Empower Network blog is 67% affiliates, 33% retail
Not all multilevel marketing plans are legitimate. If the money you make is based on your sales to the public, it may be a legitimate multilevel marketing plan.
If the money you make is based on the number of people you recruit and your sales to them, it’s not. It’s a pyramid scheme.
–US Federal Trade Commission (FTC) on Multilevel Marketing, November 2012
A few days ago Empower Network crossed the 100,000 mark for what they’re calling “blogging customers”.
On the surface this sounds impressive and whilst I don’t question the accuracy of the milestone (or try to take anything away from it, well done guys), what I found far more relevant and revealing was a short update published the day before.
In the update CEO David Wood broke down Empower Network’s current blogging platform affiliate to retail customer ratio.
Upon seeing the figures I’d like to say I was pleasantly surprised… but unfortunately that wasn’t the case.
Published on his Facebook profile page, David Wood writes,
I saw someone online saying that Empower Network doesn’t have customers.
What nonsense.
Right now, out of our active customers of the blog, 33% of them are customers only.
First and foremost kudos to Wood for revealing this figure. I imagine most MLM legal teams would shy away from publicly revealing that kind of retail to affiliate revenue ratio, but Empower Network continue to demonstrate that they are committed to transparency.
That said there was a bunch of marketing fluff attached to the announcement, no doubt designed to pad out the figure, but that was easily skipped over.
The meat of the announcement was that, at least as far as the blogging platform was concerned, Empower Network has 33,000 or so retail customers (non-affiliates) and 67,000 affiliates. Or to simplify it, 33% retail.
Without even getting into the simplest of analysis, having 33% retail reveals that the bulk of money being generated in Empower Network is coming from affiliates.
As per the FTC quote at the start of the article, this clearly brings us into pyramid scheme territory.
They key here is establishing whether or not statistically, an Empower Network affiliate’s income ‘is based on the number of people (they’ve) recruit(ed) and (their) sales to them‘.
To get it out of the way, it’s wholly acknowledged that you don’t have to recruit affiliates to earn in Empower Network (blogging platform or otherwise), and that’s certainly not the point here.
You join Empower Network as a blogging customer for $25 a month and if you don’t pay that affiliate fee there’s absolutely no doubt that you’re a retail customer.
Looking at Wood’s figures, with only one customer for every 2 affiliates paying $25 a month though, retail is clearly not the core of the business. And before anyone starts on about being a “new company” with “growing pains” or some such, Empower Network are now approaching a year and a half since launch.
As Empower Network’s own affiliates love to parrot, “no excuses”.
Getting back to recruitment earnings, as it stands I can join Empower Network as an affiliate, buy into the blogging platform (mandatory if I wish to earn anything selling it to others (retail or recruited affiliates)), and then receive $25 each month from every affiliate I’ve signed up.
Whether they use the blogging platform, whether I use the blogging platform or whatever either of us perceive the value of it to be is all ultimately irrelevant to what it is I actually did to get paid – recruit new affiliates into Empower Network.
You could make the argument that I wasn’t paid to recruit these affiliates (as the affiliate fee is not commissionable in and of itself), however if these affiliates wish to earn anything – they have to “purchase” the blogging platform.
In doing so, I am then paid my monthly commission so in effect my income is indeed tied into, as the FTC puts it, ‘the number of people (I’ve) recruit(ed) and (my) sales to them‘.
Again, I’m not asserting that recruitment is mandatory by any means but as per Wood’s figures, quite obviously recruitment of new affiliates (and the requirement for them to buy into the system to earn commissions themselves) is how the majority (67%) of blogging platform income is being generated.
And keep in mind, at $25 a month the blogging platform is only the entry-level product tier. With training running off into the thousands of dollars (where the “real money” is as they say), what’s the bet that the retail ratio plummets from 33% to… well, who knows what.
Unfortunately Wood didn’t reveal what the retail to affiliate purchase ratio was for Empower Network’s “Inner Circle” membership ($100 a month) or Costa Rica video series ($2997), just the flagship blogging platform.
No doubt aware of the importance of the retail revenue being generated within the company (whether, due to the Empower Network compensation plan, it’s being gifted amongst affiliates or not is a seperate (but relevant) issue again), Wood closed his ratio announcement with a projection:
Just wait to see what happens to your check this year when customers are accounting for 95% of your income.
