Feb 22, 2006

Recruiting Might Be the Death of You...

You just signed up for a scrapbooking or stamping direct sales company. You now start on the recruiting "train". It’s not required, but it seems to be the “thing to do”. You hold workshops and all through the workshop, you “sell” the idea of joining your company with the idea that if you can get people to sign up, you’ll be home-free – making money on THEIR sales – WooHoo! Sounds like a good plan, doesn’t it? Well, maybe not. Nothing can potentially kill a good business faster than recruiting. Huh? I’ll say it again, nothing can potentially kill a good business faster than recruiting.

Now I’ve probably made some of you mad, but before you start logging in to comment, let me show you how.

You sign up
You sell $200 a month to Customer A
You make $50 a month from the sales you make to Customer A.
Through your effective recruiting efforts, Customer A signs up to be a consultant but is really only in it to get the discount
Customer A still buys $200 a month on average of products – only now, she buys them from the Multi-level company herself
Customer A enjoys her 25% discount off of the products she sells to herself. You now make 3% off of her sales as her “upline”
You now make $6 a month off of customer A
You lose $44 a month in revenue…
End of story.

Keep in mind that the company doesn’t lose anything. They gain another one of you who will “lather, rinse and repeat”. Pretty soon, everyone is buying directly from the company and there are no “customers” left. Not to mention that now the company can sing the praises of the fact that they have X number of consultants, when in fact, a large percentage of those “consultants” are just the former customers of another consultant who was too good at recruiting. This scenario is even WORSE if there is no downline and you get a one-time credit for recruiting. Then you lose a customer forever for a mere ten bucks or whatever it is. Building a business is all about creating revenue streams that keep flowing. If you are putting a dam on the stream, pretty soon, the stream will be dry.

Can you recruit legitimate business owners who are interested in building a real business? Of course, you can. But, be careful when you blanketly throw out the “opportunity” at a workshop. What if everyone in the room signed up? You would have to find new customers every time you held a workshop.

Another option is to go with ScrapBiz. You make 50% profit on every thing you sell. That's a whole heckuva lot more than 25% and you probably won't end up turning your customers into business owners. They'll most likely stick around as your customers.

1 comment:

Anonymous said...

as always, thanks for the food for thought. You always put a unique spin on things.