Customer Retention in MLM and Home Party Plan Companies

This consultants blog is about MLM Retention.

For the past 50 years, direct selling companies have become magnificently skilled at recruiting.  However, the next 50 years will belong to the MLM companies and Home Party Plan Companies that master distributor retention and customer retention.  In 1998 I began studying distributor retention–why MLM distributors join, why they stay, and why they leave.  Over the years, we have kept up with our research, and we were recognized by the DSA (Direct Selling Association) for our work in customer service and retention, as recipients of the 2009 DSA Partnership Award (ServiceQuest, Terrel Transtrum).  ServiceQuest is the parent organization to LaunchSmart, supporting it with research, training, and expert MLM consulting.

Validating our work, Jay Leisner and other rising MLM Consultants have begun embracing our customer service and distributor retention message.  DSA workshops addressing the MLM distributor experience and what causes them to leave are now being presented by analysts and advisors whose work has primarily been operational nuts and bolts.  This is because they are starting to see beyond the mechanics of business into the HEART of business.

Direct Selling is the business of people – helping them to find happiness, health, wealth, and success.  At whatever level they find happiness, our work is about happiness and growth.  This is the theoretical basis of the work which we have done since 1988.  And we welcome all who would borrow from our research, and we invite them to continue to add to it.

Here are a few foundational principles that we invite all to build on:

1. People want to be happy.  And although each defines happiness in his/her own way, it’s always in relation to where they are in their personal, family, financial, health, and success environments.

2. In the business of direct selling, companies who are truly, deeply committed to the distributor’s happiness first and foremost will always find that they have higher average retention rates.  But, the concept goes very deep and the application of this principle is subtle.  However, once it is grasped, and the balance between corporate interests and distributor happiness can be achieved, success follows.  If you have any question about that, take a look at the MLM and Home Party Plan companies that have surged in growth during the economic difficult times, while others have followed the downward paths.  It’s plain as day once you put on this filter through which we encourage you to look.

3. In his landmark book, “The Loyalty Effect,” author Frederick Reichheld established that a 5% increase in retention equates to as much as 50% to 100% increase in net profits.  The impact of this in a high-leverage growth environment fueled by relationship marketing is not readily apparent, but our devotion to this principle over the years has proven to serve our clients extremely well.  It’s the basis for pressing forward with MLM best practices.

4. The reasons that people join your MLM business are different from the reasons that they stay, which are yet different from the reasons that they leave.  We have seen various anecdotal writings, and we agree in concept with all that we read, to an extent.  In other words, it’s common sense that one reason an MLM distributor leaves (or more commonly, never did get traction), is that they are influenced by their ignorant peers, those who really do not know much about direct selling and its merits and virtues.  However, the research points to well defined and specific causes which can be addressed through MLM best practices.

When you are looking for authentic, thoughtful research on MLM retention (and why MLM distributors join, why they stay, and why they leave), be sure to spend time at the launchSmart website.  We regularly update our results in our MLM consultants blog, bringing you fresh and original research and though-provoking insights on how to spark and sustain meaningful growth in your MLM business.  As the top MLM consultants, we challenge you to think and read, and always make sure the advice you get is based on sound experience, not just hunches and opinions.

To your successful MLM business!

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