The library is full of articles, case studies, statutes and other material useful as a resource to those interested in network marketing. This index is designed to help you find information on a category-specific basis.read more »
Networkers on the Information Highway
© 1995 by Jeff Babener
THE INFORMATION AGE.
Networkers are hopping on the information highway. The revolution in computers during the last decade has profoundly changed the abilities of networkers to run their businesses. Prior to the 1980s, almost every major network marketing company sold its products only to a limited number of direct distributors. The direct distributors in turn sold to their downline and were responsible for managing their downline, paying commissions, etc. But changes in computer technology have made it possible today for network marketing companies to generate and manage massive amounts of data about sales organizations. Thus, almost every network marketing company that has emerged since the 1980s sells directly to all distributors and provides all distributors with detailed management reports about their business.
A PEOPLE BUSINESS
A NUMBERS BUSINESS.
Keep in mind that 90 percent of network marketers do this as a part-time business. Thus, it is not unusual for leading network marketing companies to have tens of thousands, if not hundreds of thousands, of part-time distributors in their sales organizations. People come and go into the business as they get new jobs, get pay raises, get married, move or change other life situations. In fact, according to Dan Jensen, President of Jenkon Data, of Vancouver, Washington, the largest provider of computer data processing systems to the network marketing industry, the average network marketing company loses 50-90 percent of its new recruits in the first year.
Wouldn't it be great if distributors had at their disposal the ability to analyze activity in their downline sales organization to assist in keeping their sales organization as active and productive as possible? That's where advances in computers come in. Today's leading edge companies provide their distributors with detailed sales activity information about their downline organizations. On the one hand, this is a numbers business because of the huge number of distributors that any one person may have in his or her downline. On the other hand, it is a people business, and sales and recruitment in network marketing only occur through relationships. So what's the bottom line for a networker in taking advantage of availability of computer generated information? They should view the information as a management tool. Numbers by themselves mean nothing, it's what you do with them.
WHAT'S AVAILABLE TO YOU?
So, in this new computer age, what's available to you as a distributor? First, a few definitions may be in order:
Active Distributor--A distributor whose monthly sales activity qualifies them for bonuses or override commissions.
Downline--All distributors sponsored directly by a distributor, as well as distributors sponsored below by other distributors.
Leg--An organizational line of sequentially sponsored distributors starting from one initial sponsoring distributor.
Every month, companies mail to their active distributors computer management reports about their downline sales organizations. These are typically referred to as downline reports or genealogy reports. Often times, auxiliary reports and other information are available upon request. In the typical downline report about your sales organization, the following information is included covering both yourself and individuals who are in your downline sales organization:
1. Rank or position reached in the organization,
2. Levels below you or break-away position in the organization,
3. Monthly personal volume,
4. Monthly group volume,
5. Date of entry in program,
6. Meeting activity requirements this month or last month,
7. Recruiting or new sponsoring.
Basically, a downline report is a lengthy computer printout showing important activity and indicators in your downline sales organization.
THE NUMBERS ARE A
Reading the numbers is not unlike the fortune teller who reads the tea leaves. Your interpretation tells you something about your past and your future. Your downline reports turn you into a CEO of your own sales organization and you can use these reports as a management tool to:
1. promote your own recruiting and sales,
2. to promote the sales and recruiting of your downline,
3. to contact, supervise, manage and assist your downline,
4. to look for strengths and weaknesses in sales and recruiting activity, and,
5. spot trends.
Says Dan Jensen, whose company Jenkon has serviced hundreds of network marketing companies that provide downline reports to millions of their distributors, you should have some broad goals in working with downline numbers:
1. Promote retail sales outside the network. He notes that an organization where product sales are only for distributor consumption is less likely to experience major growth.
2. Recruiting - use the numbers to increase sponsoring and retention of experienced distributors.
3. Consistency - Jensen advises to look for hot and cold spots and for problems one month to the next in both individual distributors, as well as downline legs.
4. Achievement levels - in most network marketing programs, distributors who are successful are advancing to higher ranks or status based on larger group personal sales volumes. Use the numbers to see if these promotions are occurring and, if not, why not.
