July 01, 2012
Fueling Growth at 5LINX
by Barbara Seale
- Founded: 2000
- Headquarters: Rochester, N.Y.
- Top Executives and Founders: President & CEO Craig Jerabeck, EVP of Marketing Jeb Tyler and EVP of Sales Jason Guck
- Products: Essential products and services for home and business
5LINX founders are Jeb Tyler, Craig Jerabeck and Jason Guck.
Some companies seem to have it all. Fast-growing 5LINX® is one of them.
Just check out these key 5LINX VIP characteristics:
- A cultural foundation that drives every aspect of the business
- A growing suite of services that customers—including businesses— already use, but which 5LINX provides at budget-friendly rates
- A carefully crafted compensation plan that fuels growth among both the leadership and new-distributor ranks
Those are just the beginnings of an impressive checklist that has created an equally impressive inventory of accolades. For example, Inc. magazine has recognized 5LINX as one of the country’s fastest-growing privately held companies in the country every year since 2006. In addition, in its hometown of Rochester, N.Y., 5LINX has made the list as one of the top 100 companies in the region. And this year the company burst onto the Direct Selling News Global 100, the magazine’s annual list of the top revenue-generating direct selling companies in the world, at No. 76, with 2011 revenues of $81 million. It is on track to double those numbers in 2012 and executives have a five-year goal to grow to over $1 billion in sales.
Telecommunications brought 5LINX Founders Craig Jerabeck, Jeb Tyler and Jason Guck together. Jerabeck had an extensive entrepreneurial background, including starting two previous companies that sold retail wireless and wireless phone store franchises. Tyler and Guck each represented a network marketing company that sold long-distance services. Tyler met with Jerabeck to discuss providing those services to Jerabeck’s business. Instead, Jerabeck asked if Tyler could sell cellular products.
The idea didn’t gel immediately, but two years later the three men got together again. This time they hatched the idea for 5LINX. Jerabeck’s business acumen was a perfect fit with Tyler and Guck’s direct selling backgrounds, and they all had experience in telecommunications. But what united them was their determination that their new company would operate ethically and with absolute dedication to its direct selling independent marketing representatives. From the outset, they identified the five principles that would form the foundation of their business: vision, integrity, opportunity, freedom and success. The principles were so important that they even inspired the company name.
Once that foundation was firmly set, the men launched their new business with monthly services that included digital phone service, wireless phones, calling plans and accessories and broadband Internet service. Soon their lead product was videophone service, and they quickly offered service to small-business clients. Every service was one that customers already used and were familiar with. The 5LINX value proposition was simple: Just switch the service you already use to 5LINX and save money.
But the founders always kept their eyes open for other ways their independent marketing representatives could earn money. Over the years the 5LINX product line expanded to include energy, home and business security systems, identification theft protection, satellite television service, text marketing, mobile video apps, a new data storage/backup product, and a state-of-the-art Android-based tablet. It also began offering innovative, bundled services to business clients that created cost savings for customers and commission opportunities for representatives. The company had morphed from a telecommunications service provider to an essential services company for both home and commercial clients. As customers paid their bills for the services every month, the 5LINX independent marketing representative who enrolled them earned monthly commissions without the need to resell to that customer—genuine residual income. Everybody was a winner.
Then came 2009—a year that went down in infamy for too many companies in every industry. But 5LINX executives saw opportunity in the weak economy. After all, individuals and businesses everywhere needed to save money more than ever. And with job losses and cutbacks creating high unemployment—as well as feelings of insecurity among people who still had jobs—people needed a Plan B. So 5LINX adjusted its compensation plan to make it even richer. The result: Business tripled in 18 months because of new independent representatives coming into the business.
The strong compensation plan that rewarded the sale of essential services created enormous opportunity for the company’s growing cadre of enthusiastic representatives. Each home service gave them at least one customer point, so each home or business often represented several points—and several earning streams—to a representative. Plus, when representatives join 5LINX, they typically switch every service they already use from their incumbent provider to 5LINX, racking up customer points through their own services while learning about them and laying the foundation for their residual income. It prepares them to begin telling friends and family members how they, too, can save or make money. But the big game changer is commercial service. As 5LINX beefed up its commercial offerings, the business professionals who reviewed their proposals could easily see the savings to their businesses. At the same time, they also clearly saw the 5LINX business opportunity could supplement their personal income statement. Both the savings and the earnings could be substantial.
“Commercial services attract a different type of representative—commercial real estate brokers, high-level executives, hedge fund managers—because of the people they know,” explains Jason Guck, 5LINX Executive Vice President of Sales. “We proposed an energy services contract to one business in New York City recently that saved it $1.3 million a year. That single contract will generate $20,000 for the 5LINX representative who identified the opportunity. When we can propose to schools and commercial buildings, we see our rep base diversify into higher-level professionals with contacts like themselves.”
5LINX Velocity™ tablet
5LINX Credit Card Processing
5LINX High Speed Internet
Business Is Booming
An expanding product line and the income opportunity offered by commercial services have created a boom in business. Month after month 5LINX has seen increases in representative recruitment, new customers and revenues all over the United States and Canada. While 5LINX representatives usually gather customers one by one, they typically host public business receptions in their homes or off site, introducing the opportunity to multiple people at one time.
“We feel good that our opportunity is growing,” says Craig Jerabeck, President and CEO. “It’s been a record year. We’ve had significant organic growth, which is unusual these days.”
5LINX has always prepared new representatives to succeed, but executives there are never satisfied with the status quo. With so much growth in representative ranks, they enhanced 5LINX University, which provides online training. For representatives who prefer to build knowledge in person, training events are frequent and numerous, including three international events a year plus regional events that run simultaneously in 16 cities. While they were beefing up training, 5LINX overhauled distributors’ personal websites and back offices. The clean, easy-to-navigate sites did more than make using them a pleasant, professional experience. The synergy with other key improvements even pumped up sales results.
