Multilevel marketing, network marketing, company success factors Best answer on the web
Author:
jack
07 29th, 2010 in
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become succcesful?
Clarification: What were their strategies and what made them different
from other MLM companies that fail? I am looking for the 5-10 success
factors behind their billion dollar companies. There must be articles
written or interviews with their CEO online. Would expect answers to be like: Charismatic leader, sales force buy the products themselves, products are consumed etc.
Please note: I am *not* looking for how a sales rep can become
successful in their industry.
Fortunately, those nasty storms missed me.(Though we're being warned a new batch is en route.)
I hope you find my research of help:
Note: Amway co-founder Rich De Vos's name is misspelled as De Voss in some
of the following references, which can be confusing.
THE EVOLUTION OF MLM:
A good starting point is this history about the evolution of MLM, "The History and Truth of Network Marketing," by Greg Stewart, from MLM Secret, MLM Truth, Network Marketing Secret, Network Marketing Truth: http://www.internetnextstep.com/mlmsecret.htm
Both Amway and Herbalife have had to overcome tremendous obstacles in the form of bad publicity. While Herbalife's charismatic founder would ultimately (and tragically) harm his own creation's image, Amway has consistently managed to stay on-message in its wholesome family appeal, even while battling (eventually dismissed) charges of wrong-doing, early in the company's history.
Both companies thrived the way any hugely successful MLM does: recruiting wave upon wave of distributors. That's achieved thanks to both companies' dazzling ability to inspire ordinary people to believe they can realize their dreams of personal and financial fulfillment come true by hooking up with Amway or Herbalife.
Another reason for these companies' enduring success has been their ability to adapt to changes in the marketplace, and pioneering new ways to advertise: back in 1980, Herbalife founder Mark Hughes transformed his fledgling company into an overnight sensation, thanks to infomercials on cable TV.
Overcoming overwhelming setbacks, effective marketing and recruiting messages, and proven business organization, have made these companies giants of the MLM industry.
AMWAY
According to that same article:
". . . in 1959, former NutraLite distributors Rich DeVos and Jay Van Andel started the Amway company as the American Way of marketing products. Like many truly innovative breakthroughs, the development of true network marketing was an accident. . . . ."
The article goes on to explain how some early MLM companies recruited via chain letters " . . . by the 1930's the U.S. post office estimated that 10 million letters were being mailed each day. Postal Authorities and law enforcement agencies battled the fraudulent schemes and the chain letter phenomenon began to subside in the early 1940s. Unfortunately, this scam spawned schemes which came to be known as pyramids, where money was given for the right to involve others, as no valid product which was being purchased from the company.
"In 1974, Senator Walter Mondale declared such companies to be the nation's number one consumer fraud."
" . . .with no clear understanding of what constituted a legitimate use of network marketing, the Federal Trade Commission and state agencies across the nation turned their eyes to almost all network marketing companies. In 1975, the FTC filed suit against Amway, alleging that the company was an illegal pyramid and that its refusal to sell its products in retail stores constituted a restraint of trade.
"Amway spent four years and millions of dollars in legal fees to clear its name. In 1979 the FTC (Federal Trade Commission) ruled that Amway was *not* a pyramid, that its revenue was generated from the sale of its products, and the FTC acknowledged network marketing as a legal and efficient distribution system. Network Marketing exploded in the next decade."
*****
Amway's Company Structure:
The article "The MLM Recruiting Nightmare: Find Out The #1 Reason Why 95% of All Network Marketers Fail to Ever Earn a Penny in Any MLM Program,"
http://www.mlmmillionaire.com/mlm-network-marketing-recruiting.htm
provides a important glimpse at how 1950s, 1960s era MLMs like Amway operated:
"In the past, most MLM'ers were taught that they must emphasize product above all else. That may have been true 30 years ago when people worked programs like Amway, Mary Kay Cosmetics, Avon, and Tupperware in their local areas.
"The compensation plans of those programs were built around retailing product. People sold to family and friends (their warm market) and through parties in which the product was the focus. Recruiting downline members was not a primary activity. Retailing was how most people made money. . . ."
