In a world that pounds us with over 3,000 advertising impressions a day, educating, positioning and branding Chunky Peanut Butter versus Extra Chunky Peanut Butter (has anyone ever measured the difference between chunky and extra chunky?), no one has the time to make an “educated” decision on everything we do. The vast majority of our purchase decisions are based on time, and not on value. Many times we buy on convenience versus price.
Network marketing, MLM and direct sales prides itself on the ability to educate and support the marketing and sales process, in order to facilitate an educated product purchase. Referral marketing looks good on paper, but don’t be mistaken; the time factor is a major obstacle for every distributor. So how can you keep time on your side?
First make sure your products are positioned to “fit” into the daily routine of your customer. While ground breaking “revolutionary” change is a noble cause, the fact is “evolutionary” change is what creates momentum in sales and specifically your commissions. What’s the difference? Using a revolutionary new product means that I have “make time” to do something new. Evolutionary change simply means changing how I do things, which requires no additional time out of my day.
Second how do you communicate with your customers? Make sure that you have the ability to put your products and message in front of your customers, when they have time. It’s why referral marketing is so effective at the soccer match, water cooler or over lunch. Those are precious moments of time, when you can talk about your business and products without competing with the rest of the world. Passive communication like email, newsletters (printed and web based), CD’s and brochures need to be compelling and time sensitive. Make absolutely sure your customer can “fit” your message into their day, and that they have a reason to do so.
Finally, don’t bury your organization. We live in the information age, and so technology has adapted to provide a world of information at our fingertips. Any message or communication sent to your organization must be fast, accurate and relative or it’s gone! Don’t waste your organization time with processes that are flashy but slow, outdated or irrelevant.
Your customers and distributors time is precious. Don’t waste it!
Tags: Network marketing, MLM, direct sales, Referral marketing
]]>Every business must pay for the cost of their products, their overhead and their own profit. On average, most MLM and network marketing companies will pay out 35% to 45% in commissions and bonuses, regardless of their total payout possibilities. Anything less and savvy distributors will look for better commissions. Anything more means that they are robbing dollars from other important areas of the business mix (products, support, competitive pricing) to pay out a higher commission.
But back to your bottom line, what does total payout mean for you? Each commission plan in direct sales or MLM uses levels to isolate sales volume and earnings. For example a plan that pays out 45% over 5 levels, may look like 10%, 10%, 5%, 5%, 5% for a total of 45%. In this scenario, a $1,000 of sales on your second level would earn you $100, where as that same $1,000 of sales volume on your 3rd level would earn you a $50 paycheck. So ask yourself, what kind of time it takes to sell a $65 (the industry average) order? Does the effort make sense based on earning $6.50 or $3.25 in commissions per sale?
Top distributors or “business builders” love plans that pay deep, as they add up to huge potential commission checks. A 45% pay plan that pays 9 levels deep, may look like 5%, 5%, 5%, 5%, 5%, 5%, 5%, 5%, 5%, for a total of 45%. What’s the difference? On average nearly 80% of all distributors will never sponsor another distributor into an MLM, thus they will never get any volume down 2 levels, let alone 9. (Definition: a distributor builds a business, whereas customers simply buy products, without referring other customers or distributors) So in essence the “deeper” the pay plan, the less an average distributor will earn because the percentage payout on level 1 and 2 is smaller, in order to push the pay plan “deeper”.
The top 5 largest direct sale and MLM companies in the world are: 1) Avon 2) Amway 3) Tupperware, 4) Mary Kay and 5) Herbalife. Avon, Tupperware and Mary Kay have front end plans (higher commissions on early levels) whereas Amway and Herbalife focus on depth for bigger earnings. As you can see both types of plans are effective for the company and distributor. Make sure the commission plan of a company fits your style and ability to refer others or become a serious business builder.
