... the dynamics are so perfect: socialize with friends and spend money.

Party Plans: Can You Score Five Points?

By Jay E. Leisner,
Sylvina Consulting
© 2002

Home parties offer the opportunity to get out of the house in the evening or on a weekend to socialize with friends and to spend money. Friends or acquaintances of the hostess will attend and make purchases, all because a friend invited them to the party. The personal invitation is a powerful and effective approach.

Point One

If you own or work for a party plan company, give yourself one point. You've chosen a business model that fulfills two basic needs of its consultants - social interaction and economic opportunities.

Do you want more points? If so, keep reading.

Point Two

When a consultant joins a party plan company, she is encouraged to approach her friends and nearby relatives to ask them to be the hostess for a party. Some of her friends will agree to help her by either hosting parties in their homes or by attending parties hosted by friends. These are the "easy" parties. No points are given for encouraging these.

However, if you explain clearly and often to your consultants that the purposes of a party are to (a) sell product, (b) get bookings for other parties, and (c) recruit consultants, then you've earned yourself the second point.

Point Three

Let's assume a party plan company has a sales force of 10,000 consultants each of whom does an average of one party per month. And let's also assume that the average party is attended by 10 guests, 8 of which purchase products at the party. Over the course of a year, this party plan company will process orders from 120,000 parties and almost 1,000,000 purchasing guests.

Do you obtain and place into your database the names, addresses, and specific purchases of each of these guests? If you do all of these steps, then give yourself the third point. You've made the decision that it is important to keep track of your retail customers and their purchase history.

If you obtain the names and addresses on individual customer order forms, but don't place the information into a computerized system or do anything with this information, you have put gas into your car but you haven't left the garage. In a competitive environment, no points are given for lack of movement.

Here are some thoughts to consider about capturing and using guest information:

1. Unlike distributors who sell person-to-person, party plan consultants often don't personally know all of the guests at their parties, unless they host their own parties. Most relationships between guests and attending consultants at the party are short-lasting, so most consultants will never see their guests again.
2. Most party plan companies encourage sales to take place at parties, and most guests won't attend another party. (Only 5 to 15% of guests will attend a second party). So, the party is a "one shot" opportunity to sell to guests.
3. Most new consultants for direct selling companies will host a few parties, decide the business is not for them, and quit. When they quit, the guests who attended their parties will die with them.
4. If you don't capture guest and guest purchase information, you have not only lost the opportunity to capture follow-on sales, but you have also weakened the attractiveness of the consultant business opportunity. How long would you be interested in a business that discourages repeat orders?

If you haven't begun yet to capture this information yet, it's never too late to start. As with most changes in life, there are always objections. You may hear:

1. The guests are the customers of the consultants, so you don't need to know who they are.
2. If you are shipping directly to the hostess (which most party plan companies do), you don't need to know the names and addresses of the guests, and guests won't give them anyway.
3. If you have the guest information, you will cut out the consultant and sell directly to these retail customers. Consultants don't want this to happen.
4. It's too expensive to ship orders to individual guests, anyway. If guests could place a repeat order with the company instead of through the consultant, it will overwhelm the warehouse.

If you explain to your consultants that it is to their advantage for you to capture guest information, that you won't go around them without compensating them for finding the customer, and that you enforce a reasonable order size minimum for guest orders, you will successfully address these objections.

Point Four

To score the fourth point, you must be provide several channels to sell to the guests directly while at the same time paying commissions to the consultant and her upline for the purchase.

At the party, each guest should be given a catalog and a business card from the consultant. Both should be clearly marked with a consultant ID number. To help ensure the consultant ID number is given at the time of the order, there should be a small incentive or discount given to the guest to give this consultant ID number.

If you wish to hold back a piece of the consultant's commission as a processing fee for her guest's order, do so but make sure the amount is small. Using a flat amount per guest order is a fair approach.

Make it easy for guests to order and make it even easier for guests to order again by offering a frequent guest purchase program.

Sell the guest on the idea of hosting a party and becoming a consultant. Provide an easy, direct method of communication with the original consultant should the guest indicate she wishes to pursue either of them.

Permit the guests to place an order by telephone, by fax, by mail, and through the Internet. Encourage your sales force to have their own websites, but even if they don't have them, permit their guests to purchase through the Internet anyway. Don't penalize the guests if their consultant doesn't see the value in having their own web presence.

If the consultant is inactive, resigns or otherwise departs the company, accept the order from the guest as before. Don't pay the consultant her commission, but continue to pay the upline of the consultant.

Point Five

To earn the fifth point, you need to provide your consultants with numeric and graphic statistics on the follow-on purchases of their retail customers.

This information will be powerful not only to differentiate your firm from others, but also as a recruiting aid for your consultants to show potential recruits that your company is invested in their success by giving them many opportunities to earn commissions from follow-on sales.

Conclusion

As a party plan company, you are competing with not only other firms which sell similar products, but also with other direct selling companies who offer income opportunities to consultants. How did you score?

Jay Leisner is President of Sylvina Consulting, a business and software consulting firm with more than 16 years of experience, having worked with over 100 direct selling and network marketing companies. Sylvina Consulting  provides a wide range of services to both new companies and established firms.

Sylvina's business consulting services include business plan review, budget evaluation, development of marketing strategies, compensation plan evaluation, business evaluation, industry and software training and management mentoring.

Their software consulting services include software and vendor evaluation, preparation of Request for Proposal (RFP) documents, business analysis, gap analysis, software design, data and system migration, and project management.

For more information on Sylvina Consulting, please contact Jay at 503.244.8787 or visit www.sylvina.com.