The article goes on to note how that structure has now changed: "Most MLM plans today are far different. They pay the lion's share of profits to those who build a sales organization of people who consume the products themselves, and who may or may not retail a small amount on the side. . . ."
****
Amway's Recruiting/Public Image/Marketing:
Amway's "Dream Night": Amway's seminars convey a strong sense of you can succeed; you can achieve all your personal and financial goals with our help.
Here's an abridged recounting of one Dream Night session, albeit by an underwhelmed participant, published at Baffler Excerpt.com: "Dreams Incorporated: Living the Delayed Life with Amway," by Matt Roth, first published, in full, in Baffler, issue 10, 1997:
"Dream Night was not the first Amway event I had been to, but it was the most hallucinatory. It began with the triumphal entrance of the Amway Diamond couples, half-jogging through a gauntlet of high-fives to the theme from Rocky, as the audience whooped and hollered and twirled their napkins over their heads.
". . . We gawked hungrily as real-life Amway millionaires strutted about sprawling estates (proudly referred to as 'family compounds') and explained that such opulence was ours for the asking."
" . . .The Amway approach supposedly avoids impersonal door-to-door sales, as each distributor need only sell directly to a small customer base of friends and family. Business 'growth'--and an ascent to the flashier 'bonus levels' (Ruby, Emerald, Diamond, Executive Diamond, Double Diamond, Crown Ambassador)--comes mostly through expanding one's downline."
"In theory, this odd marketing system ensures that benefits accrue not to Madison Avenue slicksters, but to ordinary folk capitalizing on their close-knit community ties--a scheme that seemingly reflects the small-town, Protestant populism of Amway's co-founders, Rich DeVos and Jay Van Andel."
The article also notes Amway's troubles with the FTC back in the 1970s, then goes on to report on the company's reform:
"The reform efforts seem to have paid off. Today Amway is portrayed as a model business. A spate of articles in newspapers around the country have crowned "multilevel distribution" the Third Wave of marketing: If it looks like Amway, we're now told, then it's not a scam. Trade magazines laud Amway as a high-quality manufacturer; the United Nations has given it a rare Environmental Award; Jay Van Andel, the recipient of a score of business awards, served a term as president of the U.S. Chamber of Commerce; Ted Koppel has cited Rich DeVos as one of America's premier philanthropists . . . ." (At the bottom of that article see some helpful footnotes pertaining to FTC's ultimate ruling that Amway is not a pyramid scheme.)
I personally can recall an early Amway strategy, albeit, I recall it only vaguely. During the late 1960s and into the 1970s, my parents would receive invitations to "dinner parties" or "cocktail parties" from some neighbors and casual acquaintances.
After enjoying some refreshments and chitchat, the host or hostess of the party would ask everyone to take a seat, then announce he/she was in the midst of a life-changing experience and wanted to share it with friends.
No doubt some additional recruits were obtained this way, but many people just felt duped and ambushed.
There are still Amway parties -- actually many MLM'ers throw parties -- but I believe it's now much more standard to tell invitees that that's the basis for the party -- a strategy that makes much more sense because, like Amway's "Dream Night" seminars, you're preaching to a crowd that's already interested, or they wouldn't be there. (Another rule of marketing is, don't waste your time trying to sell to someone who just isn't going to buy -- ever. Move on to warmer leads and prospects.)
You can also see a brief bio of the company at Amway's Web site:
http://ameradream.com/amway.htm
"As carefully planned by Rich and Jay, the second generation Van Andel and DeVos families took the helm during the ' 90s. Steve Van Andel and Dick DeVos succeeded their fathers as Chairman and President. Distributors witnessed a similar trend, with the second generation of many distributor families taking on important leadership roles."
This underscore's a cornerstone of Amway's marketing message: that Amway is a family-friendly, family-oriented business, and it's a strong factor in Amway's always successful recruiting efforts.
Both Amway and Herbalife have successfully marketed strong messages of self-empowerment and "You can do it!" spirit, allowing them to build legions of distributors.
