Education ISN'T just for MLM Distributors!
The MLM Industry Is Maturing - Competition Is Up!
by David Klaybor and Rod Cook
(Aug 2009) In the competitive environment of the mature MLM industry, a lack of knowledge can cost you your business. How much has it cost you personally for what you know today? Plenty I'm sure. Let me share a true story with you...
I asked the President of a network marketing company, "How is it that you are so successful?" By making knowledgeable decisions," the owner replied. "Where did you get the knowledge?" I asked. "Experience," he snapped. "Where did you get the experience?" I persisted. "Poor decisions!" he stated with authority.
I asked him to estimate how much it cost him to learn how to operate and build his $600 million a year company... he didn't hesitate as he quipped "$600 MILLION and counting"! He said he wished that he could have gone to a MLM Owners Marketing University or worked with a person who had Network Marketing expertise as he was built his operation. He said he was guilty of an over-extended ego, too much pride to delegate responsibility, too frugal to pay for expert advice and just too over-confident that he would succeed.
He said he thought his business experience, in other areas of marketing, would transfer over to the MLM world easily... he says this was his first major mistake. He wished he could have been better prepared with a proper EDUCATION to build his MLM company. He insists that it cost him: 1- many wasted years of his life, 2 - unnecessary mental stress and pressure, 3- losing valued relationships with friends and family, 4- millions of dollars, and 5- much embarrassment as he stumbled forward feeling his way through an industry he thought he could easily conquer.
We have become "MLM statesman" from years of asking successful, (also defeated), MLM entrepreneur's powerful questions about their experiences. Like a research scientist we discovered what drove company sales forward and/or what made revenues stagnate or drop? Only careful evaluation of hundreds of MLM company "case-studies" can offer meaningful solutions. There are MLM secrets most people never discover during the life of their Network project. Without knowledge, you will go through the pain, if you're lucky enough to survive.
The majority of MLM owners haven't been able to research the industry before they launched (or better yet become a distributor to recruit and sell). Most can show you a few distributor kits, refer to the bottles of product on their shelves, motion towards the handful of videos stacked near the VCR and reference a few compensation plans they've looked over in the past 1-3 years... The industry survival-ratio, as well as the way some MLM companies are designed and run is a testament to the lack of pre-planning.
Our peers and us have multi-level expertise (you should go to a DRA meeting or MLM Cruise with top leaders) because we have dedicated our lives to acquire the knowledge every company owner/administrator needs to know. In today's mature MLM market, in order to beat the failure-rate odds you need to have new knowledge continuously. That is the reason the MLM WatchDog was founded back in 1985, to offer you one great idea, or find you a solution to one major problem... it could be worth millions of dollars, and reduce your stress-level dramatically. It's amazing that new owners launching network companies are afraid to spend money to educate themselves. Then they (are smart enough to) demand their distributors pay for, and attend training classes.
How would you define a network marketing company as being successful? Well, first it must be said that if the owner is happy, then he/she is a success.
The MLM marketplace defines it another way. History and hundreds of case studies of successful operations indicates that an MLM firm could easily be grossing $5M/month within 3-5 years... and be grossing $10-30M/month within 5-10 years. If a company is still grossing less than $1M/month after years in business, it's doing something wrong... or perhaps its owners prefer operating as smaller MLM operation. Many people like running a small mom/pop business... but these days, this can be very dangerous. All companies must keep growing in order to stay in business, otherwise you're a candidate for "raiders" ... and raiding experts are talking to your distributors everyday. If they are successful, your company could lose 20-40% gross income in one quarter alone. In today's mature market, a company could be out of business in 4 to 18 months if it doesn't know how to handle the situation properly.
