Marketing Plan Straight Talk By Kelly Olsen

Transcription

1 Marketing Plan Straight Talk By Kelly Olsen Here is why so many are attracted to Morinda's Opportunity! Finally, the real truth about marketing plans When evaluating a marketing plan, these are the things that you should be aware of: 1. Breakage. This is the portion of the commission payout that rolls back to the company. Most companies plan to receive back a substantial portion of their published marketing plan payout. In this way they can print a very impressive total payout figure, but in reality pay only a fraction of that published amount. Morinda employs Dynamic Compression to ensure that there is no breakage in our plan. Our computer software is programmed to pay the maximum to each and every distributor. Nothing rolls up to the company. 2. Total Payout. Every company must make a profit. The same profit rules apply to every company within our industry and without. Here is a brief description of the typical costs incurred by every company: * A. Cost of Goods: This is the cost of the product itself. This includes, raw ingredients, manufacturing, packaging, freight and other direct costs related to the product. * B. Commissions and Bonuses: This is typically the single largest expense incurred by a Network Marketing Company. This is the amount actually paid to each distributor monthly or weekly according to the published marketing plan. * C. Miscellaneous charges: Credit card charges, Currency exchange charges, returns, credits and so forth. This category can be a substantial amount. * D. General and Administrative: Salaries of management and staff, rent, utility expenses, supplies, legal and other professional services, travel and lodging, Employee taxes and benefits, training programs, software, subscription charges, and all other expenses relating to the actual running of the business. * E. Marketing: Meetings, Events, Conference Calls, Development of sales materials, incentives, advertising, public relations, satellite broadcasting, recognition programs, Advisory Board meetings and all other expenses relating to promoting, training and supporting distributors. * F. Taxes Most network marketing companies today pay 40% -50% of the actual wholesale volume. Despite what is published in brochures or declared on conference

2 calls, the reality is that every company has the same expenses and every company has to make a profit or go out of business. One big problem in Networking has been the practice of companies that publish big payout figures, but in fact craft their qualifications and software to insure that a consistent percentage (breakage) returns to the company. Some companies claim as high as 75% payout. Anyone who understands the simple arithmetic of business, and the standard expenses that are listed above, will immediately recognize this claim as being completely misleading and ridiculous. If Company A paid out.75 of every wholesale dollar back to its distributors that would leave only.25 to pay the cost of manufacturing, raw materials, packaging, raw materials, freight, credit card charges, salaries, benefits, taxes, rent, leases of equipment, supplies, software, travel and lodging, telephone, power, utilities, conventions, meeting, events, incentive, recognition, communications, promotions, sales materials and on and on. There are only two possibilities: * 1. That company is making a misleading and false claim. * 2. That company is dramatically overcharging for shipping, handling, promotional materials, or distributor fees to make up for the difference. Morinda's payout is in the top 1% in Network Marketing. In addition to the 53% payout with Dynamic Compression, Morinda offers a rewards program called the Concierge Club to all distributors. This allows distributors to qualify for travel and merchandise rewards in addition to all commissions and bonuses earned. * 3. Discounting Commissionable Volume: This is a common practice in Networking. Discounting Commissionable Volume simply means that the commissions for a given product are calculated on a number somewhat lower that the actual wholesale price. This practice can be used correctly to allow a company to bring certain products to the market priced competitively to ensure success in the marketplace. Discounting CV allows a company to charge less for that product, and thus will increase the overall volume of that product through increased sales. Distributors should be aware of this practice, because some companies will publish a very high payout figure and not disclose that this figure is based on Commissionable Value, not Wholesale Volume. For instance, Company A promotes its plan as paying out 75% back to its distributors. If you look closely, you will see that Company A does not pay commissions on the full wholesale value of its products. The 75% looks impressive, but the fine print discloses that it is based on Commissionable Value, not Wholesale Value. If you do the calculation, you will see that the actual payout is most likely between 40% and 50%. The best thing to look for is a company that pays commissions on the full wholesale value of its primary products as a matter of practice and only discounts commissionable value on certain products to enhance the marketability of those products. A good rule of thumb is

3 to look for a company where over 80% of its total sales are from products earning a 100% commission based on the wholesale value of the products. Morinda's philosophy is to pay commissions on 100% of the wholesale value on all primary products and only use discounting to make important peripheral products available and competitive. Currently, products that earn a 100% commission make up more than 95% of total sales! * 4. Plans that are weighted on the front end One philosophy in marketing plan structure is to put the bulk of the payout at the front end or beginning of the organization. You can identify a plan with this philosophy because there will be a huge % payout within the first 3 levels. For example: Level 1: 10% Level 2: 25% Level 3: 10% Infinity bonus: 5% There are many variations of this philosophy. The rationale behind this structure is that it rewards the beginning activity of new distributors. Here's the problem. In order to continue to build your income, you must continue to sponsor new distributors and build wide. Since the plan doesn't reward depth, your organization will become extremely wide and eventually unwieldy. This plan is great for the first few months, but goes contrary to the power of Network Marketing and unless you are one of the very few who can continue to sponsor many active people month in and month out, your income will soon level out and decline. Even if you are one of the very few who can continue to sponsor feverishly month in and month out, you will be forced to build so wide that you will never be able to manage your organization. You can't afford to work with the distributors who you sponsored two or three months ago, because your time is consumed in finding new people. Morinda employs a combination of a Fast Start Bonus Program that allows a new distributor to earn a good income quickly and an 8 level unilevel payout program that allows a distributor to benefit from the growth of the network of entrepreneurs he/she is building. * 5. Plans that are weighted on the back end Stair Step Break Away plans are good examples of plans that are weighted on the back end, meaning that the rewards are reserved for those few who reach the highest rank in the company. These kinds of plans create some very impressive incomes, but the simple fact is that most people will never achieve those income levels. These kinds of plans also have typically high personal and group volumes to maintain each month and thus create the potential of front-end loading. Morinda's 8 level Unilevel pay plan is structured with increasingly large percentage commissions. The rewards get larger as the distributor qualifies for a larger and larger portion of their organization. The largest numbers are positioned where the volume is the largest. Dynamic Compression maximizes each level payout. * 6. The "Trend 90" Fallacy Trend 90 is not a new idea, but a new term. The idea is to create a plan that provides 90% of all distributors with a positive cash flow. While this

