Maybe we'll actually reach the 100th monkey soon and people will start
thinking about this when they are approached by MLMs.
Hal
On Saturday 05 April 2008, Nicole Waldron wrote:
> Hello all --
>
> The following is an illustration of why, when I took one of those
> career tests in the past, I was best suited for "Bank Examiner".
> Not very sexy, but there it is. I was so astounded by the amounts of
> money involved that I thought some of you might be interested and
> bear with me to the end...
>
> Once upon a time, when my friend was joining Market America, I
> started thinking about this very subject of paying for trainings,
> conferences, etc. After doing some research, I began to do the math
> in my head - then on a calculator. I tried to lowball things as much
> as possible, even to the point of being silly, and this is what I
> came up with:
>
> Market America International Conference, held every year:
>
> Approximately 20,000 attendees/distributors at $195 per ticket = $3.9
> million Approximately 20,000 attendees/distributors spending at least
> $20 each (this number may be very low) each on marketing materials,
> books, tapes, CDs, t-shirts, bumper stickers, etc. = $400,000
>
> I read a newspaper article that described how, in 2004, Market
> America signed a deal with the coliseum (I forget its exact name) in
> Greensboro, NC to keep its yearly convention there for the next three
> years at a rental cost of approximately $75K per year, so that's the
> cost of renting the building for the event. The coliseum even threw
> in some free marketing.
>
> The Distributors pay for their own travel, food and lodging. Many of
> the speakers are Market America founders and higher-ups; I have no
> idea what, if anything, they are paid for their time. I have to
> imagine that the celebrities that are brought in are paid somewhere
> in the neighborhood of tens of thousands, 100K tops?
>
> I think it's fair to say that the annual convention brings in at
> least $3.5 million annually from the Distributors. Other than the
> building rental cost and guest appearances, there may be other costs
> but I don't know what they are and can't hazard a guess.
>
> Market America Leadership Training, held every year:
>
> I'm much less firm about the number of attendees for this, but I have
> to guess it's at least half of the International Convention. It's
> probably much more. Tickets are again $195 per distributor, and if
> they all spend $20 on materials, that's over $2 million coming in
> each February. Again, less the costs of celebrity appearances, guest
> speakers, etc.
>
>
> Market America Regional Conventions, held at regular intervals
> throughout the year:
>
> Tickets = approximately $65.
> I don't know how many people attend each one in each region, but the
> number of 5000 is sticking in my head. Suppose it were lowballed
> into only 1000 distributors per Regional. That's $65,000 for
> tickets. Maybe each person spends only $10 on accessory material.
> $75,000 per weekend coming in from Distributors throughout the year,
> less costs of renting a local conference center and paying guest
> speakers, if any. Again, all food, travel and lodging is paid for by
> Distributors.
>
> Monthly income from Distributors:
>
> Market America claims over 150,000 Distributors worldwide on its web
> site. Assuming around 125,000 of those people are in the U.S. and
> taking only them into account, and using Market America's "Costs of
> Owning an Unfranchise" at the Coordinator level as a guide,
> guaranteed monthly income from required Distributor product buying
> alone exceeds $20 million per month. Some distributors pay more per
> month for product purchase than Coordinators, and some pay less - I'm
> assuming the middle ground. Market America doesn't manufacture
> anything itself, so their costs would be whatever they've negotiated
> with the actual manufacturers of the vitamins, makeup, etc. that they
> sell under the Market America umbrella. The non-product payments
> made by Distributors break down as follows:
>
> $3.75 million per month for email, voicemail, etc.
> $3.125 million per month for web portals (recommended) (there was
> also a one-time $150 set up fee per Distributor; if they all paid it,
> over time it would be >$16 million)
>
> If even half of the Distributors attended the recommended number of
> monthly meetings, it amounts to $2.8 million per month.
>
> This is a page copied from a Market America web site detailing the
> costs of being a Market America Distributor (I didn't include the web
> site link because I didn't want it to be promotional).
