Superstar Standards

This articles addresses MLM customer service standards that we observe in the “superstar” service-givers. Multilevel marketing (MLM) and Party Plan companies are built on relationships, and because their continued existence depends on the customer service environment that you create within your culture, you must make the commitment to become the undisputed leader in service and support.

Objectives for the MLM Customer Service Superstar

  1. Be a Perfect Problem Solver
  2. Be a Warm, Caring Human Being

Perfect Problem Solving by the MLM Customer Service Superstar

  • Knowledge in the following areas
    • Compensation Plan
    • Products
    • Policies & Procedures
    • Company Resources
  • Skills in these crucial interpersonal areas
    • Listening
    • Issue identification
    • Critical thinking and analysis
  • Company Support from the top down
    • Customer Service Calls It, We Support It
    • Measure, Report, Reward
    • Systems Support (Computer, Work Flow)
  • Follow-up as a way of life
    • Close Each Case with Speed and Care
    • Identify Dangers and Opportunities

PERFECT PROBLEM SOLVING by the MLM Customer Service Superstar

Make sure every customer service rep has the knowledge required to be perfect problem solvers.

  • Compensation Plan — Certification program: know the compensation plan and be able to apply knowledge to a variety of situations to build solutions to all the problems and concerns of Marketing Executives
  • Products — Product champions: know the literature and all training offered regarding products; be users of the products, be able to confidently and knowledgeably answer the important basic questions about the products, and be able to administer a technical product question referral.
  • Policies and Procedures — Demonstrate Understanding and proficiency in the basis of each formal policy, in order to consistently administer interpretations and applications of the policies, and to assure that the underlying intent of each policy drives both administration and systems support of the policies. Know the policies so well that it is easy to find a way to say “yes” to a customer’s request.
  • Company Resources — Know how to obtain all the information necessary to confidently fulfill the customer service mission of WOW-ing customers.

A great deal is written about customer service, and the best companies devote substantial resources to developing superstars. MLM customer service and Party Plan support systems demand the very best in a competitive environment.

Since multilevel marketing (MLM) and Party Plan compensation systems thrive and survive on relationships, and because their continued existence is wholly dependent on the customer service environment that you create within your culture, making the commitment to become a leader in customer service and support is essential to your long-term success. And by applying these concepts and using these tools, and others presented in the series on MLM customer service, you may become better service-givers in the exciting world of multilevel marketing and party plan distribution.

Rewarding Good Workers

Good MLM and Party Plan companies constantly seek ways to acknowledge and reward people in their telephone and customer service Junctions based on both their production and quality. A great deal is written about rewarding employees. Below is a framework for analyzing the options which are open to you, and which directions you might wish to go.

In a study of consumer complaint handling in industry, government, and retailing conducted for the Consumer Affairs Council, it was reported that over 40 percent of the companies surveyed provide customer service personnel with some sort of incentives. Furthermore, those offering incentives generally provided a higher level of customer service.

Incentives are also effectively applied in companies employing telephone marketing, inbound sales, direct marketing, and direct selling. Of the 181 companies that responded to an Employment Survey of the Direct Marketing Association’s Telephone Marketing Council, many indicated that they employ incentives in the telephone marketing function. Thirty-two percent provide recognition incentives; 26 percent cash; 21 percent events or parties; and 21 percent merchandise. In smaller call center functions, however, less than a quarter provide any type of incentives.

There are two basic types of incentives: (a) cash payments; and (b) non-monetary rewards. Each of these will be discussed separately, particularly as they apply to call center services and customer service.

Cash Payments The use of cash incentives as motivators, when personnel have direct contact (by phone or mail) with customers, has always been controversial. Questions are frequently raised as to whether commissions to retail sales clerks and telephone order takers or production bonuses to those responding to service calls or letters might degrade the overall service level.

Some executives suggest that employees could become more interested in increasing their own earnings than genuinely attempting to help the customer with his or her shopping or service problem.

