Category Archives:Strategy & Planning

Starter Kit Strategy Part 1

Starter Kit StrateDan Jensen Consultinggy by Andi Sherwood, Dan Jensen

Consulting Starter Kits. Business Kits. Enrollment Kits. All of these names refer to the same thing: a packet of materials and/or products that is purchased at the time an individual enrolls with your company to become an Independent Business Owner (IBO). More importantly, this represents a strategy.

There are many types of companies in our industry.

– Internal/Self Consumption companies center their pricing strategy on the IBO/Wholesale (discounted) price, which results in most customers enrolling as an IBO in order to purchase at that price. – Customer/Retail Biased companies center their pricing strategy on the Retail Price and their IBOs focus on selling their products to customers who will purchase at the Retail Price and use the products without enrolling as IBOs. – Affiliate Programs are kind of a hybrid of the two. I say “kind of” because it is not really as simple as that sounds. There are some unique nuances and very few companies fall into this category. For that reason, the Affiliate type is not addressed within this article.

While this explanation of business types has been simplified, it isn’t necessarily a choice of one or the other, it’s a spectrum with Internal Consumption on one end and Customer Biased on the other end and most companies fall somewhere in between. There are companies that have succeeded and failed throughout the spectrum so there is no right or wrong choice. Alignment to business type, including the Starter Kit, is critical to success.

The Starter Kit strategies differ based on where your company is on the spectrum and it is vital that you understand how this impacts your desired business type. For purposes of this discussion, we will refer to strategies of the Internal Consumption and Customer Biased companies, even though many companies have a bit of both.

In this three part series, we will address the following Starter Kit related strategies: 1) Pricing 2) Products/Materials 3) Presentations

Strategy #1: Pricing The Starter Kit is not merely materials and products, it is a strategy that creates a healthy “barrier to entry” that can (when desired) separate customers from business builders. It creates a monetary gateway that an individual passes through, whether low or high, when enrolling as an IBO. While you may question the logic of creating barriers for a potential IBO, it is important to understand how this decision will impact your business type.

When the price of the starter kit is low, your barrier to entry is low. Many of the people that join your company are likely to be customers who want to buy your products for the best possible price – like a buying club. This is the nature of the Internal Consumption business type and is reflected in common starter kit pricing ranging from $10-$30.

In this low price scenario, very minimal commitment is made at enrollment so while the customers become IBOs, they do not act like IBOs. These companies will have some business builder IBOs that develop very successful teams made up of a few business builders and lots of customer-IBOs. While the average per IBO sales volume may not be high, the number of IBOs makes up for that.

Higher priced Starter Kits create a stronger barrier to entry. This often results in fewer IBO enrollments but higher commitment to building a business and thus higher per IBO sales volume. In Customer Biased companies, the IBOs count on the retail profit that they make when they sell to customers (who purchase at Retail) as a major source of income. In order to protect this vital aspect of the business, companies of this model should price their kit high enough to discourage customers joining solely for the discount and ensure that the starter kits have the proper mix of materials and products (this will be addressed in strategy #2).

Unfortunately, failure to price the Starter Kit appropriately has destroyed many companies in our industry. A Customer Biased company that fails to protect the retail profit will find that their IBOs do not make enough money for it to be worth their time selling and building a business. When earnings are not sufficient, an IBO will stop working their business and become a customer purchasing at discount. The company will find themselves unintentionally moving more towards an Internal Consumption model.

For example, an IBO who sells $1,000 in products to customers might earn a 25% retail profit of $250. If those same customers enrolled as IBO’s, they would get a 25% discount – in other words the retail profit to the seller becomes a discount to the buyer. The sponsor (seller) who would have earned $250 had they stayed as customers might now earn 10% on the IBO wholesale price ($750) = $75 total (instead of the 25% profit on the retail price). If the sponsoring/selling IBO had spent 10 hours finding those customers and taking their orders, then they would have earned $25 per hour for their time when those individuals were customers. When the customer became IBOs, that dollar-per-hour dropped to $7.50. When an IBO joins your company to make money, the $25 per hour is critical to achieving their goal as quickly as possible, thereby making the barrier to entry vital to protecting the retail profit.

