Is Forever Living Products encouraging affiliate autoship recruitment?
Forever Living Products’ Leadership Bonus pays affiliates on sales volume generated down three Manager generations.
To qualify for the bonus affiliates must meet sales volume requirements, which can be met entirely with self-purchase (no retail).
The volume can of course be also generated via retail sales (or a combination of retail and personal purchase), and so Forever Living Products operates in the all too familiar grey regulatory area.
That an MLM company without significant retail activity is a pyramid scheme is clear-cut. But Forever Living Products, like most MLM companies, does not disclose how much of its company-wide volume is attributable to retail sales.
In a recent compensation plan change email, Forever Living Products shed some rare insight into the current situation.
The gist of the Leadership Bonus change is that affiliates who haven’t qualified for the bonus by qualifying at the Manger rank.
Manager rank qualification requires the generation of 120 cc worth of sales volume every two months.
For reference, one “cc” of volume in the Forever Living Compensation plan is the equivalent of $132 of wholesale personal volume generated by an affiliate and/or their downline.
One of the concerns I pointed out in BehindMLM’s Forever Living Products review was that affiliates could sign up, pay $132 a month and eventually max out the compensation plan solely by recruiting other affiliates who also did nothing more than pay $132 a month.
That qualifies you as a Manager and, provided you keep up rank qualification, you earn the Leadership Bonus.
Previously there were no time-restrictions on qualifying for the Leadership Bonus.
Now affiliates must hold the Manager rank for twelve months before any downline Managers (and their downlines) count towards their Leadership Bonus.
Any downline Manager affiliates generated within this twelve-month qualification period are permanently passed upline to the first Leadership Bonus qualified affiliate.
And yeah, this includes their downline, meaning the qualifying affiliate misses out on the Leadership Bonus for that unilevel leg entirely.
If that sounds like a strange change to make, it’s because Forever Living Products’ top affiliates are feeling gimped out commissions because of “skimming”.
Wondering what skimming is? I’ll let Forever Living Products explain:
Managers who have not qualified for Leadership Bonus for twelve months are not putting forth the effort to build a business worthy of Leadership Bonus.
Many times, when this occurs, the upline will step in to build and support the non-qualified Manager’s downline, only to find that, when that downline becomes significant, the Manager steps in and buys 12CC each month to “skim” the Leadership Bonuses.
Thus, the upline are not fairly compensated for their effort. This will help to curb the practice of “skimming” Leadership Bonuses.
Before we get into the real problem with the above, let me further break down the issue.
Manager and higher Forever Living Products affiliates recruit affiliates who themselves don’t qualify as Managers.
Nonetheless they work to build these affiliates’ downlines because, as Managers, they earn the Leadership Bonus on downline affiliates in the leg.
Once the downline gets big, the recruited affiliate realises earning potential and pays $132 a month to qualify as a Manager.
They then start earning the Leadership Bonus but the upline affiliate, who built the downline, has whatever generation that affiliate makes in that leg cut off.
If it’s the last generation they qualify for in that leg, that means they don’t earn any money on the downline they built (the Leadership Bonus stops at the affiliate who promoted themselves to Manager).
Still with me?
While this is definitely an issue higher ranked Forever Living Products’ affiliates, the bigger problem is that upline Forever Living Products affiliates are building downlines for other affiliates.
Personally recruited affiliates are supposed to be placed on level 1 of the affiliate who recruited them. If upline Forever Living Products affiliates are placing recruited affiliates further down the line, that’s downline manipulation for starters.
Second, where is the retail in any of this? It very much sounds like the “pay $132 and then recruit other affiliates who pay $132” compliance concern I pointed out in my review.
And remember, Forever Living Products themselves are stating affiliates self-qualifying for commissions happens “many times”.
Should a regulator investigate, I have little doubt they’ll find little to no retail sales taking place.
Back to the Leadership Bonus, let’s take a step back and look at the bigger picture.
Manager and higher ranked Forever Living Products affiliates are building downlines for those they’ve recruited who can’t or don’t want to recruit themselves.
