It recently came to light that the health & wellness MLM company, Visalus has had a 50% decline in profits and has lost 40,000 of its distributors over year-to-date figures.1 This follows on the heels of the Federal Trade Commission opening an investigation into Herbalife2, and Italy’s Antitrust Authority scrutinizing three other health and wellness companies; Organo Gold, Vemma, and Asea3. There are some waves afoot in our industry!
Now some of these issues have been brought on by the companies themselves for less than desirable behavior, but other things were entirely preventable. Within the confines of network marketing, rules are established to ensure that a certain percentage of sales are direct-to-consumer and that product sales are not supported entirely upon the backs of fellow distributors. Many companies, and distributors in general, feel the pressure to push for larger and larger down lines instead of building a solid core of devoted consumers. We can see this frequently in how compensation plans are structured, promoted , or (mis)understood. As we have seen in other countries, the day is quickly coming in which all network marketing companies will be required to maintain a specific customer to distributor ratio. These requirements are a good thing because they ensure that not only is the product desirable and worthwhile, but it’s pricing is competitive. This establishes need for a superior product, and reduces the onus on sole profitability, thus eliminating the proverbial ‘pyramid’ where the few ride upon the backs of the many. As someone who readily supports network marketing, and wholeheartedly believes in relationship sales, I feel we need to look at these news reports as learning opportunities regardless of the company we personally promote.
To ensure longevity and success in any network marketing company, we should make a point of educating ourselves on the concept of CUSTOMERS FIRST. Some of the best products in the world come from the network marketing industry. The marketing model itself should be a boon not a hindrance to sales. Your consumer may very well love the product, but may have zero interest in the opportunity. If you take a product-centric approach and promote the product first, you can go back at the two or three month mark and approach your [happy] customer about the business opportunity. However, if you lead with the business opportunity, and that person doesn’t have a true desire to be involved in selling, or if their best efforts at selling result in failure (which is statistically probable) – then not only have you lost a [unhappy] distributor, but you have lost a [unhappy] customer, and you have created a disgruntled person who will share with others their displeasure with your company. If you lead with the product, then your product has to be worthy to lead with. You won’t run into the catch-22 that people are just buying your product to meet their qualification criteria. For a company to lead with their product, it creates an environment of progressiveness. The company usually will not rest on their laurels and just hope for the money to roll in but will be driven to create new and exciting products of exceptional caliber to further increase their market share.
I have seen this issue come to light recently with distributors arguing over the decreasing value of pay points, and pointing blame at the distributors who are quick to sign up people to their business who have no intentions of ever promoting the business. Yes, this is a valid point, but the responsibility cannot fall solely on the shoulders of eager distributors. Ultimately the responsibility falls with the parent company itself. If their compensation plan is not geared towards product sales, or if their compensation plan is not abundantly clear that distributors make as much, if not more money from product sales, then they have done their brand managers a disservice. Leading with the product helps to ensure exceptional customer service as opposed to creating a “churn ’em & burn ’em” mentality where you are constantly looking for the new person who will be your recruiting rock star. Leading with the product also creates stability in your pay structure, and helps you ride out industry ups and downs. If every network marketing company demanded that customer acquisition was a part of their promotional structure, then our entire industry would be seen in a more positive light because we would have, in essence, destroyed the pyramid model that overshadows us.