Why MLM Company Management Must Have Experience As Distributors

What does it mean when a company does away with its play plan? It’s an absolute kick in the guts to the hard working reps who built the company from the ground up. All that hard work inviting people, talking to them on the phone, meeting people in cafes, restaurants and homes, doing presentations, the “no shows”, follow ups and coaching calls all of a sudden means nothing – a complete waste!

That’s what happened to the distributors of XELR8, makers of the Bazi nutrition beverage. Their company, a publicly traded company, just did away with their compensation plan. The three top distributors who had all reached the 250K Diamond level literally lost their livelihood over night and now they have to rebuild it all over again.

On January 19 2010, the chairman of XELR8, sent a letter all distributors telling them they are getting rid of their Multi-Level Marketing pay plan by the end of February 2010. Replacing the MLM compensation plan is a direct sales model where distributors earn a commission only from the retail sales of the product.

This is why Pillar Number One of the The 5 Pillars of Network Marketing is so important. Pillar Number One is “Company Management Experience With Integrity.” None of the executives of XELR8 had any experience as a network marketing distributor.

They don’t know what it’s like to drive 3 hours one way to do a meeting for only 5 people, and then on the drive home pull up by the side of the road for 3 hours sleep before heading to work in the morning. They don’t know what it’s like persisting with a business opportunity that produces negative 10 bucks a hour for the first 3 years. They don’t know what it’s like to get all of those “No’s”

A true network marketing company understands the difficulties distributors face in building their own business and they never forget that it’s the distributors who build the company. Without the distributors, there IS NO network marketing company.

My mentors always warn people about building a home business with a publicly traded company – because in a publicly traded company, who comes first? It’s NOT the distributors. It’s the stock holders – the people who put money into the company. The company must pay them first. The company executives come second. The distributors come third.

Here’s a statement from the letter that was sent out by the chairman of XELR8.

In closing, I want to thank ALL of our Independent Distributors for their support of XELR8. While the decision to terminate our multilevel marketing program was not a decision that any of us at the Company wanted to make, ultimately it was deemed necessary to insure that our products remain available to support the health and vitality of our customers. We are extremely grateful for your efforts to spread the word about XELR8 products and wish you success in your future endeavors.

From this statement, who was priority number one for this company? “…it was deemed necessary to insure that our products remain available to support the health and vitality of our customers.” But who are the company’s real customers? It’s the people who would buy the company’s products no matter what – it’s the distributors.

Before you marry an MLM company because you’ve fallen in love with the product, because they’ve got the most lucrative compensation plan you’ve ever seen, please take the time to do your due diligence. Make sure the company managers have built a network marketing business and understand it’s business philosophy.

Not only have the top leaders in this company lost their livelihood, but they bare the huge emotional burden of responsibility for their downline – the people who trusted those leaders to bring them into the company for a better way of life.

Here’s a quote from Rod Cook of MLM Watchdog that says it all…

“…It’s not the money to them, that they can do anywhere. Let’s put it this way – it is like having your children murdered while you watch. I have been there…….. Rod”

To your MLM success,

Wayne Wu

 

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Related posts:

1. Fat vs Skinny MLM Companies – How do they affect Distributors?
2. A Network Marketing Nightmare – Don’t let this Happen to You!
3. Does Your MLM Company Have a Fair Compensation Plan?

Tagged as: Company Management, Compensation Plan, Diamond Level, Multi-level marketing, XELR8