Company Growth Rate = Distributors Success
Although the statement above is obvious, far too many MLM companies fail to understand and implement, that in an ever changing environment and saturated market, they have to take a more active role in their distributors' success.
So let us analyze "mathematically" what is distributor's success:
Distributors' Success Analysis
For the sake of this discussion, let us introduce the following three equations
Equation 1: Distributor's Success = Company's check
Equation 2. Company's check = Sales
Equation 3. Sales = Organization size
Distributor's Success = Company's check
While success as an employee is sometimes subject to interpretation, status, wages, point of view or attitude, there is no doubt that for an MLM distributor, the size of the check received from the company is the ultimate yardstick of success.
Company's check = Products' Sales
At the end of the chain there are customers who buy the company's products. The company's turnover is the sum of all these sales. A percentage of this turnover is used to pay the company's sales force the distributors. This system of remuneration is the company's "Compensation Plan".
Products' Sales = Organization size
Distributor's commission is derived from the overall sales of their organization according to the specific compensation plan. On average, the company's turnover divided by the total number of distributors in the company represents the average sales per distributor. Hence, the number of distributors in ones organization determines on average the company's check size, or:
Distributor's Success = Organization size
The New Distributor: Situation Analysis
Beginners have a lot on their plate. To become successful, they have to master all aspects of their new work: Company, products, sales, systems, etc. To boost their confidence in their new line of work, they need an early success. To start growing their organization, they need the tools and framework to enable this early success.
Since most distributors lack this much required framework, it does not come as a surprise that currently 80% - 90% of them dropout in the 1st year.
Organization Manager: Situation Analysis
Once a distributor has added a few new down-lines, he becomes an organization manager. Since dropout percentage is high, organization managers are in constant pursuit to recruit new distributors on one hand, while maintaining and supporting their existing organization.
The need to control their administration and sales time-share, becomes a major issue.
Growing an Organization: Facts
Let us deal with the harsh facts which, governs the building process of an MLM organization:
Fact #1: 2% 3% of people exposed to the business opportunity become prospects. This figure relates to the best recruiting Websites where figures can be measured. The figures are much lower when using other advertising channels such as newspapers, stickers, flyers etc. Fact #2: 1% - 2% of prospects become distributors. This is an average figure and depends on many factors. Some of them are personal factors, where others relate to the lead's quality and source.
The bottom line is simple: A distributor has to expose his business opportunity to some 1000 to 1500 people to recruit ONE (1) down-line.
Conclusion: Recruiting is a numbers game!
Winning the Numbers Game!
To win the numbers game two components exposure and conversion rate - has to be increased!
Exposure: There are many channels of exposure to the business opportunity: business cards, flyers, publicity buttons, stickers, Newspapers, Internet ads, recruiting Website - to name some. However, before practicing a specific method, the following important questions have to be asked:
1. What is the cost effectiveness of this method? How much time and money I need to invest to get 1 lead (prospect)?
2. What is the quantity of prospects I can achieve using this method? How many prospects I expect to add to the pipeline in a month? Is there a limit to the number of prospects I can find this way?
3. What is the prospects' quality this method produces? High quality leads are informed prospects. These people have already received information about the business opportunity before you even talk to them.
A good personal and professional recruiting Website can:
Beat the 2% - 3% ratio of surfers to prospects
Provide high quality leads
Becomes a source for the cheapest possible leads
Provide a fresh and unlimited source for leads
Having a recruiting website is a must! However, since no one can expect that a recruiting Website will provide all the leads required from day one, a mix of advertising channels should be considered.
Conversion rate: Converting leads to active distributors for some extent is personal. Some people are more gifted than others and enjoy a higher than average conversion rate. However when the human factor is isolated, the common denominator remains "technical": How well and professionally these precious leads have been handled.
As time goes by, and the list of prospects lengthens, even the most talented sales person will find it difficult to handle it without an effective management system.
USA MLM Market
Here is a snapshot of the USA market:
2000 Companies
$28 Billion annual turnover
13 million distributors
Being one of the most competitive and saturated markets worldwide, MLM companies need to make sure that their distributors are well equipped when they approach potential customers and prospects.
Traditional Support to Distributors
Usually, MLM companies provide some support to their distributors. This support can be divided into tangible and Non-tangible support:
Tangible
Training
Marketing material (brochures, product information, surveys, articles....)
Incentives
Non-tangible
Communication between its distributors
Information (down-line performance, own production, commission, Flow of business etc.,)
Organization culture, sense of belonging
The above support, as much as required, is only part of what a distributor needs to succeed in todays competitive market.
The solution
We now go back to the beginning of this article: Company Growth Rate = Distributors Success. When a company decides to play a more active role in its distributors success, it can now add to its support mix, a recruiting and management system. This system will provide:
A framework for new distributors
A possibility to manage organization
Competitiveness in a saturated market
Save time and money resources to its distributors
Lower the dropout percentage
The Companys Benefits
When company uses its buying power to implement such a solution it can achieve the following benefits:
Saves time: Comprehensive professional solution is available now
Tailors the solution to its needs
Increases growth rate and distributors loyalty.
Increases bottom line at no cost.
Summary
Let us summarize the arguments in this article in a few short sentences:
1. The company success is derived from its distributors success
2. Distributors success is directly related to the size of their organization
3. New distributors need a framework that will enable them to achieve early success. This will reduce the current high dropout percentage
4. Organization managers need a system to support their organization and as a mean to lower the dropout of new recruits.
5. Building an organization is a numbers game. To recruit 1 distributors 1000 people has to be exposed to the business opportunity
6. Winning the numbers game, can be achieved by increasing both exposure and conversion rate.
7. The market is highly saturated and competitive, and the traditional support provided by MLM companies is not enough.
8. Companies should use their buying power to provide their distributor with current technology of recruiting and management system to accelerate growth and benefit from distributors loyalty.
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