selling Symposium is a place of education, learning, and mentoring – and includes front-of-the-room instruction as well as individual coaching sessions. It is NOT a time when services are sold – in fact it is prohibited. Whether you’re an entrepreneur starting from scratch or leveraging your existing business by diversifying into the direct selling space – attending the Direct Selling Symposium will shave years off your learning curve, and dramatically increase the likelihood of success. We look forward to seeing you there!
So . . . you’ve decided to start a direct selling company. Or at least you’re seriously considering it. You’re contemplating entering into that great world of MLM or party plan marketing – or some cross between the two. I still remember when I entered direct selling. It was over a decade ago. I was acting as an advisor to executive teams and I was leveraging specific areas of expertise that I had developed outside of network marketing. I had started, operated, and sold a half-dozen businesses of my own. As I began my career as a consultant to direct selling companies, a colleague who was experienced in the industry gave me some sage advice. He said: “Dave, about 70% of what you know about traditional business will apply with just a bit of adaptation. But the other 30% is REALLY different.” I remember thinking at the time – how different can it really be? Well, it’s very different.
Here’s what you’re getting into. Your products or services will be sold through a network of independent representatives – let’s just call them distributors. Each of those distributors will decide to “join” your company because someone they know and trust (another one of your distributors) recommends it to them, and because they like the products or services you’ll be offering. Most of them have probably already had some kind of personal experience with network marketing – and most of the time it probably wasn’t all that positive. If they haven’t been directly involved in MLM before, they most likely have some negative stereotypical ideas about it. But they’re taking a leap of faith. They hope your products and services actually provide the benefits that have been touted. And they hope they can make some extra money, like their friend has told them. They hope you’re a great company with a great leadership team, as has been promised. But they don’t yet believe. And they don’t even know you, your company, or your executive team yet – let alone trust you!
This is the very person, times thousands, who will make or break your business. And every day they will decide whether or not they are going to continue using your products or services and whether or not they are going to recruit others. They will do that based a great deal on how they “feel” and how much trust and belief they have in you and your company. And how you handle every single interaction with them, from the time they sign up, to when they open their first shipment, to every call they have with your customer service team, to the training you provide them, to the compensation system you offer, and on and on – will determine whether they move forward and do anything, or do nothing. A few even slightly negative experiences because you haven’t got the right systems in place – and you’ve lost them! And without them, you have nothing!
So, attending the Direct Selling Symposium is an acknowledgement that you are stepping into a unique, and very powerful, and potentially very lucrative business model – and that you must learn the best practices from industry experts who are most qualified to teach them to you. It is an investment in your future, and dramatically increases the probability of your success. Welcome to the wacky world of direct selling! I look forward to meeting you, and serving you!
We have received interest from a viable COO candidate and I was wondering if you had some criteria for me to use to compare his past experience.
If he seems as good as I think he is, would you suggest setting up a conference call so that you can interview him with me after I speak with him first?
It’s an important hire. As a general rule, I’m always inclined to start the search for and MLM Operations executive at an Operations Director level, and with someone who is hungry and eager to get out of bed early in the morning and work all day. Many COO candidates in MLM have “been there, done that” and will thus prefer to have someone working in the mud and blood of the business.
I wanted to put that out there, with the caveat that the tradeoff is the risk of substandard operations practices and standards that the right COO will bring.
The main criteria I will personally demand is that they don’t have an office to sit in, and that they have a finger on the pulse of the business and how every single transaction and touch point and behind-the-scenes process or system is impacting the individual distributor. They will have very little time to sit, although a conference room with a huge whiteboard is an excellent venue, and it can provide privacy when it’s needed. It’s a different mindset for most COOs I have either worked with or hired, and some simply don’t see themselves signing up for an hour weekly on the phones taking distributor service calls, for example. That’s the real test.
The right person will not only say that this is important to them, but they will demonstrate it from the very first day (and even in their interview). And, they will need to be accountable to the Chief Experience Officer (whatever title you assign that person, or in your case, that could very well be you). Recall from our discussions that the CXO (Chief Experience Officer) is the most powerful position in the company, since it is there job to craft and protect the distributor experience. The distributor service group should report to this officer, and the COO will be constantly asking, “How can I improve operations to meet with your expectations?”
They must be a “servant leader” who is devoted to the notion that their purpose is to serve and clear a path for each person on their team who reports into the COO office. It’s usually viewed the other way (deep, deep down), and I’ve separated myself from companies that take the traditional “cushy position” for their CHIEF officers. CHIEF means that they have the authority, smarts, and experience to know exactly how their organization thinks and how they can best help each individual and team in the organization. They clear hurdles, they serve as mentors, they are coaches when they need to be, and above all, they are serving from early morning until end of day. Not vice versa.
