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!
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 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 firstname.lastname@example.org.
This question is the one that is asked with the most passion and worry, since the success path turns entirely on getting the first 500 to 1000 distributors or consultants. The cornerstones of growth and momentum in direct selling are recruiting & selling, field training, and retaining. Building a sales force is both art and science, combining proven fundamentals with communication and fast-paced technology. Distilling the wisdom of volumes and experience that could take you decades to digest, we approach recruiting & selling, field training and retention in a straightforward manner, giving you the proven methods and tools.
Recruiting & Selling
For seasoned MLM distributors, party plan consultants and newcomers alike, recruiting and selling turn the business wheels. The three crucial considerations for any company in its early years are listed below:
- “Priming the Pump” – attracting and building sales leaders to start building your company’s foundation
- “Pumping the Pump” – creating your system for ongoing recruiting
- Creating a culture that fosters long-term recruiting success
Priming the Pump
If you’re like most MLM start up companies, you are faced with the $10 million question: where do we find our first group of field leaders to help us recruit and sell? The party plan startups wonder the same thing. Building an initial sales force relies on six principles and a host of best practices gleaned from the front lines of the recruiting battle.
Principle # 1 – There is no “one-size-fits-all” solution. Each individual has his / her own “why” for choosing your company. Understand and embrace their “why.”
Principle # 2 – People will die for a cause. Frame your company’s story to concisely and powerfully address the deep meaning behind your products, your compensation, and your company culture.
Principle # 3 – Somebody has to sell the soap. Early efforts to seed the company’s growth most often fall on the shoulders of the company founders and leaders. A well-defined “success cycle” will then engender and fuel subsequent growth. Remember that the Space Shuttle burns 85% of its fuel in the first 8 minutes of its mission.
Principle # 4 – Seek to understand your target market(s). Realize that early course adjustments are more often required as you discover who is really taking an interest in your company compared with your perception and expectations when you designed your products and compensation system.
Principle # 5 – You never get a second chance to make a first impression. Have enough of your operating, marketing, sales and training systems in place to capture and hold the attention and confidence of early customers and recruits.
Principle # 6 – There is no magic bullet. As you fold back the blanket of any success story, you will discover that vision, passion, and diligence have always been demanded as a price of success. Building an effective initial sales force may require a sustained, multi-faceted approach for a minimum of 3 to 6 months or more.
Pumping the Pump
Many decades of direct selling have yielded profound understanding in how to build a company that thrives on recruiting. If your goal is to design a business-building system that assures immediate and enduring results for your builders, you must focus on creating a success cycle that conforms to your unique products, compensation system and culture. The elements common to all successful MLM recruiting systems consist of a well-defined cycle, foundational steps that initiate the cycle, and skills and activities that fuel the cycle. Party Plan companies know that bookings and hostess incentives are the lifeblood. Think of these processes as a recruiting “machine” with inputs and outputs.
Creating a Culture that Fosters Long-term Recruiting Success
Whether you are a seasoned builder or new to the world of direct selling, the principle-centered sponsoring system offers a proven method for developing highly successful organizations. Based on the break-through system called “Principle-Centered Sponsoring” developed by the DSWA, this acclaimed system is exclusively tailored for LaunchSmart™ clients.
Learning and using the principles and methods of Principle-Centered Sponsoring, you develop a culture of builders and leaders who do much more than merely recruit, recruit, recruit. Instead, they help their customers and distributors obtain clarity on their own visions-why they are becoming involved, what they want to have happen, and how the products and earnings systems can help them achieve their ideals, whatever they are.
Recruiting & Selling Checklist & Key Considerations
- Have we considered which recruiting methods are best suited for our company?
- Which channels do we expect to be the most fruitful for generating leads?
- What is our lead generation strategy?
- Will we use a Founder’s Group, and if so, have we set guidelines and expectations?
- Will we use a field advisory council, and if so, do we have the charter and ground rules for going forward?
- Do we have our communications plan put together (public relations, conference calls, newsletters, website) and ready for deploying field leader recruitment?
- Have we established a core leadership group to drive foundational enrollments? If not, have we explored the options for “seeding” growth?
- Are our recruiting and development philosophies reflected in our guides and training systems?
- Do we embrace the principles and practices of Principle-Centered Sponsoring?
- Are we on solid footing with the recruiting practices that create momentum and long-term viability?
- Do we understand the 6 principles and 11 practices for launching our field leader recruitment strategy?
