Question: Will you explain the difference between MLM and Party Plan?  I think that MLM is the same as Network Marketing, but are these different from direct selling?  And how do I know which is best for our startup?

Answer: “Direct selling” is the generally accepted term the selling system that moves products and services directly from a company to its users and consumers.  The selling is performed by the independent representatives of the company.  Worldwide, companies sell an estimated $118 billion in goods and services through this massive distribution system of person-to-person marketing and sales, with as much as $28 billion of that in the United States.  (Sources: Direct Selling Association, www.dsa.org, and the World Federation of Direct Selling Associations, www.wfdsa.org)

Some MLM Consultants teach that there are three methods of person-to-person selling:

1. Direct Selling
2. Party-Plan Selling
3. MLM or Multi-level Marketing

The LaunchSmart MLM consulting team suggests a subtle distinction, which is that direct selling is the umbrella under which two methods of selling reside: MLM and Party Plan.  Direct selling is a generic reference to the movement of goods and services directly from company to consumer, where sales commissions are associated with the sales efforts of the company’s independent sales force.  Party-plan sales commissions are generated through group selling, often with retail commissions plus incentives for gathering a group together.  Party-plan compensation leverages a one-to-many sales presentation.

MLM compensation plans pay commissions for personal sales, accumulating commissions and bonuses on sales that are related through sponsoring lines.  Both MLM and Party Plan methods link individual sponsors and business builders, often paying compensation through, and/or as a result of, these connected lines.  These methods are sound and very legal since compensation is tied only to the sale of products and services, and not to the act of sponsoring someone.

Advantages that are common to MLM compensation plans and Home Party Plan compensation include the following:

• Sales representatives need not stock products other than those used for demonstration or samples
• The company ships directly to the distributor or customer who makes the purchase
• MLM presentations and Home Party Plan demonstrations are ideal for presenting products that require explanation
• MLM compensation plans, like Party Plan compensation plans, pay for sales personally produced, with commissions and overrides paid to those who train and manage individuals and groups in their sales organizations
• Distribution channels, once established, are the marketing channels through which information, goods, and services are moved
• Part-time to full-time selling, with incentives for immediate action, are characteristic of successful MLM compensation plans and Home Party Plan compensation systems

Through MLM (multi-level marketing, network marketing, viral marketing, referral marketing, etc.) the direct-selling process is duplicated by independent sales reps who sponsor and train others.  Through this basic system of selling, on which virtually all sales systems are based (from insurance to real estate, and from automobiles to men’s clothing) multiple levels of commissions are earned, paid directly from the company to the sellers, managers, and leaders.  This basic concept applies in both the MLM and Home Party Plan selling models.

For a Free MLM Consultation or Free Party Plan Consultation, contact the MLM Consultants at LaunchSmart.  We want you to succeed, since your success is our success.

Historians say that more millionaires were created during the great depression than in any other point in history.

I’m amazed by the number of entrepreneurs and dreamers who are coming forward in our down times to launch new business.  Somebody forgot to tell them that times are tough!

These are the women and men embracing the American dream.  They have the courage to dream, the discipline to think, and the backbone to act.  So far this week we have served more than ten individuals and companies who are up to their elbows in starting and running their MLM companies and Home Party Plan businesses.  Ranging from eLease who is placing the first round of test market assumptions to their idea of expansion through direct selling, to Endless Glow – a home party company providing airbrush tanning services and products by two lovely sisters who aren’t aware that there is a recession.

Somebody forgot to tell them.

By David M Taylor, Co-Founder of LaunchSmart

We all remember the great childhood story about the little engine of the train that said: “I think I can, I think I can, I think I can . . . . “  Well, in the wonderful model of direct selling we call party plan – there is an amazing little engine that drives that business, and therefore drives the long-term, sustainable growth of a party plan company.  Understanding that engine, and all the personal motivations involved, is critical to success using the party plan model.

The little engine gets started right after a new party plan consultant (independent field sales representative) enrolls.  As soon as possible after enrollment, she needs to do her “grand opening party” – usually with the support and supervision of her sponsor (the person who enrolled her).  The grand opening party fills the little party plan engine with its first tank of gas!

A new consultant’s grand opening party will usually be held at her home, and she will invite all of her close friends and relatives to come and support her as she kicks off her brand new home based business.  Usually she will get a good turnout at this party, because her close friends and family want to support her.  But what is vital is that she has to get as many bookings for additional parties as she possibly can before those guests leave her grand opening party.  Why?  Because, here are the key elements that drive the little party plan engine:

1. A full calendar means a full bank account for the party plan consultant.  An empty calendar means she’s out of business.
2. The goal is to get at least two bookings from every party.  That’s what keeps the calendar full!
3. The goal is to get at least one follow-up phone interview per party with an attendee who is interested in starting her own party plan business.   That’s what builds her team and exponentially increases her income!

Now, to get the guests at the grand opening to book their own parties, there are three essential ingredients.  Of course, attendees have to fall in love with the product.  Second, there has to be an enticing hostess reward program in place that is communicated to all attendees.  And third, the new consultant has to be taught how to invite attendees to book their own parties.

Next, let’s fast forward a couple of weeks.  The new consultant is now doing the parties she booked at her grand opening.  Again, what’s her goal?  Simple – two bookings and one prospective new consultant from each party.  To make that happen, again there are several key ingredients.

Of course, attendees have to fall in love with the product.  Second, there has to be an enticing hostess reward program in place and the consultant must make it very public to all guests how the hostess will benefit that night from the guests’ purchases.  Understanding the hostess reward program helps them feel a motivation to purchase because they know the hostess and want to help her get some great rewards that night.  In addition, understanding the hostess reward program makes them want to have their own party.  It’s great if the hostess reward program has a booking incentive – something that rewards both the hostess and the guest who books at her party with small rewards.  The consultant will need to learn to effectively use “booking seeds” – comments she drops here and there to inform, educate, and invite guests to book their own parties.  If she books two parties from her grand opening, and two parties from each of those parties, and two parties from each of those parties, and so forth – she will soon have too many parties.  Great!  Now she’ll be even more motivated to invite a new consultant to enroll under her, help that new consultant with her grand opening party, and give that new consultant a couple of her own bookings to help her get started.  Of course, where is the best place to identify and invite new consultants to come on board?  At her parties!  And the hostesses are some of the very best prospects.  Again, she will need to learn to effectively use “recruiting seeds” – comments she drops here and there to inform, educate, and invite guests to visit with her about starting their own party plan home based business.

So, there it is – the amazing little engine that drives this business model we call party plan.  Get some gas in its tank, get all party plan consultants following the formula and teaching those they recruit to follow the formula – and this little engine will build a great big company!