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The basics of party plans

Article by: Keith Laggos | President
December 17, 2014

More and more networking companies are embracing party plans as a distribution model. Here’s an overview of how party plans work and how they can work for you.

In the traditional party plan there are basic components and practices. Let’s start the discussion with the company. The company, as in any direct sales/network marketing company, supplies several business functions for the distributor. These include:

1. The products, which include product research and development, usually packaging, inventory and shipping, as well as product literature. Most modern companies also have Internet support and online ordering.

2. Accounting and compensation systems, which include product wholesale and retail pricing, compensation structure and payment for yourself and your downline, order payment and processing, as well as special accounting policies for party plans such as hostess points and rewards.

3. Marketing and training material such as: brochures, videos, CDs and tapes, newsletters, books, Internet support systems, seminars and conventions.

4. Legal review, distributor rules and policies.

The above is just a general list of function and is not meant to be comprehensive. There are other items that a company supporting the traditional party marketing method must supply in addition to the usual items and functions listed above. These include:

1. Hostess gifts, often including a hostess gift catalog.

2. A party presentation guideline, often including a script and scheduling booklets.

3. Party favors including incentives for large orders or just to add fun of for certain behaviors, achievements or games and contests at the party.

4. Samples and prizes.

The college textbook, Direct Sales An Overview, has a complete explanation how party plan marketing works.

Hostesses

The distributor starts by asking a friend of acquaintance to host a party. It is the duty of the hostess to invite her friends, family and neighbors as attendees. The hostess also usually supplies her home for the party and refreshments. However, it is very important that the distributor does not strictly rely on the hostess to get people to attend.

Distributors should help send out invitations two to four weeks prior to the party with an RSVP (a request to respond to the invitation one way or the other). A week prior to the party a postcard reminder should be sent. The day before the party, the hostess should call and remind each invited person. If transportation or baby sitting is required, the hostess may even try to help accommodate by finding a car pool or setting up a group baby sitter in her home. The distributor should help with these functions. However, because of the new do-not-call (DNC) laws, it is best if the hostess initializes the call and then, if necessary, turns it over to the distributor.

The company should have a hostess reward program where the hostess receives points or a dollar amount to be used toward products. This can depend on the number of attendees, future hostesses and parties booked, distributors recruited and the sales volume of orders at the party. These points or dollar amounts can be used to purchase products or receive gifts from a special hostess catalog usually supplied by the company. Sometimes, instead of points or a dollar amount earned, companies offer the hostess various levels of discounts based on company-established criteria.

A distributor often can earn $100 to $500 and book two to four more new parties in a single evening. There have been numerous parties when the distributor has earned $2,000 or more in a single evening party. Knowing this, it should be easy to understand why the average distributor using the party plan method can earn more income faster than a company that emphasizes individuals and override commissions.

The job of the distributor is to make the hostess job easy, fun and rewarding. Most party presentations include fun activities such as games, contests, modeling, in which, the attendees participate. This way the hostess will do another party and all of the attendees are encouraged to host a party too.

It is the distributors or representatives job to conduct the presentation and manage the meeting. The hostess usually makes the introduction of the distributor to the guests as they arrive. The keys to success lie in the number of parties that can be booked and increasing the average attendance. One cost-effective way a distributor can do this is to hold a special contest at a party. Offer everyone who is willing to host a party a chance to win an especially nice prize based on the most people who attend, plus double points for each new party booked at their party. Everyone will work hard to win this special prize, making all of your subsequent parties successful and you only have to provide one extra prize for the winner.

Upsell

As in any selling environment, upselling is very important. Upselling is when the sales person or distributor encourages the prospect to purchase either a higher-quality, or more-expensive item or more products. This, of course, increases the sales volume and commission earned. In a party environment, upselling is easy. In some cases, you can offer each attendee a special prize or gift or extra free samples for purchasing minimum sales volumes. Some companies have a discount program built into the product pricing, so that the more you purchase, the greater a discount you receive.

A good distributor can create a buying frenzy. Each time an attendee purchases something or a prize level is achieved, an announcement can be made. This can even cause a competitive drive to see whom orders the most. When someone orders one product, the distributor can demonstrate another product that works well with it or looks good with it. Often, you can use a puppy dog approach. Let an attendee try something on and/or wear it for the evening and ask if they would like to continue to wear it by purchasing the item. Often, they will not want you to take it back. They may even be willing to purchase many times more than the value of an item to get the item that they really want for free. You may be in a position to demonstrate to the hostess that if he or she can help encourage a few more sales, she will receive a much nicer gift choice. You may be surprised to find how much harder someone will work towards a free gift, than the equivalent monetary reward.

