Network Marketing – Is Your Business Legal

One of the biggest challenges facing the network marketer is the poor reputation the industry has earned over the years. Most of this reputation has been created by illegal and fly-by-night businesses that have been created with the express purpose of fleecing their distributors by running illegal pyramid schemes.

Most people, when approached about joining a network marketing business, do not know the questions to ask. They tend to apply what they know about conventional business to network marketing. Unfortunately things that make sense in conventional business are very often either unethical or illegal in network marketing. Many states have enacted law specifically designed control network marketing businesses. Typical examples are:

High entry cost. – Business cost money to start so a fee of hundreds or thousands of dollars does not seem unreasonable.
Large inventory purchase. – “You need something to sell don’t you.”
Making commissions for signing up new distributors or making profits from volume sale to new distributors.
“We will pay you $50 for each distributor you sign up in your front line” or “All you need to do is buy $3000 in inventory and sell the same to your new distributors.”
Over the years while contacting people about my network marketing business I have found people who had been recently approached about joining a network marketing business. I always suggest that they contact the Direct Selling Education Foundation for their publication “Pyramid Schemes: Not What They Seem!” to determine if the business they are considering is legitimate. Some of the suggestions are:

Start up costs should be reasonable. Entry costs for legitimate network marketing business should be relatively small. The fees may include the cost of a sales kit sold at or below company cost.
Companies that require inventory should have a “buy back” policy for distributors that wish to quit the business. Many states and the Direct Selling Association require buybacks of at least a 90% of the original cost.
Are profits made primarily on the sale of product to the end user. Pyramid schemes make their profits on volume sales to new recruits.
Take your time. Never be pressured to sign up right away. Ask to meet successful distributors.Find out about the company.
Find out where they are located. Who are the officers of company? What is their history?
Are they members of the Direct Selling Association and have subscribed to the Code of Ethics of the DSA.
Network Marketing is one of the most effective ways of starting and running your own business. With effort and the willingness to work hard you can develop a strong secondary or primary income. Just make sure that the opportunity you are investigating is a legal business.

How Great Market Research Increases Sales!

Increasingly, “Location, Location, Location” is being replaced by “Customer, Customer, Customer.”

This doesn’t come as a surprise to any savvy business person: What you know about your customers will help you serve them better and encourage them to spread the word about the value of your products and services.

However, how you go about learning as much as possible about current and potential customers is the true key to sustained success, especially as small businesses find themselves vying with national brands locating here or marketing via the web.

Sure, you can learn a lot through face-to-face discussions. Nevertheless, in 2008, some of the same detailed market analysis tools used by the biggest companies in the world are accessible to you.

Whether your business is in retail, restaurant, banking, insurance, financial services, or other businesses that services homeowners; you have a need to know your customer’s buying habits and lifestyles. Why? It helps drive sale of the products and services in your business.

Understanding which customers are most likely to purchase your products and services helps you target potential buyers more cost-effectively. Furthermore, by knowing where these customers live, you can make location-based decisions on your stores, restaurants, and branch locations.

When you shop, does the sales clerk ask for your zip code or telephone number? Do you use loyalty cards, store credit cards, charge cards? If so, these techniques provide the data necessary to develop customer profiles.

Businesses increasingly are utilizing location-based technology, demographic studies, traffic patterns, sales, homeowner location, and other data to describe customer lifestyles and buying habits (psychographics), identify ideal store locations, determine high and low volume product categories, locate their competition, estimate potential sales volume, and track average daily traffic volume. The same opportunities are available to the smallest business, due to continuous technology advances.

The use of decision support tools directly assists larger companies to understand their current location dynamics and markets that lead to their success, and identify where else these dynamics exist to support additional growth strategies.

It is not by chance that Home Depot, Chili’s Restaurants, Ben & Jerry’s, Wal-Mart, Pier One, Outback Steakhouse and other national brands are locating in your communities. Their decisions to build a store, hire and train staff, purchase inventory, and advertise in specific ways using these decision-support tools substantially reduces the associated investment risks.

They know who their best customers are; where they live; what the sales potential is from each customer; and which locations can maximize their investment. Increasingly, “Location, Location, Location” is being replaced by “Customer, Customer, Customer.”

Different businesses develop different concepts. A good location for one retailer may not be the same for another. Why? Location value is determined by the customers in that trade area. Customer concentrations drive the location decision!

Market researchers have established lifestyle segmentation systems that encompass up to 72 clusters or divisions based on life stage, demographics, income, purchasing habits and other unique characteristics of residents in specific neighborhoods.

