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Why Network Marketing (MLM) Works

Archive for January, 2008

The Truth Will Set You Free

Posted by bodybydesign on January 25, 2008

You are a Champion!

I recall vividly a Management Professor who would say; “Oh what tangled web we weave when first we practice to deceive.”

Some people feel they should avoid the truth in order to get ahead in this life. This philosophy is a prescription for failure because in the long run the truth always wins.

Often, people receive direct criticism for expressing what they consider to be the truth and this modifies their behavior. We may not be the most popular, the most successful, etc. but we always should be true to ourselves.

Often, people think they have “pulled one over” on us. In reality, they are just kidding themselves.

Tell the Truth or keep silent!

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Taking Center Stage

Posted by bodybydesign on January 22, 2008

You are a Champion!

William Shakespeare - All the world’s a stage:

All the world’s a stage,
And all the men and women merely players:
They have their exits and their entrances;
And one man in his time plays many parts,
His acts being seven ages. At first the infant,
Mewling and puking in the nurse’s arms.
And then the whining school-boy, with his satchel
And shining morning face, creeping like snail
Unwillingly to school. And then the lover,
Sighing like furnace, with a woeful ballad
Made to his mistress’ eyebrow. Then a soldier,
Full of strange oaths and bearded like the pard,
Jealous in honour, sudden and quick in quarrel,
Seeking the bubble reputation
Even in the cannon’s mouth. And then the justice,
In fair round belly with good capon lined,
With eyes severe and beard of formal cut,
Full of wise saws and modern instances;
And so he plays his part. The sixth age shifts
Into the lean and slipper’d pantaloon,
With spectacles on nose and pouch on side,
His youthful hose, well saved, a world too wide
For his shrunk shank; and his big manly voice,
Turning again toward childish treble, pipes
And whistles in his sound. Last scene of all,
That ends this strange eventful history,
Is second childishness and mere oblivion,
Sans teeth, sans eyes, sans taste, sans everything.

Are you just waiting for the final curtain?

Some people, even at an early age, are simply waiting for the final curtain with no particular reason or purpose for their life. They can’t understand why they are here or what to do while alive. We all can certainly understand and live without reason or direction.

Have you ever been in a stage of your life where a particular (physical) person was extremely important? In the formative years, how about your mom and dad? Will we avoid playing in that particular physical stage of life (for some that could be age 4o)? In our final stage of life will we avoid death and eternity? If you are atheist then you don’t believe in eternity so this particular article might be extended beyond your stage. However, I believe there are physical stages, entrances, exits, and many parts to play before entering a spiritual realm and I believe they all have a reason or purpose.

I was fascinated by a leadership meeting presentation by Jenny Donnelly (Diamond Distributor) as she talked about:

  • Where You are Now
  • A Hall Way and Door
  • Where You Want to Be

Obviously, Jenny is a very deep thinker (and I could just repeat my notes) but I will add my own thoughts to just a few of her comments in order to make this my own. She talked about the struggle in the hall way. There’s something we have to learn before we can open the next door (hopefully we don’t spend the rest of our life struggling in the hall way). Sometimes we don’t learn from our adversity and can’t get through the next door (a Groundhog Day movie moment where we have the same experiences over and over). How do we explain the hall way before entering the next stage?

Bible scriptures and observations:

James 1, 2-4: “My brethren, count it all joy when ye fall into divers temptations; Knowing this, that the trying of your faith worketh patience. But let patience have her perfect work, that ye may be perfect and entire, wanting nothing.”

Why should we be joyful when we are in the hall way? Because we are struggling and we are learning perfection (completeness) and are ready for a breakthrough. In fact, in this same passage it says the trying of your faith = patience.

It’s easy to have faith when we are on the mountain top. It’s easy to think it’s all our doing and we know it all when we are on the mountain top. It’s in the valley where we really learn faith. If you look at all the great leaders in the bible you will see that “everyone” of them experienced great trials before God would ever allow them to lead his people (see Hebrews 11). Without trials comes ego and with ego comes a great fall. In other words, you are not ready to deal with leadership. Moses never took center stage before becoming a sheep herder in the wilderness (substitute Distributor if you like) and dealing with the Egyptians as a young man (things didn’t go well). If God will cast one of the most powerful of his creations (Satan) down because of pride what will he do with you and your pride?

