TEAM: MLM/Networking - Benchmarking Study

Original Post

Multilevel Marketing - MLM/Networking - Benchmarking Study
by Orrin Woodward on Tue 05 Feb 2008 12:47 PM EST

Here are the definitions for the terms MLM, Network Marketing and Benchmarking.

Multilevel Marketing (MLM) - or Network Marketing, is a system for selling goods or services through a network of distributors. The typical Multilevel Marketing program works through recruitment. You are invited to become a distributor, sometimes through another distributor of the Multilevel Marketing Company’s products and sometimes through a generally advertised meeting. If you choose to become a distributor with the Multilevel Marketing Company, you'll earn money both through the sales of the MLM's products and through recruiting other distributors, by receiving a portion of the income these distributors generate. The distributors that you sign up with your Multilevel Marketing plan are called your downline. The distributor that originally recruited you is called your upline. Often he or she will give you some help getting started, including training.

Network Marketing / MLM - is the sale of a consumer product or service, person-to-person, away from a fixed retail location, basically a home based business. These products and services are marketed to customers by independent sales consultants. Depending on the company, the salespeople may be called distributors, consultants or various other titles. Products are sold primarily through personal relationships and one-on-one retailing. Commissions are paid not only to the MLM Consultant that made the sale, but they are also paid to the person who referred that consultant to the Network Marketing Company in the first place.

Benchmarking - A process of searching out and studying the best practices that produce superior performance. Benchmarks may be established within the same organization (internal benchmarking), outside of the organization with another organization that produces the same service or product (external benchmarking), or with reference to a similar function or process in another industry (functional benchmarking).

Benchmarking - The process by which a company compares its own performance, products, and services with those of other organizations that are recognized as the best in a particular category. The product or service that is determined to be the industry standard is known as a benchmark.

Benchmarking - Searching for the best practices or competitive practices that will help define superior performance of a product, service, or support process. Competitive benchmarking allows a company to know precisely where their operation is in relation to a direct competitor, to determine its competitive position, and to identify major performance gaps. Process benchmarking searches out the best practices of a particular industry process and compares the performance of the company to a recognized performance leader. It focuses on the process not who the company is or whether or not they are a competitor.

In an industry much like the old (wild) west, with rogue companies, individuals, inflated myths & visions of grandeur—I have committed to separate the fact from fiction in the MLM industry. As an engineer I was trained by some of the best benchmarking guru’s dating back to Xerox original developments in benchmarking. Rochester Products, a former division of General Motors had studied extensively at Xerox Corporation located in Rochester on the new techniques (at the time-late 80’s to early 90’s) of benchmarking. When Rochester division merged with AC/Delco to form AC Rochester, I was exposed to these techniques. I loved the benchmarking processes developed and devoured all the literature and studies available in the field. I accepted an assignment in the fuel systems area and through hard work, God’s Providence and an excellent team—we won a National Benchmarking Award. Through the benchmarking process, I also created or co-created four U.S. Patents. In my opinion the MLM industry is ripe for an extensive benchmarking study and I have volunteered to do this free of charge. Almost ten years ago, I would charge rates of three to four thousand a day to do the same studies as an engineering consultant. Today the rates would be upwards of five to eight thousand per day.

You may wonder why I have volunteered for this assignment. I feel that someone needs to perform a public service and improve the prospective business owner’s ability to make the proper choices. I feel strongly that the future MLM businesses must quit hiding behind a cloak of secrecy and share openly the positive and negative facts about their business and industry. If something is not positive then fix it! Right? Why call everything confidential and trade secret information if you have a good business? If it is good then the last thing you would want is to keep it a secret! If the facts are negative then no wonder the company would want to keep everything top secret and confidential. It is time to shed some light on the good and bad of this industry and take it out of the old (wild) west stage and into a more civilized mainstream business occupation.

The benchmarking process falls into four systematic steps:

1. Identify –Identify all companies and processes to be studied.
2. Evaluate – Develop the criteria to evaluate from each company.
3. Analyze – Study the data and let the facts speak for themselves.
4. Implement – Announce the best practices and best companies as benchmarks.

This process works in any problem solving endeavor and I count my blessings that I was exposed to this process as a 23 year old engineer. I will share more details on the four step process and MLM specific criteria chosen for the MLM Benchmarking Project. God Bless, Orrin Woodward

Update: I have received some great suggestions for specific MLM criteria to evaluate in the comments. Let's formalize the gathering of process by polling our readers. What factors do you believe are important to evaluate in the MLM industry?