A Visionary Idea Takes Shape
FlexKom officially began its business operations on August 8, 2010 in Turkey and was able to record stunning growth in the past three years. According to their information, FlexKom established more than 50,000 business partners, thousands of outlets and over 4 million customers (including many professional clubs from the Turkish football league) during this very short period of time. After a three month pre-launch phase, FlexKom Europe GmbH was founded in Holzgerlingen near Stuttgart (now in Munich) thereby ushering in the official European expansion. Behind FlexKom stands Cengiz Ehliz, who as founder of the company was able to benefit greatly from his more than 20 years of experience in network marketing. During the course of his very successful career, Cengiz Ehliz built up an organization with over 63,000 partners and more than 1.5 million customers. Cengiz Ehliz had the proverbial enlightenment nine years ago. If it sometimes seems so difficult to win over customers as a networker, why not then turn to retailers and use them as multipliers? Because retailers already have one thing: customers!
The idea and system of FlexKom first took shape with this thought and led to the company’s founding in the year 2010. The Turkish market was selected due to the low cost for product and IT development and the sales establishment started successfully. It was possible to gain two top sales professionals for the pan-European structure who have a wealth of experience in the traditional corporate structure and in sales – Asker Sakinmaz and Michael Scheibe.
Turkey was deliberately chosen as the starting point of the company because not only was the product development there associated with low costs but also the diverse and fascinating country on the border between Europe and Asia Minor is considered one of the current hot spots for e-commerce. In Turkey alone, e-commerce has an annual volume of over US$12 bn.
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| Cengiz Ehliz – Founder |
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| Asker Sakinmaz – CEO |
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| Michael Scheibe – CMO |
Turkey was deliberately chosen as the starting point of the company because not only was the product development there associated with low costs but also the diverse and fascinating country on the border between Europe and Asia Minor is considered one of the current hot spots for e-commerce. In Turkey alone, e-commerce has an annual volume of over US$12 bn.
The Flexkom System
FlexKom does not offer any physical products – one focus of the business model is the five online portals (FlexShop, FlexOutlet, FlexDeal, FlexHoliday and FlexCall). Here, consumers can purchase products for daily use, household and health products, communication gadgets, travel, personal care products and much more at very favourable prices. The products offered are absolutely among the most popular, not just in Turkey. What is revolutionary or forward-looking about an online shopping portal, you might ask yourself? Very simple: The FlexKom portals are only one aspect of the business model. The second focus that FlexKom brings forward in full is the combination of online and offline commerce through the affiliation of local retailers.
This takes place in the form of loyalty cards, which customers can use at affiliated retailers to pocket large cash-backs. This produces a four-fold win-win-win-win situation for all groups involved. Customers receive cash-back for their purchases at affiliated retailers. Retailers benefit from acquiring new customers. (What argument would be better than buying from a retailer who guarantees cash-backs on the products offered?) And the FlexKom sales partners also benefit, because they build up a lucrative and profitable business through the FlexKom system with a real passive income. Most of us today have at least one loyalty or payback card in our wallets which is, of course, presented with every purchase in order to receive discounts or take advantage of bonus promotions. For example buy rolls from the baker around the corner nine times and the tenth bag of rolls is free. Collect points and receive awards or receive a discount upon purchase that is immediately deducted at the cash register. That is how loyalty and payback cards work – and quite excellently.
Loyalty cards in traditional retail are also enjoying greater popularity. According to a TNS Emnid study, an average of 4.4 loyalty cards are hidden in the wallets of every German. And FlexKom is capitalizing on this with its business model. If a local retailer becomes a contract partner of FlexKom (these are referred to as FlexKobi, Kobi meaning Shop), the customer receives a percentage cash-back on his purchase in the form of so-called FlexMoney when he uses the Flex-Card that he is issued.
If the customer purchases on the FlexKom portals, he receives a cash-back of the same amount. The cash-back is then transferred to the customer’s online account and in turn can then be redeemed at all outlets for the next purchase. The FlexMoney corresponds 1:1 to the respective national currency. Unlike most discount card providers on the market, FlexKom combines local retail and online shopping in an innovative way.
