Who gets the Pyramid Quack award?
On our conference call the other day, people wondered how to talk and act so that people would stop asking “Is this a pyramid/one of those things?”
One way is to stop, forever, saying and doing the things that evoke this image in the minds of others – i.e. people “who abuse their friends and try to sell them stuff, and get them to sell and take a percent.”
For years, it’s been all about getting people to sell and recruit. That’s the reason countless people discouraged (and ridiculed) my customer-oriented students, “There’s no money in customers. All the money’s in the recruiting.”
I’ve taught hundreds of classes to those who prefer to amass customers. It’s lucrative in some companies, and many stayed in the business because they learned how to do that, instead of quitting.
But some companies pay you to act like you’re a pyramid type. We will bestow upon them the “Pyramid Quack” award. Yes, here. To encourage them to change their pyramid quacking ways which make their people look bad.
If it quacks like a pyramid…
“a pyramid scheme is…[fusion_builder_container hundred_percent=”yes” overflow=”visible”][fusion_builder_row][fusion_builder_column type=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none”][where] the need to subscribe newcomers outweighs whatever benefits the products or system has to offer. Many MLMs sell distributorships more than cosmetics [name your product or service – KK].” –Coercion: Why We Listen to What “they” Say
Some people don’t know it from the way the business is promoted, but we do two things to make money in the network marketing business:
1) get customers (earn a percent on their orders)
2) Get sales reps who want to get customers and more sales reps (earn a percent on their orders)
So based on what they pay people to do, which companies get the Pyramid Quack award?
One gal, Phyllis, a Tahitian Noni rep for years, told the group this:
Typical order: $120 for the Noni juice per month.
Pay for getting a customer (who doesn’t sell it) to buy it: 6%. That’s like $5 for getting a $120 order.(!!)
With such puny pay, who’d want to go after customers? They don’t, and haven’t, for years, she said. This pay plan tells it all: We pay you to get recruits – people who sell it. We don’t care about customers who just buy it (and who don’t sell it).
So, we were about to bestow upon the Tahitian Noni International pay plan, the Pyramid Quack award.
Then with great pride, she announced to the group: “But Kim, this past year they’ve worked to change it – because I think they heard you. As of May 1, 2006, they are paying 20% for customer orders. So now we get $24 for each of those orders!”
That’s what, 3 days ago? After almost 10 years of being in business.
(This conference call will be up on the Talking about Your Great Thing podcast site later this week, so you can hear the juicy details for yourself.)
Tomorrow’s blog: The story on the pay plans of two more companies: Young Living and Life Wave. Do they get the Pyramid Quack award or not?
Send in your company plan plan info and see if it gets the Pyramid Quack award. (Use Comments below.) Here’s what info to submit:
1. What’s the typical customer order amount? And what do you get (range) if you find them, front line them, and they do NOT sign on to sell anything?
2. Name of company. And YOUR NAME.
Then we’ll check it out, and award the Pyramid Quack award to your company, or not.
After all, if it quacks like a pyramid…[/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]
Good on you.
‘Naming names’ is much-needed – a requirement underpinning real change in which we face and accept responsibility for our weaknesses… one of which is that for too long this business has had many unacceptable principles & practices – stuff we’ve either supported or kept quiet about.
Calmly and cold-light-of-day outing-it offers good ground toward a genuinely reformed business.
Thanks, g.
The idea is to encourage those who are in a position to do so, to make it better. The guys running companies like Noni can, and apparently, are. There are many to go.
Agreed.
And credit to Noni too…
‘Of course it ain’t all like that…’ this whole good/bad thing can be a dangerously divisive issue… triggering strong reactions and disagreement in which we often make emotional, knee-jerk decisions – then stand firmly by them, closed to ‘other’.
I honestly believe the ‘trick’ is, rather than one-sidely pronounce (which’ll please the choir but simply switch-off or piss-off ‘the others’), to ask – albeit leading – questions in a firmly enthusiastic manner which encourages and welcomes constructive response.
