Category Archives:MLM Launch Formula

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

 

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. terrel@servicequest.com

10 Steps Towards Launch! Part 10 - Money

The following is the last segment of 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 last of ten business segments addressed in the ServiceQuest system for evaluating “launch readiness” is MONEY.  Money and MLM, as in any business, go hand-in-glove.  Here are the best practices to help you determine how prepared you are for launching a successful MLM business.
 

  • Set up Accounting Software that Integrates with your MLM Software and Technology Systems
  • Determine your Capital Requirements for Achieving Launch and Positive Cash Flow
  • Implement Business Controls to Assure Safety and Continuity
  • Create the System for Classifying and Tracking Information Essential for Taxes
  • Pay Close Attention to Commission Payments and Supporting Systems
  • Implement Payroll and Employment Tax Systems
  • Create the Systems for Banking, Treasury and Risk Management
  • Start Early to Set Up the Payment Gateway Systems
  • Set up Your Commission and Payment Processing Accounts

 
Here are examples of descriptions that you might write for your MLM Launch Best Practice:
 

  1. Commission Payments – We have in place the technology for reporting and paying commissions to distributors / consultants, integrated with the commission processes of our enterprise software and accounting software.
  2. Business Controls – The basic business controls are set up to form the information link between business activities, accounting, and commissions.  These include procedural standards, source documents, money-handling systems, documented systems, and approval processes.
  3. Payment Processing Account – We have acquired a Tax ID number, we have our website in place (e-commerce capable), and we have opened a business checking account and have a favorable credit history so that we can successfully apply for a merchant account.


Money is the lifeblood of your MLM business.  Careful preparation and planning will be the key to starting and running a successful MLM. For more information, contact Terrel Transtrum terrel@launchsmart.com

10 Steps Towards Launch! Part 9 - Marketing

The following is part 9 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 ninth of ten business segments that make up the foundation for a successful launch of your MLM business is MARKETING.  MLM Marketing is often overlooked, yet it is at the core of the successful MLM.  Here is a closer look at the most important MLM best practices for MLM Marketing.

 

  • Brand Strategy for Your New MLM
  • Having the Right Product Plan to Sustain Success
  • Careful and Thoughtful Product Pricing
  • Implement Web Marketing Practices that Work with Social Media
  • Merchandise Your Logo with Apparel and Logo Merchandise
  • Implement and Monitor and Effective Web Marketing Policy
  • Get your Messaging and Stories Created and Aligned
  • Create a Back Office to Assist the MLM Distributors in the Best Ways
  • Understand your Customers and MLM Distributors with Profiles
  • Create a Network based on Sound Social Media Policies that work with MLM

 

Here are examples of descriptions that you might write for your MLM Launch Best Practice:

 

  1. Product Pricing – We have a clear understanding and analysis of our product margins, the features and benefits that hold up under pricing scrutiny, and a keen understanding of the consumer’s value perception and how to sustain that perception.
  2. Back Office – We have an online back office that contains all of our support materials and has analytics to tell distributors / consultants every useful thing about their business, ranging from news and company information to volumes and computations of commissions.


MLM is all about Marketing, and a sound marketing plan will cut months and years from the learning curve.  For more information, contact Terrel Transtrum terrel@launchsmart.com

10 Steps Towards Launch! Part 8 - MLM Legal

The following is part 8 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 eighth of ten business segments that should compete for your attention is MLM LEGAL.  The world of MLM Law is always evolving, but never dull.  The best MLM attorneys will guide you through the critical issues as outlined below.

 

  • Legal Review of Compensation Plan, Literature and Publications
  • Design an MLM Distributor / Home Party Consultant Agreement
  • Create the Home Party / MLM Distributor Policies and Procedures
  • Determine the Proper Sales Tax Processes and Policies for Your Company
  • Protect Your MLM Company’s Intellectual Property
  • Set up the MLM Compliance Training and MLM Compliance Administration Systems
  • File the MLM State Registrations
  • Select the Entity that is Right for Your New MLM Business
  • Develop an MLM Library of Essential Forms and Documents
  • Gather an Effective MLM Legal Team That You Feel Good working With

 

Here are examples of descriptions that you might write for your MLM Launch Best Practice:

 

  1. Distributor / Consultant Agreement – We have a distributor / consultant agreement (online and/or paper) containing the most recent terms and provisions for complying with state and federal laws and regulations, produced or reviewed and approved by a licensed legal professional.
  2. Compliance – Our compliance system is set up to include online training and certification of new distributors / consultants, compliance research system, compliance administration system, and staff training for handling policy questions.

 

MLM Legal is an important part of the launch puzzle.  With the right planning and recommendations, you will save a great deal of time, money, and worry as you select and work with the best MLM Lawyers.

For more information, contact Terrel Transtrum terrel@launchsmart.com

10 Steps Towards Launch! Part 7 - Technology

The following is part 7 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 seventh of ten business segments that will bear heavily on the success of your new MLM business is TECHNOLOGY.  MLM Software is one of the biggest challenges for all MLM startups.  Select the right solution for your company by selecting the right technology partner.  The following best practices will help to ensure success.

 

  • Write the Requirements and Business Processes
  • Conduct Due Diligence on the MLM Software Providers
  • Develop your Plan for Network, Hardware and Helpdesk
  • Work from a Technology Implementation Plan
  • Be sure that there is Good “Chemistry” with Your MLM Technology Partner
  • Document the Training and Reference Resources
  • Create an Expansion and Growth Path for your MLM Software Plan
  • Carefully plan for the Office Software Requirements
  • Test all Aspects of Software and Technology to Assure Proper Integration
  • Implement a Fully Functioning MLM Software and Enterprise System

 

Here are examples of descriptions that you might write for your MLM Launch Best Practice:

 

  1. Requirements & Business Processes – We have completed a thorough analysis of our business processes and system requirements, and the results are documented for guiding us through implementation and beyond.
  2. Software Integration & Testing – Our accounting software, shopping cart, terminal, and gateway are properly integrated, and we have run multiple test purchases and refunds to verify that everything functions properly and smoothly.


MLM Software will present an interesting challenge, but if you hit it with confidence and resolve (and preparation), you will succeed in launching and growing your MLM business.  For more information, contact Terrel Transtrum terrel@launchsmart.com

10 Steps Towards Launch! Part 4 - Training

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:

 

  1. 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.
  2. 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.
  3. 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 terrel@launchsmart.com.