Notwithstanding the above concern, cash incentives have proven to be very effective with a number of companies in increasing both sales and worker productivity. Further, those companies with professionally developed programs do not report any adverse effect on MLM and Party Plan customer relations. Here are three examples of the successful application of cash incentives.

  1. Telephone order clerks are paid a percentage of the sales dollars of “specials” they personally sell to customers.
  2. Telephone order clerks are given a monthly cash bonus based on the total dollar amount of orders taken over a predetermined base (hourly, daily, weekly, etc.). In both examples, payment is based on orders actually shipped.
  3. Customer service correspondents are paid an incentive bonus for production above a standard processing volume. Separate standards are established for simple and complex problems. Work is assigned to correspondents based on complexity.

Non-Monetary Rewards
This refers to anything from addition of gold stars on identification badges to personal commendations by senior management. One executive said, “There can’t be too much in the way of acknowledging the contributions of top-notch customer service personnel.”

A wide variety of non-monetary rewards have been put to use, most with very positive results. Here are a few.

  1. Selection of one or more customer service representatives-of-the-month who are rewarded with one of the following:
    1. Preferential parking spaces
    2. Flowers at the work place
    3. Trophy placed on the desk for the month
    4. Announcement and picture on the bulletin board and in the company newsletter
    5. Naming of a space and putting up a sign (“The Chris Starr Lunchroom”)
  2. Sending letters of commendation addressed to the residences of top performers
  3. Presentation of a merchandise certificate of nominal value or tickets to sporting, musical or cultural events when an employee receives compliments from four customers, indicating something extraordinary in the way of service.
  4. Giving outstanding representatives the latest management/business best sellers or a subscription to a business publication.
  5. Luncheon or dinner (sometimes spouses are invited, too) when an individual or department exceeds its sales or production goals.
  6. Sending employees to special seminars, workshops outside the company, covering topics related to customer service.
  7. Award of a pin, certificate, or achievement plaque for “plus performance,” with presentation made in front of colleagues by a member of senior management.
  8. Creating a “Best Accomplishments Of The Year” booklet and include the picture, name and statement of the best customer service achievements.

In sum, there is positive evidence that monetary, semi-monetary, and non-monetary rewards, or a mix of these, all play an important role and encourage telephone and customer service personnel to help customers effectively. Since multilevel marketing (MLM) and Party Plan compensation systems thrive and survive on relationships, and because their continued existence is wholly dependent on the customer service environment that you create within your culture, making the commitment to become a leader in customer service and support is essential to your long-term success. By applying these concepts and using these tools, and others presented in the series on MLM customer service, you may become better service-givers in the exciting world of MLM and party plan distribution.

23 Tips for Cost Reduction

In their efforts to satisfy their customers’ problems, a company’s MLM and Party Plan customer service function can quickly become a major expense. The article explores how to maintain a high service level while containing costs in thriving MLM customer service departments.

Properly administering customer service is vital in all businesses large or small. This department can keep or lose customers, depending upon the skill with which it is operated. This does not mean, however, that every situation requires “giving away the business” or writing every customer a personal letter. You can keep your customers happy, at a reasonable cost, if you follow these 23 practices.

