Multi-Level Marketing Realities – Part 7

When we left off in part 6, our business had just gotten listed on Yahoo.  On the Yahoo directory, we were the only distributor listed for the dietary supplement, and it was an extremely popular dietary supplement.  It was advertised constantly on radio stations in every major market in the nation.  Being the only distributor listed on Yahoo was a huge boost for our business, and mostly we were ready for the boost.  This was in the springtime in 1998, just ahead of summertime so it may have been May.

So our trickle of business turned into a tsunami and Chris is trying to keep up with all of the activity.  There was email after email of information requests.  There were telephone calls day and night, and overnight.  There was fax calls all day long, evening, nighttime.  Chris talks of having 26 voice mails waiting when she’s ready to return telephone calls (although I think this might be a slight exaggeration), as there were times of the day she was just too busy to take them.  Then as she would be returning telephone calls, more people would call.  Call waiting went into voice mail and added to the number of calls to return.

We had to order product by the master case, which was a large case of 12 little cases of 12 bottles.  Each of these suckers weighed 50 lbs and Chris would feel sorry for the UPS guy, so she would give him a good tip (I joke that she was bribing him).  Her and the kids would deliver bin after bin after bin of mail to the post office in the afternoon.  We would get orders with checks in the mailbox on a daily basis and floods of orders on the website.

As I said, we had been getting information requests by email and there were more than we could retype into Quickbooks so I created a program that would create shipping labels based on the emails.  We had also gotten our postage machine for quicker postage onto our catalog envelopes for information requests, tyvek envelopes for smaller orders, and boxes for larger orders.  We would label our bottles, samples, company supplied literature, and we would put a shipping label with our sponsor information on the distributor application (far better than trying to write it on them all).

Our little townhouse became a wreck with production and our garage was our storage space for supplies we didn’t have room in the house for.  Chris had cleared out part of our linen closet for supplies and we had row after row of bottles, boxes of samples, literature galore, envelopes, boxes of labels, and more there.

Chris had started an account with Boise Cascade who would deliver office supplies to us.  She also bought a file cabinet and organized all of our paperwork from every order.  We had a small bedroom and it was a short, long cabinet that she kept under the window in our bedroom.  Our desk space was probably 2 ft by 4 ft and two levels and we used every square inch.  We would use our bed for filling orders and had a regiment that we followed to prevent errors.

We had two major things happen during the summer: The MLM company announced that they were no longer accepting distributor applications until further notice and they ran out of product, for weeks.  Next time we will talk about the events that happened during the summer of 1998.

Multi-Level Marketing Realities – Part 6

In part 5, I talked about improvements we made with the website and with the business to be able to handle the flow of business we were now getting to our new website.  I talked about faxes we were getting, but I never did say that we added a phone line and number for faxes so that people who didn’t want to order online would have the option of ordering via fax.  We sent out order forms that could be copied and faxed, which helped build our word-of-mouth business and distributed information about our website.

In addition, we already had an 800 number even before we started our business.  It was hooked up to our home phone number.  We had voice mail at home so we changed it over to a business greeting.  There were times when Chris could not take phone calls and the calls would go through to voice mail, then she would have 5 or 6 calls to return when she was finally able to talk.  We trained our kids to play quietly (with some degree of success) when we would get a phone call, but things would often get noisy.  We also had one of these remote control cars that the kids would play with, which would create all kinds of noise on our chordless phone.  We had to put it up.

We labeled all of the product we shipped with these little return address labels.  They had our company name, website name, and 800 number.  We also labeled the sample packs so that people would not lose track of where they got them from.  At the beginning this was fine, but as we got more business we had a hard time keeping up with the labeling process.  Especially when we had a ton of backorders and needed to ship product, once we got it, quickly.  Labeling then went out the window.

So Chris and the kids were at home trying to keep up with the phone, fax machine, getting orders and information out the door and I was working during the day and travelling.  She had the chaos of operating the business and taking care of three kids, and I had the stress of trying to keep everyone from being miserable.  Before we got on Yahoo, things were not this chaotic, although we were getting a regular stream of business that was reasonable to keep up with.