As a rule of thumb, the higher your Starter Kit price is, the more Customer Biased you are and likewise, the lower the price, the more Internal Consumption focused you are. If I were to place a price on the Starter Kit for a company right in the middle of the spectrum, in today’s economy, it would be somewhere in the range of $50-60.

Please note that there are some legal requirements regarding the Starter Kit pricing in the USA. The are a number of states which specify a maximum amount that you may charge for the kit and there are rules that govern the cost of goods for the kit versus the selling price. Please check with your industry attorney for specific information on the legal aspects of the Starter Kit. In summary, the pricing of your Starter Kit is a very important strategy that should be considered in your business in order to create alignment between your kit and the business type that you intend to be.

Shave Years Off Your Learning Curve At The Direct Selling Symposium

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!100_6124.JPG

Dave Taylor


Starting a Direct Selling Company: Direct Selling Symposium

Successful businessman sit at his desk while talking on mobile iSo . . . 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!

Dave Taylor

Ask the MLM Expert: "Shipping"

By Terrel Transtrum

QUESTION: With the use of new “dimensional weight” formulas for shipping, how much should we charge for shipping?

ANSWER: Determining how much to charge the MLM distributor (and their customers) for shipping is a tricky question. It really comes down to a business decision; Are you trying to recover your actual shipping costs, should you make a profit on shipping, or are you willing to underwrite some of the shipping expense by reducing shipping costs?

Thanks to Amazon-like tactics, many now expect shipping to be free. However, depending on product mix and more importantly now with product size, shipping can be very expensive.

Man working for shipping company carrying boxesUPS and FedEx now use Dimensional Weight to determine shipping cost. True shipping cost is determined by size and no longer by scale weight. Shipping carriers typically do not fill up a truck based on maximum weight they can carry; they fill up the truck based on how many cartons they can fit on a truck. Larger packages means they need to have more trucks on the road and more drivers. To determine dimensional weight, take the Length + Width + Height of the shipping carton and then divide by 166. This calculated value (called “dimensional weight”) is compared to the actual weight on the scale; whatever “weight” is higher is the weight used to calculate shipping cost.

Because size now matters, it’s important to be efficient on both your product packaging choices as well as packing efficiently for shipping. Our shipping expert Dan Kremers advises that as you determine which products you are going to offer in your MLM company or Home Party company, a larger product will be expensive to ship. People tend to freak out if the shipping cost is almost the same as the product cost.

We have observed five methods that MLM companies commonly use for determining how much to charge for shipping. Each method is straightforward and simple, and there are benefits to each that will support your underlying product and marketing strategies:

  • Free Shipping

    • Using this method, a company absorbs all of the shipping charges. It’s an increasingly common feature in e-commerce transactions, and the obvious way to make this happen is to ensure that shipping costs are absorbed in product pricing. One caution is that where MLM products depend on multiple-times markup, we find that the better practice is to keep shipping out of the product cost and allow it to stand alone, because of its potential impact in the mark-up analysis.
  • Free Shipping when the overall Order value exceeds a specified dollar threshold

    • This method allows a company to recapture a base amount of shipping, and the company subsidizes what it does not recover on larger orders. The argument is that the higher dollar volume (and the margin that goes with it) contains sufficient to boost revenues and volume, the extra shipping cost of which the company is willing to absorb.
  • Flat Rate

    • All orders are charged a flat rate for shipping
  • Tiered Flat rate based on Order Value / dollars

  • Tiered Flat rate based on order weight

The threshold problem with each of the methods described is that an MLM startup may not be able to determine whether they are charging too much or too little. Considering that the decision is in part a marketing decision, as well, the early unknown will also include an analysis of the MLM distributor sensitivity to shipping.

Thus, the key questions will be these:
Are we making / losing / breaking even?
Will the law of averages work in our favor?
How sensitive to shipping fees will the distributors be, and will it affect optimizing revenues?
What marketing considerations should affect our decision?

Actual Cost Shipping

Another method worth mentioning is charging actual cost, which works well when an intelligent system is in place. The system automatically calculates the number of shipping cartons required and the size(s) of each carton based on the items in the order. This will optimize shipping “weight.” Through a direct interface with the shipping system, actual costs will be determined based on your negotiated rates and discounts with the shipper. The cost is then captured at the point of sale and included in the order. Though technologically advanced, this approach is my personal favorite; and the formulas can still add a percentage mark-up (small percentages) to cover not only the actual shipping cost but also packaging and an allocation for labor. In this regard, it becomes conceivable that your pick/pack operation is self-funding if not profitable.

