Well for starts, the concept behind this post is one of the main reasons that some of the large companies like Amway and Herbal Life and few other companies are still in business today. Even though many of these companies, based on my previous post, would be considered MLM companies, they do have something going for them. What do they have going for them? They, in my mind, would be considered a CONSUMER BASED COMPANY vs. RECRUITER BASED COMPANY!!
So what does it mean to be a CONSUMER BASED COMPANY? It means a large part of their focus consists of the acquisition of new customer and consumers of the products rather than just the “SIGN UP” of new distributors, business partners, Independent Business Owners, etc. Let’s all keep in mind that REAL RELIABLE RESIDUAL INCOME comes from the process of being paid on consumers purchasing products month after month, and year after year. That being said, CONSUMER BASED COMPANIES have a lot higher chance of creating a REAL RELIABLE RESIDUAL INCOME than RECRUITER BASED COMPANIES.
Now, because I like to ask questions of people that most people don’t really think to ask, I may have some insight for you that may make you wonder whether or not you have made the right decision with the company you are working with. Have you ever asked the question:
- How often will my customers REORDER these products (and NO, that does not include AUTO-SHIP)?
- Do the PRODUCTS hold enough VALUE to keep my customers as a customer?
- How many customers will I RETAIN after 90 days of my efforts?
As an engineer, I really enjoy numbers. Therefore, I have asked many TOP DISTRIBUTORS what their numbers look like, and I have also done some reasearch on my own to learn if a business makes sense to tie in my NAME AND REPUTATION. And what have I learned?
Well let’s discuss for just a minute about how the TRADITIONAL BUSINESS world works. Let’s take a RETAIL CLOTHING OUTLET for instance. How often will their customers REORDER or come back to their shops to purchase? I would venture to guess that a retail location probably has a REORDER rate of probably 10-15% annually. Even though the products probably have enough VALUE for the customer to come back, (most people) don’t buy new pants, shirts, shoes, etc. every month. I recognize there are some outliers, however, for the majority they will go to the retail location once a year. So in other words, the RETENTION of existing customers is very low. One of the major reasons in my opinion is because we are talking about DISCRETIONARY income.
Now let’s discuss a different type of retail location – TARGET. We have all been to TARGET probably more than once a month to purchase of consumable and non-consumable goods. So how often do these customers REORDER? Well, I would be lying if I told you I knew, but I would assume that they may have customers loyal to their store 50-60% of the time. In other words, they have a REORDER rate of anywhere from 50%+ on a monthly basis. The products and services people purchase from TARGET in my mind would be considered NEEDS, therefore increasing the REORDER AND RETENTION RATE of their business model. However, how often do you receive discount codes and coupons from TARGET. Why, well because they are trying to increase their RETENTION RATE.
Finally, let’s discuss why it is better to team up with a CONSUMER BASED COMPANY company than a RECRUITING BASED COMPANY. CONSUMER BASED COMPANIES will always have a HIGHER RETENTION RATE than RECRUITER BASED COMPANIES, the reason – consumers will purchase PRODUCTS more frequently when the product is based on a NEED vs. products that are a WANT or a business expense. However, you have to be careful what you team up with, because even in a CONSUMER BASED COMPANY you can get stuck in the “GARAGE QUALIFIED” club where you have too much product and not enough space to put the products because your company makes you spend too much every month for the products. Again, feel free to review the below post to help better understand how to identify an MLM company. Last point of interest, I have teamed up with a CONSUMER BASED COMPANY that offers a 95% documented REORDER rate. I would be happy to share more with you about what we do and how we do it. Feel free to fill in your information below and I will be in contact with you.