When I was happy with the website, I would promote it everywhere I could.  I would also try to build traffic by having a guest book, free for all links, forum, and adoption registry.  We found my older sister probably 5 years ago, but I thought I’d build and use traffic to look for her back then.  I also created another site in 1998 that was a multi-level marketing directory.  I linked from it to my shrinkme site to get business people to look at our site.  The directory got a ton of traffic but was also a lot of work.

I remember that we got on a freebee directory for our free samples, we were able to get on other search engines and directories, and then Yahoo listed us as the only distributor for our product.  We were on the directory with corporate as our only competitor.  And they sold for $8 more per bottle.

Multi-Level Marketing Realities – Part 5

In part 4, I talked about the rudamentary marketing that I did for my web site that may have contributed to our initial success.  As time went on, I improved the web pages by adding an information request form and a way to order online.  I also slowly added more information for customers in hopes of giving them information where they could serve themselves rather than needing to call us.

At this point, I am not sure how to connect my work life and my business life as my memories are really a blur.  I can say that for work I began learning JDE’s One World and moved to working on developing for our client’s needs on it.  On the business side, we beefed up our customer service offering by having a six month money-back guarantee.  I had been really impressed by all I read about Nordstrom and we were trying to emulate their customer service model.

On the recruiting side, we offered a free bottle of the dietary supplement to anybody who signed up and sent us a copy of their distributor application.  This gave us a quick way of working with our new distributors and gave them an additional incentive to sign up.  We marketed the business opportunity towards our customers by pitching the discount over buying from us.  This was extremely effective.  Later on we added all kinds of information that could be accessed online, including the distributor application itself.

No matter how much we offered online, though, the phone and fax machines never stopped ringing.  At this point, we didn’t receive too many calls but it was slowly ramping up.  Eventually, the phone would ring constantly during the day and often at various times of the night.

At some point in this process, we moved to having our own website at http://www.shrinkme.com.  If you followed the comevisit link before this is where you wound up.  The domain is now parked and owned by somebody else.  After moving to the new domain, I continued improving the design and adding information and functionality.

We still did not take credit cards and our order volume was increasing slowly.  I was getting a little worried about the time between ordering the product and getting paid by the customer.  My American Express was probably well over $1000 per month at this point, perhaps closer to $10,000, and I didn’t want a default of any kind.  I had good reason to worry about it because it wasn’t really my Amex.  I won’t say any more than that though.  However, I never did miss a payment on it and was well over $50,000 at one point.

We moved toward taking credit cards and checks over the internet, probably checks first and then credit cards.  We could also do business by telephone with either.  Checks were better for us because we had a very low default rate and credit card fees were so high.  Most people were somewhat comfortable giving their credit cards on the internet and others had the option to call us.  We also left the option to bill the customer on our website since it was so successful, and a few people did take the option.

I continued promoting our website for free on the internet, never even considering paying for advertising at this point.

Multi-Level Marketing Realities – Part 4

In part 3, I talked about putting the web pages on the internet and beginning to get a trickle of prospects and customers coming from our presence on the internet.  So what were we doing right that got us sales right away?  We got a lot of benefit from the radio ads that were playing in virtually all markets in the country.  People would search the internet because they didn’t want to pay the full $45 per bottle price for the product and they ran across our page with a lower price, call, and we would send them out the product and they could send us back a check.

Others were on the internet selling the product but there was some suspicion about ordering online and using a credit card, for fear that the information could be stolen by hackers and such.  So we benefited from this fear by billing our customers for the product.  I had also asked myself some key questions as I was developing the web pages.  What does somebody with internet access want?  When you are paying $20 per month for slow dial-up internet, you want a bargain.  You also want a lot of great information and quick page load times.  I also felt that people who paid for internet access would be fairly honest and able to pay.

