by Jacques Werth
I once owned a car agency which was not very profitable. Then I leased a horse stable near a park, so my kids and I could go riding together. It was a fairly big stable, so I took in other peoples’ horses for boarding to offset the expenses. Then, I bought some more horses, sold them and bought more. The profit in the horse business was much better than the profit in the car business, and a lot more fun. The interesting thing is that I was practicing High Probability Selling, using the same sales process in two different businesses, and getting very different results.
Then, I dug out the notebooks that I used to record my observations of the sales processes of top sales producers. This time, it was to make a list of the kinds of products and services they were selling. Before I was half way into making that list, I realized that there were too many categories to make sense of them all. However, I noticed that there were no car salespeople on the list. Then, I went back to the beginning and began to list other things that salespeople sold that were not being sold by any of the high-income sales producers. Here are some stand-outs on that list.
- Network Marketing (MLM) of all types
- Most commodity products and services
- Small special trade contractors
- Simple products and services that do not produce substantial income
Why aren’t the most successful salespeople selling these things? Could it be that there just isn’t any money in it? Or, could it be that the methods that highly successful salespeople use are just not compatible with selling these kinds of products and services?
Author
I think it’s both – mostly not a lot of money in those, I could be wrong having never done them. I’ve been with a multi level marketing company seventeen years and HPS is a model for selling I like and use though I’m not trained in it – only what I’ve learned reading the book and blog.
I don’t like all the hype in mlm and the bogus so called businesses and a few people make lots of money in them using lots of emotional BS and “selling the dream” that people fall for like buying a lottery ticket. That also sours people to good companies that are product based and compensate the distributor.
The biggest problem doing mlm when it’s a good company with good products is the duplication element. You may be very motivated and good but to earn the over rides – or residual income – you have to sponsor three like you – or two, some small number – on the second level. Using “3” as a number it goes: 3, 9, 27, 81, 243 – meaning that down five levels there are 363 people motivated just like you and each has a monthly gross sales volume of say $2,000.
And every one down line starts from the same “3” and on and on it goes.
That’s where it breaks down or becomes difficult – making that kind of duplication happen.The example I used would produce an $18,000 monthly income for you at the top of the structure – which isn’t a huge income anyway but very good.
Thoughts?
Mike
Mike,
My thoughts; I’ve done MLM in my past (most sales folks have, or at least have considered it.) I worked my ass off to develop an organization… but that was exactly the problem in itself; working your ass off is not duplicable, nor encouraging/inviting. Success in MLM requires that you not only sell the benefit of the core product, but simultaneously sell the wealth potential of BEING a seller of that core product (or, more honestly… you have to sell the opportunity *AHEAD* of the product.)
The harder you work (if you allow others to know the fact you are working hard) the LESS ATTRACTIVE your business proposition is… which results in fewer sales (recruits,) which results in less revenue per unit of effort. There is virtually zero revenue premium for specialized knowledge, or expertise derived from the midnight-oil extra hours applied.
Its (if I may be frank in my experience) a sucker’s game… and in order to be successful you must be dishonest… because to increase your revenue per effort of output, you must dramatically increase your recruiting sales… and the “offer” you must make is along the lines of “you can make a ton of money for less effort than at your W2 wage job for the man.” The TRUTH is far from that though… as in truth you must work exponentially harder, AND HIDE THE FACT FROM THOSE YOU SELL TO.
So there is a dilemma of integrity… and the prospects can smell it a mile away.
If not from YOU… they’ll smell it from others in the organization… because its impossible to accumulate a group trying to propagate this business model without the hucksterism sneaking in.
That’s my opinion though… I apologize for any offense in advance. I wish yu all the best, personally.
Dave Donhoff
Leverage Planner
Jacques,
The answer is; No answer… its a trick question!
How do I know? You taught me!
Judge by the responses and results…
You can try spending time analyzing the reasons… and maybe when you spend *ENOUGH* time you might (MIGHT) figure out a few of the causes.
MEANWHILE, the person dropping the analysis and simply applying the actions that empirically work, will be getting the results laid up on the scoreboards!
I enjoy getting sucked into the psycho-analysis as much as anyone… *IF* I were to guess, I would say that low-margin sales provide little incentive to set side our egos (I know, a kind of reverse irony… but its my theory.)
Big margin items… for both parties at the table… call for a “cutting of the bullspit!” When the altitude gets high enough, neither side has the patience for dance & fluffery. That’s when HPS shines!