In addition, FlexKom also vertically permeates all product segments: from the very popular consumer electronics, to attractive vacation packages to car rentals. Theoretically, all product segments are conceivable, provided the corresponding individual retailer has joined the FlexKom retailer network. In particular for retailers, there are several good reasons to become a FlexKobi. Cash-back and loyalty cards increase customer loyalty and can generate greater sales because customers are encouraged to make additional purchases.
The real growth multiplier at FlexKom, however, lies in the fact that card-issuing FlexKobi are involved in sales for all of their customer purchases, regardless of which point of acceptance around the world they are currently shopping at, online or offline. It is an enormously attractive additional business for every retailer. With the FlexCard, customers also receive discounts on their purchases at affiliated online and offline retailers. Affiliated retailers benefit from increased customer retention and an additional share in the turnover of their customers.
But that’s not all. FlexKom is using large scale advertising campaigns for their own portals AND for affiliated retailers. In Turkey for example, advertisements are being shown on five major television channels. In addition, the Turkish football superstar and winner of the golden football shoe, Tanju Çolak, appear as a brand ambassador of FlexKom. In Europe, discussions are currently being held with some former football world champions and professional athletes that will be active in the future as brand ambassadors for FlexKom.
FlexKom therefore has several unique features from which franchise partners benefit enormously. On the one hand, the company itself is actively taking on advertising, which is no matter of course, because in most network companies, sales partners are only provided with brochures and the like.
One of the most prominent advantages, however, is the clear focus on a passive income. As the franchise partners benefit directly from the growing customer base of affiliated retailers and therefore do not necessarily have to build up their own organization, a true passive income is possible. The franchise partners of FlexKom can also enjoy additional advantages. Based on the franchise idea, every FlexKom business partner receives a turnkey concept for a small franchise fee. Every affiliated retailer is equipped with the FlexCard POS device (starting in stage 3) as well as 1,000 FlexCards that are customized to the retailer’s own branding if desired.
The sales potential or reimbursement for the retailer is up to 20% of the discount – regardless of whether these are generated online or offline.
As FlexCard users of course prefer to shop at the FlexCard outlets (so they can utilize their cash-back options to the maximum), the market and competitive situation of the respective retailer will also be strengthened.
What does this mean for the FlexKom partner? The FlexKom business model allows this partner to benefit both from B2C as well as B2B business. In the first case, he can acquire a finished web shop including a back office, for a certain franchise fee and therefore benefit from direct customer purchases in his online shop.
The really big potential, however, lies in the B2B sector. The sales partner attracts online and offline retailers and earns along with the retailer’s customer sales and discounts. As a sales company, FlexKom offers its sales partners (naturally just like any other MLM company) the possibility to profit from the sales of its acquired partners, the downline and the customers. Every partner can build his own sales team here and thereby participate in their sales according to the compensation plan.
The multi-channel approach has made FlexKom into the top achiever in the Turkish direct sales industry. 43,000 business partners who put the FlexCard into circulation in Turkey as well as thousands of outlets and three million customers in just six months – a clear sign of well above average success. In order to more strongly encourage Turkish customers to use FlexCards, an incentive program was launched that distributes special awards for collected FlexMoney. For just 1,000 FlexMoneys there is a free LCD TV. For 50,000 FlexMoneys there is a free BMW 5-series or a Mercedes Benz and for 100,000 there is even a house.
Three Phases for Success
The market development and penetration takes place at FlexKom in three phases, which occur sequentially. “The first phase is used for the pure construction of a sales infrastructure,” says Ehliz as he explains the FlexKom phase model. “We need experienced and active sales professionals as city co-ordinators in all major cities in a country. It is not about who is first but very much about who is the fastest. The city co-ordinators take on the entire co-ordination of the global team members (acceptance point facilitators) in the various cities and regions.” If sufficient partners are acquired, then the second phase is initiated during which retailers become affiliated. Cengiz Ehliz explains the procedure in this phase as follows: “In the second phase, we are securing individual retailers for our sales network. Retailers are of course interested in giving benefits to a large group of customers. In addition, we are already establishing our first customers in this phase. We do this through our business distributors, junior team and business team members. Starting in phase 3, the city coordinators then start the association, hotel and company customer concept. We are now in phase 2 in the UK, Austria and East Germany with the rest of Europe currently in phase 1 and are now starting to establish pilot acceptance points.