These were theories that I came up with.  They were completely unproven.  I tried to get into our prospect’s head, and figure out what makes them tick.  But it was all just guess.  From these guesses, I did research to try to prove my theories one way or another, but generally we went with our guesses and they turned out to be scary in their accuracy.  I also based what my customers wanted on what I wanted from the product and business opportunity, and sold based on these ideas.

So we did benefit much from the radio ads, and the many people searching for information and a bargain on the internet.  We did also benefit from the ways we sold the product and did business on the internet.  We felt like pioneers.

Multi-Level Marketing Realities – Part 3

I now had several pages written in Front Page Express and they looked ok, so I bought some cheap web space from comevisit.com and uploaded my web pages using ftp.  FTP stands for file transfer protocol and is a semi-simple way to move files, i.e. web pages, from one computer to another.  So now I had the pages uploaded and I was testing them like crazy to make sure all the links worked, that there was no spelling errors, and that all the text made sense.  I was happy with what I had created, which pushed me to learning and trying even more new things.

I then started learning how to promote the new site.  Search engines, web directories, free for all links, classified advertisements, yellow page listings (on the internet), and however else I could promote the web pages for free.  I had no desire whatsoever to pay for advertising at this time.  I was actually just playing around trying new things.  Many of the things I tried, I am ashamed to say, I told my wife about after the fact.  Luckily, I did tell her about uploading the pages before we got our first call.

Within two weeks of uploading our pages and beginning to promote the webspace, which was at www.comevisit.com/smark, we received our first order.  Holy crap!  This actually worked!?!  As I improved the pages and promoted them some more, we started getting a good trickle of calls for information and to place orders.

Multi-Level Marketing Realities – Part 4

Start At The Beginning

GoDaddy.com – World’s No.1 Domain Name Registrar

Multi-Level Marketing Realities – Part 2

So when last we left off, Richard Smith was teaching me how to create web pages.  I was also starting to learn about web search and looking up various things on the internet.  Remember, it is 1997 so we are barely at the time when high-speed internet is available at a corporate level.  I must have carried a laptop with me to do administrative functions for J.D. Edwards, but my communications with the office would be through a dial-up connection to the internet, usually from home or the hotel room.  When I would be working at Lexmark, I would be working at the computers that Lexmark had.  I think they had PC’s with AS/400 terminal emulation software, and my software work was on their IBM AS/400 Midrange.  Their PC’s also did have internet access.  So like many people did, I did internet searches at various times.

At around the same time as all of this, my wife Chris was talking about this product being advertised on U.S. 99 in Chicago.  It was a dietary supplement that was “causing” people to lose weight.  A couple of radio personalities were using it with great success.  One day while during a bored search, I looked up the product on the internet and found out that it was sold by a multi-level marketing company.  Not only that, you could buy 12 bottles at a time for about $270, where retail price was about $45 per bottle ($540 per case of 12).  So I made a request for information from a company with a web site out of San Diego and never received the information.  Hmm.  So, I looked up a local distributor out of West Dundee, Illinois and asked them to send us some information.  We got samples and information and signed up as a distributor pretty much right away.  I can’t remember too many of the other details… it was fairly inexpensive to sign up I remember.

So we sent in our distributor application and purchased a case.  At the time the marketing plan was a simple 6 level plan where we made $20 per case sold by one of our distributors.  We didn’t earn any additional commission from our own sales.

We now have the business and I am writing web pages.  I wrote web pages mostly for practice, but I was starting to build a site devoted to the dietary supplement.

Multi-Level Marketing Realities – Part 1

In this multi-part series, I will be writing about as much detail as I can think of about our dietary supplement business.  Don’t worry, it’s not all I am going to write about from now on so hopefully I won’t make you too bored.  Glory days stories are great — for the person telling the story usually.  I am hoping that there is something of value to take from my stories though, so I’ll do the telling and you can decide what’s good, what’s interesting, and what’s boring you to tears.  Feel free to comment if you’d like.