Is there any doubt that ‘some elements’ of this business lack decency and the manner in which
they’re presented are simply disingenuous?
And, isn’t ‘outing-them’ whilst focusing toward ‘better’ a clear path to progress?
Kim, just to be clear here:
The definition of a customer is someone who buys at the retail price and has not signed any agreement with the company.
What are people called who sign an agreement so that they can buy at wholesale prices (in our case, 20% less than Retail) but have no intention of, and no obligation to, recruit?
Hi Shelagh:
They’re all customers. The ones who get a discount because they commit to buy regularly are often called “preferred customers” and the one time ones, just ‘customer’ or retail customer.
The key is, they do not sell the stuff. They’re like any customer – just that. They are buying, not selling.
Discounts are always available to customers – whether it’s like Sam’s Club, where a membership fee gets someone lower prices, or whether they buy in bulk, or buy regularly…
So how to define customers? They buy it. They don’t sell it.
My typical customer order is one 2-bottle pack of EnviroMax-Plus liquid gasoline catalyst. It costs $37.95 + S&H. The BV on this is $20.00. The commission is 35% which means I earn $7.00 on each order. The company is Extreme Research.
However . . . (you knew there’d be a “however”) the company forces customers to register and provide their SSN, which is normally needed only for reps. Then they bombard the customer with emails about becoming a “co-partner,” their term for a rep. I have had customers stop ordering because of this. It’s a back-handed manipulation of the recruiting evangelism. It tells the customer that as a customer their only important if they become a rep. They’ll only get the discounted price if they become a rep (it’s only a few dollars difference). And they spew their recruiting evangelism and gushy hype all over them like a baby upchucking milk. People are not stupid. They see that and know it won’t stop. In their minds it relegates them to the lowest rank in the company’s pecking order. They’re just a customer. Of no importance because they won’t sign on to sell. It’s no small wonder that people think it’s a Ponzi (or pyramid)scheme.
Hi Kim;
I’m a Tahitian Noni rep, and I want to clear up this gal’s explanation of the pay plan. TNI, like most companies in the industry, is slanted towards recruiting, so the people that join don’t see the compensation plan in a balanced way. If someone is signed up as a customer, they’re encouraged to also sign as a rep, so as to get the wholesale price. The idea is, if they get excited about the products, they may want to become a biz builder too.
If they buy 4 bottles of juice a month at wholesale, $120/mo US the most you could make this way would be 1-6%. (Royalty income)
So,the company has decided to ‘sweeten the pot’ by paying a 20% rebate for these types of customers.
What the other gal left out, this rebate has always been available when selling to RETAIL customers-
EX: sell 4 bottles of juice to a retail customer,your cost is($120) minus retail price($168)=$48,plus the 20% rebate,($24)based on wholesale cost=$72 gross profit.
My 2 cents.
I’m Walter Reade (from Appleton, WI), and I’m a rep for Pharmanex.
A typical customer order is $50-100. You get 15% of the order whether or not the customer sells as a distributor. The only way to make money is to sell product, or to have your downline sell product. (You get 5% of your downline volume.) You don’t get money for recruiting per se.
I am also a rep for Pharmanex and what Walter means is once you have achieved executive status AND reached have a monthly GSV of $50,000 you get 15% on your sales. But if you aren’t a qualified executive (which is a one to three month process during which you have to generate $4,500 in profit) you only get 6% on your customers. So I guess Pharamanex is a weird paradox in that once you generate that first $4,500 then they start paying attention to you and rewarding you for generating a loyal customer base. Just wanted to make sure the whole truth was known.
Alright Kim!
Ahh the gory details of it all … but SO important for people to begin to become clear on.
You’ve already influenced me firmly in the customer direction.
I appreciate you!
Andrea Goodsaid
Re: Pharmanex Comp Plan,
Anonymous is only partly correct.