Where these customers come from however, given the massive marketing advantage an affiliate has recruiting new affiliates, I have no idea.
As a blogging platform customer, marketing wise you’re being sold on Empower Network’s “domain authority”, pagerank (putting aside the fact that pagerank is individually page specific), WordPress templates and the actual setup of the blog platform itself (WordPress).
The idea being of course that you start blogging about whatever it is you want to promote (even if it’s just information) and having WordPress’ blogging software on Empower Network’s website domain will get you showing up in search engines.
The reality?
Despite having 33,000+ retail customers supposedly blogging for the above reasons, Alexa accounts traffic to the Empower Network website from search at just 5.3% of the global traffic hitting the site.
What does that mean?
94.7% of visitors to the Empower Network website (including every affiliate and customer’s subdomain hosted blogging service) do not come from search engines.
Further to that, with 94%+ of traffic being directly sent to the Empower Network domain by affiliates marketing the income opportunity, what percentage of the 5.3% of search traffic actually hitting the site is traffic those 33,000 or so customers they have are actually seeing?
The most popular search terms used to land visitors on the Empower Network domain are pretty much all related to the income opportunity itself:
1. “online home business team” 5.75%
2. “empower network” 3.27%
3. “a freedom message for network marketers” 2.60%
4. “stop struggling with your online home business” 2.56%
5. “how to blog effectively” 2.37%
6. “empower network monster unleashed” 2.24%
7. “blooging starts with a niche” 1.92%
8. “empower network a true business model” 1.87%
9. “downline building thre easy way” 1.84%
10. “empower network newbie system” 1.82%
For Empower Network’s retail customers search visibility is ultimately the bottom line. If, as an Empower Network customer, you’re going to just drive traffic to the sites yourself you can do that on any hosted platform (WordPress and Blogger both allow you to quickly set up a blog for free).
Capture pages? $25 once off should get you a decent enough one.
The whole “search engine visibility advantage” the Empower Network blogging platform is marketed with towards customers just doesn’t make sense.
I mean hey, even if a customer managed to generate a significant amount of traffic, does anyone seriously believe there aren’t affiliates keeping track of things like this, ready to hijack the keywords themselves (to generate more traffic to their Empower Network recruitment capture pages)?
But that’s of course precisely why Empower Network’s retail is sitting at just 33%. Why or how Wood thinks this is going to increase to 95% I’ve got no idea.
Especially when he’s making statements like this (Facebook, 9th of March 2013):
I don’t want 100,000 customers, or 1,000,000 customers – I want 1,000,000 affiliates a month to be earning a commission.
Hell, he doesn’t even want customers!
Focusing on affiliates earning money above all else (which is currently happening primarily (67%+ of commissions generated company wide) via recruitment of new affiliates), projecting a 62% increase in retail customers on a system that makes no sense to use as a customer, at least 66% of all commissions paid out being affiliates paying affiliates directly each month and currently fitting the FTC’s own definition of a pyramid scheme?!
That’s a whole lot of “doesn’t add up” right there.
Then again, with sales pitches like this from David Wood himself,
Get to Chicago.
Get in.
Don’t be a wussy.
Pull out your credit card, and get your blog setup now, for only $25.
it’s clear retail, let alone any demonstratable value needed to attract retail customers, isn’t high on Empower Network’s priority list.
I wonder how many customers are simply ex affiliates?
Let’s say.a person joined as an affiliate. After a few months of failing to recruit anybody under him he might decide he is unlikely to ever do so. At which point he can quit completely and lose his blog content, or just quit the affiliate part?
Actually, are you 100% sure that affiliates who aren’t making sales aren’t being counted as customers?
Look at this page: empowernetwork.com/income.php
In their income disclosure they only include people who they consider to be active affiliates. To be classified as active you must have made a sale in the last 30 days (among other things). But if you haven’t made a direct sale recently, you aren’t classified as an active affiliate, even if you are bought all the affiliate tools (and even if you’ve earned commission previously).
If you aren’t an active affiliate, does that make you a customer?
