MLM and Direct Selling Industries

MLM and Direct Selling Industries are similar, however there are some specific differences.  Additionally, MLM Software and Direct Selling Software are similar, however with specific differences.  Below, we will engage a short discussion on these subjects, as well as best practices for starting a company and the software required to launch and manage it’s growth.

The simplest way to draw a line in the sand is to answer this question.

What is your focus and that of your independent representatives?
___  a.) My focus is getting rich!
___  b.) My focus is recruiting lot’s of others to sell my products/services!
___  c.) My focus is to sell my  products/services, I may add someone to my sales team, but that is not important.

If you answered A, you should stay away from either of these industries and their titles, take a trip to a foreign land, sit on a mountain and contemplate the purpose of life for a few years.

If you answered B, you will probably carry the term MLM as your designation, or hide it with another term, like Affiliate, Referral, Multi Level, Network, Affinity, Direct Referral, or the hundreds of other names chosen to be create a new vision for what you are doing.  Not to say it isn’t bad, but you are specifically MLM and should swallow deep.  There are various issues you should consider for best practices, as well as secure an MLM Consultant and MLM Attorney to get up and running correctly.  You will soon learn that long term success is had when emphasis is placed on the sales of products and services to end consumers.

If you answered C, your head is already screwed on straight!  Pat yourself on the back and be sure that this emphasis is your banner and shield of conversation, marketing, events and intent, in every area of business.  Yes, there are still many items of best practice, things you can do right and wrong.  You will also need and MLM/Direct Selling Consultant and an MLM/Direct Selling Attorney.

Direct Selling began many years ago, in an attempt to concentrate companies of the MLM Industry with an emphasis on sales of Products and Services to Consumers over Recruitment.  Not to say that recruiting does not occur, but the companies activities, events, conferences and compensation plan lead people to one conclusion… if I join this company, I will earn money for marketing products and services to people and that will be my primary focus.  If I put any effort in recruiting, it will probably represent a very, very, very small portion of my time.

Many Direct Selling Companies will use a Party Plan method, although not all.  When extending your step to Party Plan, additional considerations often occur, such as representatives receiving payment, in person and the tax implications that come along with this process.  It’s enough that the sales tax process for a online retailer is horribly complex and changing, but add in the Party Plan method and more complexity and considerations pop up.  For this reason, having a proper software systems, consultant and attorney can be crucial to your success.

For the remainder, I will speak more generally on MLM and Direct Selling companies, in regards to the MLM Software or Direct Selling Software and the Start Up process.

Your MLM Software or Direct Selling Software is the backbone and infrastructure of your company.   A proper system will provides the sales platform for general public sales, through an eCommerce system, replicated to a unique url for each of your independent representatives.  These independent representatives can market through Facebook, Twitter, Blogs, or on their business cards, driving people to their own personal website, belonging to and managed by the company.

Additionally, the MLM Software or Direct Selling Software System provides Administration for you to manage sales, orders, inventory, discounts, email or newsletter communications, members, and commission calculations.  Independent sales representatives will enjoy their own back office access to measure their sales performance against the company’s compensation plan, view sales reports, personal customers, personal newsletter subscribers, manage personal profile, avatar photo, purchases and personalized content management, such as Bio or About Me pages.  Of course, they also must see their record of earned commissions and the ever-popular downline genealogy!

Every critical area of your Business is managed from this Software Platform.   It is an extremely important part of your company’s success.  Furthermore, the expense and time to develop all the necessary features correctly often run $500,000 to $2,000,000 preventing the average person from ever engaging.  This is where the Software Provider becomes your most strategic partner.  Through a licensed and managed hosting arrangement, the Software Provider can secure the value and proprietary programming, while providing a system for a considerably reduced price, hoping to earn back over time in monthly hosting and per person or per transaction charges which allow the MLM or Direct Selling Company to absorb the Software Infrastructure costs more efficiently.

