Herbalife might have given our industry a new future…
We can thank the FTC and its ruling on Herbalife’s business for this. (Herbalife (H) is one of the top ten companies in our industry).
Here’s what came down for H, and we can expect this to spread throughout the industry, since all of the network marketing companies are regulated by the FTC.
– No more income-hype-machine. Instead…
– Business (income) success is recognized to be sales skill driven (versus hype driven)
– And. Product must have real value for its OWN sake. Namely people buying it who are NOT selling it.
Based on the FTC decision with Herbalife last week, the industry will have to change – big – how it does business.
“This settlement will require Herbalife to fundamentally restructure its business so that participants are rewarded for what they sell, not how many people they recruit,” FTC Chairwoman Ramirez said. “Herbalife is going to have to start operating legitimately, making only truthful claims about how much money its members are likely to make, and it will have to compensate consumers for the losses they have suffered as a result of what we charge are unfair and deceptive practices.”
1. RETAIL focus. It’s All. About. Customers.
***80% of someone’s Herbalife organization needs to be retail sales, customers ordering every month, in order to be paid in full on any recruiting sales***
2. The autoship is on death row. Herbalife is not allowed to use auto-ship anymore (anybody happy about that?) so you can expect this will likely change industry-wide.
3. Front-loading – no more (= cannot paid on like before) anymore @ H.
It. Is. Time. It’s not easy fast money for those with no sales and marketing skill sets. That’s why almost nobody earns money with the opportunity…
“According to the FTC’s complaint, Herbalife claims that people who participate can expect to quit their jobs, earn thousands of dollars a month, make a career-level income, or even get rich. But the truth, as alleged in the FTC complaint, is that the overwhelming majority of distributors who pursue the business opportunity earn little or no money.”
The new big thing: Distributors must sell the product. And the comp plan must pay for actual sales to customers, instead of on how many downline distributors buy product.
“The settlement announced today requires Herbalife to revamp its compensation system so that it rewards retail sales to customers and eliminates the incentives in its current system that reward distributors primarily for recruiting. It mandates a new compensation structure in which success depends on whether participants sell Herbalife products, not on whether they buy products.”
And the FTC has stated that Herbalife is no longer allowed to suggest or imply that’s there’s quick easy money for anyone who signs up. If they’re caught, it could be curtains for the company.
With changes like this – See FTC Ruling here – if implemented across our industry, we might actually EARN the label “profession”. Because for the first time, companies and recruiters would have to acknowledge people need SKILLS to make the big incomes…
Build YOU, Inc. Who doesn’t want to Build YOU, Inc, anyway?
If you are ready to master advanced sales and marketing skills, send an email here with the subject: “I want to earn $3-5,000/mo and want to learn to Sell, Market and Promote”. Will get back to ya.
Keep coming with updated info.
At long last we may actually get some recognition as a profession…
For those of us who have tried & tried to find a customer-based mlm I say HURRAY!
It will be interesting to see how many of the DSN Global 100 will be left standing after 2017.
In South Africa recruiting is the norm when it comes to MLM companies. I’ve been involved with more than 5 companies. Selling products was not the focus of the companies. Is it not the focus in the USA that is applied in other countries worldwide to move products fast to improve their sales turnover?
I don’t think this will have any affect on the Fuller Brush Co. that pay between 20-50% retail profit
Fascinating. Almost all of these “changes” were mandated on Amway in the 1970s for much the same reasons, yet there was no real follow-up to ensure compliance.
The simple fact of the matter was that these court-imposed requirements were honoured in the breach, not in the compliance!
Some of the conditions:
• 70% of all product sales had to be retail sales and had to be documented.
• Every distributor claiming a bonus had to submit documentary proof that they sold to at least 10 retail customers in a qualifying month.
• Bonuses could not be earned by any distributor who failed to meet either of these requirements.