The rest of it is detail — fulfillment, supply chain, quality assurance, technology, purchasing, inventory, forecasting, supporting the distributor service group, root cause analysis, warehouse and logistics, bills of materials, receiving, invoicing, bar-coding, pick systems, working conditions in the warehouse, morale, and on and on and on.
My questions will follow an internal “compass” that I have learned to listen to when I interview. For instance, I might start by asking “what is your view of a distributor.” It’s a vague question, and they will fumble around to understand what I am asking. The nature of their questions back to me will reveal quite a bit about how important the distributor will be to them. Listen carefully and you will see what I mean.
Obviously a strong bias and views, that these create fast-growth, highly successful MLM and Home Party companies.
Take care, Terrel
Terrel Transtrum is an advisor, consultant, and training expert serving MLM and Home Party Companies worldwide. He is the CEO of ServiceQuest, a 25-year-old company that specializes in growth strategies for MLM and Home Party Companies. He is the author of “Hearts and Smarts” and “Launch Smart!” Contact Terrel at firstname.lastname@example.org or call him on his cell 208-520-3895.
Every year we interview hundreds of field leaders representing a broad range of companies, products, and approaches. There are some consistent best-practices that emerge that cause field reps to excel at retaining those they recruit. Here are the first five best-practices that field retention leaders live by:
Ask, Listen & Act
A pre-requisite to really knowing and serving a field team is the desire and skills to ask, listen and act. The results consistently astound those who effectively apply these practices.
o Get to know your customers and business recruits at a personal level.
o Ask for feedback, input and insights.
o Become an expert listener.
o Seek understanding.
o Act on what you hear, perceive and promise.
Practice #7: Recover when necessary and possible, be proactive about retention
Recovery’s a great way to keep team members and customers. Recovery is necessary when you have blown it. Recovery must be a very strong part of your retention effort, meaning, you can’t leave recovery to chance.
o Be prepared to recover.
o When things go wrong, and they often do, follow the basic steps of recovery: sincere apology, involve your team member or customer in how to handle the problem, quickly fix the problem, do something extra, follow up, and ask for repeat business and the opportunity to rebuild.
o Always take responsibility for goofs and become a sturdy, reliable bridge between the company, disappointments and failures on the one side and your customers and recruits on the other side.
o Learn the economics of the lifetime value of a faithful customer and resolve to invest in each individual customer.
o Perfect the ability to turn problems into strong relationship building blocks.
Practice #8: Regularly and meaningfully recognize
Once we learn to credit the people who are actually our customers and faithful workers in the field, the entire organization can achieve greatness. The key is to figure out how to convey to them our honest appreciation for their contributions and to realize the success of an organization depends less on motivating the top 10 percent and far more on motivating the other 90 percent.
o Recognize your customers and business builders from the heart.
o Remember that the right awards, recognition and celebration represent victory of will over doubt.
o Be consistent, be genuine and be accurate.
o Develop spontaneity and magic.
o Remember that it all comes down to motivation, and the heart of motivation is recognition and encouragement.
o Use recognition and rewards that are valued by the recipient – remembering that money is an important (but not the only) motivator.
Practice #9: Train and develop your team; constantly learn from retention leaders
Successful retention leaders take responsibility for training and developing their teams; and they, themselves, are lifelong students of the best practices.
o Always be learning and stay on higher ground.
o Share what you learn, don’t hold back; remember that each individual in your organization is at a different level, has different needs and responds in different ways.
o Use and contribute to the company’s training systems and materials.
Practice #10: Generously Give Warm Fuzzies
“Warm Fuzzies” refers to those special extras that provide the glue in a business relationship. Retention leaders understand what they are and how to use them. They are different for each leader and each recipient, but they all have in common a single vital element: a warm fuzzie creates and strengthens relationship ties. TLC (Tender Loving Care) comes naturally to some, has to be created by others. Either way, develop the feeling and give the nurturing care.
o Keep it simple and from the heart
o Develop your own style, techniques and flavor of TLC
o Give generously
Terrel Transtrum is the CEO and Founder of ServiceQuest, The Direct Selling Experts. email@example.com
The following is part 6 in our 10-part series entitled “10 Steps Towards Launch!” by Terrel Transtrum, President/Founder of ServiceQuest. If you are thinking about starting a new direct selling company, contact us today!
The sixth of ten business segments that we help our clients to implement is STAFF. Because a successful MLM is all about relationships, the MLM staff must be selected and developed to provide the highest degree of personable and warm service. Here are some best practices to help you select and hire the best staff for your new MLM.
