There’s lots of different Network Marketing companies – all with their unique compensation plans. And across all of them, there’s 1 number that’s THE MOST important number – but also the least known number.
It’s the ALV – Average Lifetime Value of your customers / associates.
Here’s how to work it out;
Calculate every dollar you’ve earned since you started (most companies will provide this for you if it’s not easily accessible in your back office).
Then, divide that by how many associates you have brought into your business.
And there is your lifetime value of each person.
So why is this so important?
Because Network Marketing is a long term, residual income, wealth creation vehicle. But FAR too often, we get overly focused and myopic on the early sign-up bonuses – losing sight of the back end commissions, and the power of creating leverage; which is where the real excitement is.
Plus – it helps to truly understand the value of each person. If we only look at the signup fee, we can get disheartened, or lazy. But if we truly understood the value that each person can potentially be worth – we’d never stop telling our story.
Because let’s say you’ve brought in 100 people. Some of those will stick around for a week, others a year, others a decade. Some of those will tell 1 person, others will tell 10 people and a handful will tell 10,000 people. We never quite know who it will be – but as more people come in, the snowball will start to grow. And if you take care of these people, help them get results and help them bring other people in – eventually the snowball will grow out of control.
All of a sudden, you’ve turned 100 people into $100,000 – making the lifetime value of each person $1,000 – significantly higher than the $50 you earned for bringing them in. And as the team grows, that number will continue to grow.
As a bonus – it helps with your own mindset of the value we should give each person. We never know who will be the next rockstar – and it’s often the person you least suspect. Instead of viewing people as a $50 signup fee, give them $1,000 worth of value each, and that ALV will grow exponentially.
To your success.
Andrew Logan is a Network Marketing Author, Coach and Mentor.
For your Free 7 Step Guide to Financial Freedom Through Network Marketing, click here.