This blog post is the companion post to the video: Factors that Make a MLM Company Successful. Expert MLM Attorney, Jeff Babener, explains what factors are necessary in a MLM company’s success.
Interviewer: Talk to me about what makes a MLM company successful. I know you’ve worked with some of the biggest names in the industry. You’ve been in this business for a very long time. So you’ve got a real unique perspective on the industry because as you worked with so many successful MLM companies. I bet from your own point of view, you see some of the things that companies are doing well and some of which they can improve on. With all of that collected experience, tell us what makes a company successful?
Jeff Babener: You know, we often hear about the newest sizzling compensation plan. I’m going to say that a good compensation plan is one that pays fairly and proper remuneration is a given. Your company can’t go anywhere unless you’ve created your compensation plan correctly.
Interviewer: So, you got to have a good compensation plan…
Jeff Babener: It should be good and it should be fair. But I have to tell you, a company that touts its compensation plan is often using that as an excuse to cover up for other elements that are missing.
Interviewer: Got it.
Jeff Babener: What drives the success of direct selling companies, that we have seen, has been high quality products and services. Products and services that stand on their own in the marketplace, something that distributors and consumers bond well with.
Representatives and consumers bond with products and services. They bond objectively. They bond emotionally. So, bonding to that quality product is really important.
Secondly, the people who run the company, for better or for worse, are extremely important. When the distributors of Mary Kay sat in the audience and listened to Mary Kay speak, each of them believed that she was speaking directly to them. There is no substitute for having a connection with the leadership and founders of the company.
Thirdly, the company’s vision is important. What are they doing? Do distributors want to do something good in the world? That is why companies that sell health products, or that sell transformational products (like financial services) resonate so deeply with people. We live in difficult time. Companies that participate in philanthropic or charitable programs connect passionately with the distributors.
When Mary Kay started her company, people may have thought that she was in the cosmetics business. But, what she was actually in the business of empowering women. That is why Avon hosts marches for cancer research.
There must be a vision, a mission or a calling. There must be something greater than a single person for everyone to rally around. People always relate to projects larger than themselves.
Prior to my coming here today, just before we were going to do the interview, I saw a picture of Babe Ruth on the wall in your office.
Jeff Babener: …Looking up the bleachers, hitting a home run… Now, there is a man who transcended all sport. Every person in America relates to Babe Ruth. There are times and there are people who transcend what they’re doing. And they give meaning. They make you feel good. They give you a purpose. They give you a goal. And they drive you to be a better person. Babe Ruth hit home runs, but he did much more than hit home runs. I’m assuming that’s one reason that you put his picture in your office.
Interviewer: Yeah, he’s a guy that only knew how to hit home runs and grand slams.
Jeff Babener: And, these things happen only a few times in our lifetime. Along comes a John Kennedy who will inspire people. You can’t explain why, but they will do it. And then a MLM company will come around that can do the same thing, which is important, spread inspiration. And that’s the last issue I wanted to bring up.
The amount of time and expense that you spend on training your sales force and your team leaders will be well paid because distributors who join companies not only need to relate and bond with the people who run the company, they need to bond with the people who brought them to the dance, the upline distributors. And those are the leaders of the company, the sales leaders, and they basically are the glue that holds everything together. Every ounce of strength and training, every penny that you spend on really developing those people into leaders, is a good investment.
It comes down to having a good, fair compensation plan that can motivate the right kinds of behaviors. The right kind of product that distributors and customers can bond with and that is a need in their lives.
And, you have got to have the right kind of owners, the right kind of people with a vision to do something greater than themselves. And, training. You must spend the time making an investment in people. You must train them and help them understand the company and how to achieve their own success. You must create the opportunity for everyone to dance together.
Interviewer: Thank you.
For more information on how to create a successful MLM company, visit the following links:
Understanding the Basics in Order to Succeed In Direct Selling – Companion Video to this Blog Post
Or, read some of our other blog posts on success in network marketing, MLM, direct selling, and party plan:
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And, as always, visit MLMLegal.com, the best MLM resource on the web. The next Starting and Running the Successful MLM Company Conference will be here before you know it! On May 16th and 17th, 2013 we are hosting the MLM Conference for the 25th year! This is now our 64th annual conference (held almost consistently three times per year over the last 24 years). All executives/owners of MLM, direct selling, network marking, and party plan companies are welcome to attend. This is the original MLM Startup Conference, hosted and perfected by direct selling industry expert, MLM Attorney Jeff Babener. Call 503-226-6600 or 800-231-2162 to register. (Can’t make this event? Keep an eye out for our October and February conferences as well.)