Elijah was ready to die because of his great enemies and God found him sleeping under a juniper tree in the wilderness. We are told in 1st Kings 19 that the Lord was not in an earthquake and fire (he was in a still small voice) and that voice asked “What doest thou here, Elijah?” God wasn’t through with him yet. God isn’t through with you either.

Malachi 3:3, “And he shall sit as a refiner and purifier of silver: and he shall purify the sons of Levi, and purge them as gold and silver, that they may offer unto the LORD an offering in righteousness.”

Fire (trials, struggle, pressure) refines everything in life:

  • Pearls are created because sand irritates Oysters.
  • Diamonds are created by coal under great pressure and heat.
  • Caterpillars turn to Butterflies by struggling out of a cocoon.
  • Trees grow strong deep roots because of Winter.
  • Babies come into this life through the greatest of struggles through the birth canal.
  • People often leave this life through pain and struggle and diseases (like cancer).

People learn patience and how not to become offended by others through the trying of their faith. Be joyful about trials (experiences) if you want to become a strong leader. If you can get to the point where you are not easily offended by what others say and do (responding with kindness), what other people think about you doesn’t determine your happiness or effectiveness, your not driving a Lexus or living in a large house doesn’t embarrass you, and you get joy from what others can achieve without envy–you’ve come a long way. Network Marketing leaders learn by serving and pleasing others and not themselves.

Learn from your experiences and open the door at the end of the hall way. Be thankful for the struggles so you will be ready for center stage (whatever that stage is) when your door opens.

Story from an unknown author:

“Refining Silver…
Some time ago, a few ladies met in a certain city to read the scriptures, and make them the subject of conversation. While reading the third chapter of Malachi, ‘And He shall sit as a refiner and purifier of silver.’ One lady’s opinion was that it was intended to convey the view of the sanctifying influence of the grace of Christ. Then she proposed to visit a silversmith and report to them what he said on the subject. She went accordingly and without telling the object of her errand, begged to know the process of refining silver, which he fully described to her. ‘But Sir’ she said, ‘do you sit while the work of refining is going on?’ ‘Oh, yes, madam,’ replied the silversmith; ‘I must sit with my eye steadily fixed on the furnace, for if the time necessary for refining be exceeded in the slightest degree, the silver will be injured.’ The lady at once saw the beauty, and comfort too, of the expression, ‘He shall sit as a refiner and purifier of silver.’ Christ sees it needful to put His children into a furnace; His eye is steadily intent on the work of purifying, and His wisdom and love are both engaged in the best manner for them. Their trials do not come at random; ‘the very hairs of your head are all numbered.’ As the lady was leaving the shop, the silversmith called her back, and said he had forgotten to mention that the only way that he knows when the process of purifying is complete when he sees his own image reflected in the silver….”

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4 Steps to Success

Posted by bodybydesign on January 21, 2008

You are a Champion!

This is a “summary” of a (4) step process used by some of the top Distributors in our Company. These people are very “teachable” and very “successful” in Network Marketing. They say that one of the main reasons they were successful in the business was moving through the process with a recruit and getting out of Step one into Step two (Third Party Credibility).

It’s difficult to explain–Third Party Credibility just works and will take your business from addition to multiplication (based on experience)!

 

>>>>>>>>(4) Step Process to Recruit a Person Into the Business
1-on-1 Conversation 3rd Party Credibility Large Group Meetings Company Sponsored Events
Your Story 2 on 1 Upline Opportunity
Ask Questions 3-Way Call Downline Products
Move to Step 2 Small Group Meeting Crossline Training
Watch a Video     Big Picture

What type of message are you delivering to your prospect?