" 'Amway is more than just a company, it's a movement to help people help themselves,' " Amway co-founder Rich DeVos told writer Paul Klebniov, in Klebniov's not-entirely flattering profile of Amway, "The Power of Positive Inspiration," which appeared in the December 9, 1991 issue of Forbes Magazine. http://www.amquix.info/forbes_december_9_1991.html
DeVos also talked about how that "Movement" has brought Amway success around the world: " 'In Mexico, people will ride a bus for hours to come to an Amway meeting because Amway will give them a shot at success. Most of these people have believed for generations that they would never be anybody, because the rich guy on the hill told them they'd never be anybody. But the Amway business has come to symbolize for great numbers of people their chance to get out of their rut.' "
Also from Klebniov's article, an outline of how Amway is structured and what motivates its associates:
"Perhaps can't keep his eye on a million distributors, but he does know how to inspire almost every last one of them. The underlying principle is simplicity itself: Persuade the distributors that their interests and Amway's are exactly the same. . ."
". . .here's how it works. Distributor A recruits distributors B, C, D each of whom recruits three more distributors to work for them. If this recruiting pattern continues ten times - that is, there are 11 levels in the distribution chain - then the fellow who started the network, distributor A, would have 88,572 distributors working for him. If each of these people sells, on average $1,000 worth of products, you've got an $89 million marketing organization stemming from that one distributor A. At offices, health clubs, beauty salons, churches, Amway recruits. . . ."
"The lion's share of money earned by Amway distributors is pocketed by 2% of the sales force, the organization's 35,000 so-called direct distributors. These distributors typically have about 50 downline distributors channeling orders up to them. Direct distributors gross a minimum of about $35,000 a year. The really big money - bonuses of up to $300,000 and more - is made by a handful of kingpins at the top of the heap . . . ."
Another powerful component of Amway's success is making its distributors feel that they are part of a team or a family:
From Klebniov's article: "But Amway goes a crucial step beyond mere money. It offers its recruits membership in a community of like-minded people - entrepreneurial, motivated, upwardly mobile people who believe in their country, in God and in their family. 'This country was built on religious heritage, and we had better get back in it. We had better start telling people that faith in God is their real strength of America!', Richard DeVos writes in his book "Believe!". Amway distributors are bound by a set of shared beliefs reinforced by myths, icons and documents."
This helps explain why Amway's detractors call it a "cult," but the depth of the company's appeal to its distributors and potential distributors is profound. Amway has succeeded, in great part, by keying in on and recruiting people who share the company's founders' beliefs regarding religion and family. This homogeny regarding fundamental personal values has allowed Amway to create a great sense of a-company-as-a-family for its workers.
*****
Other Amway Resources:
"The Good, the Bad, and the Ambivalent: Managing Identification among Amway Distributors," by Michael G. Pratt, published in Administrative Science Quarterly, Sept, 2000: http://articles.findarticles.com/p/articles/mi_m4035/is_3_45/ai_68217153
Read this lengthy excerpt from Jay Van Andel's autobiography "An Enterprising Life" (Zondervan; September 1998), which was published in the Nov/Dec 1998 issue of The Saturday Evening Post: http://articles.findarticles.com/p/articles/mi_m1189/is_n6_v270/ai_21279901
" . . .Usually I would not approach the children with the idea of pushing my view on them, but I would certainly give them advice and urge them to reconsider their behavior if it was going to cause problems.
"I think that way of doing things has affected the way my children work as leaders in Amway today. I've observed Dave using the same technique--he gives individuals considerably free rein and tells them, 'I'm giving you the freedom to do this work the way you see fit, but at the end of the day, you're responsible for the actions you took. If I see something that is incompatible with the way we do business around here, or if there is something substantially wrong, at that point I'll intervene.' Micromanagement of an employee's work is likely to produce the same sort of outcome that would result from constantly looking over a teenager's shoulder . . . ."