I have been kicking around exactly when we started our business.  I really believe at this point that it was towards the end of 1997.  I had been working for J.D. Edwards for a few months as an IT consultant working on the JDE World software, and I was flying back and forth to Lexington, Kentucky to do modifications to World for Lexmark.  Lexmark is the printer company but they were originally a business unit of IBM and made typewriters.  With the advent of computers and printers, IBM spun off the division and Lexmark remade themselves into a printer company.

Lexington is a nice city and I stayed at the Marriott Griffin Gate, flying in on Sunday night and flying home on Thursday night or Friday morning.  Several JDE people were there, but I worked directly with other consultants from other companies, such as Richard Smith from Orlando, Florida.  I haven’t talked with him in years, I think he had talked with Chris once since I left Lexmark.  Richard Smith is such a common name that it is impossible to find him anymore.  If you’re reading this, feel free to drop me a line.

So I was flying back and forth, renting cars, staying in a nice hotel, missing my family, and working on software.  Most of us consultants had “status” so we got upgraded rooms at the hotel, flew first class, etc., and were generally treated like kings by the travel people we did business with.  I have to tell you, that’s kind of cool.  Richard and I were staying in the same hotel and we would often hang around with each other, eat lunch together, go to dinner with the client, and he introduced me to writing web pages.  I would say HTML, but I really only created web pages with Microsoft’s Front Page Express, then change the things I couldn’t change with the editor.

Tales From The Dark Side

I don’t want to write a really long blog entry, but I wanted to talk about what happens when things go right. I mean they go really right. When your hopes and dreams about a successful business come true in a week, or a month, rather than the one to two years or more that businesses usually take to start up. When you are starting with no money and you get publicity you weren’t expecting, or perhaps your purchased or free advertising works better than you expected it to, and you get flooded with orders or requests for information, and you just don’t have the money or ability to keep up with this much business. I mean, you do have to buy product first in order to deliver it to your customer, in order to collect from your customer. That’s called accounts receivable. In some cases you have to deliver free information to a potential customer before it is converted into an order. This can add up to a lot of money fronted.

We lived this dream turned nightmare, as we went from getting one customer order our first week to being drowned in orders. It was two of us, one working a full-time job and the other a full-time stay-at-home mom. We built our website and got it listed several places. We got the granddaddy of them all at the time, a top spot on Yahoo for the product name. We did not have the capability of taking credit cards, so we shipped the product to the customer with an invoice and they sent back a check. This worked for us for a while but soon it was too much to manage. I charged $30,000 a month on my American Express fearful for the day I could not pay it on time.

We switched to taking credit cards and took a haircut with the fees, but we got our money in two days. We went beyond cases of 12 bottles to ordering master cases of 144, to ordering 12 master cases at a time. Each of the cases was about $350 or so, so we’re talking about $30,000+ worth of product delivered at a time to a three bedroom townhouse. Our business quickly took over our garage and our whole house. We were constantly working until midnight trying to keep up.

At one time, the MLM company completely stocked out of product and we could not get it. We set up an autoresponder email that said that we were out of product and were waiting, but we would ship as soon as it was available. Nobody cancelled. We shipped when it came in and everyone paid without a fuss.

We got email after email from potential customers and distributors for free information. I created a program that converted our emails into mailing labels because we couldn’t rekey the information. At one time I also converted product orders into mailing labels and credit card information that we could run right into the credit card program. Later we switched to using a secure server for orders where we would print the order information from the screen; so at that point we had to rekey order information.

We had to subscribe to a telephone system to prevent calls from coming in during the nighttime, although our fax machine would be cranking out the paper all night long. The telephone system took some pressure off of us by distributing phone calls to some of our distributors. Once we bought our current house, we got a four line telephone server and set it up for our own purposes.

Many of the ways we did business kept customers that we attained from our free advertising, but the original inflow was crazy. Please take our experience to heart and be prepared for the unexpected.

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