- Follow a Comprehensive Staffing Plan
- Implement a Human Resources Administration System for your New MLM Company
- Create an Employee Orientation System to Ensure Consistent Training of new MLM Staff
- Seek Balance in Your Staffing Plan
- Dedicate Sales, Marketing and Service Executives to their Respective Roles
- Provide the MLM Distributors with a Chief Customer Officer
- Coach and Develop the Executive Team to help them keep up with Growth
- Develop an Effective Accounting Staff
- Seek and Develop the Right Technology People to Fit your MLM Culture
- Engage with a Financial Officer or CFO That Understands MLM Business Nuances
Here are examples of descriptions that you might write for your MLM Launch Best Practice:
- Staffing Plan – We have a comprehensive staffing plan to ensure that we select and develop the people who are right for our culture. We have determined how many employees to hire, when to hire them, and what their various roles and assignments will be at launch.
- Field Support – We have a CCO (Chief Customer Officer) or Director of Field Support that is dedicated to understanding and empowered in all aspects of the enterprise in order to fulfill the three-fold mission of field support: delight the rep, improve the company, develop service professionals.
Staffing is at the heart of the people business, and selecting the right staff will pay huge dividends as your MLM company grows and expands. For more information, contact Terrel Transtrum firstname.lastname@example.org
The following is part 4 in our 10-part series entitled “10 Steps Towards Launch!” by Terrel Transtrum, President/Founder of ServiceQuest. If you are thinking about starting a new direct selling company, contact us today!
The fourth of ten business segments to help a new MLM company properly launch is TRAINING. MLM Training consists of the following key MLM best practices:
- Create a Training Culture
- Follow MLM Training Best Practices
- Invest in Successful MLM Compensation Plan Training
- Properly Profile new Distributors When they First Arrive
- Develop Powerful MLM Training Content
- Use an Effective Online MLM Training Center
- Construct a Successful Fast-Start Training System for New Distributors
- Develop Interesting and Useful Orientation Training
- Create a Quality Presentation of the Company
- Align Training with Success Drivers and Key MLM Builder Behaviors
Here are examples of descriptions that you might write for your MLM Launch Best Practice:
- Best Practices – We maintain a comprehensive library of direct selling best practices, templates, and processes. Our training programs are up-to-date and follow best practices methodologies. We have an easily duplicatable system for our field to follow and teach others to do the same.
- Content – Our training content is based on best practices, is created to drive behaviors, and reflects our unique culture and offerings. Our field communication strategy includes predictable communication and recognition of our field leaders’ accomplishments and the up-and-coming stars.
- Alignment – Our training is designed to focus on behaviors that drive success (at all levels) and it aligns with the incentives and promotions that have been designed to reward action and progress.
As you develop the details of your MLM Training checklist, keep in mind that MLM is a business of people and relationships. Design the training to meet individual needs. For more information, contact Terrel Transtrum email@example.com.
We ask the MLM Consultant “How long does it take to make money in MLM?”
If you are like most, you have heard of the plan to two people who sponsor two, each of whom sponsor two until the genealogy is as numerous as the sands in the sea. On the one hand, this kind of MLM forecasting is just fine, as long as it’s only about numbers. But when reality is factored, hosts of variables make for an entirely different exercise.
While MLM forecasting is not an exact science, any hope of a reasonable estimate turns on the informed application of human behavior in the key equations of recruiting, selling, managing, leading, and retention.
We have studied the trends and forces that drive the important questions of “why people join, why they stay, and why they leave.” How long it takes for them to make money becomes the key metric in determining how long it will take your MLM company to also make money, especially the profits that fuel growth and expansion.
Too often, distributors have expectations that are not met, and often will never be met. Commonly this comes from the realization that they simply do not understand how successful MLM really works.
Making money in MLM, as in any business, depends on how well a distributor applies the fundamental skills of prospecting and selling.
Occasionally, a distributor will enter the game with such experience, such vision, and such consistent commitment of resources that they will shoot to the top and stay there. A closer look at these “overnight success” stories will reveal that the success is a culmination of years, even decades, of learning now to make money in MLM—along with the failures, discoveries, and refinements along the way.
As a rule of thumb, we’ve never missed the mark by etimating that a business will take (on average) from 500 to 1,000 active MLM distributors or home party plan consultants, to set a foundation of break-even revenues. Carefully managed, this base can—and often does—sustain the next round of growth, where the growing margins provide much of the necessary capital for funding inventories and overhead.
Factors that contribute to making money in MLM include these MLM growth principles:
- An effective fast-start program and incentives that fuel early excitement and action
- Immediate and effective training for MLM distributors
- MLM compensation plan elements that reward early, key behaviors
- MLM products that are valuable, exciting, and enduring
- MLM company leaders with vision, stamina, and tenacity
Whether your goal is to break even in MLM as early as possible or to create forecasts that look far into the future, the key to projecting MLM sales and growth is to understand the human factor and apply the known MLM best practices to help you determine how long it may take to make money in MLM.
For help with MLM forecasting, contact us for our newest version of the MLM growth and forecasting software used by LaunchSmart clients.