Tags: MLM, network marketing, commissions, distributors
]]>So he took the best product concepts from the entire wellness industry (not just a knockoff of his former company), formed his own product line and launched his own company in less than 60 days. So is he a real company? Absolutely! By using business outsourcing, he was able to set up the manufacturing and the business systems needed to run his own MLM company; the marketing, the commission/bonus plan, the software, the web, the call center, the fulfillment and the financial interfaces for orders and commissions payments.
So instead of raising $500,000 to $1,000,000 in operating capital, (of which 60% goes towards payroll, let alone hiring and training time, 15% to software and phone systems and 25% to facilities) he outsourced his systems, operations, call center, fulfillment and people for a fraction of the cost and time. The advantage? He spent less than 10% of the original estimate and was in business in less than 60 days.
Outsourcing allows businesses to focus on their customers, their products and their business. It also allows young companies to take advantage of the “experience” factor, leaning on outsourcing partners for solutions that are usually beyond the budget and time frame of a start up business. In sports and business, I have found that there is always someone bigger, faster and stronger! Outsourcing allows you to put the best people on the team. FAST!
Ownership isn’t for everyone, but for the person who knows his industry and products, using an outsourced business model for the business “infrastructure”, enables an owner to “launch” the business quickly and inexpensively with a higher level of service and technology.
Tags: distributor, business outsourcing, Business Start-up, Network Marketing, Multi-Level-Marketing, Home Based Business
]]>Here’s a recap:
The first priority for any company is to create a marketing/distribution strategy based on their target audience, their product line, and their business objectives. it then becomes a matter of budget and execution. By answering those three questions above, we can generally put a company into one of 3, marketing/distribution channels:
The first part of the equation is the budget to implement the marketing/distribution strategy. Each of these 3 channels has a significant marketing expense associated with the basic infrastructure (technology, content development and delivery), which is paid for out of the marketing budget. Traditionally a company spends 25% to 35% of each revenue $ on marketing and 10% to 15% of each revenue $ on sales. As a client determines what type of marketing strategy is best for their business, they commit the bulk of that marketing budget to one of those 3 channels. In the case of a direct sales company they are paying out 45% to 50% in commissions, so you can see there isn’t much left in the marketing budget for direct mail, pay per click, infomercials, etc to be created and paid for at the corporate level.
If an independent distributor chooses to use their commissions to fund those programs independently, that is entirely up to them. The problem with that, as you may have discovered, is that it is expensive to create a web site, let alone the expense of driving traffic. The click through rate on Internet ads is .7% up to 1.8%. Of those that click through, roughly 1.4% will purchase. And without a strong national brand, (Amazon, E-Bay, etc) to validate the sale, how do you justify the expense? In most cases the ROI is way out of whack.
The second part of the equation is simply the strategy itself. Each category has very specific purposes related to target audience and the product. In the case of direct sales, the sale of a product is based on one thing and one thing only, the relationship of the buyer and seller. Direct sales products do not sell themselves, which is why companies use direct sales in the first place. The direct sale product requires some level of education, personal referral, training or support. If the product doesn’t require those components, then the company would most likely use e-commerce or retail to distribute the products, because they could eliminate having to pay out commissions to distributors, leading to better profitability.
When it comes down to generating sales and paying for the marketing strategy, it’s important to stick very closely to your overall distribution strategy, or you can end up wasting a lot of time and money. Specifically, a direct sale marketing/distribution channel, its products and opportunity will and do require education, personal referral, training and support. There are numerous technology options that offer catchy “eye candy” via multi media web sites that can be effective if used correctly within the product and marketing strategy. But they are rarely if ever effective in creating a lead, let alone a sale for direct sale companies, their products and their distributors. That said, using an ecommerce or direct response strategy is going to have limited impact in a direct sales model. Not because the tools don’t work, but because they are not in sync with the direct sales marketing/distribution channel being used.
Be very careful to position technology as a tool, not a system. In direct sales, technology should always be used to extend the “personal reach” of one person to another, in order to leverage the relationships of the buyer and seller. Technology cannot replace the “relationship” that so important to direct sales and referral marketing.
Tags: mlm software, distributor tools, referral marketing, direct sales
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