The HPS method relies heavily on establishing trust and respect (T&R). While T&R won’t harm the sales of low value items, it is really not required. If I am buying a toothbrush, a TV, or soap, I don’t much care if I have a good relationship with the salesman. OTOH, if I am buying a house, I need to feel an acceptable level of T&R before I will even begin the process, much less conclude the deal.
No offense, Dave.
Multi level marketing with a well run product driven company done with integrity is not a sucker’s game and you don’t have to be dishonest to build a five or six figure income – a slim few have done seven figures.
Whatever you do, making trust and respect mutual then uncovering conditions of satisfaction is the way to your success and I’m convinced that can be done in any business.
How much one can earn and why has other implications.
Thoughts?
Mike
Mike,
Glad you’re not offended.
I’ve heard the MLM claims for… 40, perhaps 50 years now (my folks chased that dragon when I was in diapers.) I’ve played the sport, & the above details were my experience.
Do you have any way of showing documented evidence of a situation as you have described? Where 6 figures can be generated building MLM product sales by delivering on conditions of satisfaction *without* selling a dream of more pay for less effort?
Jacques,
I’ve noticed this to be true in the insurance game I’m in. Our lists of prospects really have to be clear of any one man operations (save environmental consultants who can make $3mm/yr as a one man business) so our profit on each deal is greater, and we avoid getting treated like a quote machine. I’ve seen the faults of thinking High Prob. will work for sales situations where the key goal of the prospects is to get my price and buy on the lowest bidder. Thanks to HPS I’m disqualifying those types quicker these days.
I don’t know how that could be documented, David, but I have personal friends who have earned from $200,000 a year to a million a year and I know them as people who have integrity, whose focus is on the products, and don’t sell an effortless dream.
I believe selling effortless dreams is done by many – as well as other kinds of emotional hype and hot button pushing. Also many people with little skill and direction come into this kind of business and flounder around then quit having had a bad experience.
Also, the people I’ve associated myself with work at it and talk straight. I may be rare or not in this kind of business – I’m not sure – but because ordering some products for my wife was our reason in the first place – and remains our focus – we’ve “sold the product” and having read JW’s book five times I stick to some features unless the conversation demands more product information which is easy to get.
David, I’ve heard the same thing you’ve heard since the 1960s MI being Amway country and just as Jehovah’s Witnesses come knocking on your door I’ve had Amway IBOs literally knock on my front door – and call me up – to invite me to look at something that could change my life they couldn’t tell me about until I showed up, which I never did.
I don’t operate that way and the best people I know don’t either.
Mike
Mike,
Sounds good! I’d strongly encourage you to take Jacques’ full courses… they are certainly priced right. The book is a great “day in the life” example of the processes put into play, but it doesn’t detail them out anywhere near as much as necessary, nor provide a guided drill & practice opportunity to apply the mechanics needed.
Perhaps Jacques, and I, can discover where we’ve been wrong in what we thought we’ve observed in the MLM industry. That would be cool.
All the best!
Dave
Dave, I may take that course one day and what you and Jacques have observed in the MLM industry is as real as some of the seedy and less than candid behavior I’ve observed in conventional sales.
I got the impression once that Jacques may not have confidence in and like the structure of MLM – I’m not sure I understood him correctly he’d have to say.
Mike
Hello Mike,
High Probability Selling isn’t about liking something or feeling confident in it. It’s about using observation and experience to estimate the probabilities of what will work best, and then focusing your efforts accordingly.
Jacques’ observations and experiences are that HPS may not work as well in Multi-Level Marketing as it works in other situations.
If your observations and experiences are different from that, then your estimates of the probabilities may be different. The important thing is to act according to your best understanding of what are the likely outcomes.
Happy Selling,
Carl Ingalls
Thanks for the clarification, Carl, I understand.
Also, my last comment wasn’t about the application of HPS to MLM and JW’s “observations and experiences are that HPS may not work as well in Multi-Level Marketing as it works in other situations.”
Maybe my comment misses something and I inaccurately judge JW’s opinion of MLM.
Mike
Interesting debate. You could make argument that in each of the product lines listed about, their are sales winners in each category. There just may exist a broader gap between the few who succeed and the underperformers.
Ian
The best business analysis I’ve read on the “business” of MLM is:
http://www.vandruff.com/mlm.html
Read and judge for yourself. It addresses, among other issues, cashflow and inventory turns which are the heartbeat of any business.