A used copy of Van Andel's book can be obtained via Amazon.com:
http://www.amazon.com/exec/obidos/tg/detail/-/0887309976/qid=1085523879/sr=1-1/ref=sr_1_1/002-9833057-4089625?v=glance&s=books
See this profile of Dick DeVos from the Nov. 1998 issue of Success, written by Gerald Secor Couzens: http://articles.findarticles.com/p/articles/mi_m3514/is_11_45/ai_57608670
I found a review of the now-out-of-print "Empire of Freedom: The Amway Story & What It Means to You" by James Robinson. This link at Powell's shows you how to order a copy:
http://www.powells.com/cgi-bin/biblio?show=Trade%20Paper:Used:0761510885:8.95
MLM Survivor, an archive of Amway-related articles:
http://www.mlmsurvivor.com/enteramquix.htm
HERBALIFE
Like Amway, the ability to convey a strong message of self-empowerment reeled in distributors -- in droves. But Herbalife had another dimension: the product appealed to people who had struggled with weight problems, just like Herbalife's founder and CEO, Mark Hughes.
Tied into Herbalife's message of self-empowerment was the equally compelling element of self-improvement: the good-looking, energtic Hughes had triumphed over a miserable childhood and a serious weight problem.
Everytime Hughes stood before a crowd, or appeared in an infomercial, his own life story (he always told the story of how his overweight mother died from diet pill overdose) proved that anyone could overcome adversity. Anyone in Hughes's earshot who had been touched by tragedy during their childhood and/or battled the bulge for as long as they could remember, was likely to be moved, and many of them were moved enough to sign on with Herbalife.
Hughes grew a brand, and a company, so strong in its appeal, it would ultimately survive even the scandalous circumstances surrounding his death.
"Mark Hughes and the Herbalife Story":
http://www.moreenergy.com/history.html
(The official bio.)
"Death and Denial At Herbalife: The Untold Story of Mark Hughes' public image, Secret Vice and Tragic Destiny," written by Matthew Heller, from the Los Angeles Times,February 18, 2001: http://www.rickross.com/reference/herbalife/herbalife9.html
". . . Hughes has racked up 20--and become extremely rich in the process. In the preceding fiscal year, he earned more than $2 million in salary and bonuses; he controls 60% of Herbalife stock, worth about $250 million, and has interests in suppliers of the company's products. In 1998, he collected a tidy $43 million in a leveraged buyout of one manufacturer. . . ."
The article goes on to note that, when Hughes was a boy, his mother had died, Hughes claimed, as the result of chronic fad dieting and diet pills.
According to Heller: "The real story was a lot more complex, and fit less neatly into an inspirational parable. Jo Ann Hughes did die of an overdose . . . his mother died addicted to painkillers, not diet drugs."
Herbalife's Structure:
According to Heller: when Hughes launched his company in 1980 the "products weren't cheap. A weight-loss program alone cost about $30 a month . . . But Hughes had a way around that. Customers who became distributors would get a minimum 25% discount on everything they bought in lieu of the money-back guarantee; with that discount, you could make a profit selling products to others. You could even get commissions by recruiting other salespeople. The bigger the organization you built, the bigger the payoff.
"The payoff for Herbalife, which didn't have to worry about sales-force overhead, was dramatic. In its first five years, sales soared from $386,000 to $423 million, an increase of more than 100,000% . . ."
*****
Key To Herbalife's Success:
The key to Herbalife's extraordinary success was Hughes's magnetic, inspirational personality:
"At rally after rally--many of which were broadcast as infomercials over the USA Cable Network and by TV stations across the country--Hughes projected a boyish enthusiasm and charisma . . . Hughes' appearances were part revival meeting, part Richard Simmons-style pep talk, part the Apostle Paul finding his vocation as a missionary. . . .Hughes could deliver his rags-to-riches tear-jerker . . . so that it resonated with just about anyone who wished to lose weight--or dreamed of becoming fabulously rich like him. 'Against all odds, he made it big," says one Herbalife distributor. 'It was one of the things that drew people to him. He turned his life around. Maybe we could do it too.' "
*****
But Herbalife hit troubled waters which crested in June of 2000, when Hughes was found dead. Cause of death? An overdose, and interaction, of alcohol and anti-depressants. See a June, 2000 CNN report reprint at the Rick Ross Institute.com: http://www.rickross.com/reference/herbalife/herbalife5.html
Herbalife was struggling before Hughes's death, due to other bad publicity. See "Herbalife Faces Struggle After Death of Founder Mark Hughes," reported by Bloomberg News, August 11, 2000: http://www.rickross.com/reference/herbalife/herbalife8.html
"After sales grew at a compound annual rate of 18 percent from 1996 to 1999, they were up just 7 percent in the first quarter. Since the Class B stock hit a 52-week high of 16 1/4 on Jan. 18, it has fallen 40 percent after Hughes' failed effort to bring Herbalife private in a leveraged buyout. . . ."