If you launch and operate like most direct selling companies, statistically your attrition (drop-out) rate will be 80% per year. In other words, out of 100 people you bring to your company in January, only 20 will remain by the end of the year. And, if you are like most, you are thinking, “I’m worrying about getting started and I look forward to having an attrition problem. . . that means that I’m seeing people coming in!”
Here’s another sobering statistic: out of the 80% who leave, half of them drop out in the first 13 weeks. This underscores the importance of building your company correctly, so that you employ the best practices that lead to improved retention statistics from the very start.
In January of 2004, our firm received a telephone call from a well respected direct selling company with operations throughout the world. After introductions, the voice on the other line told us that in 2003 the company had experienced 35,000 new recruits in one of its international regions, but that the company had experienced a net growth of only 900. Can you imagine the hard work ahead of them to change so many things that were not working? In the final analysis, the company would have been better off to have 1,500 new recruits then employ key practices to keep 1,200 of them.
The two most important retention questions that you will ask yourself are these:
- When does attrition (drop-out, inactivity) begin?
- When must our retention efforts begin?
By answering the first question, you also answer the second question. The forces of attrition go to work the moment that someone joins your company. In the instant that they sign the distributor agreement or press “send” in their online enrollment form, the evil forces of attrition begin to erode the belief a new person has in your company. Therefore, you cannot delay your company’s efforts to begin working on retention, to help keep the forces of attrition at bay, or at least in balance.
Over the course of 20 years of research on the subject of customer and distributor retention, we have learned the basic five reasons that people leave or go inactive:
- Unmet Expectations
- Life Changes
You will find it very interesting that reason # 5 (life changes) accounts for only 15% of the reasons that people drop out. You cannot do much about life changes, but you can influence the 85% of reasons that people leave. You can take responsibility for better communications, better training, understanding and managing expectations, and providing better support. The responsibility for these ultimately falls on the company, although with the right leadership and systems in place, you can help the field sales force to do their part. Working together with your field leaders, you can win the war on attrition.
Retention Checklist & Key Considerations
- Do we understand the dynamics of attrition in direct selling?
- Do we have the 4 key retention metrics built into our management reporting system?
- Does our system have key touch-points and reinforcements in the first 72 hours?
- Are the incentives, promotions and training geared to assuring a solid start in the first 13 weeks?
- Are our communications channels clearly defined and do new recruits know how to get connected?
- Do we effectively convey the unique value of our company, products, and business offering?
- Does our corporate team know which promises we are making, and are our systems designed to keep those promises?
- Have we structured our operations and service teams for optimum care and impact
- Do our operational practices reflect our commitment to long-term viability and first-rate service?
- Staff selection, development and pampering
- Customer service philosophies and work flow
- Fulfillment and follow-through
- Technology tools
- Policy administration
- Field surveys and research
- Retention best practice
What is the role of the company in field training, and how much should I expect from my field leaders?
Field Training In any business, training and management are the keys to success, but in direct selling and network marketing companies, they are more than that. Field training and development, referring to the training and development of field representatives and their customers, comprise the fuel mixture that propels your organization forward.
Training and development systems must be tied to specific needs at each phase of an MLM distributor’s and Party Plan consultant’s lifecycle in your company, beginning with their very first exposure to your company. At the heart of retention is expectations, and therefore at the heart of training must also be expectations-knowing the distributor’s, consultant’s and/or customer’s expectations, what do they need to be able to do (behaviors) to attain their expectations, and what training and development support do they need to be able to perform those behaviors? Effective training is always driven by behavior and performance.
In addition to providing the information and imparting the skills that are vital to field rep success, proper training and development ensure compliance with sensitive legal imperatives. In states that have enacted business opportunity and multilevel distribution statutes, you are obliged to perform a bona fide supervisory role with your sales organization with respect to the sale and distribution of your products and services.
Our goal here is to give you the checklist for creating effective field training and development systems. You must consider the objectives of field training, the foundation for training systems, the essential topics, the most effective vehicles for delivering training and ongoing development, the tools for evaluating what is working, and some of the best practices that we have observed in our quest to understand how great companies succeed.
Foundation for Training Systems
Presented below are the five foundational principles that should guide the successful development of your training systems. We use terminology and illustrations in order to convey our vision and ideas, but not intentionally to promote pre-established systems that we use when designing training systems for clients. The five foundational principles are as follows: Retention, Customers & Field reps, Lifecycle, Structure, and Motivation.