This gives our partners the capability to present the functionality of the FlexKom success concept directly on site, i.e. at each retailer. This increases trust in our concept – both on the part of the partners as well as on the part of retailers. Overall, however, hardly any time can pass between phase 2 and 3 and it takes truly active sales professionals and a perfect infrastructure to be able to commit thousands of retailers nationwide to our company in a few weeks!
This is exactly why only select consultants can bring retailers into the network. For this, they must have already built up a large team of consultants in advance. What is then correspondingly important in phase 3 is namely when our consultants and the affiliated retailers bring millions of customers into the system!” The selection of these active sales professionals takes place according to simple and understandable criteria. Whoever has reached certain career levels in a region qualifies for the partner and retailer programs in phase 3. It is therefore quite a competition for growth and activity among the franchise partners, which of course contributes considerably to the high level of motivation. And the prior success in Turkey shows what fantastic success can be achieved. “In order to cover the German market, we do not need 100,000 consultants or even 500,000 consultants. We just need 4,000 consultants who each set up 10 retailers.
We then already have 40,000 retailers and 40,000 retailers each establish 1,000 customers. This means there are 40 million customers. And we have therefore covered the entire German market – with only 4,000 partners,” calculates Cengiz Ehliz impressively. At the same time, this also means that those who can be particularly very happy are those franchise partners and global team members for FlexKom who are underway.
Every franchise partner has the exclusive marketing right for a certain region. Only he may pass the FlexCards on to retailers there and get them into business – and therefore establish a passive income. The individual regions are co-ordinated by the so-called city co-ordinators. They receive another 5% commission on all sales in their region. In Turkey, FlexKom has already successfully completed the first two phases. On September 8, 2012, FlexKom ushered in the third phase for Turkish FlexKom partners as a part of a meeting in Konya. Within a few weeks, more than 1,000 retailers and acceptance points were established in Turkey alone with many corresponding customers. At the same time, the resounding success in Turkey gave FlexKom the opportunity to review the company’s technical foundation for potential growth and stability – and the result was more than positive. The Turkish market therefore crossed over into the third phase at the end of 2012 and the ultimate goal was to establish 30,000 acceptance points in Turkey in the following months.
The First Acceptance Points in Germany
After the first phase is completed soon in the German-speaking markets, i.e. the sales infrastructures and correspondingly large number of partners has been established, the second phase of expansion of FlexKom will be set up: the establishment of online and offline customers. Select franchise partners are now being provided with POS devices and loyalty cards for this purpose. Recently, each of the first 52 qualified global team members from Germany, Austria and Switzerland received 100 registered cards and POS devices, which are now being distributed to retailers in a pilot phase. These pilot acceptance points will be the first in the German-speaking regions that can utilize and offer the innovative FlexKom system. The pilot phase also serves as a test phase in which any existing difficulties can be taken care of so that the official launch of the second phase will be just as big, if not bigger, of a success as is already the case in Turkey. The pilot acceptance points can use the issued POS units to their entirety, but at FlexKom, attention must be paid that broad regional market coverage is guaranteed – that is why not all partners can acquire retailers at this current stage.
“In order to show the Germans, Austrians and Swiss that our system works, we are now issuing so-called test or demo units. This allows our partners to show new partners that they have a fully functional device available to them,” explains marketing manager Michael Scheibe. “But it is still not yet the case that all of our partners are going out, because in Munich, for example, we have many partners, but in Hamburg we have fewer, and then we would not have the desired market coverage. The previously distributed 500 POS units make business in real-time possible. The magic number here is 0.2. For just 0.2 seconds after the corresponding retailer has slid the loyalty card through the POS device with the purchase amount, he sees what share of sales he himself has earned and what discount the customer receives.
