Multi-Level Marketing Realities - Part 16

So our October commissions were big, paid in November but our commissions for November and December were near zero because everyone stocked up in October and demand had dropped off quite a bit because of the 20/20 interview in October.  Our website sales had dropped to nothing in November with our price change but we were selling to regular monthly customers at the same price we were selling at before.  I was not worried because it would come back and we would build our commissions up bigger than ever.

We did have a lot of stock though for the amount we were selling.  That had me a little worried, especially because we had borrowed to buy it.  Getting through the end of the year was fine but by the first of the year I was getting very serious about wanting to consult or do something.

In December we had planned to go to Disney World with my son's baseball team and we decided to go even if they didn't make it.  We had a good time for a week, not thinking about the business, and we told everyone that we were unemployed without an income.  We had actually sat through a timeshare presentation for a future week at the resort, so I guess that was the context of using that line.

By March, I had gotten a job with a consulting company so now I was employed again.  The MLM company had not only lowered the price of the product by March, they lowered it even further to try to generate some sales.  We lowered our website price back down and were starting to see some sales come back in.  Our March commissions were back up to about $5000.

And then... we found out that the MLM company was going to start selling the popular dietary supplement at Wal-Mart.  That pretty much does it for us.  In fact, that is when they said that they would no longer allow sponsoring of new sales people.  We were given the opportunity to convert from being a distributor to a consultant that spied on the Walmarts, Targets, Walgreens, and other stores near us, and fill out an online report.  The MLM company paid us $1500 per month for two years to do this, and converting to a consultant meant no more sales commissions from selling product.

I had a lot of the dietary supplement at the first of the year (2000) and I couldn't sell it fast enough, so I found a distributor that bought a lot of it from me at a discount.  I looked for ways to cut expenses and free up my time after I started my new job, so our websites went, the telephone system, and as much money I could cut from our budget I did.  Although we did try to start with another product briefly, we gave that up for more time and less spending.  We had a rough time but we got through it.

In 2001, I started with the University of Phoenix to get my BSM degree, and after I got it I went for my MBA, finishing in 2009.  I am on my third job since the end of our business and things are going well.  My middle son starts his third year of college this month and wants to be a screen actor.  My daughter wants to become a country music writer.  My oldest son is soon going to be the general manager of a tire store and gave us a grandson last year.  We tried to instill in our children that they should go for their big dreams because you only live life once.  We are trying to support them every step of the way.

THE END

Multi-Level Marketing Realities - Part 15

At the end of part 14 I said I would talk about the 20/20 story on the MLM company and how the MLM company raised the price of their popular dietary supplement to their distributors at about the same time.  But first, I must review some interesting events that happened before this.  Early in 1999, the MLM company decided that they were changing their marketing plan from a 6 level plan to a 3 level plan.  That means that instead of making commissions from 6 levels of distributors you would now make commissions on 3.  They would grandfather in any existing distributors so those with more than 3 levels already would not see a major cut in their commissions.  This didn't affect us much as most of our distributors were on our first level, though our future commissions would be affected.

Multi-Level Marketing Realities - Part 14

At the end of part 13, I said I would talk about the telephone server I installed in my home and a product launch by the MLM company.  Right away after we moved I had Ameritech install four business lines in my home, as well as our home phone and fax line, so that I could install a telephone server I had just bought.  The telephone server was to replace our off-site telephone service that we had been using for so long.  With the telephone server, which looked like a computer server, we could do the same general things as the telephone service but I would have more control over what it sounded like and how it worked.  The telephone server was one of my early projects after I quit my job.

I had several web site changes I needed to make and I also worked on them.  I answered the telephone, filled orders, and got out information requests.  I was able to talk to many of our customers and had a good working relationship with Wayne so he, myself, and Chris could trade off telephone duties.  I was able to play some golf while the weather was warm and bowled some.  I got out to the store for walks or walked around the neighborhood.  Back then there were very few people my age off during the day.  When I played golf, other sales people would be golfing so I got a chance to socialize then, but the day was typically pretty quiet.  As the weather turned colder, there was nobody to socialize with and no reason to leave the house during the day, except for maybe a walk at the mall or something.

I realized after about six weeks that this was something I wasn't going to be able to do long term.  I loved my family and being around them, but I also needed more adult interaction.  So I decided that I would try to take on consulting projects.  Unfortunately, I had no clue how to do this really.  So I went several months trying with no success.

In September, Chris and I went to a product rollout for the MLM company in San Diego.  I got to meet with the other distributors Chris had been talking about and we had a good time.  The new products seemed good and hopefully we would be able to cross sell them to our existing customers for more dollars in sales.  The company also talked about an upcoming 20/20 interview that they were going to do.  I got to meet the owners of the company and several executives.

In part 14 I will talk about how the 20/20 interview turned into a disaster and how the MLM company raised the price of their product at about the same time.

...to be continued...

Multi-Level Marketing Realities - Part 13

Part 13, that's fairly ominous.  Well I still do have good stuff to talk about before I get to the bad stuff.  In part 12, I said I would talk about the summer of 1999 when I quit my job.

