How to Build a Successful Direct Selling Company Continued - Page Five
By Jeffrey Babener, © 2013
Be sure that the product is unique or that its formulation is unique to your company. If it is a commodity or generic
product such as telephone service, then you will need to create another unique marketing edge, such as great
service and value, to market the product. The better of the MLM products are those with high margins resulting
from the "perception" of uniqueness in the marketplace. In the end, a company will only succeed when selling a
product of high quality at a reasonable price to a market that purchases the product on its own merits. Overpriced
products of dubious worth have no real long-term future. The death knell occurs when distributors are caught
informing business opportunity meetings that the product is really irrelevant and is merely an excuse for the
marketing plan. Another vocabulary term for this phenomenon is "pyramid."
Equally important to choosing the right product is the assurance that your marketing will not be impaired by poor
planning. Your initial vendor agreements should be drafted or reviewed by MLM Legal Counsel so that you do not
find yourself stranded without product, or worse, find your manufacturer in competition with you. Regulatory
compliance is essential for such issues as FDA for labeling and claims, consumer standards for water and air
products or compliance with discount buying legislation. If you are importing products, you should be assured in
the beginning that your product will not be subject to embargo or detention. And, obviously, you should be assured
that your distributors and customers would have an uninterrupted supply of product because you have established
adequate capacity to produce the product or service.
Compensation Plan—It Better Be Good!
Does a compensation plan make or break a startup MLM company? History suggests that a good one is helpful
and a must. Does it drive success? Probably not. Will a bad plan contribute to failure? Probably, together with
other unlucky breaks. As industry expert Michael Sheffield notes with respect to a "good" compensation plan, "its
absence will be noticed more than its presence."
Is there anything new under the sun as far as compensation plans? Probably not. Whether the plan is a unilevel,
breakaway, binary, party plan, Australian two up or utilizes enroller, infinity or coding bonuses, the goal is the
same….motivate varying behaviors of distributors ranging from direct sales to building wide to building deep to
supporting downline to maximizing sales volume production and retention. Of key importance is that the plan is
easy to explain to recruits and that it is perceived as fair and balanced.
Typical plans may pay out upwards of 30% to 50% of sales volume in commissions to distributors. Various plans
merely divide the pie differently. As long as the perception is that the plan is competitive within the industry, it
appears that other factors, including bonding with the product, management, field leaders, company philosophy
and corporate communication will be a more significant driving force for recruits and distributors. In fact, companies
whose pitch leads with the compensation plan are often merely hiding the weaknesses of other key components
such as quality of product or stability of management. In designing plans, leading MLM management consultants
serve a vital role in balancing all of these factors.
There are obviously significant legal issues in evaluating and implementing the compensation plans. Review and
input by a competent MLM Lawyer is essential.
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