MLM Editorial: MLM Big Dog Deals The Conversation Continues

MLM Editorial: The Conversation Continued On Big Dog Deals

This conversation has been going on for years. However, over the last 36 months it has taken a front-seat due to the decline in the economy, and the consolidation and merger of some direct selling companies. This is the most current conversation I was a part of and my video editorial.

MLM Big Dog Deals: The Conversation Continues

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16 thoughts on “MLM Editorial: MLM Big Dog Deals The Conversation Continues”

  1. Mike,

    Thank you for the kind words. We hope to make this platform and community fully driven by the members.

    I have been splitting my time between corporate duties and personal business. I should have your responses this weekend.

  2. Brent,

    Great response. Again thank you for the kind words, and this platform is only going to get better. Today we opened new registrations, and by Monday our goal is to open up for each member to create their own blogs, and to launch the forums.

  3. Bob K,

    Very well said, you are exactly right when you said, "My biggest concern is and always will be that the money for these deals is ultimately coming out of the pockets of the average distributor and not the company owners or top leaders."

    It is a travesty in the industry when top leaders are paid huge sums of money to move their teams from one company to another, when the money could be put back into the compensation structure. If there really is a budget within a company that may be used with discretion to bring the "big dogs" into the company, why not use those funds to enhance the opportunity at the lower levels?

    In my humble opinion, companies cannot sustain continued growth because of the improper allocation of profit dollars. Why do companies set up compensation structures that actually benefit less than 5% of the company? Wouldn't those profit dollars serve a higher purpose if utilized at the lower level to ensure continued growth and profitability at the grass roots level.

    Having been involved in the industry for 16 years I have witnessed many of the so called "big dogs" who lose touch with reality. Because they got involved early and had timing on their side, they have been able to achieve great success. But once a company has plateaued it then can become very difficult for an organization to move forward. The so called leader seems dismayed that others cannot achieve his level of success and forgets that he had timing and momentum on his side.

    All too often there are many unethical practices that occur just to keep those at the top, at the top. I have witnessed break inserts, moving entire organizations, and many other unethical practices. Once an organization stops growing, greed sets in and people, and companies seem willing to do anything to maintain the facade.

    If companies would actually do, what they all claim to do (which is create an opportunity for the little guy), the sustainability and growth of the organization will continue. As long as new people coming in can succeed (I consider breaking even success, because over 95% never do), a company could continue to grow and develop for many years to come. The more money that is held back for the elite leaders in network marketing, the less chance a new person has to break even. Why do people in the industry need to make a million dollars plus a year, when in reality a $100,000 a year income would but them in the top 5% of income earners in the U.S.?

    These are some of the problems that I see that plague the industry, I believe it is time for a change. Thanks for providing this platform Troy, God bless!

    Brent

  4. Troy,

    First of all, Love the new format. It looks great. I know you have been busy getting everything back up and running but I was wondering what your response will be to my post. You made it clear that you disagree with my "take" on the industry and you gave me a few examples of top opportunities for the new networker.

    As you can see I have checked these companies out and based on the numbers alone I have concluded that not only is it difficult for the "average" person to just break even but it is extremely hard for them to make any money at all because the comp plans are so biased to the "Leaders" at the top.

    I am interested to hear your response since you and Tom Chenault think I have "missed it." If you would, please explain to me HOW EXACTLY I'm missing it.

    Also, Mike Clouse said "And my opinion is that anyone at anytime can still make a large income in network marketing, the question is, are you willing to become the type of person it takes to hold it together…"

    I know that Mike is a respected leader in the industry but when he says "ANYONE at ANYTIME" I would have to respectfully disagree. I would ask him to kindly explain to me exactly what he bases his opinion on?

    Mike

  5. Bob K,

    Excellent comment!!! Thank you for adding such value to this community.

    Bob, I agree the average distributor doesn't have a voice. Which is why I have accepted a possition on the Board of the ANMP and on two committees which focus 100% on adding some meat to the voice of the average distributor. On these committees serving with me is at least one company owner. Our goal is to make a difference. And little by little we have. More and more companies are listening and are willing to talk to us on behalf of our members which are average distributors.

    It is also why this weekend we changed this site to a real community. In the last year you and other average distributors have made this community the #1 voice for the average distributor. I do hear what you are saying and I believe together we can make a difference.

    Again, thank you for caring enough to comment.

    Living An Epic Adventure,

    Troy

  6. Brent,

    Great question!

    Let's see if I can give an intelligent answer. First I would say that if a "supposed team leader" is selling tools, ad their downline find value in their coaching, then on the surface I do not have an issue. However here is where I do have issues.