Software Provider must understand your particular business and software needs, industry trends and changing technologies in order to work with you as you grow.  They must manage the IT, Software Infrastructure, Databases, Hardware and Bandwidth which is critical to your Software Systems, and hence, critical to your website and company.

Additionally, your Software Provider must be accessible for support or customer service.  It is so important, that you must build a relationship with your Software Provider and feel comfortable at the level of technology, communication and service which you will receive.

So, How do you get started in an MLM or Direct Selling Business?  How do you get your Software Infrastructure in place?

  1. First, you share your business model.  What products or services will you be selling and how do you intend to sell and market these products or services.
  2. Second, you share any integration that may be needed to support the sale of these products or services.  In some cases, it may be real time integration with a warehouse management system.  In other cases, it may be an API integration between third party site that conducts a transaction.  It could be a monthly CSV file from third party, provided to you for upload and post.
  3. Third, you share specific expectations and functions that you want in the Distribturo Back Office and in the Amin Back Office.
  4. Fourth, you share the specific MLM Compensation Plan, Bonuses, Ranks and Rank Advancement that you would like to use.  At this point, it is good if your MLM Software Provider is also an MLM Consultant or MLM Expert.  If so, it is best if you are willing to be educated and allow them to comment on the Compensation Plan.  Many people propose MLM Compensation Plans that are not capable of making money.  They over pay distributors or pay almost nothing to the distributors, making them angry.
  5. Fifth, your MLM Software Provider should provide a contract or license agreement.  Take time to review and schedule a call to ask questions about any part.  An MLM Software Provider will provide Managed/Hosted solutions for a fee.  These fees are necessary to manage the expansion of your business, updates and customer service needed along the way.  When acceptable, sign and return.
  6. Sixth, your MLM Software Provider should provide a detailed Compensation Plan Specification or System Specification Document.  It is mostly meant to spell out the details of your compensation plan as they relate to the system.  This wording is very important.  Take time to review and schedule a call to ask questions about any part.  When acceptable, sign and return.
  7. Seventh, you share site design requests with their designers.  A design document may be provided and require approval, sign and return.  Stay in communication with the MLM Software Provider during the development process, responding as quickly as possible.
  8. Eighth, when the site goes live, begin placing basic content items, such as About Us, FAQ, Founders, etc.  Also make sure you prepare and provide the Policies and Procedures, Terms and Conditions, Privacy and other policies.
  9. Ninth, contact your Merchant Provider to make application for a merchant account.
  10. Tenth, locate and purchase an SSL for your site.
  11. Eleventh, when MLM Software Provider is complete, be quick about scheduling training on use of the system.

Normal start-to-finish is 30-45 days, but custom requirements could extend the process.

This process is assuming you have received guidance from an industry Consultant and or Attorney and is only dealing with the Software Provider.

In our case, I am an industry Consultant and have been providing consulting to the industry for about 20 years.  Additionally, I have a technologies background and technologies development company for over 20 years.  This has provided me to be in better position that others, during my tenure as a Consultant, to understand a companies needs in correlation to software technologies necessary and appropriate to achieve them.

No blue-sky or smoke-and-mirrors.  We give straight answers and produce what you need, on time, on budget.

About the Author:
Scott H Leonard is a 20 year provider of consulting, compensation plan development, and software to the MLM and Direct Selling Industry.  Call me directly at: 888-221-0106

About Inpsetta Technologies:
Through the acquisition of MLM Software Central, BizLocal and DB44, into the Inspetta family, Inspetta has leveraged the 20 years of experience, reputation and software technologies to advance and provide valuable services to the MLM and Direct Selling Industry. or call 1-888-221-0106

About MLM Software Central:
MLM Software Central is a web property of Inspetta.  It began as a web resource for MLM and Direct Selling industry, personally by Scott H Leonard, offering direct insight and information critical for starting and managing companies. for call 1-888-221-0106

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