Saturday, February 11, 2012

Strategies for Successful MLM Companies

Todd Tolman - Editor
Todd Tolman

Strategies for a Successful MLM 

By Todd Tolman (Editor)


Starting an MLM enterprise is difficult and leaves no room for mistakes. Like a good game of Chess, each move you make should be governed by an overall strategy, allowing you to focus your time and energy on the correct details. Individual moves that add up to a win.

As an MLM Software provider, we are pleased to have aligned ourselves with several industry experts with decades of experience helping new MLM enterprises to launch successfully. Professionals that have developed correct strategies for new MLM companies. They can help you construct a good game strategy, putting you in a position to succeed.
 
We pleased to provide you with two great industry consultants this month, both with similar and contrasting ideas to help you with your MLM company strategy.

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Strategies for a Successful MLM


Essential Action Steps for Launching
  • Validate your product and concept 
  • Identify your core offering and unique value proposition
  • Develop your growth and financial projections
  • Identify and profile your competitors
  • Write your business plan
  • Declare your personal goals and business goals
  • Make the crucial stage 1 decisions
  • Create your support plan

Terrel Transtrum
Strategic Planning for Your MLM Company

Your MLM strategic plan will serve as the roadmap for every decision you make in forming and running a successful MLM company.  It should be completed early, with careful consideration given to each question.  Unlike a business plan (which may be used to attract investors), the MLM strategic plan is for internal use.  Complete candor is vital.  The Strategic Plan should be reflected in a “living” document that you should revisit, review, and update at least annually.

Your Purpose, Passion, and Value Proposition

The Entrepreneurial Dream

The Strategic Vision is the first concrete step toward creating your complete MLM strategic plan that will bring your entrepreneurial dream into reality.  When it is done right, you create a clear picture, a template, of what your company will look like and act like when it is fully developed.  From that point onward, everything your company and your people do moves the company toward the vision.

Your Strategic Vision is a Commitment

It’s not enough for you to have a vision; that’s just the first step.  You have to interpret it, communicate it, keep it alive in the minds of everyone in the company and in the field, and keep them moving toward it.

Put it in Writing . . . a Strategic Vision Statement

A clear written statement is needed.  A written statement does two important things: It forces you to think through not only the details of the Strategic Vision, but also how best to communicate your vision in the clearest way, thereby creating an accurate “mind picture” for everyone in your company.

Dynamic Yet Stable

Your Strategic Vision should be dynamic, subject to revision in response to major changes and trends.  But it should also be stable, not reacting to day-to-day events unless they signal some underlying shift in the company’s situation.  Think of it as your company’s version of the US Constitution – regard it with a degree of reverence, and preserve it, but be willing to make changes in response to major shifts that affect the long-term health of the company.

Stay True to Your Dream

Remember, your Strategic Vision is your vision and your dream.  It is your North Star compass.  Never lose sight of it.  Keep it in view and it will keep you on track.

Your Company Story

Remember big MLM businesses are just small MLM businesses that did many of the right things.  But they started from the same place you did, from the beginning.  They created stories that became business legends, stories that built a following, an understanding of the spirit of the company.

A Tale to Tell

Your story can be how you started or why you started your business or what incident best illustrates what you and your business are all about.  It’s about “the way we do things here.”

It could be a story like the one about a silversmith from Boston named Paul Revere who made his famous Midnight Ride to Lexington to warn Samuel Adams and John Hancock that the British are marching to arrest them.  Along with William Dawes and other riders, he warns the countryside of the British march.  He witnesses the “shot heard ‘round the world” as fighting breaks out in Lexington.

It’s All About Inspiration

Company Stories have impact.  Any great MLM business has to have a reason for being that touches its customers, employees, and field reps very deeply.  That’s what your Company Story is all about.  It’s at the heart and soul of why you’re in business.

Have fun with it.  It will serve as an inspiration to everyone it touches.  Not every story needs to be lengthy.  It needs to be your story; it needs to be real; and it needs to be told.

The MLM Business Plan that Will Get Funding

An MLM business plan is a document that summarizes the operational and financial objectives of your business.  It contains the detailed plans and budgets showing how the objectives are to be realized.

Many think that the purpose of a business plan is to secure outside investment capital.  They are right.  And the better plans make it farther if the pictures that they paint illustrate well-researched, knowledgeable preparation combined with an energetic visionary who has a product or service that enough people will buy to make the business worthwhile.

Contact terrel@launchsmart.com for a sample Table of Contents of an MLM business plan a client who was successful in obtaining funding.  It illustrates the most common elements of a successful business plan.

Your Growth and Financial Model

Our approach to MLM forecasting growth and financial results is a two-pronged approach.  The first prong is a behavioral modeling of expected behaviors of builders, based on our years of observing and quantifying performance.  A good forecast takes into account past performance, but it also looks forward with an eye on what’s different now than in the past. 

But people are people, and we have learned to rely on some of the basic behaviors in creating our MLM growth models.  The growth modeling incorporated into our spreadsheets and software forecasting tools is driven by such questions and assumptions as, “Out of 100 active reps in the month of February, how many will make a business presentation?” and “Of those making business presentations, how many will they make?”  These lead to, “Of business presentations (or home parties) conducted, how many recruits / how much in sales will result?”  And so forth.  These series of “behavioral” assumptions then drive the financial forecasts.

The second prong is the financial forecasting prong, typically much more scientific than the unknown of the behavioral model that attempts to answer the question, “how many people are going to get out of bed and work the business today?”

