Sheffield Resource Network agrees. How can we be
so sure? When you have been helping Direct Sales, Party Plan and
Multi Level Marketing companies grow from concept to success as
long as we have, there are some things that are no-brainers. And
deciding whether you should hire your out-of-work-dot.com-meltdown
"computer expert" or some geek-of-the-week company versus
partnering with a proven network MLM-savvy software technology provider
for us is a no-brainer. Unless you want your dreams to go up in
a blaze of glory, you go with the pros.
Exploding the Software Myths
The battlefield of MLM start-ups is littered with failed entrepreneurs
who have attempted to write their own software programs or chosen
the wrong providers. What's really sad is that some of them had
everything else going for them. Extraordinary products and concepts.
Field leadership and distributor loyalty. Marketing sizzle and skills
galore. A great story and personal integrity. And even the most
precious commodity of all - momentum. But early on these entrepreneurs
allowed some "computer wizard" or 20-something programmers
working out of their college dorm get into their heads - and more
importantly, into their wallets - and sell them on the idea that
they could write the program that would set the industry on fire.
Unfortunately, the entrepreneurs are the ones who went up in flames.
Seems like their hotshot programmers had no clue about what today's
hyper-competitive multi-level market and discerning prospective
distributors expect. And by the time they finally understood, what
they had developed was obsolete, incompatible with other critical
programs or simply incapable of handling exponential growth. So,
checks didn't go out on time or weren't correct. Leaders couldn't
access their genealogy or determine their sales. Products sat in
warehouses too long or simply were never delivered. The average
prospect couldn't figure out how to enroll online and, when they
did, neither they nor their sponsor knew what to do next. Customer
Service Departments quickly became customer-complaint dumping grounds.
The Compliance and Legal Departments grew more staff than Order
Ultimately, the business imploded. With it went the time, money
and livelihood of everyone who bought into the entrepreneur's dream.
All because the visionaries didn't fully understand that the Multi
Level Marketing industry is moving at the speed of light - and,
all things being equal, those who stay current with the technological
trends tend to thrive.
Eight Killer Questions You Must Ask
So, how do you avoid a potential business-killing situation? Ask
yourself these killer questions before you take a single step.
1. Does Your Size Really Matter?
If your goal is to start a little company to give your kid a job
and secure a tax deduction, you can probably find existing off-the-shelf
MLM software to manage it. But if your dream is to build a company
that will provide income, products, services, opportunity, and perhaps
even financial independence for thousands - or hundreds of thousands
of distributors - you need scalable software that will allow you
to grow to that level without committing virtual business suicide.
Before settling on a vendor, confirm that the MLM software has
proven installations that are supporting hundreds of thousands of
distributors. You must prove this capability now, because once your
business is in operation and has momentum you cannot put it at risk
by having to convert to a proven software solution.
That doesn't mean you have to start out with the most expensive
software package with every bell and whistle. It just means you
need software that can keep stride with your growth.
2. What's on Your Channel?
On the grand scale, MLM is viewed as simply just another channel
of marketing and distribution. But in reality, it is a combination
of product offerings; business-building methods, distributor support
systems and compensation plan options presenting a complex range
of alternatives. The software company you choose must be amazingly
proficient in managing your marketing method choice, be it pure
Multi Level Marketing, Direct Sales, Party Plan, or the growing
hybrid concepts that seem to dominate today's start-up ventures.
For instance, if your product requires demonstration or is sales-friendly
in group presentation environments, a party plan may be your best
choice. Your software provider must offer not only solid commissioning
software, but the breadth of experience it takes to design software
that will track hostess rewards points and ultimate compensation,
handle retail commission rebates, and support preferred customer
direct marketing campaigns. All this while continuing to compensate
the original sales person, manage inventory and perhaps even fit
your multi-language, cultural-sensitive international division by
handling currency conversions, tax calculations, and any number
of international issues that only an experienced provider is prepared
to handle. So, it is easy to see that if your software provider
or inside guru doesn't understand the present and future needs of
your business, things will get harrier than Sasquatch on Rogaine.
Translation? Your wisest choice is an experienced software provider
that not only specializes in the business channel you adopt, but
has proven success with all of the distribution models (MLM, Party
Plan, Direct Sales) and with international markets. When you expand,
versatile software will give you the flexibility to move into new
markets - without a new software system to boot.
3. How Tangled Is Your 'Net?
If you plan to do the bulk of your business with your distributors
via the internet, you need net-enabling software technology that
will allow your distributors to manage their entire business - online
ordering, downline organization tracking, management and communication,
prospecting tools, financial analysis and more. Self-replicating
websites that integrate with your software are no longer a luxury
but an expected tool.
New Web technologies are emerging every day from numerous vendors,
and you must implement those that integrate and communicate with
your existing software. You need proven tools for integrating and
implementing third-party web solutions, so don't fail to ask potential
software providers how many third-party web solutions have been
integrated into their product.
