MLM Software:
MLM By The Numbers

By Jeffrey A. Babener
2003

Your MLM Stats: By Mail or on the Internet

Every month, MLM companies mail to their active distributors computer management reports about their downline sales organizations. Many companies offer the same reports to distributors in secure sections on the company web site. These are typically referred to as downline reports or genealogy reports. Often times, auxiliary reports and other information are available upon request. In the typical MLM downline report about your sales organization, the following information is included covering both yourself and individuals who are in your downline sales organization:

  1. Rank or position reached in the organization
  2. Levels below you or break-away position in the organization
  3. Monthly personal volume
  4. Monthly group volume
  5. Date of entry in program
  6. Meeting activity requirements this month or last month
  7. Recruiting or new sponsoring.

Basically, a downline report is a lengthy computer printout showing important activity and indicators in your downline sales organization.

Use the numbers to make yourself a better networker in a "people" business.

Basically, a downline report is a lengthy computer printout showing important activity and indicators in your downline sales organization.

The MLM Numbers are your "Tea Leaves" for Fortune Telling

Reading the numbers is not unlike the fortune teller who reads the tea leaves. Your interpretation tells you something about your past and your future. Your downline reports turn you into a CEO and MLM consultant of your own sales organization and you can use these reports as a management tool to:

  1. Promote your own recruiting and sales
  2. To promote the sales and recruiting of your downline
  3. To contact, supervise, manage and assist your downline
  4. To look for strengths and weaknesses in sales and recruiting activity, and
  5. Spot trends.

Says direct sales consultant Dan Jensen, founder of Jenkon International, whose company has serviced hundreds of network marketing and direct selling companies that provide downline reports to millions of their distributors, you should have some broad goals in working with downline numbers:

  1. Promote retail sales outside the network. He notes that an organization where product sales are only for distributor consumption is less likely to experience major growth.
  2. Recruiting - use the numbers to increase sponsoring and retention of experienced distributors.
  3. Consistency - Jensen advises to look for hot and cold spots and for problems one month to the next in both individual distributors, as well as downline legs.
  4. Achievement levels - in most network marketing programs, distributors who are successful are advancing to higher ranks or status based on larger group personal sales volumes. Use the numbers to see if these promotions are occurring and, if not, why not.
  5. Activity - which individuals and which legs are continuing to be active month after month.

Plotting the Success Curves

Yes, there are certain vital statistics that you should absolutely track. MLM software consultant Jensen refers to these key statistics as success indicators. He advises that you track them, chart them, graph them from month to month and they will provide a road map for action.

Many of Jenkon's MLM software customers are members of the DSA, the Direct Selling Association, which further validates Jensen's observations. Here are a dozen or so key success indicators MLM compensation expert Jensen suggests that networkers track month to month:

  1. The number of distributors in your organization last month
  2. The number of distributors in your organization this month (although raw numbers are helpful, the actual key indicators will be how many are active and how much is their sales volume)
  3. The percentage of organization growth from last month
  4. The number of new recruits (this number is absolutely critical to success)
  5. The number of legs (a) with, (b) without new recruits. This indicator identifies where in your organization things are working, who needs help or training
  6. The downline people who (a) are (b) are not sponsoring. Consistently active sponsors are good trainers and should be leaned on, and those who are inactive sponsors should be pushed to meetings and trainings, buddy system arrangements, teaming, telephone trees or promotional contests.
  7. The percent of downline who is sponsoring. Keep an eye on the percentage that is being maintained or falling off. Hopefully, it will stay consistent. A drop from 50 percent to 20 percent, for instance, is bad.
  8. The total number of distributors who (a) are (b) are not active month to month. This indicator may be the "whole enchilada." This is your barometer, says Jensen. If it goes up, good weather, down means stormy weather.  Three tips for working with this indicator (1) focus major support for your actives, (2) before the fire gets cold, focus support to those showing first signs of inactivity, (3) once firmly inactive, don't waste your time.
  9. The percentage of distributors remaining active. If from month to month, this percentage is going down, then the signal to you is "get to work."
  10. Active recruits. A new recruit, who merely signs an application, but doesn't order, does you no good. You should strike while the iron is hot, otherwise it is a lost opportunity. You will never have the attention of a new recruit more than when he or she has just signed on. You should also be tracking which sponsors are bringing in distributors that are merely "application filers," and bring this to the attention of those sponsors in your downline.
  11. The percentage of active new recruits to total actives. Is all your new business coming from new recruits? If so, then you are losing your experienced distributors. Generally, the numbers should be low and drop month to month, which indicates that your experienced people are performing.
  12. The number of actives last month, but not this month and vice-versa. In other words, what is the attrition, which leg is it in, and who needs attention and training?
  13. The new active recruits ratio to new inactives. This is a key number. If you gain one and lose one, you are staying in place and your ratio is 1.0. If you gain two recruits and lose three to inactivity, it is a big warning and your ratio is .66. Obviously, if you gain three and lose two and your ratio is 1.5, you are headed in the right direction. Anything greater than 1.0 is the right direction.

Interpreting the Broad MLM Trends

Do you want to see the big picture? Do you want to see the trends? Do you want to see your game plan unfold before your very eyes? Do you want MLM success in recruiting, sales and retention? Then chart the success indicators month to month. Either do it by hand in a graph connecting the dots, use a bar graph, or use a spreadsheet program on the computer. As you look at the numbers over the course of twelve months, the trends will become apparent, and says Jensen, you may wish to also note important chronological events month to month that may be influencing the success indicators:

  1. Changes in product,
  2. Changes in company marketing materials,
  3. conferences, trainings, meetings,
  4. Seasons,
  5. Special events.

Develop an MLM Action Plan

Think of all the work that goes into getting a new recruit. In an industry where attrition of distributors is so high, if you can keep a distributor active, it is just as good as finding a new recruit. Ben Franklin's adage "a penny saved is a penny earned" has merit in this situation.

Is this a people business? Absolutely. Is this a numbers business? Absolutely. Use the numbers to track the success indicators, the weak links and the messages of a call to action. Use the numbers to make yourself a better networker in a "people" business. It is here that science meets art.

For more information on this and other multilevel marketing subjects, please visit www.mlmlegal.com


Jeffrey A. Babener
Babener & Associates
121 SW Morrison, Suite 1020
Portland, OR 97204
Jeffrey A. Babener, the principal attorney in the Portland, Oregon law firm of Babener & Associates, represents many of the leading direct selling companies in the United States and abroad.

www.mlmlegal.com

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