Neighborhoods and households are labeled. These clusters and divisions are critical, since they are statistically likely to act in similar, predictable ways. Most stores service several predominant clusters or divisions. Researchers have categorized the over 111 million households in the U.S. into these segmentation systems.

What is your business concept’s “trade area?” You need to know how much time a typical customer is willing to spend to drive to your business. “Drive time” is often a product of the cost of the good or service. Consumers will drive further to purchase a bedroom set than they would to buy groceries. Today, location-based technology can cost-effectively produce a polygon-shaped map of your “drive time trade area.”

Once you know your dominant customer segments and your model trade area, you can graphically plot the major and minor clusters within each. Then, you can augment this with:

Daily traffic counts by your site location,
Competitor location(s),
Trade area product demand,
Total households in the trade area, and
Total population and other demographic data.
You also can determine whether an additional location for your store in the trade area would cannibalize (steal sales from) your existing location.

Data to help you market and advertise cost effectively

Want to market and advertise to the households in this trade area?

Consider a marketing message that “fits” the lifestyles and buying habits of your predominant segment profiles – using print, radio, television, or direct mail. Today, you can target direct mail only to specific households that are most likely to purchase your products and services, saving money on wasted eyes bought in a mass media campaign.

Second-home owners, for example, purchase much differently than full-time residents.

Want to determine if a potential, new location will be successful?

Develop a customer profile model, a model of your successful trade area, and an analysis of alternative sites to determine if these sites have the critical factors (profitability analysis, penetration and product performance, competitor location, cannibalization analysis) necessary for a successful location.

Want to know if your existing product and service mix is maximizing your current locations?

Analyze consumer-spending estimates for your trade area’s demand for specific products and services in 20 major categories and hundreds of individual items. These categories and items are indexed to national averages for each segment cluster or division and can help you understand why certain products and services are disappearing from the shelves and why other products are gathering too much dust.

How do you start this analysis?

If you are not yet collecting customer-specific information (street address is the ideal), start collecting it.
Analyze your sales and inventory data, as well as total cost of goods sold, to determine high and low sales categories.
Locate where your competition is.
Consider utilizing location, segmentation, and market analysis to increase your competitive edge.
Remember, technology advances have made this process very affordable for the small, local, or regional service business. You can compete effectively with the chains.

Cost Effective Small Business Marketing Strategies and Tips – Part Four

In my Part 3 article on Marketing Strategies for your Business, I discussed Marketing Research and Targeted Marketing and how the two work together. In this article, I will show how the Mass Media can be effectively used, even on a tight budget. Let’s get to it!

Using the Power of Mass Media

Why use Mass Media? Well, it gives you a wide spread identity and recognition, which in turn, makes your Targeted Marketing more effective. It helps you establish and maintain a brand. Mass Media is far less expensive now, and it now targets small businesses.

MASS MEDIA OUTLETS

Newspapers

While Online Marketing is really giving newspaper advertising a run for its money, you will find that newspaper ads are getting cheaper and cheaper as a result. Moreover, a newspaper can add flexibility and can be quite targeted if necessary. Always test your ads by including codes so you know which ones are most effective. Narrow your ads to the most effective papers by contrasting ads and gauging the differences.

–Send in good artwork and confirm with the production department that your Ad will print well.
–I like to run smaller ads in different sections with tracking codes to determine your best as placement.
–I like the Classified Section Ads because this is where serious buyers go.
–Always point to a specific Sales Page on your website which is designed around the Ad you place.
–Always ask about volume discounts and reduced ad rates when testing the paper’s effectiveness. Everything in Advertising is negotiable!
–Offer something for FREE (Bold it & Capitalize it).
–Use a Graphic or Logo to increase the effectiveness of your ad by 30%.
–Repeat your message three times in a small area by using a Logo, Headline and Copy that relate.
–If you advertise on the TV, using one frame from the TV ad can increase the print ad’s effectiveness by 40%.
–A good ad can make good circulars and help brand your name / product.
–Newspaper advertising requires consistency to get any traction or ROI but make sure it is working for you before committing to a long run.

Magazines

I like Magazine advertising as it is Regional and National in scope and you can target your audience effectively. I like to test classified ads in different Magazines to see what works then I consider Display ads (and keep the classified ad).