    1. The leader, organization or several top leaders are not disclosing the fact they are making more money from the sales of the tools, than the sale of the primary products. To many times what we here is "We are making millions from "XYZ company." This statement, where might be true, is unethical because they are not clearly stating that the majority of the income is from their personal tools.

    2. If the "leader or their organization" is making money from the sales of tools, and are also splitting some of those funds between other top leaders for promoting those tools, then that should also be disclosed.

    Transparency is what people want these days. One of my mentors left Amway years ago, because he started making more from tools than the organization moving product. He passed away a few years ago, after going on to grow another large team. I learned a lot from him, and I realized we should never be afraid to share our beliefs even if our friends might disagree.

    I have several friends who make millions from the sales of tools. I even ran a tools company once. Tools are important, but there is a right way or wrong way of doing things.

    Living An Epic Adventure,

    Troy

  7. Troy,

    How do you feel about those supposed "team leaders" or "big dogs" who are making millions off of the sale of "business building tools". This is probably another hot topic for discussion. Many of the upper echelon distributors make way more from their training or tool systems than they do from the actual MLM model. What is your honest opinion on this? Is it ethical? Why do you think they do this?

    Thanks for sharing, Brent

  8. I think you are 100% correct that deals should be disclosed, it's misleading to not be up front with the facts. And my opinion is that anyone at anytime can still make a large income in network marketing, the question is, are you willing to become the type of person it takes to hold it together…

  9. Troy, thanks for keeping this topic out in the open, this is a topic which is very polarizing to say the least.

    I am one who feels that there are several reasons these deals should not be done but the reality is they will always be done so the best we can hope for is they be done in the light of day. I will say this. There should never be a reason why any company should not be able to say they did a deal and why it is a good thing if it is truly a good thing for the distributors. They certainly may not want to disclose the exact details but if they don't want to tell anyone they did it at all it seems to me only logical that it is very very unlikely that it will benefit the distributors in any way.

    My biggest concern is and always will be that the money for these deals is ultimately coming out of the pockets of the average distributor and not the company owners or top leaders.

    I also feel that Mike Collins brings up many good points and appreciate your responses, agreeing with some and pondering and questioning others. I would take issue on one thing Troy, The average distributor has no real voice at the table in most companies. This industry is really no different than any other in that it is a very top down oriented one. Unless they are making a very very conscious effort to actually listen to what average distributors, not just top leaders, are saying they have no real idea of what is going on. That is not because people are lying or evil but simply because everyone one of us has built in filters, we present things from our own perspective adding little words and comments which change the message. Most of us have probably played that game where a story or message is sent around a group of ten people and by the time it gets back to the originator is very different. The same thing applies here. Show me a company, in any industry, where the CEO, SVP's and other leaders are talking with average distributors or employees on a regular basis and I will be looking at a company that is in touch with their industry. Show me a group that only talks to other CEO's SVP's and leaders and I will be looking at a group that does not have a clue and is likely headed for disaster. Now I lived that in the corporate world for 30 years and there is no better predictor of success as far as I am concerned. To be clear it does not mean that everything they hear is accurate or even that they can do something they would like to but it does give them a perspective they need when making decisions. This is a wide topic and a person could go on forever but I will close by pointing a couple of things. Staying in touch with distributors takes conscious effort not lip service, if they are too busy to do it they are doing the wrong things. When staying in touch you have to be open to the idea that you just may be learn something. It is often very hard for a leader, in any business, to admit they don't know everything but the fact is nobody has all the answers. And lastly I would point out that I agree with the statement that too few industry leaders practice what they preach. This is a relationship business and relationships are always built on open communication and trust. Open communication means two way communication and that sadly is lacking in many many companies. The communication is all one way, from the top down.

  10. To be fair to Vemma, they do have a momentum bonus that will pay you $100 when you reach Bronze. You need to be on $120 autoship and have $500 on your left and $500 on your right. Under this scenario you would cycle once $25 and get your momentum bonus of $100. Obviously you break even at this point. And your success rate is doubled. That leaves everyone else under you still in the red. In Vemmas' example it shows 5 left and 5 right on 120pv. That means for every 1 person that breaks even on their autoship 10 have not made enough to pay for their autoship.

  11. Troy, this is a continuation of my post below. I had a little trouble posting it. Sorry. Perhaps you could delete the one posted at 7:49

    First of all I was surprised that you included Primerica and Keller Williams on your “Top 5” list of MLM opportunities. I was expecting companies like Limu, Vemma, Youngevity, etc.

