I am so honored this week to have a guest post by one of our commissions analysts, David Thompson.  As you read through his article, you will begin to understand why this department is crucial to ByDesign and our clients.

Inventory Loading or Front Loading, has in the past and even today cast a dark shadow over the Direct Selling and MLM Industry and for good reason. Inventory Loading is defined by Business Dictionary.com as “forcing or encouraging [the] purchase of large inventory by the agents or retailers as a condition of retaining agency status or qualifying for volume bonuses”.. In a 1979 lawsuit filed against Amway by the FTC, the FTC declared Inventory Loading as a practice which “[requires] a person seeking to become a distributor to pay a large sum of money for the purchase of a large amount of nonreturnable inventory”. In a more recent suit (Webster vs. Omnitrition, 1996), the Ninth Circuit court of appeals defined Inventory Loading   as “Occurring when distributors make the minimum required purchases to receive recruitment based bonuses without reselling the products to consumers”. In short, Inventory Loading is when a distributor is forced or feels they are forced to personally purchase large quantities of product they can neither use nor reasonably resell in order to join or maintain a status in an agency.

So what’s wrong with Inventory Loading? A good example is the 2006 film The Pursuit of Happiness. Will Smith plays Chris Gardner, a family man looking to make ends meet. In a seemingly “too good to be real” opportunity to make money, Smith’s character signs up for a direct-selling opportunity and invests his family’s savings into a large number of Bone-Density scanners. Smith ends up purchasing dozens of these scanners in hopes of reselling them for a big profit. This is the exact behavior of Inventory Loading; forcing reps to purchase product that they may not consume or cannot resell.  In the movie Chris Gardner never gains from the investment and eventually he and his son are left on the street. This example is a worst case scenario but still proves the point; Reps shouldn’t be forced to buy mass quantities of product, allowing the company to make a quick buck, while the chances of them achieving a dream come true sizeable revenue stream slowly leaves their sight.

As a Commissions Analyst, I’m constantly on the lookout for Inventory Loading qualifications in our client’s plans, but it’s not always something defined within the commissions plan itself. It can be hidden through the sly use of inventory with low volume and high volume qualification requirements.  We all have a direct impact on the Direct Selling and MLM Industry in working with ByDesign. Complete awareness of Inventory Loading, letting our clients know it is illegal and warning them when their plans and inventory encourage its practice will increase our clients’ trust in our expertise and help with the continued improvement of our industries image.

 

References: MLMAttorney.com, BusinessDictionary.com, DSA

Employee of the Year Ed Jackson

Last year we introduced our first Employee of the Year Award.  There were no boundaries set on the nominations. You could nominate anyone you wanted; the person who made the biggest difference on our team, the game changer or just the person who smiled the most.  I was delighted that one of our managers was chosen.  The differences he made in the people around him really showed on that day!  Here are a few words from Ed Jackson on how he learned to make a difference.

In the mid 90’s I had the opportunity to join a Minneapolis based catalog retailer that was opening up their 3rd contact center operation in North Carolina. I was thrilled about being involved in a contact center startup with the responsibility of managing an operation that would grow to have over 300 employees. During 4th quarters our seasonal staff would swell our workforce to close to 700 employees. To me, this was a dream job. Although it was my first start up, I felt I was adequately prepared and my mission was to make this center the flagship that would make the other 2 centers in the network stand up and take notice.

I had spent the previous 3 years working for a direct to consumer operation where I reported to the VP of Operations who I considered one of the brightest guys I’ve had the pleasure to work for. He took me under his wing and taught me so much about our industry during our years of working together. His mentoring prepared me for this new opportunity. Whenever I reflect back on our working relationship, I always say it was both a blessing and a curse. A blessing because I learned so much from him and he was instrumental in moving my career forward. The curse was that he could be somewhat of a tyrant.  If you made a mistake or failed to execute to his expectation, you would hear about it, sometimes in private and other times in public. He could be verbally brutal and had a way of striking fear in his direct reports as well as his peers. I told myself I would never be that type of boss.

Over the next year and a half, I settled into my new position and our operation became the top revenue generator in the network and I was extremely proud that some of the practices, initiatives and performance measurement systems I had implemented were being adopted by the other 2 locations. Life was great and I could not wait to get up every morning and go to work.  One day I get a call from my boss in Minneapolis saying he is going to be in town soon. He gave me the indication it would be the following day but to my surprise, he arrived in the office several hours after the phone call.  He stepped into my office and asked me to turn over my keys to the office, they were going to conduct an investigation and he would be in touch. I asked what’s this about? He insisted, “Go home and we will be in touch.” I didn’t know what to say. I was numb, shocked and absolutely surprised. I was clueless what this was all about. I went home, told my wife and she went ballistic saying I should quit immediately. She knew that I had poured my heart and soul into that operation from day 1. I was numb and baffled by the whole turn of events.

