If you’re in the MLM industry, by now you’ve undoubtedly heard of the $200 million fine the FTC just slapped on ‘once mighty’ Herbalife. I’m saying, ‘once mighty’ because this fine was very possibly the beginning of the end for Herbalife and also a wak- up call for the vast majority of the rest of the MLM and Direct Selling industry that has abused the public’s trust for so many years.
What have they done that is so naughty, you ask?
It’s simple. Basically, they just got greedy. If you want more detail…here it is:
A faulty and misrepresented opportunity
A lack of technical innovation that has resulted in a system that doesn’t meet the needs of today’s consumers or home-based entrepreneurs.
The FTC, in effect, said that Herbalife was a pyramid operation, even though they refrained from using those exact words. This was probably because they didn’t want to rock too severely an already fragile US economy but it’s clear that ‘pyramid’ was exactly what they were describing.
So, what’s the fallout going to be?
Here at Markethive, we think that Herbalife is probably ‘toast, dead meat, Big Casino, swimming with the fishes’ for all intents and purposes. Their brand will linger for a while longer but probably will never fully recover.
The sad fact is that Herbalife, and the countless other companies which operate in a similar manner, are too entrenched in the ‘old school’ MLM methodology to make the necessary changes in time to move into the new age of the home-based entrepreneur. And a lot of distributors who needed the opportunity these companies promised are going to be left with nothing but an I.O.U. for the time and money they spent.
>More and more of the public is too savvy now to fall for the ‘hopes and dreams’ MLM pitch now. That’s why the vast majority of MLM companies are losing approximately 50% of their distributors every year. In fact, MLM companies have little if any political or social ‘capital’ left to spend not only with the public but also with regulators.
Up until now, the MLM industry has always had it’s detractors and its promoters but MLM companies, leaders, and so-called interest groups like the Direct Selling Association have been able to maintain a charade of propriety by various means. Obviously there was rot ‘below the decks’ that was never properly addressed.
But, with this latest FTC decision, the cat is officially out of the bag now and the MLM industry traditionalists need some new thinking.
In trying to learn from the past (and especially these recent events) and move into the future, the present question is: Where does the MLM and Direct Selling Industry go now and where can aspiring home-based entrepreneurs find the opportunity they seek in today’s promising but uncertain digital age?
In Markethive, we think we’ve got some answers. Here are our 9 Survival Essentials For The MLM Industry:
Companies must have superlative products or services. In fact, truly next-generation MLM must be characterized by superlative products and services that have no competition in their respective market. That market supremacy will not rely strictly on price but rather on superior value. And… companies will not expect everybody to want to be ‘in the business’ but rather will have a clear retail-only distribution channel for people who have no interest in their business opportunity. Indeed, these customers might not even be aware of an opportunity. This will give stability to those who do choose the business-builder route within their respective MLM company. Example: Just because I want to drive a Chevy truck doesn’t mean I want to be pitched on buying a dealership.
Question – How can you tell if an MLM company’s products are competitively priced?
Answer – If their products won’t sell in the public marketplace, e.g. on eBay, for more than you, the Distributor, pays the company for them, then they are not good products and you are being ripped off. And you’re ripping off your friends who buy those products.
Companies must have virtual warehouses for their distributors in order to relieve them of the burden of stockpiling inventory in their homes or garages as has often been the traditional MLM model. In fact many MLM companies still load their distributors with inventory that will never be sold. Amazon has proven that the ‘virtual warehouse’ concept works. MLM companies need to adopt the same idea. This one innovation alone will likely at least double product sales, increase distributor retention, and finally make home based MLM and Direct Selling businesses competitive with local retailers.
Companies must engage in cooperative advertising and marketing with their distributors, wherein companies match advertising funds from distributors and also run ads which drive prospects and/or customers to a distributor’s 800 phone number or to the top of some other type of sales funnel. Other industries have been doing this for years. One MLM company did this in the past and was extremely successful as a result however they ceased this practice and reverted to the old-fashioned ‘hopes and dreams’ model… a move which they probably regret now as their business continues to decline. However, MLM companies which do this correctly will enable distributors to build very successful businesses.
Companies must enable their distributors to E-retail. Once the virtual warehouse function is set up a distributor, companies must give them an online interface whereby they can log into their ‘business center’ and perform any desired marketing or business management function, i.e. send samples, fill and ship product orders, and reorder inventory…all while simultaneously carrying on a live text or voice conversation with a customer or prospect. This contributes tremendously towards removing the unprofitable burden of back-office paper pushing from the distributor and enables him/her to focus on bonding with the client or prospect.