Retention – Education and training should measurably increase attraction and retention of field reps and customers, and should be developed with that goal in mind. Training and education should result in growth, retention, and ultimate profitability for the company. Therefore, these measures determine the true success of an effective training and education program. Over a 15-year period, we studied more than 100 companies in search of the secrets of retention. Out of 112 companies, 16 proactively sought to improve retention of customers and field reps. Of those 16, 4 had mastered retention by achieving retention rates of 70% or better per year. With their help, we identified the powerful principles of retention and the best practices employed by the retention leaders. Five disciplines of the high-retention companies that stood out in the study include the discipline of routine, specific measurements that show the impact and return on investment (ROI) of training, education, recognition, and other retention-focused initiatives.
Customers & Field reps – Customers and Field reps enroll with the company for different reasons. They come with different needs, and training and education must carefully consider the distinctions. Many of their needs overlap, inviting common training elements to serve both. However, where their needs are different and unique, training and education must be distinct and separate. Thus, your training systems will likely possess separate (but related) training programs.
Lifecycle – Customers and field reps have distinct, measurable phases in their lifecycles, naturally occurring in various categories of activity. Training content and delivery methodologies must be matched to specific needs at each phase of a lifecycle, beginning immediately upon enrollment. Additionally, pre-enrollment considerations (prospecting, exposing, presenting, validating, closing) must be woven into the design of the training and education system.
Structure – Training best practices suggest a graded structure for education and training that matches phases / maturity with intensity of curriculum for the direct selling profession.
Pre-Enrollment must identify the role of the company in accommodating prospects that are exploring the company, including business presentations, web-based materials, and brochures. Immediate Essentials encompasses fast-start training for all new customers and field reps, giving them instant and immediate access to training and education that supports their decision to become involved with your company, regardless of the level of intended involvement.
Core Curriculum provides the basic, thorough orientation to products and programs. The core curriculum should be a continuous, periodic structured cycle of training modules, permitting serious customers and business builders to jump into the training cycle at any point.
Success Skills are those proven skills and techniques that enhance a business builder’s success. These are the technical skills associated with crucial communications and business building, drawn from the wide spectrum of skills and tools used by the top builders in your company and around the direct sales industry.
Advanced Success Tools are the tools and skills of leadership and business building at the highest possible level.
Motivation – Motivation to participate cannot be assumed but must be built into the training and education system. This begins with the new customer or field rep and extends through all phases of development and leadership. The training and education system should work hand-in-hand with recognition, rank advancement, special offerings (products and promotions), and company culture in order to breed the proper motivation for all to participate and grow.
The attributes and features most common in the best training systems consistently appear below. These can-and should-guide the evaluation and development of a company’s training systems:
Best Practices – Best industry practices must flow through from the company to its training (for instance: enrollment processes, customer service systems, Internet tools, corporate communications to the field, and so forth)
Accessible – Training must be easily accessible by participants
Affordable – Training must be affordable for participants
Profitable – Through possible co-development and co-ownership of intellectual property, the education and training program can potentially be a profit center
Effective – Training must be simple to use and easy to understand, retain and apply
In our age of technology, give careful attention to selecting the best media for presentation and skill transfer. Each medium has strengths and weaknesses, pros and cons, depending on what is being communicated, to whom, and by whom. In evaluating the right medium for the message and desired result, also keep in mind the importance of balancing cost and return on investment. To assist you in evaluating your media and your messages, we have devised the table below:
|Training Systems with Manuals & DVD / CD-Rom / Audio Cassette||Orientation (field rep / customer)
Advanced training systems
Audio news features
|Internet & Website||Web-based interactive training
Company references (forms, brochures, catalogs, price lists, testimonials, news)
Saturday morning orientation
Business leader communications
|Live Training Meetings||Orientation
|Annual Convetions / Regional Conferences||Product and program announcements
Inspiration and motivation
Workshops and skills training
Magazines & publications
Product mailers / catalogs / brochures
|Video Mail||Modern alternative for conveying some of the same kind of information available through email and conference calls|
Training Checklist & Key Considerations
- Have we developed the success cycle for our company?
- Which mix of training tools will be best for our company?
- Have we identified the channels we will use for delivering training?
- As an organization, do we understand the role of the Internet in recruiting, training and supporting the field?
- Is the distributor manual complete?
- Do our policies and procedures reflect our unique needs and culture?
- Have we created the basic training platforms?
- Manual / guidebook
- Basic training
- Advanced and leadership training
- Product training
- Manuals, Internet, audio, video / DVD
- Have we considered the right mix of “home-grown” training combined with existing training systems that work?
- Do our measures and metrics support an analysis of the effect of training?
- Are training intervals and “on-ramps” well defined based on anticipated market segments (customers, casual builders, career builders, leaders)?