RETENTION OF DISTRIBUTORS and RE-ORDERS OF NETWORK MARKETING DISTRIBUTORS and CUSTOMERS DETERMINE YOUR LONG-TERM MLM SUCCESS
“A 5% reduction in customer/distributor defection rate can increase your profits by 25-125%, depending on the industry.” – Extreme Management by Mark Stevens
Retention rate is what creates real “Residual Income”, and determines the destiny of any MLM company. The better the retention rate, the bigger a network marketing company will ultimately be.
What a MLM company I found is doing, is using the same approach Sam Walton did to become the leader in retail. For this reason, they’re becoming known as the discount leader in the network marketing industry.
Honor in Network Marketing – The Integrity of MLM Companies
Network marketing generally has the reputation for over-priced retail products. Take note of the green “pie” section in the circle …
“Are the prices of the product competitive, or is it overpriced as compared to others?“
Just right on this point, alone, many (if not most) network marketing companies VIOLATE part of the Law of Retention … Value for Money.
Is it any wonder so many distributors struggle in sales and repeat sales? Is it really that surprising that so many MLM companies bite the dust?
You might sell the first time on excitement alone. However, hype and fluff won’t count when it comes to getting REPEAT sales, month after month. Your product(s) must offer real and concrete substance over the long haul.
Over my 13 years in Life Force International, I sold (give or take) 4,394 customers the Herbal Body Wrap. Though the product worked, the first time they did them, they found doing one … time-consuming and messy.
Life Force never paid attention, and failed to offer an easier alternative. I eventually lost nearly every one of my 4,000+ customers to, guess who?
It Works! Global, who seemed to have came out of nowhere, virtually overnight. It Works! found and offered an easier way to help people lose inches, and rose to position #56 in the Direct Selling News Global 100.
I had thought that Life Force would react to them, and do something about it. Instead, they just sat there like a lump on a log, and did nothing to improve the delivery of Herbal Body Wrap to make it easier and faster.
My customers lost their love for Life Force’s brand because they never stayed competitive.
So Life Force seriously violated the red section of the retention pie law, above.
I lost my shirt over this, because of them. Had their products been kept competitive, I’d still have 4,000 plus loyal customers, and I could be pulling down 2.4M a year in sales today, if customers bought only $50 a month. If my average commission was only 10%, I’d be making $240,000 a year with Life Force right now.
(To give you a comparison of It Works! to other well known companies. It Works! did a whopping 200M in sales in 2012, beating out LifeVantage #61 at 187M, Mannatech #64 at 173M, Organo Gold #66 at 170M, Nikken Global #77 at 133M, Vemma Nutrition #81 at 117M. Source )
So, love for the brand and value for the money is essential. Yet, even companies like Life Force violate these laws. One must choose a company who is smart, and doesn’t break these basic laws, which leads to…
MLM Companies breaking the trust of their distributors
Network marketers are tired of company owners who lack integrity; who say one thing, then do another. Typically, they’ll water down the products, change their compensation plans (using spin to deceive others into thinking it’s a good thing). And again, they overprice their products!
Perhaps my biggest pet peeve with most network marketing companies are their gruesomely one-sided policies and procedures. People are tired of bad Company Policies which allow company owners to take away their hard earned income at the “sole” discretion of the company.
Most network marketers don’t truly realize how bad these policies are until it’s too late. They get terminated, and instantly lose all their hard work from building their organization in just a instant. Their monthly income is gone in a flash, what could have taken years to build.
How many can afford a legal battle with an MLM company with deep pockets, and the emotional drain on somebody going through a 2 or 3 year (or more) legal process?
Most companies essentially state you revoke your Unalienable Right to a Jury Trial. Instead, you have to settle for some unknown (to you) mediator. You don’t know if that stranger mediator is being paid off by the company or not. Your only real safety is with a Jury.
The time to know what you can and cannot do with a company is at the beginning of your career with them, isn’t it?
Sadly, most sponsors don’t point this out to their new recruits. In most cases, if they did, the person who they’re trying to sponsor wouldn’t likely join them, IF they knew the company’s policies. How many recruiters or sponsors have ever told you, “Make sure to read the policies and procedures before you join?”
Also, people are tired of convoluted compensation plans, which are difficult to understand, and even more difficult for a new person to build a respectable income in a reasonable time.
The more difficult a compensation plan is to understand, the easier it is for companies to hide their “breakage” and “gotcha’s” that are not noticeable at first glance.
The compensation plan may APPEAR, at first sight, to be good. Many companies brag they have a total payout of say, 60%. However, when really understood, the REAL commissions out of each company dollar taken in can be as low as HALF that, only 30%, in actuality.
The days of hype, dishonesty, deception, unfair prices and dinosaur compensation plans are coming to an end.
When the dust finally settles, only the truly ethical MLM companies will stand tall above all the remaining companies in the industry.
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