–Magazines lend credibility
–You can use your Ad effectively in a Circular or other company medium. Always say, “As Seen in Entrepreneur Magazine (insert the magazine the ad appeared in).” This gives you instant familiarity, credence and credibility with the reader.
–Consider running a low cost classified Ad in a multitude of Magazines which target your prospect verses running a Display as in a couple. Your ROI for dollars spent will typically be much better.
–A prospect reading a classified as will think you are cheaper than the advertiser with the expensive Display Ad. If you aren’t selling a luxury product, this can be a great start to communicate with a price conscious prospect. They think money is being saved even before they call you and discuss price. What a win-win for both the prospect and the business owner!
–Multiple Ads run through a Ad Media Company in several magazines can get some great discounts. If your credit is decent, you can be extended payment terms which correspond with your Ad ROI. Therefore, no money out of pocket until revenue is generated from the Ads (if timed correctly). Powerful!
–Take advantage of Split Runs with Magazines to see what Ad works best, in what section of the magazine. Great way to test a Headline or Copy.
–Magazines are more targeted for the type of reader verses a newspaper. A newspaper is more geographically targeted. Using the two in conjunction can be powerful!
–If your product or service is business oriented, consider advertising in a Trade Magazine.
–MediaFinder.com is a great way to find the Trade Magazines to advertise in.
–Magazines lend themselves to color. Use it!
–Magazines life cycle or longer. People go back to them over and over, as well as, hang on to them. Your Ad has a chance of being read multiple times.
–Organize your Magazine Display Ad with Boldface sub-heads. These will be read first, should grab attention and get the reader to either read more or act. No more than 50% of a Display Ad should be text.
–Consider blowing up your Magazine Ads into posters and mount them strategically around and outside your business, with the Headline: “As Seen in Entrepreneur Magazine….”
–Ask the Ad Space Rep to call you when remnant space is available. You will save big bucks!

Radio

I like Radio when it’s a Question & Answer type scenario; ask an expert show; something which sets you up as an Expert. You can negotiate the price as it provides the public valuable information, which is the mandate of Radio. It’s an Ad disguised as a Resource! A Win-Win for you and the radio station. Make sure to give out a short website address and phone number. Make both easily memorable. Track the results!

–Another strategy is to run cheap, short ads on less popular stations, bundled for maximum savings but make sure you test and track them to ensure a good ROI. Cheap isn’t good unless you get viable, profitable results.
–Be sure to personalize your Ads and you do the talking. This is a great opportunity to connect with your prospects.
–Partner up with other strategic businesses to offer complete solution radio talk shows, like a panel of experts to give out advice. This is important: Have the moderator give out one website address and one phone number and the prospect can choose the company (or better yet companies) to follow up with. You can offer discounts for combined services and meet the customer as a dual solution. A marketing fulfillment company can help you set up and maintain a coop partnership. For instance, a Landscaper can partner with a Landscape Designer, which are two services that can be combined for a total solution for the customer. You can coop the cost with your Strategic Partners. You can kill the competition with this strategy! Make sure you choose your partner(s) carefully.
–Put your Ads on the website for people to listen to, especially your Q & A Expert Sessions.
–Interviewing the President of the company can be a great way to start, giving you plenty of material to draw on to make a variety of Radio and Online Ads. This is a very effective use of your Ad dollars.
–Consider the afternoon for peoples drive home for your radio ads, you’ll have their attention.
–Always mention your website and an easy to remember number. 9 times out of 10, if the website is easy to remember, the listener will find it.

TV

You can cost effectively target your audience. The average U.S. Household watches an average of 8 hours TV per day, with the average viewer watching 41/2 hours per day. With Cable, you can cost effectively target an audience.

–TV is a great set up for your Sales Page on your Website.
–Avoid prime time and take advantage of fringe time. Consider a media buying service to really save on your ad times; they often buy unsold TV time for pennies on the dollar.
–Consider hiring an inbound telemarketing cal center to take the calls off your ads, no matter the hour of the day. If you use a different phone number from channel to channel or ad to ad, you can easily track them.
–Direct Response TV can offer your prospects the entire sales process. This is a powerful system! Some direct Response advertising can be bought on a per inquiry or sales basis, taking a lot of risk out of your capital outlay.
–The TV station can provide all the Production services, saving you thousands. However, with a good marketing consultant, you should write the script. I like a Storyboard because it helps you visualize the Ad. Save money by having a pre-production meeting to ensure things run quickly and smoothly on production day. The less the editing, the more economical your ads will be – plan ahead! You normally can create three good ads in one production day – good planning can help you achieve this great use of time and money, which brings your production cost per ad to about $300. Shoot in digital so you can replay it immediately and quickly make any fixes.
–Concentrate on 30 second spots. Direct Response sales ads should be about 2 minutes and keep the phone number visible during the entire ad.
–Show your product or service in Action. This is the real advantage to TV ads.
–Don’t make the Ad more interesting than your product.
–Remember a TV’s volume may be muted so tell your story visually!