"There are also new problems: ephedrine, used in Herbalife weight loss pills, has been linked to cardiac arrests, strokes and deaths by the Food and Drug Administration. . . . Hughes' own image of clean living has been tarnished by evidence he smoked cigars and died after a four-day drinking binge.
" 'It's very much a cult of personality,' said David Stewart, professor of marketing at the Marshall School of Business at the University of Southern California. 'When you begin to hear things that are inconsistent with the image, that can cause all kinds of problems.' "
*****
Herbalife managed to hang on and, in 2003, appointed Michael Johnson (formerly with the Disney Corporation) as chairman: http://www.qualityoflife4you.com/michael_johnson.htm
And read more about him in this April 2003 edition of Business Center News:
http://www.businesscenternews.com/workfromhome/e_article000141505.cfm
See the article "Herbalife Puts Weight Behind New Push," from a June 2003 edition of Brand Week, announcing the company's plans to launch its first TV ad campaign in over a decade: http://www.brandweek.com/brandweek/i_display.jsp?vnu_content_id=1917312
Herbalife is now also involved in a strategy of affiliating/conglomerating MLMs:
"Heavy Hitters in the Millionaires Club - Kmiglobal.com, multilevel
marketing," written by Debbie Selinsky and published in the October 1, 2000
issue of Success:
http://articles.findarticles.com/p/articles/mi_m3514/is_5_47/ai_65301851
"Kmiglobal's list of company officers and distributors reads like a "Who's Who" of network marketing: David Sage, Jeff Schlegel, Gil Kim, Judy Kim, Dwight Johnson, and several other million-dollar babies from companies such as Herbalife, National Telephone & Communications (NTC), and National Safety Associates (NSA). . .
"Kmiglobal.com was formed as the online division of nutrition/lifestyle organization KareMor International . . . Independent business owners can sign up for $25 and qualify for their position by generating $250 in purchases and bringing on two people who've sold $250. 'That means you can earn up to $1,000 in your first paycheck,' Schlegel says. 'Through this plan, people can truly do what multilevel marketing was intended to help them do--earn full-time pay for part-time work.'"
*****
I had trouble finding comprehensive articles about Herbalife online If you want, you can search for these articles at your library. (If the paper copies aren't archived there, you may be able to access them via the library's computer system. Just tell the librarian their in EBSCO's "Business Source Premier" section.)
The April 4, 2003 edition of "The Wall Street Journal" contains a profile of Johnson.
The October 20, 1997 issue of Forbes features the article "BUT WHERE ARE THE DISTRIBUTORS' YACHTS? When U.S. customers for Herbalife's dubious elixirs got scarce, Mark Hughes went trolling for suckers overseas," by Steve Lubove.
"The Power of Simplicity," an interview with Mark Hughes," by Duncan Maxwell Anderson, was published in the May 1997 issue of Success Magazine.
The Nov. 1, 1999 issue of Business Week: "It's a Wonderful Herbalife," a profile of Hughes, written by Kathleen Morris.
Another MLM giant:
Mary Kay Cosmetics:
Regent Business Review:
http://www.regent.edu/acad/schbus/maz/busreview/issue6/bookshelf.html
features a review of "More Than a Pink Cadillac: Mary Kay Inc.'s 9 Leadership Keys to Success," by Jim Underwood (McGraw-Hill, 2003) From the review written by Diane Wiater, Ph.D., Associate Professor and the Assistant Dean of the Regent Graduate School of Business:
"Rather than being a work about Mary Kay the woman, it's really about how focusing on others and valuing them will both improve people and make a business successful. It's not a 'just for women' book; it's a 'just for managers who want to be great' book.