4 sounds very good indeed, the problem with all such ideas is that it fails to acknowledge the truth about all entrepreneur enterprises, including Network Marketing. The only true guarantee is achieved through your own effort. It is noble to desire that 90% of all distributors make a sizeable income, but the truth is that the only person who can control that are the distributors themselves. The beauty of free enterprise, and the power of Network Marketing is that I can earn as much as I am willing to work for, and I get paid according to my efforts and achievements. Unlike typical corporate life, where your income is controlled by someone other than yourself, and you are lumped in a class or salary category with others who may be less qualified, or less diligent than yourself. The key is for a company to design a plan with great possibilities and allow a person to see the potential and strive for success. Any attempt to short circuit free enterprise will, in time, hurt the organization, not help it. * 7. The devilish, typical infinity bonus structure Many companies employ an "Infinity Bonus" in their pay structure. This Bonus is designed to pay a set percentage on a given line to infinity. If distributor A qualifies for the infinity bonus, they will receive that percentage on all volume below a certain level to infinity. Sounds Great! Problem is when a new person below Distributor A also qualifies for the bonus. The new distributor cuts off Distributor A from all bonuses below that new distributor (The company pays out only a set percentage, not an accumulating percentage). Let's look at an example: Say in Company X their Infinity Bonus plan begins with the 7th level. The bonus amount is 3%. Distributor A qualifies and receives 3% on all volume from his/her 7th level to infinity. Distributor A is delighted until his/her downline, Distributor B, also qualifies. Distributor B is on A's 1st level and thus qualifies to receive the infinity bonus from his/her 7th level to infinity. Distributor B's 7th level is Distributor A's 8th level. In this example, Distributor B cut off Distributor A from bonuses below A's 8th level, in other words, A gets the infinity bonus on his/her 7th level only. Can you see why this traditional Infinity Bonus Structure causes friction among distributors in the same organization. A should be excited that B qualified for the bonus, but instead, A wishes that B wouldn't qualify because B actually lowered A's income by qualifying. This is "Scarcity Thinking" at its worst. Morinda's Global Infinity Bonus Program is sheer genius. No one can ever get cut off. Morinda places the entire Infinity Bonus amount, company wide, world wide, in a bonus pool that every qualifier participates in. Each qualifier then receives a portion of the pool depending on their rank and the size of their organization. No one gets cut off, Everyone receives their bonus on a completely fair, pro rata basis. In this way, Morinda distributors may earn a portion of the entire infinity bonus pool companywide, not just from their own organization. Remember: Don't be Fooled. If a company pays out a lot at the front, there will be nothing left at the back. If all the rewards are at the top, there will be little for the people

5 just starting out. The genius behind Morinda's plan is the balance between quick income, long term income and wealth building income. These statistics show the power of our marketing plan. Choose where you want to be. Choose how much effort you want to expend. Morinda's plan distributes the rewards fairly across the board. Maybe you will meet someone who will look at these stats and say, " Boy, Morinda ought to take some of the huge money being paid to the Double and Triple Diamond Pearls and re-distribute it to the lower ranks. This is a typical knee jerk reaction and it proves the inexperience of the person making the comment! Don't fall for that baloney! I have seen so many companies fall for this garbage of playing some kind of weird Robin Hood. Diluting the top ranks to try to motivate the lower ranks. There are two big problems with that mentality and the reason it never works: * 1. The reason Networking is motivating in the first place is the possibility of making a Lifestyle Changing Income. Take that vision away and the magic of Networking goes down the drain. You see, some have already achieved that level in Morinda. Most haven't yet but will as time goes by. This isn't a sprint. All the good seats aren't taken. The rewards must be maintained so when you (or anyone) reaches the top of the mountain, whenever that is, the rewards will be there for you. * 2. Diluting the top rank incomes and re-distributing some of the money to the lower ranks will raise the average of the lower ranks a little, but not as much as you might think. And certainly not enough to make a significant difference in the people's lifestyle. But the damage to the reward structure for the higher ranks will destroy the balance in the plan. The rewards must be earned. Company after company try to motivate their organization by lowering qualifications and diluting the payout at the top. It always ends in disaster. Well, that went on a bit longer than I anticipated, but I wanted to try to give you some hard information to feed on about marketing plans. Kelly Olsen Vice President of Sales and Marketing