Outdoor Ads

I really don’t like Outdoor Ads because most aren’t visual enough or have an ad conducive to someone driving by it at 55 mph. If your Ad tells someone to Exit Now; has a big arrow; something very Visual, and your Ad is in a good location, then maybe it might be worthwhile. Things like Next Exit or Two Miles Ahead work, while being a constant reminder to commuters. An Outdoor Ad can establish an Identity for your business. However, these ads can be very expensive depending on the location.

–Use no more than Five Words; use one large Graphic; make sure it is well illuminated.
–If it is a Digital Board, make sure your Ad stays up long enough for passer bys to visually take it in and act on it.
–Consider sharing the Billboard with another business in your Office Park or Retail Center and / or have your Office Park or Retail Center mentioned for even greater cost savings!
–Consider other less costly alternatives like bus, taxi or bus stop Advertising if it serves your market well.
–Remember, an Outdoor Ad should be clear from afar as prospects will be viewing typically from a moving vehicle.
–Be careful to design your sign with the character and taste of your community in mind.

Direct Mail

Generates leads that can lead to a sale. Direct Mail sets up your leads.

Advantagesof Direct Mail:
–Measure results immediately
–Can target your audience
–Can be personalized
–Receives some of the highest response rates of all media
–Great for repeat sales
–Important Elements of a Successful Campaign:
–Ask the reader to take Action
–Find recipients who have bought via mail before
–Include a testimonial in your letter
–Ask for the business in your first headline
–Use Black and Red color types. Red for important words or headlines
–Have a good logo or graphic
–For success, repeat your mailings with different content

The Numbers on Direct Mail:
–90% chance of reaching your targeted audience
–60% read the letter
–50% make it to the decision maker at a business
–60-30-10 Rule: 60% of your Direct Mail success depends on the right list; 30% of it depends on the offer; and 10% depends on the Creative.

Direct Mail Tips:
–Oversize the Addressee’s Name
–Consider putting no return address on it to increase curiosity
–Use mail as a follow up for:
–Sales Call
–Appointment Confirmation
–Bad Customer Experience
–Recognize Achievement
–Introduce a new team member
–Holidays
–A Thank You for a demo, presentation, sale, no sale, referral

Note: If possible, I prefer Direct Email over Direct Mail because it is instant, automated, easily tracked and cost effective. However, obtaining good email lists without violating Spam Laws can be a challenge. Always consider using Direct Mail with Email or Point to a Website with Direct Chat to enhance the dialogue and personalize your campaign.

Resource: Consider getting the Magazine Direct Marketing to learn as much as possible about the art of Direct Mail.

More Direct Mail Tips:
–Keep a detailed database and manage your mailings with a Customer Contact System.
–Repeat important items / benefits
–Photos are good and increase response rates
–Best individual Direct Mail months are January, February and October. Best business Direct Mail months are January, February and March.
–Offer a Free Trial or Free Product
–Bundle your Product and Service Offerings
–Offer payment terms, discounts and a guarantee
–Address the reader / audience directly and personally
–Keep your wording short and concise
–Provide a list or Problems, Benefits and the corresponding solutions
–Test Mail until you have all the kinks out
–Repeat mailings combined with email and phone really increase your odds of success
–When marketing to Business Owners or Executives do not use labels. And follow the mailing with a handwritten note.
–Consider putting a Teaser on the envelope and don’t forget that a great Teaser location is the back of an envelope
–A handwritten P.S. gets people’s attention – use it wisely. I.e. Call to Action, an Added Benefit, a Bonus, Discount, etc.
–Toll Free Phone Numbers can triple your response rate.
–Treat every Direct Mail order as a Rush Order.
–Test, Test, Test to ensure your Direct Mail will work. Your goal is to break even during the testing period.
–Include publicity about your Company on your mailings
–Test many different lists to find the best ones
–Check out Direct Mail News

Post Cards

I like Post Cards over a letter. Why? No decision whether to open or not. Costs 1/3 less. Easy and quick to print yourself. Post Cards force you to be concise, which can be the main reason they are so effective.

–Consider using Email Audio Post Cards

Combine Direct Mail with Email

The combination of mail and email can double your response rate. You can send out mass emails and then mail a postcard to the ones who actually opened the emails. You can alternatively send a post card introducing your company and benefits, then follow with a more detailed email that calls for action and points the prospect to a web sales page (by the way, a phone number and web sales page should be included with the postcards for Your “hot” prospects).

Catalogs

You need @ 25,000 customers for this to make sense. @ 30 pages is the optimum length. 40% of prospects save their catalogs – this is the primary benefit.

–Needs to be well organized, indexed and have categories.
–Too cost prohibitive for you now? No problem: put it up on the web and grow your catalog customer base organically.

In the next article (Part 5) I will discuss Marketing Tactics, The Customer and Essential Marketing Elements.