  1. Packing slip.
    Include one in every shipment. On the reverse side, give the customer instructions on how to complain or return merchandise. If the customer decides to return the order, request that the packing slip be completed and returned with the merchandise. This alone will save many hours and will enable you to give faster service. Companies report that 85 percent of the original packing slips are included with returned merchandise.
  2. Customer reliance.
    Take the customer’s word regarding such problems as missing items, damage, or lost shipments. This will save the time and money involved in writing for cancelled checks, order acknowledgements, or other proof of purchase. It will also eliminate the cost of receiving and processing products that are no longer saleable. Most customers are honest! Publishers Clearing House, the magazine subscription marketers, has a very pertinent customer service slogan: “Customers are always right, even when they are wrong.”
  3. Telephone calls.
    Encourage customers to call the company when they seek information or have a problem. The customer service number should be listed frequently below the ordering number in smaller type in starter kits, product catalogs, and promotional materials. It is more economical for the company and satisfying to the customer to handle problems over the telephone.
  4. Toll-free telephone.
    Do not offer an “800” number for service problems. Such a service will increase the total volume of contacts by 35 to 40 percent.
  5. Telephone customer-service form.
    Use a form to record customer-service inquiries received on the telephone when the representative is unable to respond to the customer. This form is designed to guide clerks to ask pertinent questions so that subsequently the inquiry or complaint can be expeditiously and efficiently handled.
  6. Decision tables.
    Develop and implement tables comprising sample problems, action to be taken, and response to be used. See the sample decision table in the Models and Forms section. This technique (a) speeds the decision and response processes; (b) assures conformance to established company policies; improves the level of consistency and uniformity with which issues are handled; and (d) simplifies the training process for new and temporary workers.
  7. Research tools and material.
    Supply each mail or telephone customer service representative with reference tools required to answer questions or make decisions. The ideal primary reference source should be a computer terminal that is capable of accessing the customer’s record. If this is not feasible, in spite of the extremely low cost of such terminals, computer output microfilm (COM) should be used to produce microfiche that would provide an index of essential order information. An enlarger projects the desired item in readable size on the screen. Each 4 ½ x 6-inch microfiche can hold up to 208 full size pages of computer printout. Other research tools should include the following: (a) copy of basic adjustment policies to be followed; (b) decision tables; (c) notebook with sample forms; (d) sources of prices of products; compensation plan description; operation, use and details of products; inventory status; repair service; and replacement parts; and (e) copies of latest promotional materials, newsletters, product catalogs, package inserts, etc.
  8. Returns information.
    Give customer service personnel access to (a) file of customer letters pertaining to returned goods not yet received; (b) returned-goods tickets covering merchandise returned without instructions from customers; and (c) listing of undeliverable packages retained in returns function.
  9. Form letters and Emails
    Employ forms wherever practical. Over three quarters of all customer inquiries can be answered using preprinted forms, adding only addresses and minor fill-ins. A form response can be prepared in less than ten percent of the time (and at less than ten percent of the cost) of a dictated and typed letter, or less than 25 percent of the time of a letter directly typed by the originator.
  10. Service-action form.
    Use a service-action form where internal action, such as adjusting the customer’s account, preparing a refund, or reshipping merchandise, is called for. In one writing, such a form will both inform the customer and direct other departments to take the required internal action.
  11. Recycling customer letters.
    Attach a note apologizing for the informality, respond on the customers’ letters, and return them to the customer.
  12. Postcards.
    Substitute these whenever possible. There is a savings here in both postage and stationery costs.
  13. Acknowledgment cards.
    Don’t send postcards telling customers that their letters have been received. The average customer doesn’t appreciate a card reporting that the problem is being worked on-unless, of course, your operation is temporarily swamped and won’t be able to answer for over three weeks.
  14. Window envelopes.
    Use these to eliminate the addressing of envelopes.
  15. Return envelopes.
    Enclose envelope addressed to your customer service department in correspondence when requesting return of material. 

    Handwriting.
    Use it to fill in and address form replies. Typing involves additional time and money and isn’t appreciated by the customer. Customers don’t mind handwriting, as long as the form is friendly and appropriate. It shows customers that they are dealing with a person, not a computer.

  16. Direct handling.
    Fill in and address in handwriting the form postcard or letter at the same time that the decision is made. Answering the customer should be a one-step process. Do not forward correspondence to another clerk for typing and then return for proofreading and signature. In fact, the letter should be folded and inserted in the window envelope, so as not to require any further handling except metering and posting.
  17. Outgoing telephone.
    Utilize the telephone to respond to irate customers or to resolve complex problems. In the long run, it is less expensive than preparing, typing, and mailing a long involved letter. Further, the good will generated is simply amazing.
  18. Files.
    Retain only correspondence from lawyers, including MLM lawyers, consumer advocates and governmental agencies or those involving downline changes, disputes, and major adjustments. If the company doesn’t file correspondence, who should? The answer is the customer. Except for VIP letters, return all but the routine correspondence to the customer with the answer and, in the case of routine letters, they should be thrown away. Unless the customer is writing from an office, he or she rarely has kept a copy of the letter and will appreciate the original letter to compare with the company response. In the rare instance that a dispute arises, ask the customer to forward copies of the relevant documents.
  19. Production records.
    Set simple work standards, by complexity of correspondence, and maintain records of each employee’s output. The resulting increase in production will surprise you. To get even greater production increases, install an incentive program. The axiom is true: 