By paying as little as $132 a month, their “lazy” downlines potentially cut them out earning a Leadership Bonus on volume generated by those they brought into the business.
Is severing non-Managers from their downlines the answer though?
The core issue, I believe, is not Manager and higher ranked affiliates getting screwed out of commissions on one bonus (cue violins), it’s how Forever Living Products are allowing affiliates to qualify for the Leadership Bonus to begin with.
By allowing affiliates to only pay $132 a month to qualify as Managers, Forever Living Products are basically condoning affiliate autoship recruitment.
“Skimming” upline affiliates out of the Leadership Bonus shouldn’t be so easy.
An actual solution to the problem would be to increase Manager rank qualification criteria, but by that I don’t mean simply jacking up the volume requirement.
The Manager rank is the fifth progression rank in the Forever Living Products compensation plan.
By that stage it should be expected affiliates are generating retail sales. So why not roll them into Manager qualification?
This way Manager affiliate’s wont feel “skimmed” if their downlines qualify as Managers, as it would require actually building a business and not just paying a $132 a month fee.
And if they still feel cheated, what are these people doing in an MLM company anyway? In an MLM company upline affiliates are supposed to be working with their downlines, not against them.
But to hell with that, Forever Living Products have issued a qualification deadline of September 1st, 2018.
Starting September 1st, 2017, affiliates must maintain the Manager or higher rank for twelve consecutive months, otherwise they lose their Manager lines to the first qualified upline Manager.
After September 1st, 2018, Manager and higher affiliates surrender any downline Manager affiliates (and their built downlines) until they’ve been Manager or higher ranked for twelve consecutive months.
Call me cynical, but now I see two things happening:
- Greedy uplines will “steal” a bunch of downline Leadership Bonuses from their downlines over the next twelve months or
- a whole lot more affiliates are going to start paying $132 a month just to qualify for the Leadership Bonus (fear of loss)
This is a classic case of not addressing the root problem and instead creating a solution to treat symptoms (the fact that Manager qualification doesn’t require the building of an actual business).
What’s worse is those at the Manager level who are deeply rooted in a $132 a month chain-recruitment downline, will just continue to pay $132 a month and earn off others who do the same.
And again, this is such a common scenario that Forever Living Products have gone out of their way to address it.
Better people losing downlines doesn’t prompt a flood of regulatory complaints.
But better still, why even let it come to that. Why not actually fix the problem and implement workable solutions to begin with?
So let me see if I get this right:
You can’t make leadership bonus once you hit manager. You have to STAY there for 12 months to get leadership bonus. In the meanwhile, all your bonus goes to your upline.
Boy, talk about maintaining the status quo, noobs are screwed.
Pretty much.
The current affiliates have until September next year to start their 12 month qualification, and if they fall short even one month they permanently lose all their Managers to their upline.
What’s wrong with the principle of autoship qualification, if the products are quality daily consumables?
The whole point of the MLM biz model, as a business builder, is that if you put in the upfront work you have the potential for a passive income, not spend the rest of your career maintaining retail customers of face cream and vitamin pills.
FLP’s comp plan was always retail heavy IMHO and the elite have messed with qual. levels before to force lesser distributors out of their commission once they’ve built their biz to a certain level and decided it’s enough.
I’m not defending the company by the way – it’s a rat’s nest as much as any other with slimy Rex Maughan as King Rat.
Autoship qualification by itself isn’t a problem.
In MLM however when it’s used by the majority of affiliates companies start operating as pyramid schemes.
So if you get ill or have a family issue that means you disrupt your qualification months then they take your down line off you.
But that means you’re BUYING, not selling.
No it isn’t. It’s the exact opposite. THINK about it. MLM is about selling. The last M stands for MARKETING, i.e. selling.
If you just autoship stuff to yourself, you’re not selling. You’re just BUYING.
Instead of selling to consumers, YOU ARE THE CONSUMER!
I think you’ll find many in FLP are doing just that – auto shipping to themselves to meet the minimum requirement.
I’d need to check but I think the comp plan is also bias towards recruiting ahead of retail.