You start at 6% commission. When you are qualifying to be an Executive (the process starts when you get $1000 in sales in one month and finishes when you are at $2000 per month) your commision kicks up to 12%. Once you are an executive, you get the base 6% on your front line, PLUS an additional 9% to 15% depending on volume.
Bottom line — If a person maintains $2000 a month in sales, they will be making %15 commision, regardless of whether or not their front line sells.
Hi Kim,
I’m with Lifewave. I used to think our company didn’t quack like a pyramid. Today I’m not so sure.
Here’s why:
A typical monthly order is $89.95, the selling distributor gets about 22%. Not bad, if I had 100 customers buying each month I’d be making 2K/month.
Here’s where my doubts come in, we are rolling out a new product but it will only be available initally to those who are “Team Leaders.” To be a team leader one must have sponsored 8 distributors 6/8 must be at a Silver/Gold level-more intial product- and 6/8 must be on autoship. I’ve sponsored 13 people but only 5 at the Gold level. All the rest are at the lowest level. Why? Because Lifewave has yet to have a price break for recurring customers so I’ve set people up their own wholesale accounts so that they can purchase at a wholesale rate.(I get BV points for this on our comp plan)
So now Lifewave is discriminating against those who are not recruiting. Humm…do I hear a quack?
Hi Kim,
I’m with Goldshield Elite and we get 20% if the customer buys at Retail price (either direct from us, or direct from the company through our personal website).
There are additional bonuses on personal retail sales which rise to approx an extra 25% if you are retailing over $250 a month (and many reps do).
If the customer buys at wholesale price, she does not have to place a regular monthly order ( and many don’t, preferring to place just a couple of orders a year), but there is an incentive to do so in the form of points to exchange for free products which equate to a further approx 7% discount.
We get from 7% (up to 8 customers) up to about 18%(over 50 customers) on these wholesale customers, depending on how many we have of them. Which I think is a great encouragement to find customers, be they buying at retail or wholesale.
Goldshield Elite is strongly based on sales to customers -rather too strongly I suspect our President thinks at times!
Hi Kim,
This is John Counsel, founder of The Profit Clinic MLM Success Centre in Australia.
Not many people know that I actually work with a couple of network marketing companies. My primary program is Flantech International. Its pay plan was designed to reward distributors who sell products very well, in two ways…
First, the usual retail commission. This can be whatever the rep wants it to be. Under Australian trade practices laws, all reps have the right to charge what they want. Companies that try to force reps to charge a fixed retail price are subject to fines of $100,000 per DAY per product for collusion and price fixing.
Second, Personal Productivity Bonuses. The company’s computer creates a special “virtual leg” just two levels deep to handle a rep’s personal volume (not group volume). The first 100 CV of personal volume is the rep’s monthly qualifying volume, on which no bonuses are paid. The next 100 CV is rolled down to the first level of the virtual leg and the rep receives 15% of that volume, on top of any retail commissions earned.
Everything over the first 200 CV in a month rolls down to the second level of their virtual leg, and the rep earns 55% of that volume!
Upline leaders earn normal override bonuses on all that volume, but they don’t earn the biggest share… that goes to the people who EARN it.
A typical retail or preferred customer (committed wholesale buyer, not a seller) personal order is around 50-60 CV per month and costs around $80-$100, depending on the products ordered.
It’s a great incentive for people to actually find and sell to customers… instead of trying to find ways to rort the system so that they’re not robbed of their rightful earnings in order to reward the upline heavy hitters.
Someone who gained 100 customers in 100 days, and they all bought 50 CV each per month, would earn the following:
Total sales CV: 5,000
Bonus on first 100 CV: 0
Bonus on second 100 CV: $15
Bonus on balance (4,800 CV): $2,640
Total Bonus: $2,655 per month on their PERSONAL volume alone!
That’s what I call a decent pay plan for retailers!
