MLM attrition is high. This is a fact of life. All of those distributors, who you have signed up, have competing demands on their time. So, if they go passive, it is not your fault. If that happens, you should give it a good shot to encourage them to reengage. However, after a few attempts, you should realize that you may be wasting your time. Hopefully, the value and quality and service proposition of your company’s products will allow you to convince the passive distributor to remain as a preferred customer.

At some point, however, you need to move on and focus on finding new recruits. One company executive succinctly captured the strategic decision in a metaphor when he said, “You can throw alarm clocks at the cemetery, but you won’t wake up the dead; it is easier to make babies.” Although a bit crass, this point is well taken. You should invest your time and effort where it will pay off.

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When you are starting your MLM, direct selling, network marketing, or party plan business, you’ll find that recruiting experienced distributors is often essential to your company’s success. And if you don’t have the background yourself, as a successful recruiter, you need to budget for a Sales Manager position for an individual who does have that capability.

Your ability to recruit directly equates to your success. If you have a background in recruiting and a background in direct selling, then your need for capital will be substantially lower. Recruiting top distributors will enable your company to have the capital to stay afloat and even grow. If recruiting is slow then you will need to raise one to three years of buffer capital in order to support your company in the event of stagnation or loss. And remember, the remuneration that is offered to top distributors will be effective in their decision to stay and help grow the business.

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The issue of levels has not been the focus of the Federal Trade Commission (FTC) or state attorneys general in the enforcement of pyramid laws.

The issue of levels has not been the focus of the Federal Trade Commission (FTC) or state attorneys general in the enforcement of pyramid laws.

The issue of depth of levels seemed to be a major focus prior to the internet and other non-postal (mail) means of communication. In the late 1980’s the United States Postal Service (USPS) examined numbers of levels to make a determination of whether or not, in its opinion, the depth of levels created a “lottery” element under U.S. Postal lottery laws that forbid payment based on chance. Various cases and consents sorted out a safe harbor (at least from the U.S. Postal Office standpoint) for at least four levels (not necessarily agreed to by the direct selling industry). Separately, the Postal Service looked for evidence of “supervisory requirements.” Most companies adopted specific supervisory requirements of sponsors to demonstrate some managerial activity by distributors. For the past 25 years, little recruitment activity is conducted by U.S. mail and it has been a long time since the U.S. Postal Service has expressed a serious interest in this subject. The issue of levels has not been the focus of the Federal Trade Commission (FTC) or state attorneys general in the enforcement of pyramid laws. Instead, the focus for the last two decades has been on the whether or not product/service

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Incentives absolutely increase sales. However, sales incentives go by many names, shapes and sizes.

Incentives absolutely increase sales. However, sales incentives go by many names, shapes and sizes.

Incentives absolutely increase sales. However, sales incentives go by many names, shapes and sizes. Obviously, the understood and expected incentives are bonuses and commissions. Since companies are trying to incentivize different types of behavior, the compensation plans of companies are often complex and multi-task to provide incentives for retail selling, preferred recurring customers, building wide, building deep, working with immediate downline and deep into a downline, time sensitive personal and group sales production, personal and group sales, longevity, quick start, etc. Beyond cash incentives, most leading companies understand the power and inspiration behind noncash incentives that

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It depends on which hat you are wearing that day as to whether they are to be considered MLM professionals or MLM junkies.

It depends on which hat you are wearing that day as to whether they are to be considered MLM professionals or MLM junkies.

The answer here is somewhat “tongue and cheek” and should be taken with a “grain of salt.” This question is often asked of people who are starting network marketing companies. The majority, if not all of them, respond that they want to recruit MLM professionals to their companies. An industry observer once commented wryly that, too often, “junkies” and “professionals” are merely flip sides of a coin. The commentator said, “A MLM junkie is someone who will raid your distributors and take them to another company while a MLM professional is someone who leaves their company, raids the distributors and brings them to your company!” It depends on which hat you are wearing that day as to whether they are to be considered MLM professionals or MLM junkies.

In all seriousness, the above comment too often contains more than a kernel of truth.

Lastly, companies that pay people to bring recruits with them to the new company are not conducting good business strategy. They will often claim to recruit thousands of individuals and only bring a few, yet still get their money. Unfortunately, this happens time and again and it is not an ethical way to do business.

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The Next MLM Startup Conference Takes Place October 23 & 24, 2014!

The Next MLM Startup Conference Takes Place October 23 & 24, 2014!