Affiliate fees and blog fees are seperate so you can’t be classified as a paying blog customer by failing as an affiliate (failing to sign people up as blogging customer or recruit affiliates who must purchase the blog platform to earn on it).
Given that the income opportunity itself is what is primarily being marketed on the network (at least 94.3% or so of all traffic to the domain), it wouldn’t make much sense to stop paying your affiliate fee and continue to pay your $25 a month blog platform fee.
I’d be curious what the retention rate was of retail customers over there too.
NO. It’s only a method they use to make the income look nicer, look more profitable for new affiliates to join.
People are clearly participating in an income opportunity here, and failing to make an income doesn’t make them become “customers”. “Victims of a scam” is probably a more correct description.
There are two aspects to this.
1. The first issue is retail customers. How many have they really got? For this I am using the same definition of “retail customer” as I think you and I think the FTC use – people not involved in the income opportunity.
I am not 100% sure if empower use the same definition, but let’s leave them aside for a moment, and come back to it point 2.
I agree that very few new people would be interested in the empower blog without income opportunity. It would be very hard to get new retail customers.
The template is garish, and IMHO would put off normal people (those not into hype-y marketing). The pitch pages at empower seem to all be about the income opportunity not the blogging platform. And Alexa rank has nothing to do with how much traffic a blog can get, or google PR, etc.
And most importantly, you can get the same thing or better free – and the free blogging systems have far more visibility around the net than empower.
Of course some new people might choose empower for blogging, regardless, but it seems like a really uphill struggle for them or their affiliates to sell. I’ve never seen an affiliate even try to sell the blog without the opportunity…
But assume for a moment that if empower does have retail customers. Where could they be coming from?
One obvious source would be failed affiliates.
Imagine that you invest in empower, join as an affiliate and setup a blog. After a few months, of not making sales, the logical thing to do is quit. However if you have spent a lot of time and effort writing your blog, you may not want to lose it. In which case you might quit the affiliate part, but continue paying so as to keep your blog alive.
In other words, even without funny math, the best source of retail customers might well be ex-affiliates.
2. The other part that troubles me is the definition of an affiliate vs a retail customer.
Your definiton is clear. An affiliate participates in the income opportunity. A retail customer doesn’t.
I think empower may be using a slightly different definition.
An “active affiliate” is somebody who pays the affiliate fee AND made at least 1 direct sale in the last 30 days.
You could pay the affiliate fee, have made thousands of sales in the past, and still be getting pass-up commissions, and not be counted as an active affiliate
Similarly you could pay the affiliate fee, not making any sales, and not be counted as an active.
Of course the company prefers to count people making money in their income disclosure, and ignore people not making money, as it makes their opportunity look better.
But my point is there could be tens of thousands of people paying the affiliate fee every month, and simply not being shown in the income disclosure, because they haven’t made a recent direct sale (the vast majority of them won’t be getting pass-up sales either).
And if empower only considers you an “active affiliate” if you both pay the affiliate fee AND have made direct sales in the last 30 days — what are you if you pay the affiliate fee, and haven’t made direct sales?
Yes I know that you (and probably the FTC too), wouldn’t consider you a customer in that case.
But what do empower classify you as?
If Empower Network are indeed classfying inactive affiliates (by definition of not having made a sale in the last 30 days) as customers, then indeed there’s a problem.
Not only with the definition of a customer itself but rather in the sense that it means the true retail percentage is going to be much, much lower.
I took David Wood’s mention of “customer” at face value, with customers not participating in the income opportunity (not paying affiliate fees). Going over what he said again with the mention of “active customers” and your input, now I’m not so sure.
If he’s talking about active affiliates and non-active affiliates (those who have failed to make a sale in the last 30 days but still paying affiliate fees), then the figures provided by Wood are a complete farce.
I can’t find the text o David Wood’s post. What was his exact wording?
Maybe Wood is just getting in front of Herbalife for once. 🙂
That is very ambiguous, but I think it may contain a giveaway “tell”.
If David Wood were simply talking about paying blog users, and subdividing them into affiliates and retail-customers, then his statement does not really make sense.
All the blog users that he is talking about are doing something in order to be counted as “active blog users”, as opposed to “inactive blog users”.
