Positioning Your Company for Survival
A matter of innovate or evaporate

The Sheffield Report

by Michael L. Sheffield
CEO The Sheffield Group

The success or failure of any Direct Selling/MLM company is based on many issues. It is difficult to target any one factor as the primary reason a company will thrive or fail to survive.

Product Selection. Products or services that are “New to the World” have the best chance of success. Products or services that may have competition but have gained momentum in the marketplace and are at the beginning of their life cycle will also be helpful in establishing company strength.

Management Team With Sales Experience. If the management team has Direct Selling or MLM experience, this will enhance their success. Lack of knowledge in this are must be offset by hiring a VP Sales and Marketing with the depth of experience to guide the company in recruiting and sales functions.

Management Team With Business Experience. It is very important that your management infrastructure understands “real business”. In many ways, Direct Sales/MLM operations and day-to-day activities require the same checks and balances of more traditional business. If these qualifications do not exist in the corporate leadership, the company should consider a good COO and VP Finance to help watch normal business issues.

Compensation Plan. While important, your Compensation Plan is not as critical as some of these other factors. However, it must be good enough to reward the various types of distributors (part time or full time) while providing a reasonable profit for the company. It should reward early to help maintain new distributor enthusiasm. It should be reasonably aggressive in order to be competitive, but fall into a category of being legally defensible. Corporate difficulties can arise from legal issues surrounding pyramid scheme accusations by regulatory agencies. There can also be a lack of balance providing too many or too few incentives to people at the varying levels of rank accomplishment. And there is always a chance that a plan may become obsolete and won’t compete in the current environment.

Communication. The number one reason that companies fail is lack of effective communication between the home office and the distributors. Newsletters print and electronic, daily and weekly e-mail blasts on current events, a living website that stays current with product and business news etc. are all areas that need constant attention. As a result, even a young company should have someone assigned as the Director of Communications.

Software. All things considered, a good software package that is well supported by a competent and experienced software provider can make or break a company. The company credibility with its distributors hinges on commission check that are on time and accurate. And it must have a solidly functional back office that provides the current data on distributor sales and downline activity for sales leader strategic planning.

Training. It’s been said, “Give a man a fish and feed him for a day. Teach a man to fish and feed him for a lifetime.” You can’t just provide good products without training on their features and benefits and education on how to sell them. You can’t provide a good business opportunity without training on how to recruit and build a sales team. The best companies give this area serious attention. They have determined its importance is much more critical than new products or compensation plan enhancements. Companies with average products and compensation plans, but great training, have always excelled.

Sales Tools. Most distributors are novices and need self-selling tools to help them get the job done. The more effective your brochures, videos, audio CDs and website sales functionality, the better the chance that your new distributors will find some success. It is critical that you new distributors find that success within the first few weeks or they are gone. Accordingly, you need to make the process understandable and easily duplicable. Compress the sales process to three or four steps that are then duplicated over and over again and supply effective tools to make this happen. Remember, this is a formula business. You just need the right formula

Only a few years ago, we said that a company must reinvent itself every three to five years in order to stay competitive. Today, because of technology like the Internet, a company must reinvent itself every 18 to 24 months. To avoid getting stuck in a pattern of business building that can rapidly become obsolete the company must listen to what their distributors are telling them about the marketplace. For in today’s highly complex and competitive Direct Sales/MLM world, it truly is a matter of innovate or evaporate.

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About the Author:

Michael L. Sheffield is the CEO of The Sheffield Group, a full-service direct sales and multi level marketing (MLM) consulting firm. He is a Co-Founder and Chairman Emeritus of the Multi Level Marketing International Association and in 2001 he was inducted into the MLMIA Hall of Fame. He and the Sheffield team have assisted in hundreds of national and international MLM corporate start-ups as well as offered a full line of services for established direct sales companies including consultation on MLM Website development. As the most noted expert on compensation plans, he has been a guest lecturer on the subject for the DSA, University of Illinois, University of Texas, Berkeley and Harvard Alumni Association. He has helped launch over 200 new products marketed by direct selling companies around the globe. He can be contacted at 480-968-6199, The Sheffield Group, 2239 N. Hayden Road, Suite 103, Scottsdale, AZ. 85257, website address: www.sheffieldnet.com.

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