    • When performance is measured, performance improves.
    • When performance is measured and reported, the rate of improvement accelerates.
    • When performance is measured, reported, and rewarded, the rate of improvement is optimized.
  20. Workstations.
    Provide desktop storage arrangements for response forms, work in process, and research tools. Neatness is an important key to efficiency.
  21. Categories of complaints.
    Eliminate the burden of continually tally-stroking the various types of complaints to track and report the causes of complaints. Instead, employ these alternative techniques: (a) tally-stroke problems only on a different day each week, thus obtaining a reliable sample; and/or (b) have representatives prepare a listing of unusual problems that would provide current feedback on what is going wrong (for example, a Hot Sheet for the employee to write notes in all week, then gathered on Fridays).
  22. Powerful words.
    Use these seven powerful words to calm an aggravated customer and transform a telephone dialogue from diatribe to decorum. The magic words are listed below: 

    “What would you like us to do?”

    Once this question is posed, the customer’s attitude should change from anger to reasonableness. The problem can then be quickly and effectively resolved.

Outsourcing Makes Sense

Experts estimate outsourcing to be a $400 billion market in the United States and a $500 billion market in North America. Sadly, not all services called third-party sourcing or “outsourcing” are adding value. Some outsourced service-providers take on more than they can handle. Others exceed their capabilities or they do it to generate business for their core business. The end result is that the concept of outsourcing loses and so do the users of the services. So, does outsourcing really make sense?
[Read more…]

Fast Start Success

“Our strategic opportunity lies in providing more effective support for every Avon representative immediately upon their decision to start their business.”

John Fleming, AVON
Vice President Sales, North America
November 2003 DSA Management Conference

What is It and Why is It Important?

Fast-start success of each new recruit, whether they are a customer or a business builder, virtually guarantees your long-term success. “Fast start” refers to the crucial period that begins immediately upon a recruit’s sign-up and continues through the first 90-days following sign-up.

The powerful emotion behind a person’s decision to join your company will rapidly subside unless the decision takes root. A customer must quickly experience the benefits of the products and services. A business builder must experience a measure of success that will reaffirm their belief in your company and in his or her ability to attain their goals.

In fact, the emotional “juice” that moves a person to action will diminish or completely dissipate when:

  • The new recruit’s decision is questioned or challenged by well-meaning (but uninformed) friends or family
  • The new recruit encounters a negative response when they share their newly found product and/or business opportunity
  • The new recruit fumbles or procrastinates the important first steps in getting started; or worse, they don’t know where to start
  • Time passes without sufficient reinforcement of the belief
  • Expectations are not realistic or are not managed through the establishment of goals followed by adequate planning and action

Thus, effectively deploying your fast start system is the critical leadership activity that will give new recruits the best chance at succeeding with your company. Fast-start followed by effective business-building activities creates lasting business growth and retention.

Participating in your company’s fast start system should also produce the following results:

  • More commitment and excitement
  • Strengthened belief in the company, products, opportunity
  • Increased growth in enrollments
  • Increased leadership compensation
  • Higher average sales per order
  • Increased number of leaders
  • Faster advancements
  • Better team focus
  • Great relationships
  • More fun & celebration in building the business
  • Increased retention
  • Increased income

What is Fast Start?

To understand fast start and what you should do, first consider the activity timeline for a new recruit. The steps leading up to the decision to send in an application and the activities that immediately follow the enrollment are extremely crucial and time-sensitive. The clock begins to run. The energy and effort required to commence building, while reinforcing the seeds of belief and hope, typically comprise the single most important sequence of events in the life of a new recruit.

