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Article Title: What To Say To, "Is This A Pyramid Scheme?"
Author: Kim Klaver
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On a call yesterday following the pyramid post, people wanted
to know what to say if, they're presenting the business or
product, someone pops the question,
"Is this a pyramid?"
Before you brainstorm over your winning comeback, how about a
quick check to see whether 1) your company acts like one or
not, or 2) if you are acting like one (without realizing it, of
course)?
Here's the question we discussed:
1. Is your business all about recruiting?
If so, you are acting like a pyramid, according to Rushkoff's
book, Coercion:
"a pyramid scheme is...[where] the need to subscribe newcomers
outweighs whatever benefits the products or system has to
offer. Many MLMs sell distributorships more than cosmetics
[name your product or service - KK]."
Yes of course you want to recruit reps - but if that's all you
do, you are in the pyramid zone, because you give the
impression that the product and customers don't matter, except
to sell distributorships.
Everyone quickly re-evaluated what they were doing to be sure
they weren't coming across like that.
All could see how a fixation on doing 1. above might give
someone else the impression that "Yep, there goes one of those
pyramid schemers."
After a quick review of 9 different company pay plans (of
distributors on the phone) it became clear - it's true what the
recruiters say: "There's no money in customers. All the money's
in the recruiting."
Company owners decide where to put the money they pay their
reps. Say a network marketing company pays out to the field,
50% of what it takes in. They have complete disgression on how
to divide that up - between paying for recruiting and amassing
customers (for those companies that make the recruiter/customer
distinction - and some don't.)
So, how much were companies paying for getting customers (who
were not also distributors)
On product orders ranging from $85-120, some people reported
getting paid from 0 - 7%. In one company, they got nothing on
those customer orders if they hadn't reached a certain position
in the company based on their sales; and for other companies,
the reps reported getting 5 or 6% for orders of $100. (A few
paid more. List to be posted soon.)
Five bucks for a hundred dollar customer order?
There are much easier ways to make money than that!
However, for recruiting, we got much higher returns. With
sign-up bonuses and fast start bonuses of $50-350 or more, for
orders ranging from $300-1000.
Who else wouldn't rather make $50 than $5 for making one sale?
Big money in selling distributorships (which may include
products). Versus getting just customers.
So yes, companies whose pay plans are weighted so much to
recruiting are acting like a pyramid. Worse, they make their
reps look like it too, since they want to get the most return
they can for their time, and would rather make $50 than $5. Who
wouldn't?
Well, as they say, if it quacks like a....
Oh. What to say to that question, "Is this a pyramid" (or 'one
of those things')? One option (we discussed several):
Let me tell you what we do, and you can call it whatever you
want ok?
PAUSE
We market products directly to consumers, people like you and
me, and we also find people who want to do that with us. You
think you could do that if I showed you what to do?
(That's from the Truth book.)
And yes, there are other options...for another post...send in
yours that have helped. (Use 'Comments' below).
About The Author: Kim Klaver is Harvard & Stanford educated.
Her 20 years experience in network marketing have resulted in a
popular blog, http://KimKlaverBlo
http://YourGreatThi
http://BananaMarket
tips, books and CD programs for those who want to learn the art
of network marketing.
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