I’d go as far as to argue that ALL of the major MLMs, with possible exception of Amway, and only by a matter of degree, that they all went toward recruiting autoshippers, rather than retail. Esp. when MLMers have the attitude such as DRT as quoted above:
i.e. retail is lame, it’s easier to recruit minions (who recruit yet more minions)
They have lost the soul of MLM/direct selling a long time ago. Nobody wanted to sell any more.
Wasn’t it Amway who coined “Buy from yourself, and teach others to do the same”?
And then they just winked and told you to type in the names of anyone for the 10 customer rule, or state that 50 pv was for retail. It went something like that.
@Chang The last M stands for MARKETING, i.e. selling
Marketing is not just ‘selling’ it is also promoting and distributing.
IMO and IME MLM is a system of building a distribution network, through which products move from manufacturer to end users.
I really don’t understand all the panic about dizzies buying product for themselves, rather than ‘selling’ products to friends and family or cold customers, as if that’s somehow a bad thing.
I’m not saying the system isn’t abused, or even create a fertile environment for abuse – all systems are subject to the dysfunction of human nature.
IMO, MLM has far more insidious problems than ‘distributors’ buying product for their own usage in order to qualify for downline commissions. Mass hypnosis into the cult of the organization via public rallies (complete with attendant litany of exaggerations and lies) for example.
Because in MLM when the distributors are close to 100% of the customers it’s not the products being marketed, it’s the income opportunity – which at that point relies on recruitment.
Affiliates buying product isn’t a problem in and of itself. But if it’s the primary source of revenue generation than that company is operating as a pyramid scheme (no retail).
We are arguing over semantics. The point is even in distribution, goods flow from company, THROUGH marketers/distributors/ affiliates/IBOs into the hands of consumers/ buyers / customers.
The point is in LEGITIMATE MLM, goods flow from company into the hands of consumers.
In a product-based pyramid scheme, goods flow from company into the hands of distributors, and ends. The distributors are the customers, and company can only grow by finding more distributors.
and… you can’t tell whether the current MLMs are legitimate, or product-based pyramid scheme.
Because they can’t prove their goods are flowing to people who actually buy them because they need them, rather than needing them to qualify for income.
I fully understand both of your arguments.
My challenge is to the wisdom of arbitrarily assuming that ‘distributor as their own customer’ equals corruption (ie. makes the model illegal)
Yes, it’s open to abuse, “but it ain’t necessarily so”.
I’m insisting that when the argument rests on ‘oh look, distributors are the customers, it’s a scam’ then the argument is flawed if no other evidence is considered.
re: “Because they can’t prove their goods are flowing to people who actually buy them because they need them” – there are VERY few consumable MLM type products that are purchased due to a genuine NEED.
The vast majority of purchases are driven by WANT, not need… and that category includes purchasing expensive aloe soap to bathe with or aloe gel to drink in order to qualify for a profit share on a distribution network one helped to create.
It doesn’t, in and of itself. You’re the only one arguing with yourself.
The issue is when affiliate purchases are made at the expense of retail. And this is what typically happens in an MLM company when retail sales can be ignored.
There’s absolutely no issue with affiliate purchases when an MLM company also has a healthy amount of retail sales volume.
Sorry, you don’t get to speak for every affiliate in every MLM company where self-purchase creates commission qualification volume.
I’ve known many who end up with piles of un-wanted goods they’ve ended up buying themselves.
I ran a facebook group for an FLP group and it was constantly full of people who had quit and were trying to sell unwanted goods they’ve ended up purchasing to stay considered ‘active’ that’s not what I would class as affiliate marketing.
If you raise the bar and threaten removal of your downline then it will further create a behaviour of self-purchase not for consumption but to simply be classed as active.
For me if any rule encourages self-purchase for any reason other than self-consumption then its stepped over a line into something else.
“Want” and “need” are essentially the same – it’s the WHY.
As Oz explained, if there are no significant amount of retail to accompany this self-consumption, i.e. a comp plan that rewards such, one must assume there is no retail. Vemma and Herbalife are prime examples of such.
Remember, Vemma was advocating all its members to “buy a 2pak, 1 to drink and 1 to share”, nothing about selling anything. And Herbalife was touting “70+% of our members do not intend to earn a profit” even when pushed by Ackman, as if that can absolve them of their no-retail sins.