The activity time line, presented in Illustration 1, consists of the following phases: Pre-enrollment, Sign-up, First Order, First 72 Hours, First Month, First 90 Days, Ongoing Activity, and Inactivity.

FIGURE

Pre-Enrollment

This is the period leading up to the decision to enroll in the company. During this period, field leaders must present an exciting but accurate portrayal of the company, its products and business opportunities. This is where expectations are shaped and emotions contribute to the decision to sign up.

Sign Up

Submitting an application signals a commitment. It also indicates that a very small window of opportunity has opened for creating common bonds, answering questions, and addressing expectations, dreams, and commitments.

(Note: More information on effective pre-enrollment and sign-up is presented in the following weekly practice: Recruit to Retain – Understanding the power of market segmentation.)

First Order

The opening order, placed in the period that is most advantageous to the new recruit, will expose the new recruit to the order process, to company systems and personnel, and to the products. It presents a key contact point for contributing to the fast start success of any new recruit.

First 72 hours

A host of activities should occur within the first 72 hours of a new recruit’s signing up. The company and field should work together to assure that the correct foundational activities occur during this vital period.

(Note: More information on effective first orders and the first 72 hours is presented in the following weekly practice: The First 72 Hours – Key actions for you and your recruit.)

First Month

The first month following sign-up should be filled with training and one-on-one mentoring. Short-range goals must be set and achieved in order to build confidence and shape successful habits. Essential skills must be introduced and practiced.

First 90 Days

The Retention Leaders know that most new recruits exhaust their contact lists by the end of 90 days following sign-up. In fact, this is the primary reason that many organizations experience half or more of their total fall-out within the first 90 days. During this period, new recruits stumble upon discouragements, recognize their inexperience, feel forgotten, meet the realities of work required to attain their goals, and ultimately face decisions to drop out, cut back, or keep going.

MLM Distributor Retention

Managing the Million-Dollar Asset

Historically, businesses have viewed customer service operations as a cost-adding activity that subtracts from rather than adds to the bottom line. Companies frequently refer to customer service (encompassing field service or distributor service) as a “mop-up” crew, creating a perception that customer service is mainly a reactive function concerned with enrollments and sales that have already been made, and with little relationship to future sales.

These companies superficially respond that distributors are paid to take care of the customers, and that any budget for distributor service is difficult to justify since distributors are paid well to recruit and develop their customers and other distributors. Thus, managements scrutinize customer service operations for cost-reduction opportunities rather than for ways in which customer service can contribute to increased revenues and market share.

Throughout the 1980s, this casual view of customer service resulted in relatively high distributor and customer turnover rates in direct selling companies, reflecting the many distributors who failed to see the fulfillment of their expectations, or customers who believed that the prices charged for products were unjustified. The product – price – service model lacked sufficient foundation in the service component that they would leave after they had received indifferent service from their company of choice once they had signed up and begun ordering products. But it was also a time of economic expansion, with great new products and services in all business sectors, and with great emphasis on capturing new markets via the introduction of new products and services. Yet, with the cost of acquiring a new customer through distributor recruitment estimated at five times the cost of keeping an existing one, profit margins became increasingly thin—and still efforts to cut customer service costs continued!

It was a mixed blessing when U.S. businesses, which were in the habit of measuring results by the quarter and sometimes by the month, realized that they were being squeezed out of the world markets by Japanese and German companies, which had been investing for the long haul in their customer relationships, and were profiting at the expense of U.S. companies by doing so. While U.S. managements were not blind to the value of repeat business—customer retention—very few were ready to quantify their customers as assets, or to recognize their customer service efforts as asset management. These attitudes spilled over into the direct selling sector. However, overseas competition forced businesses to rethink their customer service attitudes, and by the end of the decade there were signs that the concept of “customer value” would probably supersede the focus on excellence, quality, and customer satisfaction that dominated so much of management thinking during the 1980s.1

