New companies in direct selling start with developing their product, their commission plan, and their founding distributors. The next big requirement to starting your business is to get credit card processing. You can only work with cash payments for a short time before you realize there is a need for electronic payments. A few questions might come up. How do I get a merchant account and credit card processing gateway? How long does it take to set them up? How many do I need in order to work in multiple countries?
To begin earning revenue as a company, it is important to work with your software provider to connect your commissioning engine, order processing, fulfillment, and returns systems to your merchant account. I recently had a conversation with Glen Rawlins, a merchant processing and fraud monitoring consultant who works with startups and companies seeking to expand internationally. He has observed the difficulty new companies go through when they try to get and maintain merchant accounts.
Avoiding and mitigating account freezes
Legitimate direct selling and pyramid schemes have often been confused. While there are clear distinctions between the two, pyramid scheme promoters do everything possible to disguise what they really do and to represent themselves as legitimate network marketing activities.
This week we will go over some of the most frequently asked questions on this topic:
1. What Is a Pyramid Scheme?
Out of all of the topics covered in MLM law, there is not a single topic more obfuscated and misinterpreted than the 70% Rule. This rule has been purposefully screwed up by MLM critics in an effort to craft a narrative that suits their agenda. Candidly, I’m shocked that neither myself nor my peers have addressed this sooner. The rule is incredibly easy to understand ONCE YOU UNDERSTAND THE HISTORY.
The Origins of the Seventy Percent Rule
The Seventy Percent Rule was one of the “Amway Safeguards” that the court highlighted in 1979 when it found that Amway was NOT a pyramid scheme. The summary of the rule: In order to qualify for downline bonuses, Distributors had to move 70% of their existing inventories to customers OR distributors. The spirit of the rule is designed to ensure that Distributors were not “garage qualifying” and sitting on inventory. The inventory had to MOVE to other people.
You’re about to start your MLM business. You designed an exciting product. You have a competitive commission plan. You have recruited new distributors. You have your warehouse and manufacturing established. Now you need software to keep track of distributors and their downlines. The right software will enable you to take orders, process auto-shipments, calculate commissions, provide reports, and track customer interactions with your support team.
Some business software is not configurable; it comes preset with options which force you to use the terminology and processes designed by the software maker. Configurable software allows you to create unique processes; it allows the end user to set parameters that change the software logic or process to meet the company needs. Rather than putting in work orders for the software company to make changes for you, you set the parameters.
You’re starting a new MLM company, so you’ve probably realized that you won’t know everything about your business on day one. Configurable software allows the software to change to meet the changing needs of your business. It also allows the software to grow and scale with your company’s growth.
Oriflame’s story begins in 1967 in a small office in Stockholm, Sweden. Three partners, Jonas and Robert af Jochnick brothers and Bengt Hellsten give a start by selling cosmetics through the direct sales method.
Company’s name originates from a royal banner of medieval France that was opened only on the battlefield. The original word is “Oriflamme” and means “golden flame”. The first company logo is shown on the right.
The business grows in time, expands into some of the Western European countries and even goes public on the London Stock Exchange. Until late 1980s, Oriflame registers no major international success, though.
From time to time we see career transitions between the corporate world and the field within the direct selling industry. Most often, the direction is from the field to corporate life. It is not common for a direct sales company manager to leave his/her job and start working as a distributor. This is especially true if that person is holding a position like Ben Woodward’s. Ben Woodward has recently left his job as the President of Nikken and moved to the other side.
Let’s hear what Ben has to say on his experiences.
Your last corporate role was with Nikken. Could we start with your educational background and work experiences before joining Nikken?
When Paul O’Neil delivered his first speech as CEO at Alcoa (the aluminum manufacturing giant), he shocked the audience of shareholders when he disclosed his top priority for his tenure as CEO. Instead of doing the usual dance where the CEO talks about increasing sales, increasing margins and driving down costs, he talked about something that seemed completely unrelated to revenue. His top priority: worker safety.
Worker safety!? The shareholders were appalled. After all, what does safety have to do with share value on the New York Stock Exchange? Countless shareholders immediately dumped their shares, thinking that Alcoa hired an out-of-touch powder puff CEO…someone who lacked the guts to make tough decisions and focus on the bottom line.
The result? During O’Neill’s tenure as CEO at Alcoa, shares more than tripled in value. O’Neill explained his logic when he said, “I knew I had to transform Alcoa. But you can’t order people to change. So I decided I was going to start by focusing on one thing. If I could start disrupting the habits around one thing, it would spread throughout the entire company.”