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
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 Fulfillment.
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
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
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
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 business.
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 success.
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
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)