Party plan companies don’t ask this question, because almost all of their sales are to customers.
If your company is a network marketing company, however, this is an important question to which you need to know both the short and the long answer.
The Short Answer
There is no legally mandated requirement that at least X% of a direct selling company’s sales must be made to customers who are not independent representatives.
Does this mean you shouldn’t worry about sales to retail or preferred customers?
The answer is no. There have been companies, like Burn Lounge, that were shut down because the purchase behaviors of their customers were so different from those of the independent representatives. Others, like Vemma and Herbalife, were pursued by the FTC with legal actions in part because of a lack of customer sales volume.
The FTC issued guidance expressing its belief that sales of multilevel marketing companies should principally be made to consumers who are not pursuing a business opportunity.
The Long Answer
One of the best ways to grow your direct selling company is to increase the number of sales generated by each independent representative. Independent representatives will consume only so much of your products. Customers who buy without a thought about your income opportunity may buy more frequently than your independent representatives. To maximize your company’s sales, you need customers!
Will you use a carrot or a stick approach to get them?
You also need to decide how you will price your products for customers.
When you have customer sales, it’s good not just for your business, but it’s equally good for the businesses of your independent representatives.
What are you doing to increase your customer percentage of company sales? I’d love to hear from you.
Jay Leisner, the President of Sylvina Consulting, is a top compensation plan and direct selling expert, a trusted adviser to new and established network marketing and party plan companies. For more than 30 years, Jay has enjoyed assessing and improving network marketing, party plan and referral marketing companies across the globe.
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