5. Activity - which individuals and which legs are continuing to be active month after month.
TRACKING SUCCESS INDICATORS.
Yes, there are certain vital statistics that you should absolutely track. Computer expert Jensen refers to these key statistics as success indicators. He advises that you track them, chart them, graph them from month to month and they will provide a road map for action.
Here are a dozen or so key success indicators Jensen suggests that networkers track month to month:
1. The number of distributors in your organization last month,
2. The number of distributors in your organization this month (although raw numbers are helpful, the actual key indicators will be how many are active and how much is their sales volume),
3. The percentage of organization growth from last month,
4. The number of new recruits (this number is absolutely critical to success),
5. The number of legs (a) with, (b) without new recruits. This indicator identifies where in your organization things are working, who needs help or training,
6. The downline people who (a) are (b) are not sponsoring. Consistently active sponsors are good trainers and should be leaned on, and those who are inactive sponsors should be pushed to meetings and trainings, buddy system arrangements, teaming, telephone trees or promotional contests.
7. The percent of downline who is sponsoring. Keep an eye on the percentage that is being maintained or falling off. Hopefully, it will stay consistent. A drop from 50 percent to 20 percent, for instance, is bad.
8. The total number of distributors who (a) are (b) are not active month to month. This indicator may be the "whole enchilada." This is your barometer, says Jensen. If it goes up, good weather, down means stormy weather.
Three tips for working with this indicator (1) focus major support for your actives, (2) before the fire gets cold, focus support to those showing first signs of inactivity, (3) once firmly inactive, don't waste your time.
9. The percentage of distributors remaining active. If from month to month, this percentage is going down, then the signal to you is "get to work."
10. Active recruits. A new recruit who merely signs an application, but doesn't order, does you no good. You should strike while the iron is hot, otherwise it is a lost opportunity. You will never have the attention of a new recruit more than when he or she has just signed on. You should also be tracking which sponsors are bringing in distributors that are merely "application filers," and bring this to the attention of those sponsors in your downline.
11. The percentage of active new recruits to total actives. Is all your new business coming from new recruits? If so, then you are losing your experienced distributors. Generally, the numbers should be low and drop month to month, which indicates that your experienced people are performing.
12. The number of actives last month, but not this month and vice-versa. In other words, what is the attrition, which leg is it in, and who needs attention and training?
13. The new active recruits ratio to new inactives. This is a key number. If you gain one and lose one, you are staying in place and your ratio is 1.0. If you gain two recruits and lose three to inactivity, it is a big warning and your ratio is .66. Obviously, if you gain three and lose two and your ratio is 1.5, you are headed in the right direction. Anything greater than 1.0 is the right direction.
CHARTING THE NUMBERS.
Do you want to see the big picture? Do you want to see the trends? Do you want to see your game plan unfold before your very eyes? Then chart the success indicators month to month. Either do it by hand in a graph connecting the dots, use a bar graph, or use a spreadsheet program on the computer. As you look at the numbers over the course of twelve months, the trends will become apparent, and says Jensen, you may wish to also note important chronological events month to month that may be influencing the success indicators:
1. changes in product,
2. changes in company marketing materials,
3. conferences, trainings, meetings,
5. special events.
CALL TO ACTION.
Think of all the work that goes into getting a new recruit. In an industry where attrition of distributors is so high, if you can keep a distributor active, it is just as good as finding a new recruit. Ben Franklin's adage "a penny saved is a penny earned" has merit in this situation.
The computer revolution puts the networkers on the information highway. Use the information, track success indicators and use those success indicators as your call to action. Success in this business does not have to be an accident. Hard work can pay off. Your call to action is in the numbers.
Thank you Mr. Computer.
Other Pages of Interest
MLM law in 50 states, IRS Publication 911, the MLM Textbook, as well as a comprehensive index of articles on the direct selling industry.read more »
Key Pages to Visit While You're Here
For Startup and Existing MLM Companies
Starting and Running the Successful MLM Company manual
The Best MLM Resource on the Web