How To Make Your Network Marketing Business Thrive After The FTC Settlement

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For the last two years, I’ve immersed myself into the study of network marketing, affiliate marketing and internet marketing. Together they can build a beautiful business model. You can create multiple streams of income on the front end, and strong sustainable residual income on the back end.

Most people I’ve met seem to start with network marketing, then find the others as they want to grow their businesses. I’ve focused on slow steady growth to build a solid foundation and a sustainable business model. This allowed me to learn a lot about different companies and how they train and reward their distributors.

As you look to the Future of Network Marketing, many top earners and trainers have considered some key changes may be needed in the industry.

These are things they would never discuss with their downline, and you certainly won’t see it on the agenda at your next Super Saturday event. However, these changes could easily improve the view that much of society has on our industry.

Changes to help all of us…

  • Be seen as more legitimate business owners by the general public (and our social circles and families).
  • Avoid unwanted attention from “Alphabet” federal agencies.

You see, over the last few decades, Network Marketing has operated by its own rules, outside the constraints placed on many corporate groups.

Of course, some of the publicly traded companies have to abide by more rules than the privately held ones.  However, for the most part, the industry has been self-policed.

The landscape of Network Marketing is changing.

(Note: I’m not in Herbalife.  I do not have a direct or indirect relationship with anyone in Herbalife, either customer or distributor.  This is only my opinion based on 20 years in the corporate world, and my personal experience in network marketing, which has been very positive.)

In the last year, there have been rumblings of the FTC investigation into Herbalife over allegations of “pyramid-scheme” business practices.

In truth, this kind of started out as a fight between two hedge fund investors a couple of years ago.  One investor, Bill Ackman, falsely accused Herbalife of being a pyramid scheme.  Carl Icahn, another investor, sided with Herbalife.

While they were duking it out in the press, the FTC took interest, and started an investigation which led to a complaint being filed in Federal Court.  (See it here.)

While it is concerning that the allegations of one hedge fund manager can cause a federal agency to begin a two-year investigation into a company which is otherwise in good standing, that’s a conversation for another day.

Nonetheless, the investigation did take place.  After two years, the FTC made an offer to Herbalife.

One of the biggest complaints lodged during the battle in the press was over autoship.  Many network marketing companies require distributors to participate in a monthly autoship program.  They purchase product every month, with a set order quantity and monetary volume.

Watch our Free 5 Part Video Tutorial to get daily qualified leads for your networking business.

network marketingWhat’s wrong with the network marketing autoship machine?

The biggest flaw is that you aren’t really serving many real consumers in the marketplace.  This is kind of the definition of a pyramid scheme, right?

Another flaw here is when your volume comes from other distributors, and they quit, the volume goes with them.

This also means you aren’t creating raving product fans so much as an army of distributors.

We’ve all heard, “Be a product of the product,” and I firmly believe that you must use any products you promote.  It’s also not a bad idea to have some customers.

This very practice is what some industry leaders have been warning against.

They warned against using autoship to build your business with an emphasis only on recruiting new distributors (who were immediately signed up for autoship).

The outcome shocked many in the industry!

Herbalife accepted the conditions from the FTC, and has agreed to work under a specific set of conditions.

So, how was it possible that Herbalife was “Okay” with this settlement?

Now, for those who know people inside Herbalife, there are a couple of reasons this made sense.

First, Herbalife has a strong emphasis on retail.  I have friends that know distributors who have opened retail stores to get their retail volume up when they reach certain rank levels in the company. They believe they can comply with the FTC’s guideline and remain in compliance over time.

Second, they don’t think many other companies can do the same, and this will give them an incredible competitive advantage in the network marketing arena in the future.

According to many long-time network marketers, Herbalife is truly one of the high quality companies in the industry.  They are certainly one of the most retail driven network marketing companies today.

 

Now, perhaps most importantly, what does this mean for you (and your team)?Network Marketing

Well, let’s get into that, shall we?

#1: Sales Volume Controls

In the “new” Herbalife, distributors must have 66% of their organizational volume in product from retail sales.  That’s TWO-THIRDS!

Distributors must track their volume by distributor or retail customer.

This means those at higher ranks have to make sure their entire organization is following this volume guideline as well.  For every distributor dollar in product volume, you need two dollars in retail product volume.