    So let me start with Keller Williams. I don’t believe this company fits into the category of MLM. Although it has a comp plan tied to it I believe that is just a unique business model that allows someone to become a real estate broker without necessarily opening an office. And it does operate on the big ticket item. It doesn’t have a consumable product or service that generates residuals like the majority of MLM companies. I do like the fact that you can produce a nice income based SOLELY on your efforts I think this is a good opportunity for someone who wants to become a licensed real estate rep. But you can do that anywhere. This is not really an MLM opportunity.

    Next is Primerica. Again, I don’t believe this company fits into the category of MLM. Even though it has a networking component to it, it’s not really MLM. It’s a very unique business model. Also, I do like the fact that you can produce a nice income based SOLELY on your efforts I think this is a good opportunity for someone who wants to become a licensed insurance and a licensed securities rep. But you can do that anywhere also. This is not really an MLM opportunity.

    That leaves us with three. Rastelli, Vemma, 21Ten, and Lifeforce International. In order to “succeed” in business I will assume that you will agree that you need to make a profit. Let’s look first at what one must do in these companies to first break even. I am purposefully leaving out fast start bonuses because in reality you cannot count this as recurring revenue. You get it one time only. So, this analysis concerns business conducted after fast start bonuses.

    Let’s start with Vemma. Vemma has a binary comp plan. I have spoken directly with Vemma’s corporate office, as I have with every company listed here, as to what an associate needs to do to break even. To maximize Vemma’s comp plan you must be on a 120pv autoship. The good thing is that Vemma give you $1 for 1pv. In other words, there is no built in breakage to this part of the comp plan. So to break even you must generate $120.00 in commissions to pay for your autoship thereby “breaking even.”

    To generate $120 in commissions you need to “cycle” 6 times. Every time you cycle you get $22-$25. A cycle is 180pv on one leg and 360pv on the other. 6 x 180=1080pv on one leg and 6 x 360=2160pv. If you have all of your team members on a 60pv autoship you will need 36 reps on one leg and 18 on the other. That’s 54 reps on a 60 pv autoship to generate $120.00 Let’s bump everyone up to 120pv. If we do this we can cut the numbers in half 9 on one leg and 18 on the other. That’s 27 reps spending 120 bucks. 27 x $120 = $3240. So you generate $3240 in sales to get $120.00 This means it takes 27 people to actually lose money for you just to break even. So, to calculate the “success” rate you would take 27 x 4 = 108 then divide 4 by 108 and you have 3.7 percent. This means that with this comp plan 3.7 out of 100 just break even. The other 96.3 people lose money or in other words fail.

    And we haven’t even started talking about what it actually takes to make money. After you start to factor in things such as: buying extra product to promote your business, attending functions, buying tools (there’s a good one) and the fact that the “average” networker sponsors 2.2 people into their business you can begin to see why so many people fail in MLM. The majority of the money is going to the top. We haven’t even disussed breakage yet. In this plan you need 180/360 to make $22. What happens when you have 180/300? Zero. That’s what you get. That’s $480 in sales you and you team generated and NONE of you get paid. Nice huh? Sign me up!

    Next up we have 21Ten. This is probably the most generous plan of the four. It’s a unilevel. To break even you have to be on a $100 autoship and you need to sign up 4 personals on a $100 autoship. (Remember, the average networker only sponsors 2.2 personals into their business.) So for every 1 person that is just breaking even you have 4 more who are losing money. 1 out of 5 breaking even. That’s 20 % breaking even 80% losing money.

    Next is Lifeforce International. This is probably the least profitable of the four. This is also a unilevel. Right off the bat you have major breakage built into the comp plan. You have to be on a 100pv autoship. To generate 100pv you need to spend an astounding $155.00! That’s right. From the very get go this company is making a 55% profit off of its’ distributors. This is what you need to do to just break even. The company pays 5% on your front line or 1st generation, 40% on your 2nd, and 10% on your 3rd. So, you will need to sponsor 3 who each sponsor 1 and have 2 of those sponsor 1. That makes 9 people on 100pv. You would make $15 on your 1st gen. $120 on your 2nd gen. and $20 on your 3rd gen. for a total of $155 Congratulations you just broke even. You and your team generate 900pv equaling $1395 US. You made $155 one of your people made $5 and two made $45. 1 out of 8 breaks even. That’s an 87.5% failure rate. And we haven’t started making money yet. But the guys at the top are.

