PJ Stafford wrote:
> Is it possible for the right product/service to be sold with MLM incentives in place and NOT BE EVIL? Or does the MLM structure just bring out the evil in everyone involved since the incentive is to simply recruit more fresh bodies
MLMs tend to reward recruiting over bona fide third party retail
sales. So the structure gets warped to maximize recruiting commission
at the expense of retail commission.
>and not really service the END CUSTOMERS with great service?
Will your organization provide _real_ training in customer service, or
simply do what passes for "feel good" stuff that is meaningless
everywhere except in the castle that one built in the air on a
foundation of clouds, before the thorzine took effect?
> MLM seems to offer a couple of key benefits to a COMPANY, such as not having to hire and pay a bunch of $75,000/yr regional managers nor paying a HQ team to market to and recruit distributors/
* So who foots the bill for the "big splash" events that theoretically
will convince people to join your fledging MLM, that statistically is
going to fail?
* Talking about failure, are you aware that 0.025% of the people who
sign up for an MLM do not lose money?
* Or that only 0.01% of the people who sign up for an MLM show a net profit?
* Or that somebody who nets US$50K per year from retail sales in an
MLM can waltz into a sales gig that pays them US$250K + commission per
year with a company that provides real fringe benefits?
> In theory MLM structure gives people (at least the early people) a chance to have an ongoing stream of income from the sales of the people whom they both bring into the organization and coach and manage and who actually succeed.
Theory does not equate to practice.
* How does that "ongoing stream of income from sales" work?
* How do you determine what their commission is going to be?
* Are you paying a commission based on verified bona fide third party
retail sales to bona fide customers, or are you paying a commission
based upon purchases by the individual's dog, made for the sole
purpose of collecting a commission check?
* How do you do quality control, if your firm uses "independent
contractors" as defined by IRS regulations?
* What makes you think that the people that are recruited into your
organization will be any good at coaching or training other people?
* What makes you think that people won't recruit their dog into your
organization?
> Other options include:
> A) a Franchise structure, but that involves consultants having to pay at least 15,000 upfront to help cover the large costs associated with the very legal Franchise process, and of course, a $100 starter kit is a much lower barrier than a $15,000 + franchise fee...
There shouldn't be any difference in your legal costs, between setting
up a franchise operation, or setting up an MLM operation. How much
your sell your "opportunity" for is utterly up to you, and should be
independent of the legal costs of setting up the business opportunity
in the first place. (FWIW, lawyers who specialize in franchise law
are far more numerous than those who specialize in MLM law. )
The same applies to the rest of your costs. There is no financial
difference in setting up the cost of organization that services
either.
> B) A simple distributor agreement where people get their, say, 40% markeup or more on the product/service, but don't have any real financial incentive to help recruit or manage others in their city/town
* How are you differentiating between the "franchise opportunity" and
the "distributor opportunity"
* What is the objection to having existing businesses sell your
product or service?
* Why do you need regional/local distributors in the first place?
Website with telephone/email/
support suffices for 90% of the products used by consumers.
* Why should somebody recruit their customer to become their competition?
> So are there any MLM organizations that are not evil.
Some people seem to think so. None of them appear to meet that status
after careful scrutiny.
> or is it an unavoidable outgrowth of the Upline/Downline structure,
The data I've seen points that way.
> if the company is selling some crappy product that people don't need or could buy a substitute at Wal-Mart for 50% less anyway...
I've yet to see a product sold by an MLM whose equivalent could not be
purchased from a standard retail outlet for half the price and equal
or (usually) better quality.
xan
jonathon
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