Your cost of goods is calculated as your acquisition or manufacturing cost. The more frequent question we come across relates to pricing. Most MLM experts agree that you must have adequate margins to pay commissions and to make a profit. Different products and services carry different profit margins. In addition, smaller margins may be satisfactory with high-priced products because there is still room for profit. Most MLM companies are likely to pay total commissions equal to between 30 and 45 percent of the price sold to distributors for resale, or prices for which consumers buy directly from the company. A typical company will try to achieve a minimum 5-7 times markup to allow for commissions, overhead and profit. Typical markup for resale by distributors is 25% of their purchase price. A good place to visit this issue is at the MLM Startup Conference, offered by www.mlmlegal.com, where experts discuss margins, pricing, profit, proformas, and a whole lot more.

Continue reading »

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.

Continue reading »

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.

Continue reading »

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.

Continue reading »

Some of the larger companies will provide you with tools and charts in which you can use to make an educated guess on your potential earnings.

Some of the larger companies will provide you with tools and charts in which you can use to make an educated guess on your potential earnings.

Will the stock market rise tomorrow? Who will win the Kentucky Derby? If one knew the answers to these questions then he or she would be rich. How much one might earn in a direct selling compensation plan is the result of many moving parts and to make any sort of prediction: the compensation plan itself, percentages paid on product, profit margins of product, personal sales, down line sales, etc. are all contributing factors that are endless. Two important resources are available to consultants: (1) leading companies post average earnings disclosure charts which indicate average earnings for distributors at various levels and stages of their direct selling program; (2) many companies provide online earnings calculators which allow a consultant to plug in their own assumptions on their personal and group sales and activity, which are then used to calculate the payout based on their expected sales performance.

Continue reading »

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?

Continue reading »

Tell us how your network marketing company is streamlining its technology. Has it eased the sales process or made it more complicated?

Door-to-door sales are becoming the sales method of ancient times. As technology advances so does the network marketing industry. More commonly, consultants are using personalized websites, often provided by their MLM company, as well as new devices, such as tablets, as sales and recruiting tools. Industry experts say that enhancements in tablet communication software enable consultants in the field to achieve greater success. Tablets enable salespeople to give more striking presentations, lower attrition rates, increase sales, as well as make ordering and enrolling new consultants easier. And, industry experts agree that the network marketing companies that embrace the newest technology will attract a new crowd of independent business owners and also the highly-desirable top sellers. Companies that fail to adapt to the latest technology may end up losing its most valuable salespeople to more industry-leading direct selling models.

Tell us how your network marketing company is streamlining its technology. Has it eased the sales process or made it more complicated?

Continue reading »

Credit to labarbosa Most direct selling companies permit advertising, but provide specific guidelines and protocols for promotion. Some companies require that all advertising be submitted to the company for approval.

The MLM company does, in fact, have the right to set the rules for marketing of its products or services, and those rules are typically found in the advertising guidelines section of the company’s policies.

Continue reading »