Up to this point I had gotten pressure from Wayne to quit because we were doing so well and I really wanted to quit my job and run the business also.  Chris was a little more concerned, she felt we could do both but it was very busy.  We talked about hiring somebody but she didn't want to do that either, so we finally decided it would be ok to quit my job once we closed on our house.

In the spring and summer of 1999 I was advertising in various ways, mainly to try to attract new distributors into the business.  I am fairly positive that our commissions were up to nearly $15,000 per month, probably early in the year, and that was our plateau as we had that commission level for nearly all of 1999.  By the end of the summer we had over 350 distributors in our group.  My advertising consisted of small display ads in Entrepreneur magazine, a card deck advertisement, and I tried a full page ad just once.  I was a little unhappy with the results of these ads although the quality of distributor we attracted seemed to be much better.  Ultimately I went back to the internet and signed a contract with Excite by the end of the summer.  It was about $3000 per month for banner advertisements.

I had contracted out the work to create our advertisements.  Our display ads, card ads, and banner ads were all created by other companies and were generic rather than being specific to the product we were selling.  By being generic, I was trying to avoid the discerning eye of the MLM company's compliance department.

As far as our house goes, we were able to pay off our second mortgage and close on our house in August.  We had also sold our townhouse and were able to navigate both so we only had to spend one night in a hotel between closings.  Our new house was giving us space for living and space for doing our business, as it is a 4 bedroom, full basement, office on the first floor home.  We also got some nice features like a two story family room and 10,000 square foot lot.  It's a nice place to live and we have been here more than 10 years now.

I gave my notice and quit my job, with no place else to go.  This is the first time I had been completely without a job since I went to college (the first time).  I was now able to devote time to the business and I had several things on my agenda, as well as several regular things I wanted to do outside the house.  My kids were still little then so I was able to walk them to the bus and meet them at night.  I really enjoyed my family and got along with my wife very well during this time.  When the warm weather ended the story changed a bit.

In part 14 I will talk about installing a telephone server in my home and flying out to San Diego for a product launch by the MLM company.

...to be continued...

Multi-Level Marketing Realities - Part 12

In part 11, I finished by talking about the vacation where we had to shut down our website for several days because the MLM company said we had a compliance issue and we could either fix it, shut down the site, or lose our distributor agreement.  Based on that, our only choice was to shut down the site.  I also said that I would talk about the MLM company asking for our customers' names and addresses.

Multi-Level Marketing Realities - Part 11

I finished part 10 talking about having to shut down our web site because of the MLM company's compliance department.  However, I wanted to talk about something I had forgotten to mention: Chris had been taking the dietary supplement for about 6 months in May of 1998 and had lost a total of about 50 lbs.  I used this fact on the home page of our website and it gave people who called something to talk about with Chris.  We didn't use before and after pictures or anything, but this success really helped us continue to sell a lot of the dietary supplement.

Multi-Level Marketing Realities - Part 10

In part 9 I taked about the summer of 1998 and how the MLM company decided not to allow sponsoring any longer until further notice.  I guess they did this to get more control over how the product was being sold, as distributors were saying all kinds of things about the product.  We were still sending out all kinds of distributor information packets with a notice that said that the MLM company was not sponsoring at the current time so to expect a wait when they sent in their paperwork.  The company finally allowed sponsoring in the fall of 1998.

Multi-Level Marketing Realities - Part 9

In part 8 I wrote about the summer of 1998 and how the MLM company ran completely out of their popular dietary supplement.  We were better off than most distributors because we had product on hand that carried us into this period.  Unfortunately, we could not prevent running out of stock.  I had also talked about how the company decided not to accept any new distributors during this summer.

Multi-Level Marketing Realities - Part 8

I finished up part 7 saying that a couple of things happened during the summer of 1998: The MLM company disallowed sponsoring indefinitely and they ran completely out of the product.  I had a spreadsheet that told me how much to order and when based on how much we were selling per day, the days of lead time to get an order, the variations in the number of days it would take to receive an order, the amount of safety stock we wanted, the cost of placing an order, and the customer service percentage we were shooting for.  So I would place an order for the EOQ quantity (economic order quantity) when our calculated safety stock reached a certain point and, in theory, we would receive product from the MLM company before we ran out.

Multi-Level Marketing Realities - Part 7

When we left off in part 6, our business had just gotten listed on Yahoo.  On the Yahoo directory, we were the only distributor listed for the dietary supplement, and it was an extremely popular dietary supplement.  It was advertised constantly on radio stations in every major market in the nation.  Being the only distributor listed on Yahoo was a huge boost for our business, and mostly we were ready for the boost.  This was in the springtime in 1998, just ahead of summertime so it may have been May.

Multi-Level Marketing Realities - Part 6

In part 5, I talked about improvements we made with the website and with the business to be able to handle the flow of business we were now getting to our new website.  I talked about faxes we were getting, but I never did say that we added a phone line and number for faxes so that people who didn't want to order online would have the option of ordering via fax.  We sent out order forms that could be copied and faxed, which helped build our word-of-mouth business and distributed information about our website.