It can’t be paying to keep their blogs running, otherwise the word “active” would have be redundant. Moreover, if by “active” he were simply talking about these people paying to keep their blogs running, there would be no such thing as “inactive”, because in that case (a) their blog is terminated, and (b) they would no longer be a customer.
So David Wood, I think, meant something else by “active customers of the blog”.
My guess is that by “active customers of the blog” he means people who have paid for the blog, and who have paid to be active in empower. And of those, he is saying 33% are not getting commissions, i.e. are customers only.
The only other plausible explanation that I can think of is that he mis-spoke.
Of course, I could be completely and entirely wrong. Perhaps somebody else can come up with an alternative explanation which fits the quote?
I would say that when it comes down to it, it doesn’t matter in light of the fact that David Wood admitted the 66% affiliate to 33% customer ratio. But I see where you are coming from.
Well I think it does matter.
67% affiliate, 33% retail, would be bad, very bad, but still potentially solvable if they get their act together before the regulators go after them on this issue.
It would also mean they had a product that was potentially retainable without the income opportunity, but their mistake was emphasis being incorrectly aimed in their marketing efforts.
67% active affiliate, and 33% inactive affiliate, would show empower up as a joke. Among other things I would demonstrate that thru couldnt sign up people to blog, with the income opportunity, and that virtually nobody was truly interested in the blogging product.
I heard all this almost verbatim with Zeek Rewards. Poor poor misunderstood put-upon Zeek.
Gonna get the compliance all in order, cos due to such growing pains n’ all, they forgot they actually had a penny auction. Oopsie. Didnt mean to get carried away.
Yeah right, so yeah, we need to dissect every word out of their mouth. 🙂
I would take it one step further.
The reason pyramid schemes and endless chain recruiting schemes are illegal is simply because they don’t work as promised.
pyramid and endless chain recruiting are not mathematically sustainable, which means members lower on the pyramid cannot earn the amounts of money being claimed by those at the top of the pyramid.
For potential members, this amounts to two problems.
1) the scheme is illegal
2) they are not going to be able to earn enough to cover expenses, ESPECIALLY without knowing how many others are above them in the pecking order.
Smart, non get-rich-quickers will recognize the risks far outweigh the potential benefit and stay away.
The ability to take risks is an essential part of making money.
Trying to ignore mathematic reality is just plain stupid
Stupid phone. Too many typos in my last post. I don’t think it changed the sense. as I seem to have got my point across, but what I meant:
Well I think it does matter.
67% affiliate, 33% retail, would be bad, very bad, but still potentially solvable if they get their act together before the regulators go after them on this issue.
It would also mean they had a product that was potentially RETAIL-ABLE without the income opportunity, but their mistake was emphasis being incorrectly aimed in their marketing efforts.
67% active affiliate, and 33% inactive affiliate, would show empower up as a joke. Among other things IT would demonstrate that THEY could NOT sign up people to blog, WITHOUT the income opportunity, and that virtually nobody was truly interested in the blogging product.
While I agree it “matters'” and the loophole could be easily closed by those behind Empower, in the context of a blog commenting on the viability or otherwise of an MLM “opportunity” it is irrelevant.
History tells us the chances of an MLM being closed by the authorities are comparatively small.
For whatever reason, be it budgetary or simply the sheer numbers involved, an MLM would have to be a blatant fraud (i.e. Burnlounge) to attract prosecution.
Blogs such as Behind MLM exist so that potential recruits can be made aware of all the possible pitfalls involved in making their choice, not just the dry legal information available on the authorities’ websites.
Smart people will avoid pseudo MLMs such as Empower Network BECAUSE they are being used in a pyramid scheme manner by some members and the company itself is taking no steps to prevent such abuse.
IOW, in the longer term, why would anyone trust Empower if it refuses to fix such an obvious and potentially lethal problem ??
Don’t get me wrong, I’m not defending empower. I have nothing positive to say about them.
David Wood’s quote only reinforced my view. Even the most generous interpretation of the quote, results in a major red flag as far as I am concerned.
I checked the different options there. All the typical Empower products (blog, marketing education) included membership. They didn’t have any typical “customer class” there.
Theoretically, the “Badass” products (T-shirts) CAN have some retail customers, but I didn’t check that.
The 33% customers is probably only an imaginary number, derived from David Wood’s fanthasy rather than from reality.
