Increase MLM Retention: Focus on These 5 Relationships

MLM retention
Back to News July 10, 2019

Increase MLM Retention: Focus on These 5 Relationships

We’ve written before about how, in light of recent regulatory investigations, direct selling companies must be more careful than ever to pursue product sales as a primary focus rather than overemphasizing the recruitment of sales reps.

To put it simply, don’t give off the vibe that you only care about adding more distributors. Instead, focus on selling your products, and look for talented people who will help you do that.

But don’t stop there. As you reconsider your recruitment goals is it possible that instead of constantly pounding the pavement for new sales reps, you need to focus on better MLM retention? How can you make the most of the great people you already have?

Chances are, the answer is yes – this needs to be an area of focus. MLM retention rates are notoriously poor. If your direct selling company is like most, your turnover rates hover in the 90 percent range. You attract hundreds or even thousands of people each year who think they want to be distributors, buy your starter kit….and then never even make another effort to sell your products.

This retention rate fall out goes with the nature of the direct selling business. But that doesn’t mean things can’t change.

If you want to boost MLM retention, you need to take a closer look at the relationships you’re building with your people.
 

The Five Types of People You Meet in Direct Selling

Before you can convince your customers and distributors to stay with your company for years and years, you first need to understand who they are and what they want.

People will build five basic types of relationships with your direct selling company:

  1. Customer.This is anyone who has bought something from your company but isn’t on a schedule to buy more. They may make their next purchase tomorrow—or, you may never hear from them again.
  2. Preferred Customer. In contrast to the Customer, the Preferred Customer has committed to a purchasing schedule—such as a monthly refill or auto-ship—or is paying a membership or subscription fee. If at least some of your products are consumable, you should be able to attract a good base of Preferred Customers.
  3. Distributor. This is someone who likes your products enough to get paid to distribute them. Their mindset is often, “Hey, I’m going to use these products anyway, so I might as well talk to my friends about them—and get paid a commission if they buy them.”
  4. Business Builder. In contrast to the Distributor, the Business Builder is serious about making a steady stream of income by selling your products and recruiting others to do so. They’ve committed time and money to building their business. They’ve probably created a marketing plan.
    Whether they’re trying to earn enough to make the car payment each month or want to replace their full-time income, your Business Builders are in it for the long haul. What’s really intriguing about Business Builders is that they often have hundreds of devoted followers in their structured downline. If the Business Builder changes companies, they’ll often bring most of their downline with them.
  5. Influencer/Affiliate. In an age of full-time bloggers, there are countless potential spokespeople for your products. They’re not interested in building a business—they just want to earn a commission for telling people about your products, whether they do it once or regularly.

 

Here’s Your Angle for MLM Retention

OK, so what do these types of relationships have to do with MLM retention? Well, it’s pretty obvious that your Business Builders will be your most valuable distributors. The more people you can nudge along the spectrum towards becoming Business Builders, the better your sales numbers will look.

So for that new Customer, you’ll want to offer incentives for becoming a Preferred Customer. This could take the form of a discount on their first auto-ship order.

How can you get Preferred Customers to become Distributors? Find ways of helping them overcome their fear of rejection. Make the potential compensation appealing enough that they won’t be put off at the thought of asking friends to buy your products. And urge speedy action. Remember that those who generate at least some income within the first 30 days of becoming a Distributor will be more likely to stay.

What about turning Distributors into Business Builders? That generally takes mentoring from the upline. But there are things you can do from a technology perspective, too. As your people move up the ladder with your organization, make sure you’re continually increasing the functionality you make available to them.

When a new Distributor logs in, they really only need to see a few buttons—for example: Update Profile, Training Videos, Fast Start Program (which offers them incentives for their first 30 days), and Action Items (which makes it easy for them to schedule their first product presentation to a group of their friends).

When a Business Builder logs in, they can benefit from seeing chat conversations that are occurring in their downline, a dashboard that tracks volume across their network, and reports on personal and team performance.

And in fact, the back-office tools you offer your Distributors and Business Builders can be an incentive in and of themselves. Many direct selling companies offer back office tools at no charge while others charge a monthly fee for using this technology. Those that charge for use of the back office turn those fees into a profit center that pays for stronger platform technology and a more feature rich system. A blended approach between these two options comes from creating an incentive where the back office is free to anyone who maintains a certain sales volume. Each approach can be an effective MLM retention tool when considered as a part of the complete package you offer your distributors.
 

Prowess Supports Better MLM Retention

Fighting turnover in direct sales isn’t easy—but one could argue that it’s easier than constantly searching for new sales reps. Why not make life better for the sales reps you already have?

Thatcher’s Prowess platform helps you focus on MLM retention by giving you the tools you need to maintain healthy relationships with your customers, preferred customers, distributors, business builders and influencers. Click here to learn more.

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