Even if your product or service offering will be more "high
touch" than "high tech," your distributors will rely
more and more on you and their computer to manage their home-based
4. What Kind of Bait Are You Offering?
If you are fishing for minnows ( Multi Level Marketing novices),
questions about your back-office support will never arise simply
because they don't know the issues or even what to ask. But if you
want to catch the whales of the industry - the seasoned MLM professionals
who can catapult your business into the stratosphere - you must
offer the right bait.
And one thing veterans - the kind with scars left from MLM companies
gone bust - will ask upfront is, "Who is your technology provider?"
They will grill you on the particular functionality that is meaningful
to them. They'll inquire about the sophistication and applicability
of your replicating websites. They'll ask if they can get their
genealogy in real time and will expect scores of other tools that
will allow them to leverage their time.
Understand that your MLM software selection is a major business
decision, not just a technological one. Because, in the end, the
software is running your business. Don't let your IT department
or software consultant make this critical decision for you until
you have had a needs based business evaluation. Make sure that your
MLM software vendor can provide proven solutions and support for
the type of business you are now as well as the type of business
you want to become. Beware of software vendors that support only
small MLM businesses.
5. What Is Your Real Cost?
If you think your in-house programmers can design, program, test,
revise and deploy a reliable and stable MLM software application
within your timeframe and budget, you more lost than Ozzie Ozbourne
at a Toastmasters' convention. Even great programmers may lack in-depth
MLM software experience, and therefore be clueless about how extensive
and complex MLM software truly is. They see the tip of the land
mine, but because they lack experience, they don't realize the hazard
that is buried beneath.
Going with their own computer wizard is a common mistake for start-ups
- and unfortunately almost always a fatal one. The history of Multi
Level Marketing is strewn with failed businesses that went with
a vendor who they thought could build MLM software from scratch.
6. What Does Your Future Hold?
Distributors will quickly become a very strong influence in any
business decisions you make, and they will expect you to move at
warp speed on their requests. Nearly all of these changes will require
software modifications, and you will need to make them quickly,
seamlessly and accurately. Experienced MLM software vendors are
accustomed to these changes and have designed their software to
accommodate them rapidly. And they can usually predict where most
of your changes will be made, while inexperienced in-house or novice
MLM outside programmers probably couldn't even guess where future
changes are likely to occur.
Remember: An MLM company usually has one chance to succeed. If
you can't be responsive to your distributors because you're waiting
on your programmers, you're likely to lose your opportunity for
7. Should You Consider Outsourcing?
The life of your business depends largely on your ability to manage
your most critical asset ... your sales organization. And the ability
to do so successfully rests on your access and ownership of the
data that tracks their sales and produces their commissions. Although
the vast majority of all major MLM companies host their own data
on their own servers at their home office, there are a growing number
of new start-up software providers selling a service bureau approach.
However, take caution here! This is an awesome responsibility to
put in the hands of an outsourced provider without understanding
how to manage your own expectations.
You had best do your research and select a stable and proven partner.
They will want you to give them your data and let them manage it
with the promise of saving you the expense of an in-house IT manager.
But consider this. What would happen if that new "access everything
over the internet" provider lost power the day you were running
commissions? What if their server crashed? What if they went out
of business? What if they wanted to hold your data hostage because
of some disagreement between you and them? If you are just starting
your company and have limited people and financial resources, the
service bureau concept could be a practical and cost effective solution
for you. Just make sure that your provider has a good reputation,
a satisfied client base and is financially solid. Also, make sure
your agreements allow you to transfer the hosting of your data to
your own server at your home office when the time comes, and that
this transition will be smooth and reasonably painless. .
8. Who Ya Gonna Call?
Okay, so the image of looking like Wile E. Coyote after the TNT
goes off has finally convinced you to go with the pros. Now, where
do you find them and how do you determine which one is best for
you? You start by asking even more questions from people who can
provide the right answers. Questions like: Who is regarded as the
best software provider in the industry right now? Who are the most
promising newcomers? Who has the best track record? The most experience?
The latest cutting-edge technology? The best IT support in their
maintenance package? Who can I afford?
If you ask enough of the right questions of the right people, a
few names rise to the top over and over again. Once you narrow the
search to the top three or four, you then simply interview each
of them and determine which is the best fit for your company.
There's a timeless adage that says an ounce of prevention is worth
a pound of cure. Never has that advice been more applicable than
to the entrepreneur taking the walk of faith into MLM. If you are
to remain unscathed, we highly recommend you choose a software provider
that has thousands of hours of MLM experience. Select a respected
vendor that is competitively priced and stable enough to provide
service, training and support from the moment you launch until the
day you are managing your entire company from your laptop on the
beach. Most of all, choose a software partner that will have the
foresight to make your business smarter, safer and stronger every
perilous step of the way.
Michael L. Sheffield is the CEO of Sheffield Resource Network,
a full-service direct sales and multi level marketing (MLM) consulting
firm. He is also cofounder and chairman of the Multi Level Marketing
International Association (MLMIA). 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. As the most noted expert on compensation
plans, he has been a guest lecturer 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
- 1805 N. Scottsdale Road, Suite 7, Tempe, AZ. 85281 website address:
(Reprinted by permission)