Later that evening, my boss called and asked me to come back to the office. I stepped in the office, and he gave my keys back and began to share with me concerns corporate had about how the center was being managed. He said phone conversations he had with some of the staff, particularly the management team, warranted his visit. The feedback he received was that my autocratic management style was a major issue. My direct reports felt they had limited if any input in major decisions that impacted the center and felt their contribution was not valued. They felt like puppets and it was Ed’s way or no way. Knowing that the people I worked with, I smiled and joked with every day felt this way about me cut to the core. It was a very bitter pill to swallow and I just had a difficult time seeing myself in the same light as I was obviously perceived by my team.  I knew I could sometimes be uncompromising. As I thought about it, I tried to justify in my mind why I ran such a tight ship. It was one of the lowest moments in my career. Had my previous boss rubbed off on me and I was oblivious to it?

That same week, I was asked to come to the corporate office to meet with our CEO and President. I really did not know what the outcome of this visit would be. I didn’t know if they were buying time to find a replacement for me or what. During my visit, I had a very pointed conversation with the leaders of our company. However during this visit, they also scheduled time for me to spend with the industrial psychologist on staff. As I spoke to the psychologist, he told me his main role was to help the leaders of the company be better leaders. He also shared something so remarkably simple but powerful.

He said, “Ed, treat your employees like a bank. Your goal should be to make deposits, make deposits, make deposits so every now and then when you have to make a withdrawal, it’s not so painful. ”  As I thought about it, my team was not looking for the type of encouragement and enthusiasm they saw me display on a daily basis with our staff that worked directly with our customers. They wanted deposits of “Empowerment”. They wanted to have more autonomy to make decisions that impacted their departments rather than my directing every facet of the operation.

On the plane ride home, I had a lot of time to think about how I was going to turn this around? Could I relinquish some of the responsibility and put my future and more importantly the goals and expectations of the company in the hands of a management team with limited experience in the industry? I had stepped into this operation a year and a half ago with a well-defined plan that I would like to think contributed to our success, but at what cost? The long plane ride home gave me time to think and do a little soul searching. I knew back at the office they were waiting to see and hear what the outcome of all that had transpired over the course of the last few days. I still had a job so I knew the expectation was that I would go back and do what was required to fix this. I also had to face the fact that I now knew I had a management team that for the moment was not 100% in my corner.  Somewhere along the way I recall reading or perhaps someone told me that when things go wrong, don’t be quick to point the finger and cast blame. Turn that finger inward and ask yourself what YOU could have done or can do to engineer a better outcome. This was a very traumatic time for me and if I did not handle this correctly, things could go bad in a hurry. I had a very sleepless night preparing for a staff meeting on my return from my visit to corporate.

At our staff meeting, I shared with the team that I was extremely proud of what we had accomplished. I told them they had been instrumental in our success and we got there because of their contribution. I said there are some obvious concerns, let’s be big boys and girls and talk about it. One by one the truth came out. They wanted more involvement in the decision making process, particularly where there departments were concerned. I had been oblivious that I had intimidated some to the point where they were scared to speak up or question my decisions. I had hired a group of smart managers and it was time for me to simply trust them more. This was not easy for me but at that meeting, I made a commitment to them that I would take a step back, get out of their way and give them the freedom to do what managers are hired to do, run their departments. We would still discuss major decisions but I would not overrule them simply because I was the boss. It was very difficult but I knew I had to do this.

Over the course of the next year and a half, I watched my team flourish. We still had our disagreements and I did not agree with every decision they made but I stayed true to my promise. I saw them make some blunders but they learned from it, made the necessary adjustments and we moved forward and never once did I say “I told you so”. By the time I was ready to move on to another opportunity, I had a number of managers that had demonstrated they had what it took to run this operation. I never would have seen their potential if I had not gotten out of their way. Once I gave my notice, I recommended one of my direct reports as my replacement and it was rewarding to see the company agree rather than search outside.

As I have moved on to several organizations since then, I’ve never forgotten the psychologist words about making deposits and I have continued to empower those that work with me so they get to exercise their full potential and are prepared when opportunity presents itself. I sometimes wonder if those that I worked during those times ever think about me and say, ”You know, working with Ed was both a blessing and a curse.”

Last week I promised you some interviews with great MLM/direct selling and party plan companies.  Every few weeks, we will highlight one of these great companies.