Figure 1. Customer-Base as Assets

Year

Retention Rate

70% 80% 90% 100%
1 $1,000,000 $1,000,000 $1,000,000 $1,000,000
2 770,000 880,000 990,000 1,100,000
3 593,000 774,000 980,000 1,210,000
4 466,000 681,000 970,000 1,331,000
5 352,000 600,000 961,000 1,464,100
6 270,000 528,000 951,000 1,610,510
7 208,000 464,000 941,000 1,771,561
8 160,000 409,000 932,000 1,948,717
9 124,000 360,000 923,000 2,143,589
10 95,000 316,000 914,000 2,357,948
Totals $4,038,000 $6,012,000 $9,562,000 $15,937,425

Figure 1 represents the first known publication of data representing the customer base as assets, and reflecting the revenue enhancement that can result from improving the management of those assets. In this context, improved asset management is most often equated with improvements in customer service in any one of literally hundreds of ways, with the net result of retaining customers by ensuring that they have little incentive to deal with others.

An earlier version of this figure was published in the July, 1986, issue of Customer Service Newsletter, under the heading, “How customer loyalty goes to the bottom line.” The version shown here, which was introduced several years later, is the first to portray customer service as asset management. It has had considerable impact in that respect.

On the basis of American Management Association data for conventional business, a company with a 70 percent customer retention rate is typical of most U.S. companies, and an annual account growth of 10 percent among existing or retained customers is a reasonable expectation. This is the starting point for our analysis of the statistics that back up the power of distributor retention in the direct selling industry. We have taken liberty to begin the analysis by treating the 10 percent growth as representative of the growth in customer and distributor networks by active distributors, although the retention rate in direct selling has been shown to be the inverse of conventional business.

The data in the figure have been calculated on this basis and reflect the increases in ten-year revenues that can be anticipated from improvements in customer service that will increase distributor and customer retention as shown. Starting with a group of customers representing $1 million in sales during the first year, Figure 1 shows these totals after ten years:

  • 70% customer retention rate $4,038,000
  • 80% customer retention rate $6,012,000
  • 90% customer retention rate $9,562,000
  • 100% customer retention rate $15,937,425

This can be phrased as follows. Using the ten-year revenues from a 70-percent customer retention rate:

  • 10 percent increase in retention will increase revenues by 49 percent
  • 20 percent increase in retention will increase revenues by 137 percent
  • 30 percent increase in retention will increase revenues by 295 percent

This original approach to customer service as asset management does not mean that managers should attempt to reach the 100 percent retention level, because it’s highly likely that the cost of providing that level of service would outweigh the returns.

What it does suggest, however, is that as customer service manager you will want to test and probe this theory of retention to modern distributor service applications and different levels of service—and the cost of the service features required to attain those levels—and then set service levels at the optimum point, when the asset return over a comparable period will be most favorable in terms of the cost of attaining it.

In the 1990s, senior managers began to think along these lines. As we applied the conventional principles in the direct selling environment, we paid special attention to the compounding effect when applied to distributors who brought in multiples of customers at a time. Part II of this series presents conservative extensions and a practical application of the power of retention as we now better understand it and the elements that make retention a worthwhile pursuit.

1 For serious students of customer value issues, a 1991 book, Competing Globally Through Customer Value, edited by Michael J. Stahl and Gregory J. Bounds (Quorum Books), addresses the subject of customer value strategy. The contributions in the book are mainly from faculty members at the Colleges of Business Administration and Engineering, University of Tennessee. There are also case histories and descriptions of applications at companies such as Bechtel, Xerox, Procter & Gamble, Georgia-Pacific, and Warner-Lambert. Subtitled The Management of Strategic Suprasystems, the book offers practical examples of customer value determinations, human resources management for competitive capability, marketing in a value-oriented company, and designing services to meet customer expectations. The editors credit the University of Tennessee’s Institutes for Productivity Through Quality for having provided “a living laboratory for many of the coauthors of the book to develop, test, and validate their ideas.” For customer service managers who expect to engage in serious dialogue with their own managements on future directions in customer service management, this book is an excellent reference and resource.