90 % of The Time 10% of The Time Never Never Never
Emotional Message
(tells a story)
Factual Message
(tells facts)
Neutral Message
(tells nothing)
  • My friend paid off…
  • We will pay off…
  • We will earn…
  • I’m looking for people…
  • Residual income…
  • Point to the mag. article…
  • Know “their” story…
  • Do you know someone who would like to earn…?
  • Who do you know…?
  • Company Founded…
  • Product Does…
  • Company Pays…
  • It Costs…
  • Our Endorsers are…
  • Our Doctors are…
  • Our Founder is…
  • XYZ is awesome
  • We have great products
  • Check us out
  • Trying this…
  • I might…
  • Read this…
  • Let me know...

Question: If you are a baseball player would you like your batting average to be 900, 100, or zero? Which message will get you to the Big Leagues?

These are the steps that top Distributors use and train!

 

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Product Development

Posted by bodybydesign on January 18, 2008

You are a Champion!

Products will need to be developed by the management team member(s) with that experience and normally through alliances with suppliers.

Here’s where my manufacturing and costing background experience takes me:

  • A very few high impact products or brands correctly priced and marketed.
  • A very simple inventory.

Your business can get more complicated as it grows and matures by adding the right key people.

Any serious manufacturer of products knows all about the high cost of inventory imbalance. Unless you have experienced purchasing, production and inventory control people (APICS certified) I strongly suggest you don’t start with manufacturing your own products or do so on a very limited scale.

Why? Dr. Joseph Orlicky with IBM many years ago started developing MRP computer systems to handle the manufacturing environment because of simple probability theory. “If the probability of having one item in stock at a time of need is 90 percent, two related items needed simultaneously will have a combined probability of only 81 percent (0.9 x 0.9 =0.81).” In other words, without a proper inventory control system not having continual shortages quickly becomes a fluke. Many companies compensate for this probability (fluke) by over stocking (dead inventory) and high spoilage ratios–not good! Manufacturing is the most complicated business in the world and not recommended for the inexperienced startup!

A couple of stories will drive home some other key points.

As the Controller of a heavy manufacturing company I was asked to review the profitability of a startup company financed by family members of the principal stockholder. This startup company had a wonderful product idea (created by a smart engineer). Unfortunately, they had been in business for some time and were beginning to question the “cash drain” of building the product and began to wonder how profitable the company would be. Folks, this is not the time to be figuring that out and it’s very simple to do (only took me one afternoon reviewing their books).

Take the sales invoices of key products and determine the unit sales price on the products. Next, take the major costs (estimated costs) of the units from material purchase invoices (usage times cost per unit) to determine the estimated gross profit per unit. I quickly found that the sales price didn’t even cover the variable cost let alone the fixed cost (no possibility to ever make money). I prepared a report to the owners and the very next week the CEO inventor of the product left town in the middle of the night not to be heard from again. If you think this story is not typical it’s because you haven’t been in the business world too long. Do your homework first and not after things don’t look right! Sure, people can overdo the planning stage but this real story wasn’t funny to the investors.

Brilliant ideas are a dime a dozen as the old cliché goes.

You think Bill Gates is the richest man in the world? According to Fortune it’s Carlos Slim the son of a Mexico City shopkeeper (worth 59 billion). “Periodically the elder Slim would round up his three teenage sons for an economics lesson. Sitting them down in the living room of the family home, Slim would produce a single handwritten list. One line would show, for instance, how a Mexican insurance company was selling for far less than a similar American insurer. Another would show that compared with European candy or cigarette makers, Mexican manufacturers were drastically undervalued.” Obviously, there is opportunity in a country that many Americans would classify as third world.

Opportunities are everywhere but they don’t often come from high tech inventions. They come from “knocking off” products and companies that are undervalued or not properly marketed. In my opinion, knowing the value of something is a lot more important than your latest brilliant idea!

Here is the link to a brilliant idea company in the industry I follow and while I think they are a smart group of people I wish them the best of luck (Gatorade Vs. Enlyten: Sports Strip Battle Moves To Court).