The risk?  Any distributor not meeting the volume guidelines will have their commissions cancelled.

That’s HUGE!

Seriously, just think about it for a moment…network marketing autoship

#2: Autoship Is Gone!

Yep, the sacred cow of network marketing is no more.

In this settlement, distributors cannot be required to participate in a monthly autoship program to get paid commission or be classified as a distributor.

That’s over.

The impact of this one thing on those recruit-and-autoship organizations will be a very big deal.

They will have to learn new methods to build.

#3 Will This Become the Law of the Land?

As of this writing, these guidelines are only in place for Herbalife.

However, there’s a giant “what-if” pregnant pause hanging over the industry right now.

What if this becomes law, and every network marketing company has to follow these rules?

Without a doubt, laws like this would completely destroy many organizations, and some entire companies.

How does this affect your network marketing business right now?

Well probably not in a lot of ways…

However, I would urge you to consider the future of your organization and downline.

Do you want to be a dinosaur left to go extinct, or a trailblazer building a team for the future?

You can keep doing what you have been taught for years.  Or you can learn a few new skills.

Consider the following:

  • What does your company teach about building your business with recruiting and product sales?
  • How does your upline teach you to build your business?
  • What do you teach your team about building?
  • How are you actually increasing your monthly volume now?  Where is your volume coming from?

What if You Built A Prospect List Online?

One of the great things about starting my network marketing and online businesses at the same time is that I’ve built a list of prospects over time.

I’ve built a brand – the brand of me.  That’s what I recommend you do as well.  Build the brand of you.

Here’s how it works…

Brand yourself and you can survive the lumps of time.

You know that 90-95% of people that say “no” when you pitch your opportunity?  Well, when you have a branding strategy in place, that 95% can still follow you and stay connected.  They may even do business with you on another platform, say in training or info products that teach them to be better networkers themselves, or better at something else.

This process positions you as an authority, and it helps the people who are following you learn how to improve their business as well.

This is called “Attraction Marketing,” and many leaders use it in their business models.

As a matter of fact, my business partner and I have a 5 part video tutorial that shows you how Attraction Marketing can work for your business.

Here’s a Peak at How It Works – Build a Prospect List Online

network marketingWith this method, you can truly lead with your product, and get customers first, then build a team of distributors from those raving fan customers!

Simply position yourself as an authority in a niche – the niche of your company’s products.  Think, weight loss, athletic performance, wellness, nutrition, travel, legal advice, etc.

You can get specific with your niche inside a larger product category.  Think something like “essential oils for healing” versus “natural wellness.”

When you position yourself as an expert or authority in the field, you attract people who want to learn about those types of products.  Some of them may even be interested in a business opportunity related to those products.

Imagine that!

This method puts you in a great position for compliance in the future

When your upline and crossline are scrambling in a couple of years, you will already be humming along with your plan in place!

This process simply attracts people to you because they believe you can help them solve a problem.

Problem: I want to lose weight (or need to).

Solution: Here’s a weight loss expert who can help me make better choices. She can also suggest some products that may help me reach my goal faster.

Problem: We may not be able to go on vacation next year because travel is so expensive.

Solution: Here’s a travel expert who can help me find discounted packages to a lot of high-demand destinations.

You see it, right?

Use what you have learned from your company’s training and your upline to position yourself as an expert in your product field.  Share the knowledge and help people.

This means you have a REAL and SUSTAINABLE BUSINESS!

Not only that, but your branding strategy can help you build long-term security for yourself and your family.

After studying Attraction Marketing, I generate new leads every day for my business.  I also help other networkers learn how to do this for their own businesses.

Here is exactly how I do it.

The real beauty of this model is that you get to choose how to build the brand of you.  Once you’ve got it started, the followers are yours, no matter what company or product you are promoting.  That’s a sustainable business model!

Please feel free to comment and share with others who can benefit from this information.

Many thanks to my coach and mentor, Ferny Ceballos, whose original article on this topic appears HERE.
In that article Ferny attributes Kevin Thompson, a highly respected Direct Sales Attorney for assistance on his website.

Don’t want to wait? Get started right away with a free 10-day online recruiting boot camp.

 

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