"Underwood presents the nine leadership keys practically, with significant anecdotal support that they've worked because Mary Kay walked the 'Golden Rule' talk. And he explains that payback was far more than financial. Mary Kay changed lives. She provided women with a sense of destiny while encouraging the priorities of God first, family second, and career third."
In fact, Ashe's impact can't be overestimated: When she began her company in 1963, not only did she make the women who worked for her feel deeply appreciated, she provided them with a (at that time) rare opportunity to build a career,and one in which they controlled their own destiny, at that; there was no glass ceiling at Mary Kay Cosmetics.
Mary Kay established the most famous blueprint ever for MLM success; her legendary "Nine Leadership Keys":
"Create and maintain a common bond.
. Shape the future (think and act strategically).
. Make me feel important (value people).
. Motivate others with recognition and celebration.
. Never leave your values.
. Innovate or evaporate.
. Foster balance (God, family, career).
. Have a higher purpose."
From: http://www.alicepirola.com/inspiration/More_than_a_pink_cadillac.htm
SUCCESS FACTORS:
Just as Amway and Herbalife used some already-pioneered principles, the lessons of these, and other giants among MLMs continue to be practiced by other smart MLM leaders.
You can think of these points as the legacy of early giants like Mary Kay and Amway, then Herbalife.
I asked Greg Arnold,
http://www.greg-arnold.com
who the author of "The Multi-Level Mangler In King Arthur's Court":
http://mlmbooks.us/greg_arnold.html
to please offer some expert commentary for my answer, regarding the success factors of Amway, Herbalife and other major MLMs.
Arnold is an MLM veteran who's started several MLMs (he "once helped build an organization of over 11,000 distributors in less than a year.") He's now also a consultant to network marketing companies and network marketers, and an MLM trainer.
Arnold offered these observations on what made some MLMs, like Amway and Herbalife, so hugely successful:
Timing:
"You can't discount timing. All of the billion dollar companies in the MLM industry had great timing. They were born during a time of 50 cent per minute long distance phone calls and information had to be passed on through word of mouth, printed advertising or printed material, which had to be stamped and mailed. This meant that all information passed on outside of friends telling friends was very expensive.
"If you were to survey 100 network marketers today as to how they originally got involved in the industry, I believe over 90 would tell you through a friend or relative. Yet today, most unsuccessful mlmers want to build their business through the internet or some other impersonal "no-contact" way of recruiting and selling. If you look at the giants today, their main mode of prospecting is still the solid old fashion, face-to-face, way.
Visionary Leaders:
"All of the giants have two more very important things in common: They all had leaders that had laser vision that were totally committed to that vision. From day one, they saw ten, even twenty, years into the future. When problems arose they knew that some-how, some-way, they would get through because the company's history was already written in their mind's eye. All of these leaders were able to share their vision with the masses in a very powerful and inclusionary way. . . .The vision of the owner and their ability to communicate it is one of the two great keys to the success of the giants."
Company Culture:
"Culture is another key ingredient they all share. Each company has a distinct culture. Their participants that stay long term stay because the culture is an important part of their individual lives. Money is not the key issue for longevity or growth. We all get paychecks, there isn't anything special about getting a check from your company. People want to feel like they have an identity and they are a part of something special. The giants provide that."
Products
"High quality products, great customer service, wonderful computer programs, these are all important, but the giants had a very strong vision and culture."
To Greg's list I would add:
Tenacity & Resiliency:
From the article: "The Need For SPEED - Michael Jackson, CEO of EcoQuest
International,"
written by Debbie Selinsky, from Success Magazine, Dec. 2000:
http://articles.findarticles.com/p/articles/mi_m3514/is_1_48/ai_68148058
"But Jackson says he in no way deludes potential EcoQuest distributors that multilevel marketing is a get-rich-quick option. 'It's not easy. It requires a lot of hard work, a lot of sacrifice, and a huge personal commitment as a family,' he says. 'There's also a huge amount of disappointment. You think the next person you sponsor will catapult to the top, and two days later their commitment turns to `I quit.' You have to overcome that. A successful career in network marketing is built on tons of failures' . . . ."
