iLearningGlobal is the second major MLM company to terminate it’s pay plan in 2010, and therefore all of its distributors. It follows XELR8′s painful decision to go direct sales in February. It was announced on March 17 that iLG will cease distributing it’s products via MLM and go to a more traditional retail sales model.
This decision will be hugely detrimental to the many distributors who have put their belief, faith, trust and energy into the company for their future. It will be especially so for the top distributors who will bear the responsibility of emotions from their entire downline team. It’s also bad for the entire MLM industry as many will lose confidence in it as a vehicle.
iLearningGlobal began in early 2008 with Brian Tracy, a global leader in personal development, as one of its founders. It was in pre-launch for about year before it officially launched in March 2009. Come March 2010, the company has failed its hard working distributors.
It will continue as a company, but it’s MLM business model, like most new MLM companies, did not survive the first two years. In an open letter to all of its distributors, iLG explained its reasons for terminating the MLM pay plan. Here’s an excerpt from that letter:
Much has changed in the marketplace during the past two years. When we began, streaming HD quality video was a unique and distinct advantage, public perception of online video training and higher end pricing was the norm, speakers continued to protect most of their content and the global economy was still perceived as strong.
While we have continued our quest to be the cutting-edge leader in our industry, we find ourselves facing a vastly different environment. HD video streaming is more common, authors and speakers are giving away a great deal of content, online communities are low-cost or no-cost and discretionary spending is at a record low. All of this has challenged our pricing structure, particularly under our network marketing model.
While iLG’s decision is very unfortunate and traumatic for its distributors, it really should not have come as a surprise if distributors were aware of iLG’s intentions in the beginning. In their Policies and Procedures and Terms and Conditions, it said they could they could terminate the MLM pay plan at anytime with a 30 day written notice. And they did!
From Terms and Conditions Document point five (5) which is available at marketer.ilearningglobal.tv:
“… iLG reserves the right to terminate all Marketer Agreements upon 30 days notice if the Company elects to: (1) cease business operations; (2) dissolve as a business entity; or (3) terminate distribution of its products and/or services via direct selling channels. Marketer may cancel this Agreement at any time, and for any reason, upon written notice to iLG at its principal business address. iLG may cancel this Agreement for any reason upon 30 days advance written notice to the Marketer.”
This is why it’s so important that you, as a professional network marketer to read your company Policies and Procedures, and Terms and Conditions, so that you’re aware of your agreement and relationship with your company.
In my opinion, if a company has this clause in their contract, it’s fairly clear evidence that the company does not intend to remain as it is for the long haul. The company owners and operators had clear intentions to change the business model at some point in time and guess what? They did.
iLearningGlobal will stop paying residual income to the field and change its business to a traditional retail sales model, where it may eventually not pay any commissions at all. (It may become just a subscription service for ex-distributors who still believe in the product.)
It’s not the first Personal Development MLM company to cease its network marketing operations. Several before it have come and gone in a very similar fashion.
In the late 1990′s, The People’s Network (TPN) merged with Pre-Paid Legal. If it had not done that, TPN would have failed and dissolved as a company. I read reports that today, most of the top producers and earners in Pre-Paid Legal were originally from TPN. (Please feel free to agree or disagree by posting a comment.)
On BetterNetworker.com, Daegan Smith tells his story about how the two personal development MLM companies that he had built to the top level, Financial Freedom Society and Success University, failed under similar circumstances. Daegan paints a very clear mental picture of how his 3 years of hard work vanished right before his eyes.
MasteryTV.com is a personal development TV channel on the internet. It used to distribute it’s services through MLM. It is now a free service.
While personal development is critical for long term success in network marketing, history tells that it doesn’t stand up well as an MLM product in and of itself.
Here is my view on why this is so…
1) Information is not tangible, no matter how good it is. There is no power in information in and of itself. Power comes from the actions you take after absorbing the knowledge. Getting good information into people’s hands through network marketing is a great concept, but it doesn’t work unless the people know how to put it into use.
In the audio version of his book “The Slight Edge”, Jeff Olson, former CEO of TPN gives his own insight as to why the company failed. He talks about how information itself can’t solve problems. You first need the right environment and associations to make it work.
Then you need a processor. Most people expect to get results in a “quantum leap” after learning the tips and tricks. But in reality, getting results is a process of learning and applying, learning and applying.
2) There’s not enough of a mark-up on the price to pay the distributors and the trainers. iLearningGlobal had some very successful coaches conducting their training in many different areas from real estate, to marketing, to business management.
I imagine paying these people for their training would have been very expensive because their time is very valuable. But you also have to make the information value priced, otherwise most people won’t be able to afford it. Therefore, the profit margin would not have been sufficient enough to cover the costs of the trainers and pay the distributors.
The reason why MLM companies who sell nutritional supplements, weight loss products and skin care do significantly better than companies with other products is because there’s a very high mark-up on the products. The raw ingredients required to manufacture those products literally costs pennies on the dollar, yet they can sell products at premium prices because the market allows them to do that.
My thoughts go to Brian Tracy, who had the vision to put iLG together, and all the distributors. It demonstrates just how important it is for the company owners and managers to have experience as successful network marketing distributors. Brian Tracy did not have that experience and this is unfortunate the result.
To your MLM success,
Wayne Wu
P.S. I would love your input! If you have an opinion that would contribute to this discussion, please leave me a comment below.
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