Hi, Kim:
I’m with Legacy for Life, and our plan rewards customer gathering; we even have bonuses and awards that are based on customer gathering.
As a distributor, I am paid 15% on regular retail customer orders and 20% on preferred customer orders. The percentages are calculated based on the retail price of the product. A typical customer order is around $100 retail. There are no quotas or eligibility requirements in order to get paid on customer sales.
The preferred customer program allows customers (not distributors who just use the product themselves) to get a 10% discount by being on autoship. It costs them nothing to become preferred customers, and if the order is at least $100 retail, they also get free shipping. Legacy ships everything directly to the customer, so I don’t inventory and resell anything.
Customers can also refer other customers and earn referral credits which they can use to pay for their own orders. And those referred customer orders still earn the distributor a commission.
And yes, we do have people who enroll as distributors in order to buy the products at the distributor price. We get paid on their orders in the form of monthly overrides on seven levels of volume plus infinity bonuses.
So, to sum it up, I am happy to say that we love customers at Legacy for Life!
Hi Kim
This is Brenda Mogensen I am with USNaturals(Sizzlers)a company based in Utah.
Here is how we get started to be come a dealer…
Your order consist of 4 packets of Sizzling Minerals @21.50
per packet which is $86.00, account set up fee is $14.00 and postage $6.33. total amount $106.33
You will be paid 50% commission on every new customer you acquire…your first level in your business making $43 commission on every new front line sale.
To become qualified you need to purchase 2 packets(monthly)to be paid 5% commission on all reorders (wholesale) from customers/dealers in your first seven downline levels.Each downline dealer who fails to qualify it will roll up to the next level.
There is also bonus plan on 1st level dealers a requirement… Sapphire(5dealers),Ruby(10dealers), Diamond(15dealers) and double diamond(25dealers), triple diamond(50dealers)….8%,10%,15%,25% 50%Bonus on commission.
You can place your personally sponsored dealers anywhere within your downline.
Sales volume from downline levels below your first seven levels, will compress up and fill any level, within your first seven levels, that have no sales for that month.Each month the commission, in the account of each dealer who fails to qualify, will roll up to the first dealer in their upline who has placed a qualifying order for the month.
In my opinion, the compensation plan in a few MLM companies I have joined were so complicated and lenghty.
I find this the best and simplest compensation plan to follow which allows me more time to talk to the people about my product.And knowing that, I dont have to worry about what comes next….lengthy compensation plans. It makes it all that much easier to get out there especially when one is on their own.
Kim I appreciate everything that you have done for us you kept us going with your thoughts and inspirations. Cheers Brenda
Hi Kim,
This is Karen with AMIGO Health. My company offers just ONE product in 2 forms: AMIGO juice in either powder or capsules. AMIGO contains 3 Superfoods: the Acai berry, the Mangosteen pericarp and the Goji berry, all freeze-dried into ONE potent powder. All 3 fruits are *packed* with nutrition and antioxidants. The customer or rep does not have to pay costly s/h for heavy glass bottles, and there’s a much higher potency of the sought after antioxidants.
THE PAYOUT: Weekly
Structure: 3×9 Forced Matrix
Commission Qualifying Details:
Qualify to earn 3% on all 9 levels with only 1 personally sponsored customer or rep/dealer and a $49.95 monthly product order
Qualify to earn 9% on levels 1-3 and 3% on levels 4-9 with only 3 personally sponsored customers and/or reps/dealers and a $49.95 monthly product order
Qualify to earn 9% on levels 1-6 and 3% on levels 7-9 with only 6 personally sponsored customers and/or reps/dealers and a $49.95 monthly product order
Qualify to earn 9% on all 9 levels with only 9 personally sponsored customers and/or reps/dealers and a $49.95 monthly product order
Earning Potential – Payout on one 3 x 9 Full Matrix: with all members in the matrix placing a minimum order of $49.95*
3 x 9 Matrix = 29,523 members times a $49.95 mo. purchase for each member
9% of $49.95 = $4.49
Therefore, a full 3 x 9 matrix with all members purchasing just $49.95 a month will pay out a total of over $130,000.00 ($132,558.27 to be exact) per month in commissions to you.