“It increased product sales by 40 percent,” says Jeb Tyler, Executive Vice President of Marketing. “It was a combination of the momentum of the company, having the right products at the right time, the right compensation plan and the right leadership in place. That perfect mix has helped catapult us to record numbers of new customers and new representatives. Our investment in infrastructure and marketing is starting to pay huge dividends right now.”
Investing in Growth
5LINX: More Than a Name
When its founders created 5LINX, their goal was to build a truly better company with the best possible opportunity. Their foundation was five principles—five links—that still guide the company every day. 5LINX President and CEO Craig Jerabeck says that the principles are as important today as they were in 2000, when the company was created. He explains the central role they play at 5LINX.
Vision: “We’ve laid out a vision for our corporate and field teams so they have a clear picture of where we are taking this company and how they fit in the long term.”
Integrity: “It’s our most important value and it’s at the heart of every decision we make. We define it as doing what you say you’ll do.”
Opportunity: “We broadened the scope of our mission statement and product line to create an even more meaningful business opportunity. Everyone in our corporate office is compensated based on the success of our independent representatives.”
Freedom: “Our independent representatives typically work in their 5LINX businesses part time at night and on weekends. They can do their business wherever and whenever they choose. They can’t do that by working for a corporation. It gives them time freedom.”
Success: “People give us their blood, sweat and tears on a volunteer basis, so it’s critical that they can rely on us to give them the opportunity for success in our business without looking over their shoulder or wondering about the moral fiber of the management team.”
Jerabeck notes that 5LINX recently hired 46 new employees to keep up with its growth surge. In order to make certain that its culture is permeated throughout the staff, it ran a program to reinvigorate awareness of the principles. Jerabeck stresses that maintaining the corporate culture is supremely important to 5LINX’ success.
“Part of our onboarding process is teaching the culture that is based on our five core principles,” he says. “Every new employee learns how their job ties into the corporate values. They’re tightly woven throughout the organization.”
William Faucette Jr.
Those new representatives are sticking around longer, too, thanks to the robust product line and also to even more innovations in the company’s compensation plan. Last year the company enhanced compensation for its top leaders while giving new recruits a clearer career path and the opportunity for more income sooner. The effect was immediate, and it has continued.
“The impact has only continued to demonstrate that those moves were the right things to do,” explains William Faucette Jr., 5LINX Vice President of North American Sales. “We’ve had record growth for six of the past seven months. Those changes we implemented last year are truly taking hold. About 25 percent of people hit their first promotion in their first month. The biggest impact is the new Diamond position at the top. You always need something at the top for top leaders to run for. We should have people who reach that position this year.”
Faucette has special insight into what drives representatives. His 5LINX career began as one, while he kept his day job as Chief of Staff for the City of Rochester. He built one of 5LINX’ largest downlines, even as corporate execs periodically tried to lure him to join the staff. Finally, after more than eight years as a field leader, he joined the staff in January 2009.
“When I started to make a couple of thousand a month [as a representative], that’s when I started to believe that this could become a career. I want to reinforce that in people.”
—William Faucette, Jr., Vice President of North American Sales
“In my experience, when I started to make a couple of thousand a month, that’s when I started to believe that this could become a career. I want to reinforce that in people,” Faucette says. “I want to give people a chance to turn Plan B into Plan A.”
One of the ways he and other 5LINX staff members are enabling field leaders to make that transformation to full time is through the Platinum Pool, which is funded bit by bit every time a new representative or a customer affiliates with 5LINX. This January 5LINX divided the $1 million Platinum Pool among 11 people, issuing checks ranging from $30,000 to $120,000, based on 2011 efforts.
Results like those come from representatives who use every occasion to discuss the life-changing opportunity and services the company offers. 5LINX recently made it even easier for its representatives to do business on the run. It introduced the 5LINX Velocity™ tablet, which runs on the Android 4.0 operating system. The tablet comes preloaded with apps and YouTube videos that help representatives show the business opportunity, even if they aren’t accomplished presenters. It also lets them sign up new business partners or customers—all in a way that not-so-subtly demonstrates 5LINX’ commitment to providing top technology.
Moreover, the Velocity tablet is now the portable platform for 5LINX’ flagship videophone service. Gone are the days of carrying a separate device to make or demonstrate videophone calls. The multipurpose tablet is less bulky, more versatile, and affordable.
Even with such impressive credentials, services and technology, CEO Jerabeck is convinced that the company’s secret ingredient to 5LINX’ enviable growth is the cohesiveness of its sales and corporate leadership. The group gathers often, but once a year they meet to do strategic planning at both the corporate and field sales levels. The top 12 sales performers form the advisory council, meeting with corporate executives and the same facilitator each year. Jerabeck says that the group reached a whole new level at the planning session for 2012.
“After many years of doing this, I felt the most gratified ever,” he recalls. “There were 12 very strong, Type-A sales leaders in a room with the corporate team, and when we left that room, I knew we were all of one mind. It was a cohesive team, and we built our 2012 plan together. That meant we had matured as an organization, and we can now take this business anyplace.”
That solid management foundation has created strong, steady growth—the best indicator of the health of the organization, according to Jerabeck.
“Every month, we’re consistent and improving. We’re financially healthy,” he says. “We don’t have very big margins. Telecom and energy don’t lend themselves to that. But we have a sound balance sheet. We’re well-positioned for growth and sustainability. If there are economic or political storms, we’ll weather it because people rely on us to.”