Repeat Sales

One area that few distributors take full advantage of is repeat sales. The first sale to a client is always the hardest sale. Repeat sales are almost always easier and faster than the first sale because the client has tried your product and knows the product story. The following are some tips for all distributors to increase repeat sales and their income.

  1. Call or e-mail your customers to ensure that they are using your products and know how to use them. If they are not using your products, there is no reason to order more. If they are not using your products, they will not be enjoying the benefits and will probably be reluctant to provide referrals.
  2. Send product literature and product testimonials to reinforce their buying decision and to encourage their continued product use.
  3. Send samples or information on other products and/or new products.
  4. Make re-ordering easy. Provide a Web site or fax number, so that customers can place their own orders conveniently. Encourage them to get on an autoship program or allow you to continue to order for them until you hear otherwise.
  5. Set a specific time each month to check on their next order and to answer any questions.
  6. Create a monthly product newsletter with order forms for everyone that is a retail customer. If the company provides catalogs or product brochures, include them or your Web site information too.
  7. Send an e-mail or even a postcard to remind your clients to place their order. Include your e-mail address and your phone number with the best hours to reach you and keep those hours.

Referrals

Obtaining referrals is the most powerful marketing advantage that any sales person has. However, in today’s do-not-call and spam law environments, it is best to ask for personal introductions. If this cannot be done in person, then obtain the phone number of the person referring and their referrals phone number. The distributor should initiate a three-way phone call. Dont put the burden on the person who is giving the referral. He or she is already doing you a favor by giving you the referral. Besides, if you wait for him or her to initiate the phone call, you could be waiting a long time, a very long time! Once he or she makes the introduction, thank him or her and give him or her the opportunity to hang up or stay on the phone. You, as the distributor make the presentation but do not hesitate to ask for a personal testimonial from the person making the referral, especially if you know that he or she is a satisfied customer.

You can also reach a referral using e-mail. However, 99 percent of emails from unknown senders get deleted without being opened. Many spam e-mailers are using subjects such as, as referred by a mutual friend (or a common name like Mike or Linda). Therefore, having just an e-mail address will not do you much good. Ask the person providing the referral to send an introductory e-mail and copy you. This way, you receive the prospects e-mail address. The prospect will be made aware of the fact that you will be e-mailing him or her and will know your e-mail address. This should help him or her to recognize your e-mail address and open it, instead of deleting it.

Referrals can be obtained at many stages. Never be shy to ask for a referral. If a prospect does make a purchase, then ask if he or she knows of other people that would like your products or services. If referrals are given, ask them if they would help you with the introduction. If possible meet both the customer and his or her referral in person, otherwise do the three-way call as described above. If the prospect decides not to purchase your product, then ask if he or she would mind if you kept them up with new studies and products. Either way, you should ask them for referrals too.

Whether you are a party or another situation, ask someone if they would like to host a party. If a person says no, then ask for referrals for someone who they know that may want to host a party. In fact, if you are giving out points to the hostess for newly booked parties from their party, also offer points, but less points, for referrals for hostesses not at the party. Sometimes the referrals are even better because they do not socialize in the same circles.

Every time someone re-orders, ask him or her for referrals. If the referrals purchase something, give them a free gift. It would be wise to give him or her, as a gift, a product that you think they may like if they tried it.

Sometimes asking for a referral can provide an opportunity to discover if there is a personal interest in joining your downline. This is especially true when dealing with close friends or family and you want to be very low key about pressuring them with the income opportunity. Simply mention how well your business is going and that you need to find people who want to start their own business and are willing to work with you as a team. Ask your friend or relative if they know anyone that would want to team up with you. Then shut up. Most distributors don’t wait and let the prospect (friend or relative) have enough time to think and way, Why not me?

Sometimes even asking someone for a retail sale referral will prod them into inquiring about the product in order to understand the product well enough to know who to refer. This can easily result in them realizing that they may want to try the product too. Thus, asking for referrals can be beneficial on two levels. You can find additional new prospects. And, secondly, by asking for a referral, you can tactfully let a friend or relative, whose personal relationship you do not want to jeopardize, help lead themselves to a sale or distributor decision.

Read more About

Party Plan Companies, Recruiting for Direct Sales, MLM 101—Your MLM Business Plan, How to Run a Direct Sales Company, Direct Selling and Sales Business News, All Articles

Keith Laggos | President

Keith Laggos has been in the direct sales industry for 33 years, half of that time as a successful distributor.He is president of a 19-year-old...

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