Multi-Level Marketing Realities - Part 5

In part 4, I talked about the rudamentary marketing that I did for my web site that may have contributed to our initial success.  As time went on, I improved the web pages by adding an information request form and a way to order online.  I also slowly added more information for customers in hopes of giving them information where they could serve themselves rather than needing to call us.

Multi-Level Marketing Realities - Part 4

In part 3, I talked about putting the web pages on the internet and beginning to get a trickle of prospects and customers coming from our presence on the internet.  So what were we doing right that got us sales right away?  We got a lot of benefit from the radio ads that were playing in virtually all markets in the country.  People would search the internet because they didn't want to pay the full $45 per bottle price for the product and they ran across our page with a lower price, call, and we would send them out the product and they could send us back a check.

Multi-Level Marketing Realities - Part 3

I now had several pages written in Front Page Express and they looked ok, so I bought some cheap web space from comevisit.com and uploaded my web pages using ftp.  FTP stands for file transfer protocol and is a semi-simple way to move files, i.e. web pages, from one computer to another.  So now I had the pages uploaded and I was testing them like crazy to make sure all the links worked, that there was no spelling errors, and that all the text made sense.  I was happy with what I had created, which pushed me to learning and trying even more new things.

Multi-Level Marketing Realities - Part 2

So when last we left off, Richard Smith was teaching me how to create web pages.  I was also starting to learn about web search and looking up various things on the internet.  Remember, it is 1997 so we are barely at the time when high-speed internet is available at a corporate level.  I must have carried a laptop with me to do administrative functions for J.D. Edwards, but my communications with the office would be through a dial-up connection to the internet, usually from home or the hotel room.  When I would be working at Lexmark, I would be working at the computers that Lexmark had.  I think they had PC's with AS/400 terminal emulation software, and my software work was on their IBM AS/400 Midrange.  Their PC's also did have internet access.  So like many people did, I did internet searches at various times.

Multi-Level Marketing Realities - Part 1

In this multi-part series, I will be writing about as much detail as I can think of about our dietary supplement business.  Don't worry, it's not all I am going to write about from now on so hopefully I won't make you too bored.  Glory days stories are great -- for the person telling the story usually.  I am hoping that there is something of value to take from my stories though, so I'll do the telling and you can decide what's good, what's interesting, and what's boring you to tears.  Feel free to comment if you'd like.

Tales From The Dark Side

I don't want to write a really long blog entry, but I wanted to talk about what happens when things go right. I mean they go really right. When your hopes and dreams about a successful business come true in a week, or a month, rather than the one to two years or more that businesses usually take to start up. When you are starting with no money and you get publicity you weren't expecting, or perhaps your purchased or free advertising works better than you expected it to, and you get flooded with orders or requests for information, and you just don't have the money or ability to keep up with this much business. I mean, you do have to buy product first in order to deliver it to your customer, in order to collect from your customer. That's called accounts receivable. In some cases you have to deliver free information to a potential customer before it is converted into an order. This can add up to a lot of money fronted.

We lived this dream turned nightmare, as we went from getting one customer order our first week to being drowned in orders. It was two of us, one working a full-time job and the other a full-time stay-at-home mom. We built our website and got it listed several places. We got the granddaddy of them all at the time, a top spot on Yahoo for the product name. We did not have the capability of taking credit cards, so we shipped the product to the customer with an invoice and they sent back a check. This worked for us for a while but soon it was too much to manage. I charged $30,000 a month on my American Express fearful for the day I could not pay it on time.

We switched to taking credit cards and took a haircut with the fees, but we got our money in two days. We went beyond cases of 12 bottles to ordering master cases of 144, to ordering 12 master cases at a time. Each of the cases was about $350 or so, so we're talking about $30,000+ worth of product delivered at a time to a three bedroom townhouse. Our business quickly took over our garage and our whole house. We were constantly working until midnight trying to keep up.

At one time, the MLM company completely stocked out of product and we could not get it. We set up an autoresponder email that said that we were out of product and were waiting, but we would ship as soon as it was available. Nobody cancelled. We shipped when it came in and everyone paid without a fuss.

We got email after email from potential customers and distributors for free information. I created a program that converted our emails into mailing labels because we couldn't rekey the information. At one time I also converted product orders into mailing labels and credit card information that we could run right into the credit card program. Later we switched to using a secure server for orders where we would print the order information from the screen; so at that point we had to rekey order information.

We had to subscribe to a telephone system to prevent calls from coming in during the nighttime, although our fax machine would be cranking out the paper all night long. The telephone system took some pressure off of us by distributing phone calls to some of our distributors. Once we bought our current house, we got a four line telephone server and set it up for our own purposes.

Many of the ways we did business kept customers that we attained from our free advertising, but the original inflow was crazy. Please take our experience to heart and be prepared for the unexpected.