How Do You Know
Where You Are Going,
 If You Don't Know
Where You Have Been?
 

Introduction
 

We all need a solid point of reference to be able to weigh our performance. When we decide to build a solid business, we need to understand the importance of making realistic goals, as well as how to project the ups and downs of our income.

It is self defeating to set a goal of one million in sales if you have never reached more than $100,000.

It is imperative that you start from where you are, and where you have been, in order to gauge where you are going. To do this we start with a point of reference.

This point of reference is a form of tracking:

	Income and expenses
	Trends in your market
	To help you to see where you have been
	And also to help you to set realistic goals for the future.

The first step is to determine how much of your business is from how many clients.

In all businesses there is a 80/20% rule of thumb.

80% of your clients will purchase a minimal amount of products.  They are referred to the bread and butter of your business.

While these people represent 80% in numbers, they also represent just 20% of your income. In other words, they place sporadic and small orders, but provide a nice foundation income.

20% of your clients will go on to develop a business (in MLM), decide to sell your products, or place large orders each month (depending upon your type of business).  They will be referred to as the cream of your company.

While these people represent 20% in numbers, they also represent just 80% of your income. They are placing regular, large orders and signing up people on a regular basis.

The beauty of MLM (Multilevel Marketing) is that one person can not place a negative impact on your income if they drop out.

Example

	Let's say you work as a salesperson for XYZ company. The orders from one of your large, regular clients represents 10% of your total monthly income.
	One day, the president from XYZ decided to try a new company. Just like that, based on one person's decision, you have just lost 10% of your monthly income.

With MLM, if one of your top producers decides to quit (which rarely happens), all the people they signed-up are still under you.

This means that you still receive about the same amount of income you did before they decided to quit, and when that "leg" continues to grow, so does you income.

In other words, as long as you stay active, all the people you have signed-up, and all the people they have signed-up, and all the people they have signed-up, etc., are still producing income for you.

In MLM, your income will not be negatively impacted by one person's decision.

Point of Reference Tracking
 

Point of Reference Tracking helps you to understand:

	Every aspect of your business
	Where your business is coming from
	What areas may need extra attention

Example

Let's say that your business comes from 12,500 customers/distributors. This would represent those you signed-up, and those they signed-up, etc:

	You sign-up 100 Customer/Distributors.
	Each of those 100 people signed-up just 5 people = 500 Customer/Distributors
	Each of those 500 people signed-up just 5 people = 2,500 Customer/Distributors
	Each of those 2,500 people signed-up 5 people = 12,500 Customer/Distributors

If each customer/distributor ordered just $50.00 per month, their total orders per month would be $625,000. To take a rough average (in MLM some will be higher and some lower) you would receive 7%, or $43,750 per month potential income.

Sounds great! It can work this way, but rarely does. We still need to work on more rules of thumb.

There is no definite way to work these numbers, but let's use the 80/20% rule. 80% of those people will become sporadic clients, or 80% of $43,750 = $35,000. You can pretty much count on the 20% of $43,750 = $8,7500 per month.

	So from your 20/80% customer and/or distributors, $8,750 would be the base monthly income you could pretty much count on (Nothing is sure in any business).
	>Because the 80/20% customers and/or distributors loose interest and/or order sporadically, I don't plan on more than 10% of the total potential income = $3,500.
	If you had built this type of a MLM downline, you could count on an average of  $8,750 from your 20/80%, and another $3,500 from your 80/20% =  $12,250.00 Average Per Month.
	After watching your monthly numbers carefully, you will find that this number will fluctuate each month. If your organization is growing, readjust each month to accommodate the new averages.

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Monthly Forms

Each month you will receive a commission check with a form that tells you who ordered what.

Because a majority of the people who are ordering will be people who signed-up under one of your distributors, they will be people you have never met. By contacting the company, you can order the names and addresses of all the people in your downline.     

Keeping track of these monthly totals will show you which months are slow (meaning you will want to make an extra effort to contact your distributors, maybe put on a class, etc.), and in which area your business is falling off.

Every sponsor works their business in a different way. Some send information to the people they directly sign-up, then those distributors pass the information on to the people they signed-up, etc.

This sounds great in theory, but remember the 80/20? Most of your distributors will not pass along the information.

For this reason, if you are serious about building your business, you may want to develop a monthly or quarterly newsletter and mail a copy to everyone in your downline, organize classes, and weekly or monthly meetings, make phone calls, or set-up an E-Mail mailer, etc.

The bottom line is, when you see big discrepancies in the numbers, either higher or lower, this is a simple way to help you to see where the activity occurred, and to act accordingly.

When you understand the ups and downs of the numbers, you will be less intimidated, or excited, by the monthly sales totals. It is important that you maintain an attitude that all your customers are special and valued, instead of getting depressed by immediate drops in sales, or to get too lax when you have jumps in sales.

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