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Compensation Plan Design

Posted by bodybydesign on January 17, 2008

You are a Champion!

We talked a little bit about building a Team in our last article but now we will talk about the most important part of a Network Marketing Company—the Compensation Plan. The design of this plan is more important than your products, management team, and board of directors or medical board, etc. Why? Network Marketing Companies have to attract strong leaders to their company by giving the Distributors a great plan that is absolutely the greatest.

Think about this for a moment…your company is a Network Marketing or multi-level pay company. By definition, you have given up other forms of marketing and distribution systems to implement this particular business model. If you are going to implement this business model it requires a great multi-level compensation plan to attract the best Business Builders in the Industry. Some of these people are looking for a fast buck but most of them are looking for residual (passive) income. Income they earn after they quit doing the business. Net Sales Growth is absolutely and positively the most important part of your business and if you can get it done better through a different business model then “go for it.”

Well, of course the products and science behind the products are the most important part and not the compensation plan—right? No! I don’t have to “sell” the quality products I use in order to receive their benefit and get the maximum discount (you can ask any experienced Distributor how). If I can make more money pushing XYZ why would I be pushing the quality product I buy? I might use them but why would I actively and aggressively sell them if I couldn’t make a good living doing so?

What does the compensation plan say about my Network Marketing Company? Hopefully, not Ho-hum but this is the best and greatest plan I’ve ever seen!

A big part of my business experience has been around engineers and their egos cause them to fall into a trap so, so often. We build the “best” product on the market for a fair price so why can’t you sell the products Mr./Ms. Salesperson? Because the customers don’t know about or don’t want your products! You designed them Mr./Ms. Engineer—they didn’t! How do we bridge that gap?

If I know about and like your products I may use them but it doesn’t mean that I will tell family, friends, and neighbors about them—ever! In fact, I remember well a customer who was getting great results on the products we sell but he wanted people to think he was getting the results through exercising (not taking great nutrition). He never, never, ever told anyone and would deny it if you suggested it was the products that helped him get good results. He kept the secret to himself!

How do I design the compensation plan? Take a tried (through the courts) and true plan and make it simpler and better.

What about overpaying the distributors and going broke? That’s why you take a plan designed by someone else that’s been around for years. No matter what you pay in compensation it will always be just a percentage of Net Sales.

If you will review industry statements you will quickly see that most Network Marketing companies have great margins and the key to profitability is simply Net Sales. Remember: “Retail Prices” are “almost” meaningless (see other articles on discounts) so how do I get the Distributors to rapidly grow the company?

THIS COMPENSATION PLAN DESIGN IS YOUR NO. 1 OBJECTIVE AND IF YOU DON’T UNDERSTAND THIS YOU WILL NEVER MAKE IT IN A NETWORK MARKETING COMPANY SO DON’T EVEN START!

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A Beginning CEO…Startup Company

Posted by bodybydesign on January 16, 2008

You are a Champion!

This section (MLM Startup) gives tips on how to start an MLM company (not how to run a successful Distributorship) for those who have the desire to build a successful MLM company. Hopefully you can avoid some common pitfalls in starting a company because the majority of startup companies will fail. Just remember, some will defy the odds and that is the reason for this section of my blog. I hope to write a host of articles for this section.

CPA’s will tell you, through experience and published statistics, that most companies fail because they are under capitalized. However, there are ways to find capital if the business plan is sound. Often, rapid growth kills many businesses because people underestimate how much cash it will take to run a business. Maintaining positive cash flow is a very key element to success and nothing will eat up cash faster than uncontrolled growth. Therefore, even wild success can create failure for the unknowing entrepreneur.

In my opinion, most companies fail because they don’t have the right management team or leaders in place and haven’t correctly defined their own position in the organization. As Clint Eastwood said, “A man has to understand his limitations.” Your understanding of self will have a great deal to do with your success. Building the right team begins with understanding your own skills and going from that point to build a strong team. In my organization the Lone Ranger or Superman need not apply.

