Will the Herbalife decision spell the end of MLM as we know it in the USA?
(And that might not be such a bad idea…)
Herbalife – as of 7-15-16 – can not pay its big earners – the recruiters – like before. It’s designed to curb front-loading. Any customers – retail or preferred wholesale – are paid on. Provided they are not also selling. That is, they are NOT distributors.
Now, of the total volume a rep has for any pay period that they’re eligible to be paid on, they will be paid NO MORE than on ONE-THIRD of volume that is generated by their downline non-customer orders and their recruit orders. (Any customer orders by anyone in the downline are paid on in full to the reps and to their upline – it’s the distributor personal orders and recruit orders that are subject to the restriction)
Any other pay for eligible volume for a pay period MUST come from customers…defined as verified buyers who are not connected to the company as distributors. All customer orders must be verified to prevent shenanigans (like paying for your relatives who don’t really use the product, or signing up the dog…)
So if a distributor and their downline have little or no customer volume that pay period, then 2/3 of volume that they used to be paid on – their downline non-customer orders and recruit orders obtained – they would not be paid on anymore, as of this agreement. That’s how I read it. To prevent front loading as the primary driver of income to top recruiters.
Because only 1/3 of the volume allowed to be paid on can be from downline and recruiting orders.
The rest – 2/3 of the eligible volume – must be from verifiable retail customers (who are not distributors).
This has been imposed on, and agreed to, by Herbalife – one of the top MLMs with sales in the billions per year (all three of its entities are signers on the agreement – USA, International, and the Partnership),
This means customer acquisition will be the primary driver, because that’s what MOST of the distributor rewards will be based on now.
Will the Herbalife ruling become “law” for MLMs throughout the USA?
Nobody knows. But I’d get some customers and not just recruit.
PS Who’s affected? The biggest earners and all recruiters in Herbalife. They’re the folks who get the big package orders and who get others to do the same. And who cross the stages around the world.
Who’s not affected? Those who are primarily customer gatherers.
PPS Yes, you CAN still recruit some in Herbalife. That’s how the business grows – if those recruits get customers too. But the FTC ruled that recruiters are basically selling to each other. And that the recruiters have very few end users (customers) who are not also distributors. (Remember the old, “Is anyone SELLING this!?”)
Can they sneak by like before?
Herbalife’s agreed to pay for a 24-7 monitor – for the next SEVEN years. They are to report to the FTC on compliance for this and many other new rules H must play by, to stay in business in the USA.
Want a bit more? Here’s an interview I did on this quite momentous agreement – which also tells what kind of training Herbalife must offer new reps BEFORE they can either be paid anything or sign up anyone –
PPS You can also pick up the (for right now still) complimentary orange eBook, “If My Product’s So Great, How Come I Can’t Sell It?” (Click that link, see top right side of the page, orange square, see it?)
Leave a Comment