    In the interest of time I’ll leave Rastelli alone. If you want the numbers just look at the comp plan. Take the amount of pv required figure out your commission on team members sales then you’ll have an idea of just how much meat you have to sell to pay for the meat you are eating or sampling. Anything above that you can count as profit.

    No matter how you slice it Troy the sheer numbers are staggering. The comp plans are so slanted to pay the people at the top that it makes it extremely hard for the “average” person to make any money at all. Truth is, most people LOSE money in MLM. Throw in all the other crap that goes on in the industry and you begin to get a very different picture than the “Dream” we are selling people. I used to love this industry…….then I figured it out.

    Mike

  12. Ok Troy,

    Here we go. First off, I want to approach this from a mathematics or numbers approach. The reason I even entered into this discussion with Tom Chenault was that I figured that if I went to a recognized industry “Leader” and had this discussion with him I could get some answers to my concerns. I figured that, considering his pedigree, if anyone could give me the straight scoop it would be him. As you know the conversation didn’t go well as he resorted to condescension and insults rather than taking on and answering the tough questions. I sent you the following email:

    Hi Troy,

    Just to be fair. I would like to know: If I was a new person looking for a good NWM company to join, what would be your top 5 recommendations? If you include Ignite 360 in the list I would not accuse you of being self serving or biased. If you would think about this for me and shoot me an email I would appreciate it.

    thanks

    Mike

    To which you responded: (Edited by Troy To Make It Easy To See My Response)

    Mike,

    Sorry for the delay, I was swamped yesterday. Thank you for being fair, but Ignite 360 is too much of a niche to add to a list such as this. My list is in no specific order.

    1. Rastelli Direct – Excellent food and marketing. Priced competitively with some high-end delivery services. Just lowered shipping costs.

    2. Vemma – doesn’t expect the field to growth the brand, just their businesses. Truly partners with the field, and tweak compensation later year to increase income to brand partners earning less than $500 per month.

    3. Primerica – Still the world leader in “Buy Term Invest the Difference”. Very product driven, and a person can earn six figures a year strictly on personal production.

    4. Keller Williams – Although real estate is down, this company offers some of the best training and like Primerica a person can earn a six figure income just from personal production.

    5. There is a tie – 21Ten or Life Force International – both companies are run by proven conservative leaders. Both of these companies have more medical professionals than traditional networkers. Very product driven, and are willing to take the slow road to success.

    Hope this helps.

    Living An Epic Adventure,

    Troy

    continued next post………

  13. MLM Rep,

    I agree this is a huge concern. And I can fully understand where it can come from, and it is warranted. However, if the deals are disclosed, and folks are able to learn the real WHY the deal was cut. And learn the real story of how the leader and the original team started at the bottom and rose to the top, then maybe they can use the deal to their advantage.

    Lord know Orrin Woodward was not around when Amway started. He came on board during the Quixtar days and took TEAM to the top of the world in both Amway and as a Tools company. That story should be told. Then tell how MonaVie got involved. But if all people ever here is "Orin got a deal" then folks really wonder WHY!

    You present a very valid point, lets see what others might have to say. Together I think we can find a solution for all.

  14. Mike,

    Thank you for continuing this conversation publicly. Although we may not fully agree on all issues, I do believe this is a conversation where others may also have concerns, hurts and confusion and by taking this public we can all work towards a resolve.

  15. Dear Troy,

    First of all I want to say thank you for going public with our conversation. I think it takes guts. I would like to recap what I said so I’ve taken an excerpt from our email exchange and copied it. Here it is:

    “I have simply come to this conclusion: I believe that based on my experience it is now nearly impossible for me to sit across the table from an inexperienced and unsophisticated network marketing prospect and tell them that "all you have to do is a, b, and c and you will get free from your job." All of my experiences have lead me to believe that there are now so many mitigating circumstances, along with the need for one to be willing to deceive anyone in your downline that starts to ask specific questions about the industry, that it is close to impossible for the average or even better than average person to make it by just doing these "simple" steps.”

    I am going to post my reply to your video after I have written it. I will include facts to substantiate my opinion. And it is an opinion. I will say that before someone else does. But I would challenge your readers, whether they are distributors or CEO’s, to look at this (in the words of a good friend) NOT from a TOP DOWN perspective but from a BOTTOM UP perspective. Because this is what is truly at the heart of my argument. My argument is: that it is NOW nearly impossible for the AVERAGE person to actually MAKE money in NWM. And frankly, I will be very surprised if you leave my response up or unedited.

    Thank you again Troy,

    Mike Collins

  16. I think one reason why deals are not public is because then it would make the average person question if they can really make the big bucks from building starting at one.

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