Often, startup companies get the reputation for only being built around strong dominant personalities that carry the load for the new company. People like Bill Gates and Steve Jobs come to our mind and we will readily admit that companies have stages and many large companies have different management teams for different stages of development (startup, growth, maturity, and death). Often, a strong entrepreneur can’t take the company successfully into the maturity stage because they may lack management skills or key people. Recognition of this fact is not a fault in the individual because often a later stage management team doesn’t have the skills to get a startup business off of the ground (they may hire experienced people to do that for them). They may have the management skills to run a large organization, and (since one of my degrees is in Business Management) I will just tell you upfront–this section is not at all about that broad body of knowledge! Also, I am a CPA but this section is not about accounting and taxes! It’s about MLM startups and not about buying a business or the finer points of how to manage a large business.

So you are not a Charismatic Leader? It’s very good that you recognize that fact upfront so that you don’t waste your time trying to turn yourself into one and get on to the task of building a business or get out of the way of the Organization Structure! I’m not saying that being Charismatic is not a worthy goal–life is short.

There’s a real advantage to realizing that Charismatic Leaders will be drawn to your MLM organization if it’s developed properly. In other words, have you carefully designed your fishing bait (Compensation Plan)! Yes, strong leaders who understand first hand how to build a large Distributor organization will be key to your MLM business. However, that is not the job of the CEO (assuming you will be the CEO). Please note: “Even if you have those leadership skills that’s not your job as the CEO, and you won’t have the time to make that your job if you are doing your job as CEO!”

Startups have the advantage of starting fresh with the management team. Generally, when new top management is installed in an existing company the jobs of “all” the existing management will be in jeopardy over time and this can be very disruptive to an organization (tearing down before beginning to build up).

This is a Key question: “What is the top management structure?” Peter Drucker: “Top-management work is work for a team rather than for one man. It is quite unlikely that any one man will, in his own person, unite the divergent temperaments which the job requires. Moreover, it will be found, when the top-management tasks are analyzed, that there is more work to be done than any one man can do…To recognize the team nature of the top-management job is particularly important in the small business. The one-man top management is a major reason why businesses fail to grow.”

Also, your company will need a functioning board of directors. Peter Drucker, the “Three Functions of the Board:

  1. The enterprise, first, does need a review organ. It needs a group of experienced people, people of integrity and stature, people of proven performance capacity and proven willingness to work, who counsel, advise, and deliberate with top management.
  2. An effective and functioning board is needed to remove a top management that fails to perform.
  3. Finally, the enterprise needs a ‘public and community relations’ organ.”

Developing a good Team will be time well spent towards avoiding management by crisis.

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Listening - Facts Versus Feelings

Posted by bodybydesign on January 12, 2008

You are a Champion!

Absolutely nothing will kill a Network Marketing Business faster than not acknowledging people and showing “warmth.” No one wants to be around a cold person.

Bert Decker, You’ve Got To Be Believed To Be Heard writes: “Why do people talk to us? Why do they want us to listen to to them? The vacuum cleaner salesman at your front door talks to you in order to separate you from a portion of your earnings. Fact Listening is the dominant mode for making a thumbs-up, thumbs-down decision on the amazing little technological wonder he wants to sell you.

But the little child tugging at your elbow talks to you in order to receive your attention and acknowledgment. If you respond to her with Fact Listening (as, unfortunately, all to many parents do) real communication will not take place. In fact, the result could be very frustrating for both you and her. You won’t get any data from the child, you’ll feel she is wasting your time. She won’t get the attention and acknowledgment she wants, and will feel hurt and ignored.

Feeling Listening is the form of listening we use for complete communication. It’s the most important form of listening there is. Feeling Listening is active. It is multichannel, involving not just the information channel of mere words, but all the sensory input channels. Feeling Listening involves making First Brain-to-First Brain connection through eye communication. It involves being receptive to nuances and subtle emotional cues in the speaker’s voice, eyes, gestures, and body language.

Feeling Listening is concerned with the facts, but it is very much concerned with getting to the feelings behind the facts. If we don’t get to the feelings, the facts may forever remain obscure.

