A Network Marketing Nightmare – Don’t let this Happen to You!

You may find this a little bit worrying. You may or may not believe it could happen to you. But it does happen… more often than you think. It’s already happened with two major companies in 2010.

Some “network marketing” company managers are so stupid, that they don’t even know what their primary asset is. With their massive greed and over inflated egos, they let the distributors do all the hard work, then they pull the rug out from underneath.

Imagine building a network marketing downline up to the point where you’re earning $46,000 per month, then in the first days of the New Year, you get this letter in the mail…

Dear Independent Representative,

We would like to take this opportunity to thank you for your continued support of Body Electric, and to announce some very exciting changes and enhancements to our program.

Body Electric has spent the past 5 years developing a huge base of satisfied customers through both direct sales and network marketing. We’re very pleased with how our large our customer base has grown. We choose to make our valued and loyal customers our number one priority.

As we move forward into this new year, Body Electric has elected to renew our commitment to provide excellence and service and support to our customers. In 2001, we will offer lower prices, expanded specials and an exciting reward program. Of course we will continue to provide the best products available. Our customers get results, we like it that way.

To more effectively focus on our loyal customers, we are eliminating the need to qualify for bonuses. We have replaced the present commission structure with a one-time referral payout for new customer orders. Anyone who is a customer and refers a new customer will receive a bonus on that first order. It’s our way of thanking you for helping us spread the good news on Body Electric’s unique products and philosophy.

We hope you are as pleased with these program enhancements as we are. Thank you again for your support of Body Electric. We hope you will continue to enjoy the benefits of our exceptional products, and hope you will continue to promote our products to others.

With best wishes for a happy and healthy new year,

Sincerely Yours,

Body Electric Vice President of Operations

“We hope you are as pleased with these program enhancements as we are”… Can you believe this company had the nerve to write that after effectively terminating all of their distributors?

“We are eliminating the need to qualify for bonuses”… You don’t have to worry about qualifying for that $46,000 monthly residual bonus anymore.

Body Electric sent this letter to their reps in early January 2001. Four years later, the company got its just deserts – it went bankrupt.

The two major companies who have done exactly this in 2010 are XELR8, the makers of the Bazi nutritional beverage in January, and iLearningGlobal in February. Fruta Vida/Pro Image waved goodbye to their reps in April 2009.

These companies were digging themselves into a financial hole, and for them, shutting down their MLM operations seemed to be the best way (easiest?) out.

In the case of XELR8, being a publicly traded MLM company, they had stockholders to please. That move has backfired as revenues are well down and the stock price has tanked. Hmm, it turns out their real assets were their hard working distributors.

What emotions do you feel when this happens to You?

Richard Dennis was a top earner at Body Electric when he unexpectedly received this news. That day he felt an overwhelming burden of responsibility on his shoulders for the pain of his faithful team.

When you get to the top, you feel very close to the people who’ve been with you all the way. They’ve put their trust in you to lead them, to help them achieve their dreams. They believe in your best judgement, your choice of vehicle…

I can only imagine it to be gut wrenching.

How do you make sure this doesn’t happen to you?

Read your Policies and Procedures!

Body Electric had every legal right to terminate their MLM pay plan. So did iLearningGlobal. Here’s exactly what they laid out in their Policies. There is no easier exit clause than this…

“… 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.”

It was written. They had every intention of using it. And they did.

Don’t stake your future on companies who can do this to you at their will. It’s just not worth the risk.

To your MLM success,

Wayne Wu

 

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Tagged as: Body Electric, Compensation Plan, iLearningGlobal, Network Marketing, Termination Clauses, XELR8