Companies must provide a robust 800 phone number telemarketing platform. This is an affordable and very effective marketing tool which starts with distributor getting an ID# from the company. The ID# resides on company servers and is used for all manner of tracking. The operator talking to the customer or prospect may or may not be the distributor but the operator interface displays the source of the call. The stimulus for the call could be any type of media ad, event, or call to action. Operators receive and handle the calls and have the ability to make notes on the account, forward the call, or 3-way the call as appropriate.
Companies must use API’s (Application Programming Interface) to enable their distributors to establish a smooth presence on online stores. This is where they can ´meet’ the customer when they shop on eBay, Amazon, Alibaba, or any of the large number of ecommerce sites that are popping up today. In the past, MLM companies have ignored the advice of qualified experts and have resisted authorization of API use by their distributors, claiming they (the companies) would lose control of prices and selling policy. In fact, properly constructed API’s do allow the company the control they are unnecessarily worried about.
Companies must develop, allow, and encourage a robust retail presence, in the form of retail-only websites for distributors. One of the FTC’s specific complaints concerning Herbalife was that Herbalife did not actively encourage retail sales by their distributors. Thus contributing to the fact that Herbalife had almost no retail sales. Instead, Herbalife and other MLM companies have insisted on cramming ‘Hopes and Dreams’ propaganda about their worthless opportunities onto distributor sites. And they wonder why they don’t have many retail sales. This is a huge ‘turn-off’ to many retail customers. To reiterate, legitimate business retail product irrespective of ‘ownership’ (or pseudo-ownership) opportunities. And they don’t distract buyers with money in their hands with ‘a great opportunity’.
NB: here is it also noteworthy that no current MLM company encourages their distributors to build their own database of customers… which any smart distributor should do. Some companies even expressly prohibit it.
MLM companies need to provide the marketing systems for their distributors to win in today’s modern digital marketplace. This includes such items as autoresponders, social broadcasters, social media tools, conference rooms, blogs and other publishing platforms, brandable and replicable PDF’s, video marketing platforms and tools, co-op advertising support and software, and (of course) high-quality training. No MLM company, other than the emerging joint venture between Valentus and Markethive, have even attempted to do this.
Because business is competitive and technology is rapidly evolving, MLM’s need to provide constant, quality, live and archived video training. A few MLM companies have attempted to do this but the overwhelming majority of that training has been mostly motivational ‘hopes and dreams BS’ rather than information which actually enables a distributor to win in the marketplace.
Final Thoughts and Summary
A look across the MLM and Direct Sales landscape today reveals a dismal scene of the majority of companies hooked, like an addict, into Old School methodology and philosophy which did work briefly in the early days of the industry but in fact no longer does. It’s clear that the reputation of the MLM industry has gotten worse and not better.
Even worse, the landscape is littered with battered and broken dreams and self-images…interspersed with the crafty, grinning, minority who have made huge fortunes in MLM at the expense of not just the aforementioned X-distributors but also millions of consumers who did not get the product and/or service they deserved.
There are two companies, Valentus and Markethive, who believe this situation needs to change and are doing something about it. Valentus has a great tasting, weight-loss coffee that’s very reasonably priced, a strong retail reorder rate of 80%, and an excellent compensation program. Matter of fact, experts agree that Valentus is currently entering momentum.
The other half of this unique equation is Markethive, an innovative inbound marketing platform, free for all. Markethive is supported by advertising…similar to Facebook or YouTube and is actually better than similar platforms from better known and longer established companies like Hubspot and Pardot which start at $200 and rapidly escalate into thousands of dollars per month.
Markethive’s platform is rapidly becoming the new ‘Platinum Standard’ automated marketing system of choice for home-based entrepreneurs and is perfect for almost any business.
Just coincidentally, (some would say, ‘by fate’) the principals of these two companies (Dave Jordan, CEO of Valentus and Tom Prendergast, CEO of Markethive), share a common vision for a New Age of The Entrepreneur and the contribution that their respective companies can bring to the MLM industry.
For more information on anything discussed in this article, or to get involved in the discussion yourself, you are encouraged to register for a free Markethive membership, here. If you are an aspiring or disgruntled home-based entrepreneur looking for a great opportunity, click here. Or….if you just love great coffee and/or want to lose some weight, click here.
Markethive Developer and Case Study Writer