Tag Archives: second job

‘Network marketing’ is not a dirty word: story of a highly successful business model

20 Jun
white Mercedes Benz

some deal sweetener

Network marketing companies get a bad press. There seems to be some kind of stigma attached to performing the role. Admitting you are in network marketing is almost as much of a social taboo as letting slip at a cocktail party that you are a traffic warden, or an electricity salesman.

‘Can’t you get any other job?’ is the underlying assumption. But in fact, many people treat direct selling as a second, or even third, string to their bow. And these organisations reward their consultants generously for their time and capital input.

Many are not obliged to reward their shareholders, with dividends, because they are private limited companies. This also means there is no legal requirement to publish their annual financial accounts, which explains the aura of mystery which seems to cloud public perceptions.

Let us sweep away some of those cobwebs of half-truth and rumour with some hard stats. Network Marketing Central’s 2013 report on the ‘Top 50 MLM Companies by Global Revenue’ showed direct selling organisations across the globe are thriving. And not just the long-established ones like Avon.

Swiss-origin health, beauty and skincare brand Arbonne earned a respectable $353million. Though it has some way to go before it catches up with its nearest European competitor Oriflame, the skincare and cosmetics brand based in Luxembourg, which netted $2.1billion. For purposes of comparison we have sidelined the German Vorwerk & Co, because its main area of operations is household appliances (it started out selling carpets).**

Oriflame has an impressive gadget to ‘prove’ the effectiveness of its products. Its ‘biophotonic scanner’ purports to measure carotenoid antioxidant levels in skin, to “prove the effectiveness of your supplements in improving your overall antioxidant health.” This tool is doubtless necessary to justify the prohibitive price-tag on its anti-aging products: the ageLOC Future Serum comes with a whopping £170.99 price tag, while in the same range its Radiant Day SPF 22 is at £52.22 a premium-price product.

Arbonne, the company I represent, has a comprehensive programme of rewards and incentives for its consultants which I assume is similar for its rival network marketing companies. The standout showpiece of the scheme is the ‘White Mercedes Benz Cash Bonus Programme’, which allows anyone who becomes Regional Vice President with £500 cash towards the lease of said Mercedes. But only as long as they remain Regional Vice President. If the net sales volume they are oversee drops too low, their flashy set of wheels will be towed.

For the rest, the cash bonuses escalate in scale as you climb the pyramid of seniority and have an increasing number of consultants, district managers and then area managers beneath you. Just like in your standard office, you receive a pay rise when you get promoted, and bonuses when you reach and exceed sales targets.

Arbonne responded promptly to a request for its sales figures for 2013: “Our total sales for the year are up across all markets +10%, and your income is up on average +17% for the year — by all accounts you are in real momentum, and the best is yet to come in 2014!” The company spokesperson reported that consultant sponsorship increased much faster, by 54%.

It seems sometimes like the independent consultants comprise a larger part of the company’s revenue stream than they suspect, or than the companies let on. Many of the special offers are targeted at consultants themselves: make an order valued above £150, you get £65 worth of goods for £20. Not to mention the substantial discount that these half-enfranchised vendors receive on all inventory.

But Lord help you if you fail to make it to your annual quota by the end of the year, or you will be booted out of the sisterhood (or, for equality’s sake, gender-neutral fraternity). Bye bye discounted skincare.

One girl confided to me that a major portion of her annual quota was made up at Christmas, partly due to customer orders but also thanks to Christmas presents she bought with her discount. Admittedly there is a limit to the amount of consultant-discounted items comprise the required total, and a set portion must be through organic sales.

 

** For those who are devotees of Teutonic efficiency and quality standards is provided this, Vorwerk’s online self-description of its line of “innovative, high-quality Vorwerk products that are so practical and useful, and last for an exceptionally long time.” Everlasting lipstick, folks. Get in.

Know also that “Innovative ideas make for maximum quality. This is an officially acknowledged fact.” Presumably the EU Commission has published a statement to this effect.

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