A recommended book on the “tools” business and the practices of some of the largest Amway Diamonds is: The Merchants of Deception by Eric Scheibeler, a former Amway distributor. It is available online as a pdf. Again, judge for yourself. If you can’t find it I have a copy and would be happy to email it to you.
Many of the big guns in amway/quixtar/amway global have been bounced out over the past 10 years because they wanted to push the “tools” profits farther down the foodchain to the lowest level distributor but the super big guys at the top disagreed. The real money is in the tools and conventions not in the outrageous product margins (necessary to fund the massively inefficient MLM distribution and marketing model) which disappear once the recently touted, unique “miracle” health or cleaning product finds its way onto your local supermarket shelves.
In my opinion there are more than enough flaws in the MLM business model and more than enough contradictions between it’s basic premises and those of HPS to avoid it, but others need to draw their own conclusions if they want to.
The most sustaining companies that use network marketing/multi level marketing as their system are product based, do not allow independent distributors to sell their tools, do not require recruiting or the sale of company tools to make money, and have compensation plans that reward product sales.
There are many companies that fit this description.
Mike
Thanks, Mike!
I appreciate your comments about MLM. I also believe that HPS would work in the kind of MLM companies you describe. I am currently evaluating MLM opportunities and would appreciate your opinion on companies I should evaluate. You are welcome to email me directly if JW does not allow company names on the blog. I am sold on HPS!
Jeff Rose
Hello Jeffrey,
If you and Mike want to send your email addresses to each other, we can facilitate that. Just send a note to Main@HighProbSell.com
Carl Ingalls
Hi,
Love the book. After reading it, I got 2 questions.
1) HPS seems to work perfectly when the customer exactly knows what he wants. But what if the customer doesn’t know that they would need our product (although they have a hidden problem we can solve?)
2) Is there a way to combine HPS with method such as SPIN-Selling? (I must confess that I’ve never really understood the SPIN selling approach of prospecting – as outlined in the book Major Account Sales Stratety by Nail Rackham – but this is another topic I guess)
There was a great comment about the book by someone on Amazon (User: E. Stafford in 2001). I hope you don’t mind that I am reproducing it here. But it elaborates perfectly on my questions.
“This is great for situations where the customer knows what their needs and wants are and can act on them. It also is great for establishing clear rules of engagement with customers. It is direct and to-the-point. The material is POORLY delivered yet can be understood with multiple reads and with some in-depth thought. No doubt that this stuff will get you off your knees and prevent you from begging, BUT it is not SPIN or Solution Selling, this stuff will not work if you customer does not know or realize his needs. Is there value in creating needs? This is not “creating demand,” it is setting up clear roads to enganement beyond building up the pain to act on their needs, and doing it in a respectful way. This is great for closing on demand, NOT for creating demand, which is what solution selling is all about. This book has changed the way I sell for the better, I now choose either to “create a need,” “walk away,” or “close on their needs.” One must think before they act on this material.”
Best regards from Germany & stay healthy!
Benjamin
Hello Benjamin, and thank you for writing.
High Probability Selling only works when prospects understand what it is that you are offering. Without that understanding, they cannot answer the question, “Is that something you want?”
This is not a problem when you are selling something that a lot of other people talk about, whether in their marketing or selling efforts. You can let your competition educate your market.
However, a lot of us sell products and services that are not at all well known by the people we can serve. This requires educating a lot of people, and that is most efficiently done with marketing methods, broadcast messages that go out to a lot of people at once. Educating people one-on-one is extremely time consuming, time that could be spent finding someone who is ready to decide whether they want what you offer, or not.
In HPS, we separate our marketing and selling activities. Marketing messages go to large numbers of people at once, so that we can really leverage our time. This makes it practical for us to reach out to prospects one at a time, and then to focus our real efforts on someone who is likely to do business with us.
There is a way to combine HPS with SPIN Selling. However, it requires a major change in what we understand to be the fundamental purpose of selling. Instead of “getting” someone to buy, we find someone who wants what we are selling. We do not attempt to create any change in a prospect when we are prospecting or selling. We do not try to impress them, convince them, or create a need. If we do our marketing right, it is much more profitable to find a sale than to try to create one.
Thank you again for your questions, and for the opportunity to answer them. I hope my answers are helpful.
Carl Ingalls