MLM Key Performance Indicators

Key performance indicators for MLM and Home Party Plan are not addressed in the MLM consultants blog or similar MLM consultant publications.  Here, we will share the basic metrics for MLM companies.

A top-drawer MLM consultant will have his or her favorites, and we have ours.  As a starting point, consider the following six key metrics:

  1. MLM Recruiting Rate
  2. Activity Rate
  3. Orders per Active Rep
  4. Average Order or Home Party Size
  5. Leadership Development
  6. New Recruit Success

MLM Recruiting Rate.  This metric focuses on the number of sellers in the organization.  It’s as function of the opportunity, kit price, and length of time to inactivity.

Activity Rate.  Depending on your definition of activity (typically tied to qualification), a common metric is as follows: of those in your business, how many turn in a show (home party plan) or a qualifying order (MLM) each month or period?  If the period of time to inactivity is reasonable, about half of the sales force will turn in a show in any given period, and the longer your time is to inactivity then the lower the activity rate will be.

Orders per Active Rep.  Of those in your company, how much business do they do in a month?  More than ever, there are activities that would not previously be classified as a “show” or “party,” but don’t miss the opportunity to accurately capture the right data.  These will range from booking shows to Internet orders, from social media to virtual parties.

Average Order and Party Size.  These are a function of products, hostess plan, attendance, average purchase occasions.

Leadership Development.  Some say that this is the most important metric of all in MLM best practices.  There is a clear correlation between revenue growth and the number of leaders in an MLM or Home Party Plan organization.  The number of leaders is a predictive indicator of growth and stability.  Increase the number of leaders and revenues will increase in the future.  Conversely, decrease the number of leaders and revenues will decrease in the future.

A parting shot about new MLM distributor and home party consultant success.  The life blood of direct selling (MLM and Home Party Plan) is recruiting, and thus helping those new recruits become immediately successful.  Consultants (home party) who do more than $800 in sales in their first 4 weeks will on average go on to sell $3,200 in their first 13 weeks.  Consultants that do less than $800 in their first 4 weeks will on average do $900 in their first 13 weeks.  These are two of the three building blocks of what we call the “13-week Rule.”  Conversely, of those who drop out in a year, 50% are gone in the first 13 weeks, the third building block of understanding.  This is a poignant contrast between success and failure, supporting the need for a rock-solid fast-start system to discuss with your MLM consultant.

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