*Potential payout is higher if members in the matrix place a larger order, at the 2 container option for $80.00 or the 4-pak option for $120.00 etc.
Reach Maximum 81% PAYOUT with a $49.95 personal monthly purchase and *only 9* personally sponsored customers and/or reps/dealers.
Re-entry: Ability to re-enter once your first matrix is full
Note that customers on autoship receive the same wholesale product price as reps on autoship. When a rep signs up a new customer, a spot on the matrix is filled just as it would be for signing up a new rep, and the commission is the same.
Amigo Health offers many bonuses to reps that sign up new business. Right now, any rep that upgrades their personal autoship order to one of the $120 Business Builder Packs and has at least 3 people in their matrix, will receive 5% of the company’s *gross sales*.
Amigo Health is open for business to reps in 21 countries and is shipped to customers in 42 countries. Expansion is underway.
I love the simplicity of the pay plan and the fact that there’s just ONE product to deal with! Customers are held in just as high esteem as the reps, so there’s no *quackin’* here!
http://ilovemy.amigohealth.com
Hi again Kim,
Just want to thank you for your inspiration to create my very own blog!
I worked on it all afternoon and posted 3 articles so far…I really enjoyed putting it together.
It’s nice to know that I can now send my prospects to one link, then they can decide what they want to look at from there:
http://ilovemyamigo.blogspot.com/
I’d be honored if you could find the time to visit my blog!
Many Thanks, Karen O
ilovemyamigo@cox.net
Wow! After reading these posts, I am more proud than ever to represent AVON! Our Leadership strategy is relatively young, considering that the company is more than 120 years old. One of my favorite things is being able to “lead with the brand.” For better or worse, everyone knows my brand.
We have been, and always will be, a product-focused, customer-service oriented business and we sell value-priced items at high volume. All reps start at 50% earnings in their first two months, then earn on a sliding scale from 20 – 50%. However, every rep has the opportunity to level out at 40% in her first year. She can go up to 45 and 50%, but does not go down.
Leadership pays on as few as five recruits and with personal sales of $250 every two weeks.
Again, because we are a high-volume business, it takes a large team to realize a full-time salary at the Executive level. ($30 – $60K) I know that sounds like pocket-change to many of your programs, but it’s only a $10 entry into our business. More importantly, my prospects BELIEVE in their ability to attain that.
Many of my team members are single, middle to lower income moms who have had their lives changed by the $300 – $500 per month they earn with Avon. They have been able to quit their 2nd or 3rd dead-end jobs and take better care of their children.
Yes, I could go on and on. But you definitely won’t hear any quacking!
Hi, Kim—thanks for your blog and newsletters. They really help.
The last blog I received said that we would check out Young Living for the ‘quack fator’ but I didn’t get anything about it.
I am in your class now and I just read the article you recommended. I got to the part about TNI winning the quack award. I don’t mind you pointing out things that are wrong with our plan if they are accurate, but Phyllis’ statement was not accurate as it was written. I have been a leader with the company for over 9 years and as far back as I can remember they have always paid 20% on customer orders. I have hundreds of customers myself and I earn 20% on all those customers (there are no requirements to earn that except being on AutoShip of 120 PV per month which can include customer orders). We also have the option of the retail markup which is approximately 25-30% on all products, which creates a huge earning potential on each product ($16 per bottle on TNJ alone). These customer orders can create a substantial income in itself and some consultants prefer to do just that, especially healthcare professionals.
