From: ogden_jon@macmail1.rtsg.mot.com
Subject: Re: New (?) Marketing Technique
Organization: Motorola LPA Development
Date: Fri, 11 Dec 1992 08:57:05 GMT

In article <1992Dec8.212623.17912@Rapnet.Sanders.Lockheed.Com> babb@k2 (Scott
Babb) writes:
>I am soliciting net.comments on the following concept:
>
>I am planning to market books through a variation on the MLM
>concept.  There are a few important differences between the
>MLM methods that I have seen in use elsewhere, and those which
>I plan to use.  Here is a synopsis of my technique:

[ Stuff Deleted ]

>5.  For each order that a distributor gets, they receive $2.00,
>    their sponsor receives $1.50, and their sponsor's sponsor
>    receives $1.00.  This provides more reward for your own
>    personal effort (I've seen many MLMs where the compensation
>    structure is inverted, with those furthest removed from the
>    sale receiving the most compensation) but also maintains a
>    reasonably high profit from the multiplex income.  The 
>    multiplex income stops after 3 levels below the individual
>    distributor ($2.00 for your customers, $1.50 for your
>    customers customers, and $1.00 for your customers customers
>    customers.)		
>
In the long run though this will limit the income of those distributors with
large organizations.  The company I am involved with (Amway) basically has
extra bonuses which are given out based on organization size (after you reach
certain levels).  This creates a lot of residual income and incentive.  Why
should I build my organization any bigger than 3 or 4 deep if I don't get
compensation?  Building an organization under you many, many layers deep is a
way to ensure stability to your business.

Also, many people get into MLM's for the opportunity to earn residual income
based on helping other people develop businesses.  For example, if I help
someone do about $15,000 in volume a month for 6 months, I will then receive
from Amway 4% of his business for the rest of the time it exists.  His volume
no longer is counted with mine, but then neither am I doing any work for the
money.  I would suggest adding such a thing.

>This is one of the simplest MLM layouts that I have seen.  I don't
>know if anyone else has come up with these ideas for modifying the
>standard (i.e. you advertise, you solicit distributors, you take
>orders, you stock product, you deliver product, you keep records,
>etc.) MLM formats.  It certainly is easier on the individual
>distributors than any other MLM that I have seen.
>

Yes, it does not seem like a bad idea.  But in a way it is already being done. 
Amway has a catalog of major merchandise that your customers can call an 800
number, order via credit card, have stuff shipped directly to them, and a week
later you get a check in your mailbox for the difference between the wholesale
and retail price.  Works real well.

If you want an honest opinion about this read on.  This sounds like a decent
idea.  I would suggest that you study the marketing plans of other companies
especially Amway.  Am I trying to toot Amway's horn?  No, but Amway's plan is
the only MLM plan approved (recommended) by the FTC and it is the benchmark by
which all others are measured.  Also it does help to see what the biggest and
most successful companies in an industry do, and there is NO question that
Amway is the biggest and most successful MLM supplier in existence.

MLM's are hot, and it is not a bad idea.  But be prepared to work and work like
crazy.

Jon