Whether you're an owner/administrator of a veteran company, or just starting out... in today's competitive market there are many weak areas in MLM operations that must be improved, removed, edited, enhanced or modified in order for your firm to compete in today's MLM world. 1996 was the first huge surge in new MLM company launches. Today there are 2-3 real (serious $$) MLM operations starting every WEEK! All these companies are competing for a limited pool of entrepreneurs. If you think there an unlimited amount of potential prospects you're wrong. Our industry has stabilized at OVER 15 million distributors. Rod Cook estimates that about 45k distributors leave and about 50k enter the industry each month. This year (2009) there are over 100k distributors moving monthly or picking up a second company. Leaders of network marketing operations must receive training in the following areas in order to compete and survive. Most MLM operations are weakest in the following areas.
This an updated article from the print copy of MLM Insider Magazine - Rod Cook Publisher, April/May 1996 Issue
THESE INSIGHTS INTO AN MLM COMPANY ARE MORE IMPORTANT THAN 1996!
Most MLM Company operations fail to do at least half of these listed below:
(1) Many fail to create a compelling company "ELEVATOR STORY"...
(2) The company elevator story will never be right unless the company is "DESIGNED" properly...
(3) Most MLM firms do not have the proper PRODUCT MIX, and/or have products with the wrong mark -up ratio to pay their company plans...
(4) Too many companies expand their product mix too fast expecting that to increase their income, what is does is create confusion in the distributor sales force about what to sell. Top leaders get lost and can't train newbies.
(5) Too many MLM operations improperly sell money as their # 1 product; they focus too much on the business opportunity... This = no R&D!
(6) Most MLM firms do not focus on product and distributor results = competitive analysis number crunching.
(7) Most MLM firms do not know how to handle defecting distributor "raiders"... Except lawsuits which give their company a "negative image."
(8) Most do not know how to make win-win "offers" or create deals that will attract and keep MLM leaders, and most never know who to give a deal to; currently most MLM owners get ripped-off in this area when they never understood its importance to their success...
(9) Many mature companies lose their leaders, ending in litigation you can see here on the MLM WatchDog. Why they ignore competitive intelligence analysis and have no strategic plan like divisional diversification.
(10) Many company owners think they are invincible, they're not in control of their egos, and they do not delegate or communicate properly. Top and midrange leaders feel alienated just because there are no MLM competitive intelligence surveys done of the distributor force.
(11) Many MLM companies have poorly named their firm, their products and have poor to average sales aids/ company forms, websites that don't sell and marketing departments that don't market or provide tools.
(12) Many distributor kits are worthless and do not work to perform the task they were created to fulfill. Today most don't know the #1 sales tool to put in a distributor kit.
(13) Many MLM compensation plans are too complicated, and do not pay the right people the right money at the right time... There is no balance between big distributors and newbies.
(14) Many companies try going International too soon, older firms have gone overseas because their USA plan isn't working well anymore in the competitive MLM market here.
(15) Most MLM firms do not use industry vendors often enough or listen to the advice they receive.
(16) Most operations fall-out ratio is too high and their activity ratios are too low. Attempts to improve these figures usually work short-term and then hurt the company long-term = competitive analysis number crunching
(17) Many MLM conventions, regional events, conference calls and home office tours do not maximize their potential.
(18) Despite hi- tech communication systems, contact between the company and the distributor and contact with the firm's customers are weak, never reaching their true potential.
David Klaybor and Rod Cook
Both Experts and Competitive Intelligence Consultants
Editor Notes from Rod: I think that many of the insights listed above are easier to fix or live with than a Franchise. I have owned two Lube and Tune locations. Marcie and I have owned five Great Clips hair salons. If you kill youself off while out marketing the franchise (with shaky marketing instructions).... the franchise owner is still collecting 10% or more of your GROSS sales. So, if you have an MLM and stumble, it doesn't directly kill your income. One thing you do learn with franchises is number crunching for Competitive Intelligence to survive and prosper.
P.s. Starting a franchise location generally costs $50,000 out of your pocket just for marketing - per store!
Your Company Owner Driving You Nuts?
They aren't doing Distributor Surveys?
PRINT AND MAIL THIS TO THEM SECRETLY
OR send them a link!