To start off the series, I interviewed AJ Deeds of Loving Works.  They are a relatively new company that just celebrated their second year in business.  When I first met AJ, I was very impressed by his dedication to his products.  He told me what a difference the products had made in his life and he wanted to share that with others.    When I asked him why he started Loving Works, he said it began as a way for him to provide products, tools and experiences that could help others  grow in body, mind, heart and spirit. He said, “When I met Dr. Kyle Morgan (formulator of the Weight Balancing System, Sleep Balancer and other products), Loving Works was the ideal platform to bring forward her amazing inventiveness and help others to grow.”

There are many different ways to sell products.  Why did you decide to go the MLM/Direct sales model rather than traditional retail?

We chose the MLM model for several reasons. When people lose weight quickly on the Weight Balancing System, friends and family want to know how they did it. A network appears naturally. In addition, helping families and individual households increase their sources of revenue matched our vision. When people have more resources, they have more choices and can better live a better life and fulfill their own visions.  As one household, then two, then ten make better choices, they affect a neighborhood, a town, a community, a region, a country. Want to change the world? Start by helping local people. You’ll change the world, or a significant piece of it, before you know it.

What lesson have you learned that has changed your life?/business?

The underlying message from the most successful network marketers is to never give up. Distributors who are successful could have never predicted what a difference a single day would make until they reached that day. We’ve found this applies to network marketing company leaders as well. We like to use the term “keep going” as that has been the mantra through many difficulties we’ve encountered in this business journey. Knowledge comes from applying learning gained via experiences that are based on mistakes. We know quite a bit as we celebrate our second year in business.

If you could change one thing what would it be?

Since you can’t change the past, it’s not important what could have been done. What’s important is what we are choosing to do right now, today. The experience of network marketing is truly about acting, about taking action. Plans are important. But taking rapid action to recruit, to communicate, to motivate is much more important.

How do you deal with change?

The marketplace, the technology, the channel all change very quickly. One must have both flexibility in method yet steadfastness in principle, in vision, to do well.  You can’t chase a dream as you’ll never catch it. You have to create the future you desire. Keep going.

AJ, Thank you so much for your time and sharing your wisdom with ByDesign Technologies and others!!!

Are MLM, direct sales and party plan executives money hungry scammers or are they generous and giving?  I think this a question that must be answered. The industry has been hurt by pyramid schemes and people who speak loudly but have little insight.   I think, as with most businesses in the world, there are definitely bad apples out there.  But as a whole, I have found that individuals that start or lead a direct selling company are very generous.

For the last twelve years, ByDesign Technologies has had the privilege of working exclusively in this industry.  In 12 years, you see a lot and you learn a ton!  One of the things I love about this industry is the executives that we get to work with. We have had the honor of working with some truly fantastic business owners.  These people are innovative entrepreneurs with a passion to make the world a better place.

We have such an important job!!  We know that companies are depending on our software for their success (and the success of their field)!

We serve startup companies, emerging companies and multi-billion dollar, public companies.  This  is a large range in company size.    Learning how to meet the needs of each has taken flexibility and time.  In dealing with these companies, we have found one remaining truth.   Regardless of the size of the company, the executives really care about their products and their teams.  They want high quality products and they want their field to be successful.    They want to help the field make a mortgage or car payment.(or more)  They want to empower people to become leaders.  They want to change the world for good.

What an awesome job!  We are so lucky to be a part of it.  In the coming weeks, I will be blogging some interviews with a few of these executives.  I think you will enjoy learning from them and seeing their perspective on this great industry.  Don’t miss it!!!

 

Have you ever been told you have potential?  It is a good thing, but growing up, I found it infuriating.  Let’s look at the definition of potential from Dictionary.com.

po-ten-tial

 adjective

1. possible, as opposed to actual

2. capable of being or becoming

noun

5. possibility; potentiality

6. a latent excellence or ability that may or may not be developed.

If you look at the first definition, you see that potential is possible not actual.  When I was a junior in high school, I tried out for the high school tennis team.  Having only played recreationally, I showed a lot of potential.  I was fine with that for a little while, but found myself becoming more and more frustrated.  I was getting better, but not as fast as I would like.  Potential to me was failure, not mastery.  My senior year (my second year of playing competitively) I was the #1 seed at our school.  I should have been thrilled with that!  But for some reason, I wasn’t.  After high school, I walked away from the sport for many years. I just felt I was not reaching my full potential.

It is really quite a sad story.  Potential is a variable, it can grow, stay stagnant or decrease, but if you have it, it is a great gift.  Some of us (me) are quite hard on ourselves when we cannot do things with excellence quickly.  We fail to recognize that excellence is a journey.  As you seek to develop your potential, don’t be so busy looking forward that you fail to look back and applaud all you have become.

 The true gift of potential is developing it.  Go for it!!