If they really do have customers, make them into “preferred customers”, and OUTSIDE of the comp plan, not as a distributor “who just want the discount”. Preferred customers get the discount, but gets ZERO incentive to recruit.
If the company can survive with genuine customers, that’d be absolutely great. But if the company can only grow by adding DISTRIBUTORS, each of them expecting to earn money by recruiting yet MORE distributors, all of whom are CONSUMING rather than distributing, then it’s perverted MLM into a pyramid scheme.
As far as I can see, Forever is one of the rare companies who actually promotes retailing, and generously pays a 35% commission on the RETAIL PRICE to beginners.
The 35% retail commission (up to 48%) is forever locked in. The percentage never falls lower. Nobody has to buy anything monthly to qualify for this commission, unlike most MLM’s. This hefty retail commission promotes people to actually retail their products.
Most MLM companies don’t pay anywhere near this percent. Even if they do (I haven’t found one), the commission paid is not based on the RETAIL price, it’s based on a cv/pv/bv amount, which is always lower than the retail price.
One company I know (Modere) doesn’t pay ANY commission up to 250 “volume”. Then from 251 to 499, they throw in a 5% bone for retailing products. Now that’s insane!
Companies who don’t reward retailing well are the one’s who should be picked on most. It’s practically criminal for a company to not reward generously the actual people doing the selling.
Unfortunately the presence of retail commissions doesn’t negate the autoship issues in the article.
Just having retail commissions isn’t enough when your compensation plan is geared toward affiliate autoship recruitment.
Can somebody explain how the term “autoship” is defined here?
Does “autoship” here mean:
1) “A convenient set up to get products monthly so one doesn’t forget to order”
2) “Optional voluntary purchase of products to use for selling or personal use to meet volume requirements”
3) “automatic forced monthly purchase required to make commissions”
If it’s none of the above for the sense of this article, how is autoship defined here? I think it’s important it’s clear what is meant by the terms.
Thanks!
Probably 1.
The issue is any MLM company that generates the majority of its sales revenue from affiliate autoship orders is operating as a pyramid scheme.
You need to be generating an equivalent in retail sales volume, and with a compensation plan geared toward affiliate autoship recruitment that doesn’t happen.
Note that “but you can…” alternatives do not negate the problem of affiliate autoship recruitment focus.
In Forever, significant retail selling is absolutely required before one qualifies to get paid team bonuses. Autoship is never required, ever. Nobody has to make any personal purchases to get paid retail commissions. One can create a legitimate retail business.
Their program is set up where it’s in a reps best interest and desirable to retail because of their generous 35% to 48% retail commission based on Forever’s retail price list.
With the exception of Avon, Tupperware, or a few other direct selling party-plan companies, I’ve found no other network marketing company which meets the FTC criteria of requiring retailing as well as Forever. (Perhaps somebody can name one that I’m not aware of.)
Forever is the last company anybody could ever call a pyramid or who violates any anti-pyramid statutes.
Disclosure: Yes, I’m a rep. But I was careful and purposely hunted down looking for an old, legitimate BBB A+ Accredited, and stable company that did not violate any FTC anti-pyramiding statutes.
I sign up as a Forever Living affiliate, pay $132 a month to qualify for commissions and recruit others who do the same.
How is that “absolutely requiring” retail commissions?
Unless you have access to Forever Living’s annual retail revenue versus affiliate purchase revenue reports, how can you state that with any accuracy?
A regional television broadcaster (HRFernsehen) in Germany has broadcast a critical documentary about network marketing, which can also be seen on YouTube. In this documentation the company Forever Living Products is mentioned repeatedly.
share-your-photo.com/db31eac13b
youtube.com/watch?v=cG5T4_YoHsM
One station in the CV of german scammer J. Wittke.
@Thomas Kaysh
This book by Jörg D. Wittke is still available – but only used, not new.
share-your-photo.com/b334d629c0
Source: mlm-worldwide.de/forevergreen-kuendigt-joerg-wittke