We have always been trained to keep customers as customers and only sign up business builders to maximize our income with our pay plan. That is why we spend millions of dollars marketing our products and our brand to the general public through ads in women’s magazines, celebrity endorsements (who really use and love the product), celebrity athletes, motion pictures, Tahitian Noni Café’s, Tahitian Noni Lifestyle Centers, etc. They have always had the marketing strategy to reach the 87% that were not interested in network marketing rather than go after the 13% that everyone else is fighting over.
There is an additional new program they are starting in June that will increase our customer benefits by allowing us to sign them up as a special “Customer Rewards” member where we still get the 20% plus we get to count their volume as if they are also our reps to qualify for extra incentives, bonuses, trips, etc. The customer will earn special offers and rewards from the company in addition to purchasing the products at a discount. Existing consultants will be given the option of remaining a consultant or switching to the new Customer Rewards program which will benefit consultants by removing anyone who is not actively building a business and not interested in doing so, so that volume will roll up to the next active builder. So it is a win-win for everyone. TNI has always been a product-driven company and always will be. I know all the top leaders in our company and they all promote the product. The passion for our product is what has driven our company to the highest levels of success creating $3 billion in sales in 10 years in 100 countries with over $1.5 billion paid to Independent Product Consultants. I just wanted to set the record straight.
I am in your class now and I just read the article you recommended. I got to the part about TNI winning the quack award. I don’t mind you pointing out things that are wrong with our plan if they are accurate, but Phyllis’ statement was not accurate as it was written. I have been a leader with the company for over 9 years and as far back as I can remember they have always paid 20% on customer orders. I have hundreds of customers myself and I earn 20% on all those customers (there are no requirements to earn that except being on AutoShip of 120 PV per month which can include customer orders). We also have the option of the retail markup which is approximately 25-30% on all products, which creates a huge earning potential on each product ($16 per bottle on TNJ alone). These customer orders can create a substantial income in itself and some consultants prefer to do just that, especially healthcare professionals.
We have always been trained to keep customers as customers and only sign up business builders to maximize our income with our pay plan. That is why we spend millions of dollars marketing our products and our brand to the general public through ads in women’s magazines, celebrity endorsements (who really use and love the product), celebrity athletes, motion pictures, Tahitian Noni Café’s, Tahitian Noni Lifestyle Centers, etc. They have always had the marketing strategy to reach the 87% that were not interested in network marketing rather than go after the 13% that everyone else is fighting over.
There is an additional new program they are starting in June that will increase our customer benefits by allowing us to sign them up as a special “Customer Rewards” member where we still get the 20% plus we get to count their volume as if they are also our reps to qualify for extra incentives, bonuses, trips, etc. The customer will earn special offers and rewards from the company in addition to purchasing the products at a discount. Existing consultants will be given the option of remaining a consultant or switching to the new Customer Rewards program which will benefit consultants by removing anyone who is not actively building a business and not interested in doing so, so that volume will roll up to the next active builder. So it is a win-win for everyone. TNI has always been a product-driven company and always will be. I know all the top leaders in our company and they all promote the product. The passion for our product is what has driven our company to the highest levels of success creating $3 billion in sales in 10 years in 100 countries with over $1.5 billion paid to Independent Product Consultants. I just wanted to set the record straight. Thanks! Michelle Sanchez, TNI Independent Product Consultant
Hi, Kim,
As you say, customers are important!
My company believes that as well. We can even place our customers under our distributors (that gives 15% to the one whom we placed our customer under and 35% to us!) So, if we had 100 customers, and we placed them on Level 2, we would be earning $3,500.00 just on our CUSTOMERS if they ordered 100 points worth (Many times I have customers who order $400 worth, in which case, I can earn $120.00 just on that order!) Pyramid? No! The UniLevel is designed so that anyone who joins at any time can bypass up the ladder and be the highest income earner! I LOVE it! It is fair to all! Hope this helps!
http://www.WelcometoAdvantage.com/Margie
Hooray! I have never seen such a friendly company to customers and customer/distributors as my company!