The Cash Couple

Here is a classic MLM math model used by marketers everywhere…

"If you sponsor just 4 people who all do the same, on level 7 you would have over 16,000 distributors ... of course that won't happen exactly...some people will quit ..but lets say only 10% remain active…you would still have over 1600 distributors!"

Well, this famous model is flat out math magic.…an illusion.... here is why: Sure 10% of 16,000 is 1600, that is absolutely correct. But to get to the 16,000 we had to assume 4 people sponsored 4 people down 7 levels ...here is the tricky part…to get there, no one could quit.

Here is what happens at 25% retention rate (much higher than the proposed 10%)...

4 people are recruited, 3 quit. Leaving 1 active Distributor. He/she recruits 4 ...3 quit ...that leaves 1 active Distributor on level 1 and 1 active Distributor level 2. The level 2 Distributor recruits 4 people...3 quit ..now you have 1 active distributor on each of levels 1, 2 and 3 ..hmmm only 3 active distributors. we have maintained a retention rate of 25% and it doesn't look like we have any chance of ever getting to 1600 Distributors.

Finding 4 Leaders is the key to this model. You might have to sponsor 10 or 20 to find the 4 leaders you need.

Many Network Marketers spend a lot of time recruiting. They recruit new members, and just as quickly, older members quit. It is much better to recruit a few Distributors and work with them. Teach them the principles they need to succeed. Not everyone is ready to be a Leader and build a business. If they are not willing to learn, then move on. The old saying “some will, some won’t, so what” applies here. If at some point you as a sponsor care more about their success then they do, it is time to move on and work with someone else.

The more time you invest into training new Distributors, the less time you will need to invest in recruiting new Distributors.

In Network Marketing/MLM retention is KING. It is important to sponsor people, its much more important to support, train and motivate the distributors already in your organization.

I read everywhere that traffic is the key to an online business. To some extent this is true, but to say traffic is the only thing that matters is a bit misleading. Let us jump straight into an example.

You have your website and from various methods you are creating traffic. It takes you 20 hours of your time to create this traffic per month. At the end of the month you generate 50,000 hits. Your conversion rate from hits is 1% and you create 500 Leads. Your conversion rate for leads to sales is 1% so you create 5 new Members/customers for the month. You have invested 20 hours to create 5 New Members/Customers.

The people that say traffic is what matters most will say to increase sales you need to increase traffic. From this example, if you wanted to double sales, you would need to double traffic and to get double the traffic you would need to double your time invested.

If you are spending ad dollars instead of your time, the example still works…double investment to double your traffic. So you invest 40 hours to create 100,000 hits , 1000 Leads and now can produce 10 new members/customers per month.

What if you concentrated on conversion rates instead of traffic? Let us say that you spent 5 extra hours per month concentrating on better conversion rates. Creating better offers. Creating more targeted traffic. Working on following up with leads.

Lets say your traffic gets trimmed down 20% with your new campaign and you only generated 40,000 Hits but you increased your conversion rate by a mere 1%. With a 2% conversion rate you would have created 800 Leads and 16 new Members/Customers. So here you spend 25 hours creating 40,000 Hits, 800 Leads, 16 Members/Customers.

Lets exaggerate this example a bit. What if you could only generate 100 hits per month? What if you had a 50% conversion rate? You would create 50 leads and 25 new Members/Customers.

The lower your conversion rates are, the higher your investment and traffic will need to be to grow your business.

The fact remains that traffic is important, but the kind of traffic and what you do with the traffic is much more important. If you have a choice between doubling your traffic or increasing your conversion rates, even by very small percentages, the increased conversion rate will win more customers just about every time.

I have run into some people who are very proud of their traffic and site rankings. They have tons of traffic but no sales. I will take sales over traffic any day.

Conversion really does count!