Greg Arnold offers this from-the-trenches observation:
"Most MLM companies start off with little or no money and have no real hope of surviving long term. Also, most new company owners have no clue what they are in for. Running an MLM company is not only hard work, it is painful. I believe all successful company owners have high tolerances to pain."
When considering resiliency, just look to the Amway and Herbalife stories: both had to overcome major setbacks, but both companies hung tough and remain superstar MLMs.
Networking/Recruiting:
Arnold believes the best recruitment tool is "the product line. I believe that people who enjoy and are even passionate about the products make the best distributors."
When Amway began there were Amway parties, like the ones I remember from my neighborhood. As Arnold notes, "There are many generic training seminars out there that are held throughout the country. Atending these and getting to know other networkers personally as friends I feel is the best way."
Solid Organization:
Financials:
Arnold says, "Many companies start with terrible products, false notions about the industry or some idea about getting rich quick. Many new company owners are ex-distributors who were never successful as a distributor so they try there hand at ownership. Most companies start out pricing their product too low while paying out too much in commission."
Successful MLMs have viable "breakage plans." To learn more about that, read "Compensation Plan Breakage - Why and How," By Dan Jensen, Chairman of Jenkon International, Inc.: http://www.mlmstartup.com/articles/jenkon6.htm
"Reward specific behaviors which are most desired by the company such as recruiting, retailing, building managers and leaders, and retention."
Think Pink: perhaps the most famous MLM reward of all time was Mary Kay's Pink Cadillac program.
Structure: The Downline (and Upline) Approach:
Downline has actually been around for decades, starting (at least) with Amway and remains a mainstay of MLM.
According to Arnold "Both downline and upline are old terms. They have been used in the industry for all of the thirty years I have been in the industry and I suspect from almost the very beginning.
"Downline: All of the distributors you personally sponsor plus all of the distributors they personally sponsor and so on and so on to infinity. Everyone under you in your group is in your downline.
"Upline: Everyone above you in which you are a member of their downline. Obviously your personal sponsor and his sponsor and his sponsor and so on are all in your upline."
Corporate Leadership:
A "charismatic" CEO is certainly a valuable asset, as both Mary Kay Ashe (Mary Kay Cosmetics), and Mark Hughes, both proved), as he or she may draw the interest of economists and the financial press, and then, perhaps, the general media.
But the fact is, most founders and CEOs don't look like movie stars and, while very likable, aren't necessarily "charismatic." (Granted, Frank Perdue didn't look like a movie star, yet his became a recognizable face and helped to drive his brand.)
Most successful business leaders never become known outside the business press/community. That's not a problem, as most products/MLMs aren't sold based on the CEO's personal appeal.
Successful business leaders instill a sense of confidence and pride in everyone throughout the organization; a sense of the company constantly going forward with a sense of purpose.
MLMs are especially dependent upon a team approach and team spirit; successful MLM leaders know how to make their workers and feel involved, appreciated, and valued.
At NetWork Marketing/ MLM Watchdog: "The Essence of Leadership," by Rod Cook, B.sc, M.A., M.B.A, discusses MLM businessman and trainder Greg Arnold's theory of "overlapping leadership" http://www.mlmwatchdog.com/Report_Leadership.html
"Greg's Rule #3: 'Communicate with all your leaders, no matter how deep they fall in your organization, whether you get paid on them or not. Practice and teach over lapping leadership.'
"Don't leave the task of growing a superstar to inexperienced people. Large organizations don't just happen. Like roses you have to cultivate them. By keeping in close contact with all the leaders on your team, you build long-term relationships and loyalty. Leaders always want to work with other leaders, they want to win and they don't like being ignored by their upline. . . . Make them a part of your inner-circle."