The most commonly used financial statements used by investors and executives in managing and planning business are the following three:

·         Profit & Loss Statement
·         Balance Sheet
·         Cash Flow Statement

Interestingly, the one we find ourselves watching most carefully is the cash flow statement since it is the predictor of how much cash / credit we need access to at any given time in the company’s growth cycle.  It’s the key to not “outgrowing available resources” which is one of the primary causes of failure.

Marketing Strategies

Most MLM startup companies enlist (or should enlist) the support of a marketing firm.  This firm will help develop your company and product/service names, logos, packaging, branding, sales tools, advertising strategies, websites, etc.  This firm will be one of your most important strategic partners.  You will find that the degree to which they will be able to effectively help you will depend upon how ready you are to help them to understand you, your products and services, and where you want to take your company. 

The basic marketing strategy workshop will apply the rigor we introduce here.  The results are well worth the rigor.  “No rigor, no results.”

  1. Basic MLM Business Concept
  1. Basic MLM Product Concept
  1. Branding
  1. Overall Market Description
  1. Specific Market Segment Description
  1. Target Market Description
  1. Competitive Analysis
  1. Unique Selling Proposition
  1. General Awareness Marketing
  1. Lead Generation Marketing Strategies
  1. Distributor Specific Marketing
  1. Product Specific Marketing Strategies

Local, National, Global Launch

Having viewed the tremendous international MLM success of companies such as Avon, Nikken, Amway, NuSkin, Mary Kay and Tupperware, many owners of startup Network Marketing companies are tempted to go into international markets immediately.  The short answer is "don’t do it.”  Starting a successful Network Marketing company is a daunting and complex task, a process that should be perfected one step at a time.  For most companies, it is important to first develop a working model in the United States or country of origin. 
Mastering the marketing plan, establishing distributor and customer service departments, refining the support technology, etc. are best accomplished in one country, with duplication and adaptation in foreign markets to follow once the machine is working in the home country.  In addition, it is important to cause distributors to first focus their efforts in one market rather than ineffectively diluting their efforts in multiple markets.  Of course, all rules have exceptions, and if your company is a multi-billion dollar conglomerate with worldwide retail stores or international catalog operations, the resources may be available for a multi-country launch.  For the "small guy," the logical progression from the U.S. is to Canada, Europe, Australia, Asia, Mexico, and South America.

Competitors

When working at Melaleuca, LaunchSmart™ co-founder Terrel Transtrum tells that he learned early on that other direct selling companies were not the competition.  For Melaleuca, the competition was Proctor & Gamble, the personal care and home products giant.

There are different types of competitors in direct selling:
  1. Traditional (non-direct selling) companies that sell the same or similar products and services
  2. Direct selling companies that sell the same or similar products and services
  3. Direct selling companies that offer income opportunities that will draw reps to them
As you become aware of the strengths and weaknesses of your competitors, you will grow strong and confident.  If you are keenly focused on your unique differentiators, the primary one being your culture, you will find that the game of growth will be challenging and fun. 

As you go through the strategic planning process, don’t skip through the SWOT analysis where you will be guided through the exercise of identifying competitors and creating profiles from which you will learn.

Terrel Transtrum is the co-founder of LaunchSmart, a company that supports clients in starting and running successful network marketing and home party companies.  Accepting new clients and offering free no-obligation MLM consulting.  terrel@launchsmart.com


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Jay Leisner
Strategies for Successful Multilevel Marketing Companies

by Jay Leisner

Why are some network marketing and party plan companies successful while others struggle? Are the successful companies following specific strategies? If you follow the same strategies, will you be successful, too?

If success was that simple, we would all have it. The reality is that direct selling companies are complex organisms and no two are exactly alike. This means that following all of the strategies of another company will not produce the same results for your company.

So, what can you do to have a successful multilevel marketing company? You must first start by following the golden rule of direct selling.

Golden Rule of Direct Selling

Strive to make your income opportunity
as easy, lucrative and fun as possible.
 
While this golden rule is simple to recite, it's not as simple to follow. Network marketing and party plan companies on occasion make decisions that cause their independent representatives to feel confused, frustrated, or angry without realizing it.

Your independent representatives are not just your salespeople. They are also your customers. Remember to always treat them like customers first!

Like all customers, they are free to do business elsewhere.  While you sell products or services, you are also in the business of providing an income opportunity. Much like a franchisor, the success of your business depends on the efficiency and effectiveness of the systems you are asking others to follow.

How welcome your independent representatives and their customers feel when they interact with your company is directly related to your longevity and your rate of growth. Successful direct selling companies stand out from others because their culture is not only welcoming, but also supportive, informative, and nurturing.

How well your products or services perform is equally important.

Interestingly, the success of all direct selling companies depends on the retention of failed independent representatives who stay with you as customers. In other words, if you are selling products that are purchased only by representatives who are making money through your income opportunity, when they quit working, they will also quit buying.

If you look carefully at the most successful network marketing and party plan companies, you will see that a significant percentage of representatives who have not built a downline or who are not building their businesses any longer are still buying products from the company.

Would you like to know more about what you can do to have a successful network marketing or party plan company? If so, I invite you to request a free copy of our special report – 20 Secrets of Successful Direct Selling Companies – at http://www.sylvina.com/20-secrets.php.

For even more information, I recommend out insightful book, Start Here:  A Guide for Starting Your Own Home Party Plan or Network Marketing Company.  You can view the Table of Contents or obtain your copy at http://www.sylvina.com/start-here.php.

Lastly, I invite you to meet with us at the best MLM and party plan startup conference in Las Vegas on March 8 and 9.  For details on our conference, visit http://www.directsellingedge.com.

Jay Leisner is the President of Sylvina Consulting.  For 25 years, Jay has helped to launch and grow network marketing and party plan companies.  To contact Jay with your questions, call 503.244.8787 or email jay@sylvina.com.




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