The next Starting and Running the Successful MLM Company Conference will be held October 23rd & 24th, 2014!

For more than 27 years, leading industry experts have educated the executives of starting and existing MLM, direct selling, network marketing, and party plan companies on how to structure their compensation plans, legalize their companies, recruit key employees and top-ranking distributors, develop business models, generate leads, fund their business, establish their website and technology platforms, better understand the direct selling industry, and so much more.

The next MLM Startup Conference takes place held October 23rd & 24th, 2014 in Las Vegas. View the conference flyer page at http://www.mlmlegal.com/srs2.html to learn more.

This is the original MLM Startup Conference – responsible for launching many industry-leading companies – perfected over the course of a quarter of a century to ensure the highest quality of information, the most knowledgeable experts, and the most practical advice from qualified experts.

Over the course of two days, attendees will hear from scores of industry experts, and if they choose, can sign up to meet with the speakers for individual one-on-one time. A full list of speakers and their biographies/credentials can be found at http://www.mlmlegal.com/bio.html.

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Tell us your story. How did you discover the network marketing industry?

Tell us your story. How did you discover the network marketing industry?

There are many ways that new consultants are initiated into the network marketing business. Some find or seek out MLM companies on the internet, while others get recruited by friends, family, co-workers, neighbors, acquaintances, or other people that they know.

MLM Attorney wants to know: How did you discover network marketing? Did you have family in the business and were always aware of the industry? Did you learn about an opportunity from an acquaintance? Do you seek out new network marketing companies or are you loyal to a long-standing company? Did you find a product that you liked and joined to get the product? Tell us your story. How did you discover the network marketing industry?

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It is very illegal to pay headhunting fees, i.e., paying commissions merely for distributors to recruit other distributors.

We are often asked by executives starting a network marketing company if they can have consultants earn income by referring others and if it’s legal.

Effectively, multilevel marketing is the sale of products through person-to-person, “referral” marketing. It is very illegal to pay headhunting fees, i.e., paying commissions merely for distributors to recruit other distributors. However, if a distributor builds a sales organization and receives override commissions on the sales activity of those in his or her downline, this is the essence of multilevel marketing, and is quite acceptable, assuming all other elements of legitimate direct selling (vs. pyramiding) are in place.

MLMLegal.com has launched the Innovation Campaign for its February 2014 MLM Startup Conference. Read how to get your two free tickets by clicking HERE!

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Mandated kits are typically in the $50-$100 range.

Frontloading generally refers to a process in which a MLM company, or a sponsoring consultant, encourages a new consultant to purchase far more than is commercially reasonable under the circumstances. Often the “push” is explained to the recruit as necessary to qualify in the compensation plan. This is an unacceptable practice is often one indicia of a pyramid scheme.

On the other hand, virtually all regulatory agencies recognize that purchase of an “at cost” sales kit is an acceptable practice in the mainstream of leading direct selling companies. Such mandated kits are typically in the $50-$100 range. They generally entail “hard copy” or online supply of sales and marketing materials as well as ongoing, updated sales and marketing materials for one year. Typically the mandated sales kit does not include product and generally a company offers an optional deluxe kit that may include product. Such an optional kit, which is often referred to as a “fast start” kit, may contain several hundred dollars of product. This is not unusual. Although the same regulatory standards on upfront, mandated purchases are applicable to party plan companies as they are to other companies; it is not unusual to see party plan companies mandate a beginning starter kit that contains a wide array of products, with a price tag several hundred dollars. Regulatory agencies are very liberal in their view of such mandated purchases in party plan companies because party plan companies are so overwhelmingly retail-oriented and the movement of product to retail customers is the norm, and not the exception.

MLMLegal.com has launched the Innovation Campaign for its February 2014 MLM Startup Conference. Read how to get your two free tickets by clicking HERE!

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As a consultant, where did you first begin selling your products/services?

It is often said that direct selling/MLM/network marketing is about first sharing your product and services within your spheres of influence, that is to say, first harvest the low lying fruit. This means calling upon your friends, family, social acquaintances, co-workers, members of your church, religious group, fraternal organizations, etc. In other words, sell where you are the most comfortable. Generally, this includes territory close to home. Generally speaking if you sell products/services at a distance then it is because you have connections. As you mature, you may venture into other territories, but it likely will be through social networking or by having an online presence.

As a consultant, where did you first begin selling your products/services? How would you rate your success during your first year as a consultant?

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