OPPOSING VIEWS:
When studying any topic, it always helps to look at the pros and cons of an issue for greater scope. So, you might want to check out these sites:
"The Anti-MLM, Anti-Amway Webring":
http://www.cocs.com/jhoagland/webhq.html
Barbara Ling's Entrepreneurial Web site, "Opposing Views of Home Based Businesses," has a comprehensive library of articles that delve into the pros and (sometimes rather ugly) cons of MLM: http://www.barbaraling.com/entrepreneur-article-mlm.html
Search Strings:
keys OR secrets AND success AND Amway OR Herbalife
success AND MLM
why MLM fails
leadership AND MLM
leadership AND OR Amway OR Herbalife
giants OR "household name" AND MLM
"Mark Hughes" AND Herbalife
DeVos AND "Van Andel" AND Amway
"Michael Johnson" AND Herbalife
Mary Kay AND Leadership Keys
I hope my research is of help to you.
If you require any clarification, please post a "Request For Clarification," PRIOR to rating my answer and I'll be glad to assist you further.
Best Regards,
nancylynn-ga
Google Answers Researcher
I just found this site, which may be of interest to you:
At "The Herb TeamMark Hughes Training
http://www.theherbteam.com/id20.html
You can read a brief essay by Hughes, "The Meaning of Success," and at the top of that page you'll see links to four audio recordings of Hughes's training seminars. (You'll need Real Player to hear them.)
Thanks also for your concern: the storms veered north of here, and we just got a few thunder boomers. Last summer, my house was damaged by lightening, so I now take storm warnings very seriously!
"Just an 'FYI' the FTC (Federal Trade Comission) has required Amway to
post a label on their products that state "54% of Amway Recruits make
no money and their upline makes and average of 65 dollars per month"
That's an improvement on the 1991 figures I cited in my answer: "The lion's share of money earned by Amway distributors is pocketed by 2% of the sales force, the organization's 35,000 so-called direct distributors."
I made a point of noting criticisms of MLMs in my answer, because -- there's plenty of criticism out there! Some people do incredibly well; many don't.
Besides the setup of the company, it's up to the individual -- it takes tremendous effort and salesmanship to make money selling these products. The reality is, many distributors find their friends and family start avoiding them because they're tired of being pressured to buy products! You have to be very creative, as well as very dogged, in order to sell enough product to make a profit.
I've been working on your question for several days and want to assure I am close to completing my answer.
I was hoping to post it late tonight or early tomorrow morning; however, the area where I live is now under severe storm and tornado watch for the night. So, that may delay my posting the answer.
I will try to get it posted for you no later than tomorrow evening.
Best Regards,
nancylynn-ga
Google Answers Researcher
They have virtually destroyed our lives. My husband got recruited "part time" about 7 years ago. Attending meetings at least twice a week and not really making any money. Through their form of "brainwashing"- meetings, meetings, meetings, he was convinced that he would make his fortune if he went into it full time and quit his job! He wouldn't listen to anybody who made sense...it WAS going to work! Each time he took money out of our retirement fund to help us make it through the month he still insisted it WAS going to work! Well, it hasn't worked! He was working 60-70 hrs a week, still going to meetings and doing very little business. He has hit rock bottom with severe depression but still has that little bit of hope that it will work.NEVER! He has been letting me in on some of the propaganda that goes on in these meetings: God's hand is in this business; Don't listen to your family they will try to take the dream away from you-when you start making money they will become believers; we need to deprogram you from the business world-they want you to think you have to work for somebody else; I talk to God directly; Don't get on my wrong side because I'm vindictive and I pray that people die! These are just a few. His "upline" even called to wish us a Merry Christmas but when his call was returned it was really just a pressure call to see if he was with us in 2000 or not...but no pressure! He has even yelled at me on the phone..wonder if i'm one of those people he prays to die! Please if you have any sense don't be conned into a MLM!
thank you for providing excellent answers. Nice job!
Very much appreciated your pasting of MaryKay's 9 steps as well.I might come back and post more questions regarding the MLM industry shortly.
Hope your house weathered out the storms :)
With kind regards,
pangus-ga
Mary Kay is not a MLM.
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