Don’t overlook using USPS flat rate boxes, depending on your product mix. As long as items fit in one or more of the box sizes offered, the flat rate is 100% predictable. With some thoughtful planning, you might be able to overcome the USPS branding that screams much louder than your branding could do on a box. For instance, you might lightly campaign that you are a supporter of the US Postal Service. Simple.

In the end, your goal should be to select the method or hybrid of methods that work best for your product mix, marketing and branding objectives, and shipping budget strategies.

A simple way to determine which method makes the greatest sense is to create a sample set of orders that best represent what you will ship to your distributors and their customers, and then calculate the shipping cost for each order. By running various scenarios, you will begin to see patterns emerge that will help you get real close. Then make your best decision and implement, tracking along the way and refining.

Terrel Transtrum is the founder and CEO of ServiceQuest, the Direct Selling Experts. He and his group are the recognized experts in MLM and Home Party success.

Organic Reach on Facebook: Pages or Profiles for Social Selling?

Facebook-logo-270x270Facebook is becoming a less and less hospitable place for businesses when it comes to organic reach. For the direct selling industry, each sales rep basically runs their own small business. But most of the advice out there about social selling on Facebook might not be right for every independent rep when it comes to representing their business online.

While there’s no question that the home office needs to have a Facebook page up and running as a way to show that the brand is active and engaged, it’s not necessarily the case for each individual rep in the field. While it’s still undeniably top dog, Facebook is just one of many ways to engage with prospects and customers.

The two most important things I believe should be considered when it comes to making this decision are:

  1. Reach – How many people actually see your activity?
  2. Quality of Engagement – How personal can you get with those individuals?

Does a Direct Selling Representative Need Their Own Facebook Page?

This is a very good question. And no one answer is right for everyone. In order to help your reps answer it for themselves, here are a few things they can consider.

In previous years, it made sense to have a Facebook page for business. It was a great way to keep work and personal lives separate. We didn’t bother people interested in our products with messages about our cats and friends did’t have to hear marketing messages from personal accounts.

In those days, enough followers saw our pages’ posts to make the effort seem worthwhile. But now, organic reach has become so low even for large organizations that a one-person shop doesn’t stand much of a chance of being seen unless they’re willing to shell out advertising dollars.

Also, the best “selling” that happens in social media isn’t about product messages. It’s about engaging and connecting with real people. That kind of engagement is more natural on the personal profile than the page. So there’s no easy answer – at least not anymore.

The Case for Individual Reps Maintaining Their Own Facebook Pages

The Facebook page is still standard issue when it comes to 101 advice about social selling. This works so long as you’re actively posting on a regular basis. It shows up in search, and it’s a way to show that your business has a pulse. Contacts who might not ordinarily need to become a “friend” can like your page and maintain a more distant relationship.

When funds are available for advertising, Facebook’s ad platform can help you introduce yourself to new people in your area who you might not have been able to reach previously.

For the sales rep who is willing to commit to regular posting and maintenance, along with an investment in advertising dollars, it might make sense to have a dedicated Facebook page for his or her business.

Reach: Without advertising spend, reach very minimal on a Facebook page. But when there are advertising dollars to spend, it can help bring in new prospects.

Quality of Engagement: Engagement on a page is not as personal as it is on a profile, but it’s a great way to engage with those who might want to maintain a more distant business relationship.

The Case for a Strictly Organic Social Selling Strategy on Facebook

Since organic reach has nearly disappeared for small businesses on Facebook without advertising spend, a strong case can be made for bypassing the Facebook page completely and using the personal profile.

Reach: The number of individuals reached organically is much higher on a Facebook profile than on a page.

Quality of Engagement: Social selling 101 is all about moving away from marketing speak and building real relationships. This happens much more naturally on a profile than on a page.