>
> Costs of Owning an UnFranchise
> START UP COSTS
> Distributorship - $99.95
> UFMS (UnFranchise Management System) - $60, which covers first 3
> months of running your business Product Cost – 300 BV – approx $450,
> depending on what you choose, plus shipping (7.5%), administrative
> fee (2% of retail value) and tax. Supplies - $200 for UFO Kit code
> #1526
> Brochures and other supplies – optional
> Ticket to the next event – range from $25 (Local Seminar) - $195
> (Leadership School or Int'l Convention) ($260 Gala ticket at Int'l
> Convention is optional)
>
> This section shows monthly costs (most of which are products and
> things that you would be buying anyway from grocery stores and
> malls). These do not go higher than what you see here, not matter how
> much money you are making. UNFRANCHISE MANAGEMENT SYSTEM AND
> VOICEMAIL
> $29.95 monthly ($20 for UFMS and $9.95 for the 800# voicemail system
> called PatLive) . E-COMMERCE (optional but highly recommended) - $150
> set up fee, then $25 monthly thereafter. 2.37% interest rate per
> transaction & $.55-$.65 authorization fee per transaction (subject to
> change). TRANSFER BUY - BV
> Ranges from 50 BV – 150 BV per month depending on your income status
> in the BV plan: Distributor – 50 BV per month – Approx $70/month
> Coordinator – 100 BV per month – Approx $140/month
> Executive Coordinator and higher – 150 BV per month - Approx
> $210/month. BV requirements do not increase beyond 150 BV per month.
> TRANSFER BUY – IBV
> Ranges from 10 IBV – 30 IBV per month depending on your income status
> in the IBV plan: Distributor – 10 IBV per month – Approx $15/month
> Coordinator – 20 IBV per month – Approx $30/month
> Executive Coordinator and higher – 30 IBV per month - Approx
> $45/month. BV requirements do not increase beyond 150 BV per month.
>
> "TUITION" – NMTSS (National Meeting Training & Seminar System)
> –Ongoing educational costs incurred over time and are very
> affordable. This is an "earn while you learn" process (almost like an
> internship). Second Looks (2L's) - $5.00 (recommended 2 kick-offs or
> 2L's per month) Basic 5 (B5) and New Distributor Training (NDT) -
> $10.00 ($15.00 for the first time only to get certificate) -
> Recommended once per month Executive Coordinator Certification
> Training (ECCT) - $50.00 first time only, $25.00 for retakes –
> Recommended 2-4 times per year Local Seminars (Sat/Sun 9-5) - $25.00
> – Recommended 1X per month when there is no other seminar District
> Rally (Sat 9-5) - $40.00 – Recommended once per year Regional
> Convention (Fri, Sat, 1/2 day Sun) - $65 – Recommended once per year
> Leadership School (Thurs, Fri, Sat in Miami, FL) - $195 plus expenses
> (hotel, airfare, gas, food, etc) International Convention (Thurs,
> Fri, Sat, Sun in Greensboro, NC) ) - $195/$260 Gala Dinner (optional)
> plus expenses (hotel, airfare, gas, food, etc) OPTIONAL SPECIALIZED
> TRAININGS
> Motives Cosmetics
> Motives 2Ls - $5.00
> Motives Day 1 and Day 2 - $50.00 each full day (plus supplies needed)
> Beauty Basics trainings - $15.00 each
> · Internet Trainings
> § Internet Certification Training (ICT) - $50.00 full day
> § WebCenter Training (WCT) and Advanced WebCenter Training (AWCT) -
> $50.00 full day · Product Symposium - $200.00 for 3 full days in
> Greensboro, NC – occurs annually SUPPLIES - Replenished as needed.
>
> Obviously in my little summary here I've left costs out, like if you
> want to do specialized trainings on one product or another and the
> startup costs (150,000 Distributors at approx. $850 each = >$127
> million). The company, in turn, pays no wages to Distributors, no
> medical or dental benefits to Distributors, there is no 401K for
> Distributors, no workman's comp to be paid, no payroll tax to be paid
> for Distributors, etc.
>
> One of my Holy S***!!! moments came while many pages deep into a
> Securities and Exchange Commission filing from a few years back. The
> land that Market America corporate headquarters sits on was owned by
> the founder of Market America and the company, which is funded by its
> Distributors, was paying him rent on that land every month. Same
> goes for property in Florida, same goes for the yacht. The company
> was taken private since, so there are no more SEC filings to read,
> alas. That's not company income, of course, but went directly to the
> founder every month. I'm betting it still does. Also in the SEC
> filings, I think in the merger section, is the statement that all the
> higher-ups, including the founder, are considered plain old
> Distributors. I am assuming that when I see the figures for annual
> Distributor commissions, it includes theirs and accounts for a
> rather, um, sizable percentage of the whole. I can't bear the
> thought of reading through all the Market America SEC filings again,
> but here's a link to start with if you answered the same way I did
> when you took your career test:
> http://www.secinfo.com/$/SEC/Registrant.asp?CIK=880121.
>
> So there's a good likelihood of more than $360 million a year flowing
> in from Distributors to a private company that's owned by, I think,
> fewer than 10 people. All of which made me think "Man - you can make
> a LOT of money in network marketing! Just don't be a Distributor."
>
> Nicole
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