Perhaps the most important dimension of Feeling Listening is that it involves feedback to the speaker. We feed back acknowledgment of the speaker’s importance and worth by giving steady, attentive eye communication. We feed back understanding and agreement by nodding and giving brief expressions of affirmation: ‘Yes, Uh-huh. Right. Amazing! No kidding? Really?’ We let the speaker know and feel that he or she is being heard. We continually affirm and cement the First Brain-to-First Brain connection that takes place between two people during the act of communication.

So a good listener practices listening for feelings, not just for facts.

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Tired of Working for Someone Else?

Posted by bodybydesign on January 10, 2008

You are a Champion!

So you are tired of working for someone else and have decided to strike out on your own. How do you go about starting a business?

Ask yourself some basic questions:

  • What are my skills?
  • How much money will I have to invest?
  • How much time will I have to spend?
  • How long will it take to become profitable?
  • Who will I have to recruit to be part of my business?

What a lot of people don’t think about is trading one boss for a bunch of bosses. You will be working for your partners, employees, bank, suppliers, and particularly your customers. And so, after giving it a little thought, most people decide to go back to their job and live for the weekend. What a way to spend your life!

Before deciding to return to reality please consider this: “There are some reputable Network Marketing companies excited to help you go into business for yourself.” They even provide the tools and the training. Their business model is designed so that you can concentrate on building your business without a huge investment of money even before you begin. You can focus on retailing to recruit, training, and building your company within a company.

In our business we have a (90) day plan for those who want to go to work part-time. What you need to bring to the business is your desire and influence. That’s what we talk about and think about: How to help you get Life on Your Terms!

Do you have a plan? If not, why not try our plan?

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Build Your Team

Posted by bodybydesign on January 5, 2008

You are a Champion!

It’s OK to look inward to determine what you want to do in life but when it comes to building a business it’s time to look outward and begin building a Team. Building a Team is what Network Marketing is all about.

Loral Langemeier in her book Cash Machine For Life says this:

“Despite myths to the contrary, there have never been entrepreneurs who are Lone Rangers. Successful wealth builders do not go out into the business world alone. It just doesn’t happen. The best leaders gather support around them so that they can do more with less of their own time and energy. The goal of the Cash Machine is to grow, not to set up shop on the corner and bring in a few bucks every week. A Cash Machine is about building a big, wealth generating business, and that takes a team.”

You have skills but why would you want to duplicate those skills in your organization? Why would you want to replace the Team with your own efforts? You want people who are strong where you are weak.

“How about those Michigan Wolverines!?

Those were Lloyd Carr’s last words to his players as he boarded a bus headed to the team hotel Tuesday night, shortly after ending his coaching career with a 41-35 victory over Florida in the Capital One Bowl.” By Larry Lage, ASSOCIATED PRESS, 5:04 p.m. January 1, 2008.

Florida Sophomore Quarterback Tim Tebow won the Heisman Trophy in 2007 and can really do it all on a football field–except beat Michigan in the Bowl Game.

Building a Business is a Team Effort!

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Star Cluster

Posted by bodybydesign on January 4, 2008

You are a Champion!

What “binds” a cluster of stars?

Job 38:31 “Canst thou bind the sweet influences of Pleiades, or loose the bands of Orion?”

The Pleiades or Seven Sisters of Stars:

“They have long been known to be a physically related group of stars rather than any chance alignment...When studies were first made of the stars’ proper motions, it was found that they are all moving in the same direction across the sky, at the same rate, further demonstrating that they were related. …Orion, Its three prominent ‘belt’ stars - three stars of medium brightness in the mid-section of this constellation.”

This phrase from Wikipedia talks about the influence of the Pleiades as “moving in the same direction across the sky.”

Sometimes people wonder why they don’t have any influence on someone else and it could be because they aren’t aligned in their thinking and not moving in the same direction. Many families go their separate ways and many do not–what keeps them aligned? What do you have in common?

Look for people who think like you do and are headed in the same directions in life if you want to have influence.

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