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Why Some Of The Best Network Marketing Companies Are Experiencing Massive Attrition Rates

Feb 13, 2008
Network Marketing Businesses function by employing unsalaried sales people who are also called distributors, entrepreneurs, Sales Consultants, Consultants, etc. These people or companies sell products and earn sales commissions based on the sales or performance, so if they don't product for a month they don't get paid.

The Best Network Marketing Companies operate on this concept which is similar to the franchise concept the sales of individuals pays commissions to the main franchisor as well an area or region manager.

Multiple levels of people receive these commissions from one person's sales. A Low Attrition Rate is considered good for most companies as it means that the distributors and customers are loyal to the same. However even the best Network Marketing Companies have an alarming growth in attrition rates which can also sometimes go up to 80%. This means that company is spending all of it's time replacing the people who are leaving their organization.

The internet is a huge medium of business opportunities. There are scores of companies opening up and shutting down. With this come the endless opportunities for many people who are lured away every day by newer earning methods. The attrition rate or churn rate is a primary factor that determines the steady level of customers a business will support.

The number of individuals who leave or join an organization over a specific period of time is the attrition rate of a company. The attrition rate applies to the best Network Marketing Companies which have customers based on contracts. The growing attrition rate indicates customer dissatisfaction. It implies that the customer has a cheaper or
better option which usually is offered by the competition or more successful companies.

The growing competition offers more to the existing customers in terms of commissions which results in the shifting of the customer to another firm before the tenure of his or her contract is over. The attrition rates are determined by other factors also. There are customers whose services are terminated by the company itself after the completion of the life cycle of the customer with the company. This can also be due to reasons like inefficiency of the employees or not completing targets or poor performance. Often a part of the customer base moves away from the mother company to form their own company. The Best Network Marketing Companies suffer from this problem.

The Best Network Marketing Companies try to prevent this from happening by discouraging customers to shift by providing them better offers and commissions. They also have retention activities such as loyalty programs. Another option used by some of the Best Network Marketing Companies is that when a consumer leaves a company but resumes service within the same year. Many companies hire new customers which lowers the attrition rate.

But the Best Network Marketing Companies try and balance the attrition rate to prevent a loss in the longer term. A high attrition rate creates a bad impression of the company. Thus new measures are always applied t retain older customers and encourage new sign-ups too.
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