It can of course reflect the non-recruiters, the bottom level of all the downlines.
Just to let everyone know I have ran a spyware scan for the past to days on my computer every time I am getting ad ware and malware I have come to find out they are from empower network be very care these guys are starting to play their little tricks
Perhaps I can help clear up the confusion about what makes someone a customer vs. affiliate within Empower.
A person can come into Empower, purchase all the marketing training products, and blog. They would be considered as a customer. They would be considered as an affiliate after they activate their e-wallet (at $19.95/mo (all going to Empower for support expenses)).
I would love to know what programs you’re using to check for such things. I have one of the top of the line programs on my systems and have not encountered any such issues before nor since becoming part of the Empower Network.
If we take that at face value, then at 33% retail there’s still a problem.
The majority of revenue in Empower Network is being generated by affiliates, who are recruiting new affiliates.
@Raymond
sorry been away but let me say this i have no reason to make this up when I run a scan and its showing adware and malware from empower what am I to assume and I use AVG who do you use
Wow. Just did a little research and pulled up this Felony Arrest for David Sharpe, Co-Founder of the Empower Network.
http://pcsoweb.com/InmateBooking/SubjectResults.aspx?id=1224783
I think this says quite a bit about his character and morale.
What the heck is 322.212 1/F? All the statutes I searched only goes up to D.
@John Doe –
That’s from 2006. DSharpe is quite open and honest about his history with Drugs and alcohol. He’s been sober for approximately 5 years – since about 2008.
Did you look at the charges? Pretty inconsequential… He was released on his own recognizance… Hardly earth-shattering.
This says it all… no idea about compliance lol.
(Ozedit: The above was published by David Sharpe (co-founder of Empower Network) on Facebook, 16 hours ago)
Only taken nearly 2 years for them to come out with compliance, when that starts, the end is nigh! From my experience anyway.
Sounds to me like they’ve called in the “psuedo-compliance” lawyers in to try and make a cash gifting scheme legal…
Compliance courses… oh dear. If your opportunity was legit you wouldn’t have to tell your affiliates what to call it.
And it’s easy to introduce a compliance course after you’ve recruited over 100,000 affiliates into a cash gifting scheme that has seen the transfer of tens of millions of dollars amongst affiliates. Zeek Rewards (albeit a Ponzi and not gifting) tried to do the same, look how that turned out.
Wow guys.. Most of these remarks and comments are coming from people who haven’t even joined to see what its about…
I can tell you this… What most companies lack in this business is Continuity, Real Support, & truly how to market. Guys, this is more than a blogging system, its a philosophy. They Encourage you to read, Enlighten yourself, be creative, and get healthy.. Without all the numbers you guys are crunching, how many companies in this game is doing this.
As for as the Retention Rate, most of the affiliates that has taken in the philosophy of the core commitments, have gained something way more then just the money made. Yes most of us are plugged in because of the value, not just the money..
For those who got in, and didn’t understand the philosophy.. If you never change your Mindset your Past will always be your Future… All the number crunching doesn’t tell the true value of what most are getting out of it.
Since when do you need to join something to understand a compensation plan and business model?
All of which is irrelevant when you’re analysing a 33% retail (and thus majority affiliate-funded) pass-up gifting scheme.
EN was 33% back in March, who knows how much it’s dropped since then.
Philosophy schmilosophy.
Join, gift your upline, recruit new affiliates who gift you.
That’s where the buck stops analysis wise and anything else is just waffle.
Do funeral directors need to die first?
Do jailers need to go to jail first?
Your logic is just bull****.
You know what else say that? Cults.
Yep, you sound like you’re pretty much in rapture. I see a cult intervention in your near future.
Just saw this posted on David Wood’s FB page:
Sounds like he just described a ponzi scheme.
More of a pyramid scheme.
Note the absence of the word “retail” before “customer”.
Basically affiliates = customers and Empower Network is begging for a regulator to come in and reveal what ratio of revenue comes from affiliates.
youtube ENV2 empower network’s new blogging system. Thats why Wood quotes the drastic increase in retail customers……its gonna be better than wordpress!!!
Gonna be, or already is? Based on your opinion? Or simply Dave’s word?