Here are a few tips to consider sharing with sales reps who might want to take this approach with Facebook:

  1. Use your personal profile for business and pleasure. Just like with Twitter Lists, there are a number of ways to slice and dice your friends list on Facebook. If you’re friended by prospects that you don’t know well, create a category for them such as “Business Contacts.” Unlike Twitter, your friends can’t see the names you give these lists.
  2. Make business pleasure. Direct selling reps are already well aware of the balancing act required to sell into friend circles. Aggressive sales tactics can be hard on friendships whether online or off. Many individuals who choose to become a direct selling rep are already passionate about the products they’re selling. It’s a part of their life. That’s exactly the kind of sharing that succeeds on Facebook. Reps can share pictures of new items proudly displayed in their homes (next to their cat would be a nice touch). They can share their successes, such as hitting a sales goal they’ve worked hard for, which can inspire friends in their own journeys. There are many authentic ways to generate curiosity and excitement about their products without sounding like marketing copy.
  3. Make sure your posts are seen. Want to make sure your posts show up in peoples’ timelines? Engage with them. Pick a few people you want to reach every day. Go to their profiles and like or comment on their posts. The more you interact with an individual, the more likely it will be that your posts will appear to one another organically.
  4. Share directly from your company’s Facebook page. You can show off celebrity endorsements, success stories, new product launches and more. Your business is independent, but it shows that you’re tied in to something bigger – something successful and exciting.

Reach and Engagement: The Page vs. Profile Choice

In a perfect world, each sales rep would have both a robust Facebook page as well as a thriving profile with organic connections. But even after all of the best practices are followed and the page is set up, it’s easy to let it fall to the wayside. And an abandoned page can potentially do more harm than an active one can do good. So before diving in, it’s important for each person to consider their resources – money and time, then decide where they’re going to get the most reach and the highest quality of engagement.


Contributed by Mick Twomey
Article originally posted on PointBurst

4 Ways Consulting Beats Selling for Increasing Revenue

Business man pointing to transparent board with text: ComplianceMany business owners will say they provide consulting, when what they really provide is a sales pitch. In most cases though, genuine consulting typically trumps selling when it comes to increasing business revenue and here’s why:

  1. Through consulting, you gain a deeper understanding of your customer’s needs because you are practicing active listening to truly understand the customer’s current situation as well as his or her long and short-term goals. This opens the door for you to offer far more services than may have initially been apparent.
  1. In consulting you put your customer’s needs first. You understand that while you may not have a “fix” for every problem, you can help them meet their overall goals by referring them to a trusted partner, providing leads from your network, or providing advice based upon your industry experience.
  1. Through consulting, you build trust and long-term relationships, which leads to stronger communication, more positive word of mouth/social media buzz and higher customer retention. You essentially become the customer’s “go-to” source so you are part of every conversation and therefore in the best position to recognize opportunities to fulfill customer needs over time.
  1. With consulting, because you gain a better understanding of the bigger picture, you can often discern ways to vertically integrate services and better serve your entire customer base.

While making a “quick sale” is enticing, the long term gains that can be realized from true consulting are often far more rewarding!


by Wendy M. Yurgo
President & CEO, Metrics Global, Inc.

Recently featured in ISO & Agent Magazine, Wendy Yurgo gives frequent lectures on merchant services and enjoys cooking and writing in her spare time.

Are Your Tax Deductions Slipping Away?

Human nature never ceases to amaze. We haggle over a restaurant tip, but let tax deductions that may total hundreds of dollars slip through our fingers. We complain over high interest rates, but neglect to include that sales tax on our tax return. Why are we so fickle?
The reason for letting those dollars land in the U.S. Treasury at tax time is simple. There’s just no easy way to keep track of all those middling expenses that seem so insignificant until you decide one day to tally them. That’s when you realize you’ve actually been on a mission to lend a helping hand to the I.R.S. Did you know? But stop and ask yourself: Do you really want to fork over more money to Uncle Sam? Wouldn’t you rather keep your dough, especially when you realize those missed deductions are adding up to a sizable wad of cash?
It comes down to the aggravation factor, but you shouldn’t let that stop you from keeping what’s rightfully yours. Most of us feel Uncle Sam already keeps too much of our earnings.
Research demonstrates that the convenience factor is a huge element for most Americans, but you already knew that intuitively. Just think about how you go about your business each day in your car. You look for the shortest way to your destination, even if it costs you a little more.
What if you could record those small deductions on the go with the swipe of a card? That way come tax time, tallying all those small deductions could add up to a big savings for your small business. Now that’s a tax deal that hard to pass up!
Kelly Thayer – Deductr –