The franchise partner who has gained the retailer also finds out just 0.2 seconds later via text message what commission he has earned on the customer’s purchase – passive income in its purest form. The rollout is in full swing in Germany and more countries will follow soon. The first major meeting with British leaders already took place in Birmingham. Michael Scheibe and Asker Sakinmaz got together with 300 highly motivated top leaders and prepared the rollout for the United Kingdom, which has meanwhile also gotten started. After the meeting, more than 100 new applications were submitted to FlexKom within just four days – and the “sales are incredibly good,” says Michael Scheibe excitedly. The European expansion of FlexKom is making headway – steady and precise like clockwork.
Flexkom and M-Commerce
“The foundation must be right and solid for a functional m-commerce concept,” says Cengiz Ehliz. And at FlexKom, the foundation is there to connect online and offline trade through loyalty cards and POS devices via the superbly functioning system. As a new feature, FlexKom is now offering its customers, partners and affiliated retailers an expansion of the system.
With the FlexKom app, it is possible for customers to also pay for their purchases via their Smartphone. For this purpose, the corresponding function is activated with the downloaded app and an entered number. The POS devices positioned at retailers have a touch screen that generates a QR code within split seconds, which the customer can scan with his Smartphone.
So it is possible to collect the corresponding bonuses or FlexMoney via Smartphone. This is actually a true m-commerce concept. The FlexKom app not only allows for paying and collecting bonuses via the Smartphone, but also has a tracking feature that, if desired, can display all other affiliated retailers in the area as well as their discount offers.
The FlexKom app also functions as a kind of autopilot that alerts the user of FlexKom acceptance points, thereby allowing him to save money by taking advantage of cashback offers.
Given the fact that around 94% of all Germans regularly look for special promotions, discounts and coupons in their region, the FlexKom app meets a real existing need and therefore is absolutely at the cutting edge. As a part of the new m-commerce aspect, FlexKom is also carrying out a paradigm shift: away from the E-N-D-F concept to the M-N-D-F concept.
The original business idea remains essentially unaffected. It will, however, be expanded through m-commerce and therefore carried over into a new era. This is now also reflected in the mission statement, which was previously summarized as a E-N-D-F concept. E-N-D-F stood for e-commerce – network marketing – direct sales – franchise. As e-commerce will change into m-commerce in the near future and FlexKom will be one of the first companies to offer a functional m-commerce concept, this will also now be reflected in the mission statement, which is now summarized as an M-ND- F concept. The M of course stands for m-commerce. See saw with innovation and forward looking trends – but you may argue that this approach is too simple and too technical for some. FlexKom does not offer any physical product that can be explained or demonstrated. FlexKom does not offer any product for daily use that everyone uses anyways, but rather a system that is relatively new and unknown still.
But every visionary idea was either, ridiculed initially, dismissed as useless nonsense or simply not understood. When asked how he would enthuse less tech-savvy partners of his system, Cengiz Ehliz answered confidently: “We are not the traditional network marketing company. We have a system that is not suitable for everyone. Our target group consists of nearly 90% of entrepreneurs. Our system definitely attracts entrepreneurs and they are exactly who we need, because entrepreneurs know other entrepreneurs – and they have customers.
We’re not the classic Network, where you can get everyone in the business. We focus on the category and not the masses. Nevertheless, we also need traditional networkers who, for example, distribute loyalty cards and reach the masses.” Another impressive advantage is of course in the context that no one has to sell a product.
Loyalty cards are ultimately fast selling items, because who does not want to save money when making purchases that you have to make everyday anyway? Another unbeatable benefit of the FlexKom system is as follows: Once the loyalty cards are distributed and enough retailers are affiliated, then a true, really true, passive income is possible. Without being directly involved, a franchise partner can profit from the sales of one of his affiliated retailers. This may be the bakery, butcher, hairdresser or greengrocer around the corner where you do your errands every day anyway. Let us assume that every partner only acquires 10 retailers and each of these retailers gives out 1,000 loyalty cards. The franchise partner could therefore take part in the sales from a total of 10,000 customers. And let us assume that every customer spends 100 euros per month at the affiliated retailer…the result: a true passive income.
(From The Obtainer Online Magazine, March 2013)
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