Is Your Downline Up For Sale on the Internet?

A while ago, I received an email from my mentor. He was telling a story about how one day, he found an entire downline genealogy of an existing MLM company for sale on the internet.

He knew the owners of the company, so he called them up and said “Hey! What’s going on? My gosh, your company is doing good, isn’t it?”

“Yeah. Company is doing great. But we couldn’t afford to buy the software, so we leased it. And part of the lease deal is, the software company owns the database.”

The software company decided it needed more money, so it sold the entire database to 10 third party MLM lead companies for $10,000 each, pocketing a nice $100,000 off the backs of the hard work of the distributors.

Can you imagine that?

You work hard to build a big organisation only for it to be sold to lead companies, who will sell those leads multiple times, and the next thing you know, you and your entire group is being pitched on all sorts of other deals.

A most prized asset…

A network marketing company’s operating system, which includes the database of distributors, the ordering system, the commission payment system and the software that manages all of this should at all times be one of, if not THE MOST closely guarded assets of the company.

It should be something the company has FULL control over by itself ONLY.

If it can’t create it’s own software, it must hire contractors to develop software exclusively for them from the ground up. It’s the only way they can make the software fit their business model.

For example, there’s a company based in Utah that operates a binary compensation plan, where you only have a maximum of two legs. A left leg, and a right leg.

In this binary plan, as with most (but not all) other binary plans, they only paid commissions on the weak leg volume.

They couldn’t get the software they leased to adapt to this pay plan. They tried for 6 months, at the expense of the distributors, and then they gave up all together!

The problem was, they couldn’t sort out the placements of new distributors. An existing distributor, who had a strong leg going, would be working very hard, spending money on ads, showing the plan and placing newly sponsored people in his weak leg… or so he thinks…

But alas, when he logged into his back office, to his shock, all of his newly sponsored distributors ended up in his strong leg! So he would have to call the company, to get them to manually move his new people from his strong leg to his weak leg at the cost of $10 each, for the company’s mistake!

The company got so overrun with distributors wanting to change their positions that they just gave up and said “We are not switching anybody anymore!”

Sell your soul to the Devil!

In network marketing, it’s very important that company management have had experience as successful distributors themselves. This is Pillar Number One of the The 5 Pillars. A company CEO who does not have experience as a successful distributor cannot empathize with what it takes to build a network marketing organization.

He or she won’t make decisions that are in the best interests of the distributors. Without distributors, there is NO network marketing company!

It’s equally important that the people who write the software for network marketing companies have experience as distributors, because only a distributor knows how to manage his or her downline.

Most third party MLM software providers don’t, and this is where most MLM companies lease their software from.

Most startup MLM companies can’t afford to buy their software and that’s understandable, because network marketing software can be very expensive.

They simply may not have the $2, $3, $4 million required to purchase the software upfront. Plus they know it’s a tough business and there’s a certain probability they may not be around after two years. So instead, they do the sensible thing and lease their software for about $10,000 a month.

Sensible, but they’ve sold their souls to the devil. Especially when the software company says in their contract that they own the database and are free to whatever they like with it.

If you are choosing an MLM company, make sure they own their own software!

To your MLM success,

Wayne Wu

 

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Tagged as: 5 Pillars, Binary Compensation Plan, Company Management, Downline Genealogy, Network Marketing Company, Network Marketing Software