Following the Zeek Rewards review I published yesterday, I got into an interesting discussion with BehindMLM reader ‘Colsta’ about the way he was using Zeek Rewards (you can read the discussion in the comments section of the review linked to above).
Completely ignoring the MLM business opportunity or penny auction side of things, instead Colsta (and presumably many others like him) chose to work the Zeek Rewards compensation plan as a pure investment opportunity.
I’ll go into exactly how this works in a bit, but after looking over the methodology involved… I can’t help but ask how this is going to be sustainable in the long term.
Not withstanding some pretty dodgy looking practices being undertaken by Zeek Rewards and Zeekler themselves.
In order to completely ignore the MLM and penny auction side of things and treat Zeek Rewards as a pure investment opportunity, all you have to do is sign up to the program as a Silver Affiliate.
Once that’s done, you can then purchase what are called VIP bids. Zeek Rewards members must give these bids away in order to receive what are called VIP reward points.
As an income stream for members offered through the compensation plan, a commission percentage based off these reward points offers members a daily return.
The percentage value of this return is determined by Zeek Rewards on a daily basis depending on the total VIP point sales volume of that particular day.
Now, here’s where it gets interesting.
The VIP points themselves are a kind of virtual currency, and Zeek Rewards pay members a percentage of the point value a member has. This effectively means they have a liquid virtual value that is constantly changing.
In order to increase the amount of points a member has, and effectively automate the investment process, members can opt to re-invest the daily investment return Zeek Rewards pays its members out daily.
The way this works is via an advertising co-op that Zeek set up last month in August. You see, in order to give away their VIP reward points, Zeek Rewards members need customers to give them away to.
Instead of having its members go out there and advertise the business themselves, Zeek instead have opted to do this for members, or so they claim.
Through an advertising co-op, Zeek Rewards claims to supply a steady stream of customers to its members.
This advertising co-op apparently puts the Zeekler penny auction website on a ‘‘customer registration rotator with a fantastic “Receive UP TO 500 Bid Give-Away” splash page‘.
The specifics of this marketing campaign are unknown but from the looks of it, it appears to be company wide effort to spam the crap out of the internet (starting with the requirement of Zeek Rewards members to spam the internet with daily ads in order to receive commissions).
Due to the nature of this marketing campaign, which relies on a demand for penny auctions itself, Zeek Rewards are counting on bringing in enough new customers to cover the re-investment demands of their existing members.
Whether there are customers or not, Zeek are selling these customers to members on a pre-allocation basis.
When a new customer registers they will be rotated out to the next affiliate in line that has pre-purchased customers.
The important thing to take away from that sentence are the words ‘in line’. Zeek admit there’s a waiting line for customers by their members but instead of balancing their new customers with member orders for new customers, they’re just letting their members purchase new customers and continue to grow their VIP point investments.
What we have here are members purchasing VIP bids, giving these bids away to company supplied customers (who most likely don’t exist), getting reward points off these customers and then being paid out a daily commission on these reward points, which is then re-invested into the system to purchase more VIP bids to sell again.
So what’s wrong with that you ask?
Well without actual customers, where are the daily returns coming from?
As long as everybody is busy re-investing their daily returns in order to increase their VIP points to in turn increase their daily returns, Zeek Rewards don’t have a problem.
But that doesn’t mean one isn’t building.
In tying their daily returns to the guarantee of daily new customers, Zeek Rewards inevitably set themselves up for catastrophic collapse.
Think about it. Hypothetically, let’s say one day no new members sign up to Zeek Rewards via their advertising co-op. Members of course are still able to purchase customers (even though they don’t exist) and are put in a line waiting to be allocated.
In the meantime they receive their VIP points and a calculated percentage return for the day.
The next day this happens again. And again, and again and again.
Even if we’re a little more forgiving and change zero customers to ‘well below the amount needed to sustain member return payouts’, after one week, one month, hell a YEAR of not having enough money to actually pay out everyone (because there’s not enough actual customers!), what happens when everybody eventually wants to cash out?
Where the hell is the money going to come from??
And don’t forget, the entire time this is going on, every member’s VIP point balance is exponentially increasing as the size of their returns organically increases along with the amount of points they are able to purchase each day.
The whole time of course Zeek Rewards is collecting a monthly subscription from everyone, and when combined with whatever revenue they make from the penny auction side of things I’m sure can cover the odd person cashing out, but everyone?
Not a chance!
Unless I’m drastically missing something here, everybody participating in Zeek Rewards as a straight investment opportunity is counting on cashing out before everybody else does… but without knowing what everybody elses personal payment threshold is.
One thing’s for sure, with a virtual customer waiting list and payments being made daily exponentially increasing demand for customers to the point they inevitably won’t be able to keep up (if they ever were in the first place)… people simply aren’t going to be paid.