Monday, July 18, 2011

Melaleuca VS. MLM

Almost every person I talk to about Melaleuca asks me if this is one of those "pyramid things." Then I proceed to tell them the differences. Here is a great article with in-depth details on the things I tell everyone.

Melaleuca: The Perfect Fit

Twenty-three years ago I was a young father living in a small community trying to make ends meet. I owned a retail sporting goods store, worked as a flyfishing guide, and tried to support my community and keep balance with my wife and family. But I never had enough money and my cheese, as they say, was constantly moving.
Early in March 1988, I was introduced to Melaleuca, and that introduction changed my life. But at the time, I was like so many of you were when you first heard about Melaleuca—I was skeptical. I had thoughts like, "Is this multi-level marketing?" "How are they going to try to swindle me out of my money?" "Is this a pyramid scheme?"
Twenty-three years later, a lot of things haven't changed: Customers can still be skeptical about Melaleuca, and there are still major differences that separate Melaleuca from the MLM companies.

I recently sat down with Executive Director III Jeff Stutz and Executive Director III Paulette Magaw to talk about those differences. We discussed questions like, "How is Consumer Direct Marketing different from MLM?" "Why doesn't MLM work? "What makes Melaleuca such a viable business today?"

Let me share with you what Jeff and Paulette shared with me:
Jeff: When Paulette Magaw and I teamed up together and I began to invest my time and energy into building my own Melaleuca business it was important for me to help those in my circle of professional colleagues to clearly see what Melaleuca is. It's unfortunate, but very true, that Melaleuca gets thrown in the bucket of MLM companies by people who just don't know any better.

Why does that happen? Here are four reasons:
1) Referral Marketing: We introduce people to our brand of products through word-of-mouth advertising. We also believe that if a product is good, it should sell itself. Unfortunately for us, that means when I call friends and tell them that I am excited to share something with them, they immediately, think to themselves, "Oh brother, it must be one of those things."
2) Commissions are Paid on Multiple-Referral Generations: When customers purchase products, their entire support team participates in a percentage of commissions. This, of course, is not unlike any other sales organization. However, when combined with referral marketing, our friends also see it as a potential pyramid scheme.
3) Presentations: We educate consumers on the value of shopping with us. Presentations are a way to communicate an idea or concept. This is not unlike any business presentation or television commercial trying to convey value. However, multi-level-marketers are constantly inviting people to come to "a meeting." This brings with it all the negative connotations in the MLM industry—that they sell the dream of making a lot of money, yet deliver nothing but disappointment with time and money wasted. Melaleuca presentations introduce products to customers and the business concept to those interested.
4) Home-Based Business: We work from our home offices. We have flexible hours, and we enjoy the benefits of being our own bosses. However, when we talk about a home office or business, we once again get thrown in that bucket.
These four similarities to MLM are my biggest challenges in just setting the appointment. Because of that challenge, Paulette and I began to refine our message to be clear—crystal clear! We need the skeptical people to get through the fog so they can see who and what we really are. Because Melaleuca is the first and only manufacturer to accomplish what we have with our business model we can easily set ourselves apart in the marketplace.
Paulette: One of the key ways you can begin to change someone's paradigm about who we are at Melaleuca is in the language we use. Language is so powerful; it literally paints a picture in the mind. You simply cannot use MLM language and then try to tell someone that we are different.

Here are a few phrases and words, and some potential alternatives:
Instead Of..................... We use...
Business Opportunity VS Business Concept
Join or get in VS Open your shopping account
Place an order each month VS Monthly shopping, Switch stores, Try our brand first
If you're interested VS If you see what I see
Upline Support Team Downline VS Business partners, Team, Organization
Break a Director VS Develop a Director
Show the plan VS Present the concept
People VS Customers

The Next Key Point when approaching is to keep your energy non-defensive.
When someone asks you, "Is this MLM?" or "Is this like Amway?" the best response is to smile and say:
"No it's not, but you know what, I thought the same thing when I was asked to take a look at this. Melaleuca is actually America's first Consumer Direct Marketing company. We're the first to do business quite this way. It's tough sometimes being the first—there's nothing to compare us to. So I think it's natural to automatically throw us in that bucket. But let me help you understand who we are: Melaleuca is a manufacturing company, so if you need to categorize us in your mind, put us in the group as Proctor & Gamble, Johnson & Johnson, Centrum, Gatorade, Clinique and other major manufacturers competing for market share in the economy."

Again, non-defensive. Simply tell them who we are (instead of what we're not) using business language.

To me, the most critical piece to helping someone understand who we are is to appeal to their business mind. I will say "You know Bob, when you peel back the layers of what really defines a company and filter it through your business mind, everything changes. Why don't we take a look at what really defines a company: Their products, business model, what and who it was built for and how the money flows."

By their own definition, MLM companies focus on the "money" and the "opportunity." Products aren't the focus. Long-term market share is not the goal, because that's not what it was built for as there isn't enough value (price, quality, performance) to compete for a consumer's brand loyalty.
With most MLMs, the products are overpriced (such as a $40 bottle of juice) and the majority of them are sold to those who "join to sell." And once they stop pursuing the "opportunity," a very small percentage continue to buy the products at all.
Contrast that with Melaleuca where the focus is squarely on the products, in fact, the products ARE the business. Everything about Melaleuca is improving the value of our brand and authentically competing for market share. That's what Melaleuca was built for: to compete for, and grab market share from the giants in the market.
Probably the most telling fact is the high percentage of customers who do not build a Melaleuca business. They are with us for the products, not to earn a check. I've been a Melaleuca customer for nearly 12 years and there are hundreds of customers still shopping in my business who enrolled over a decade ago. Wow! Real people, buying real products they really want. That's the key.

For many, the clear light-bulb moment happens when we sit with them and "follow the money." When you look at the MLM business model, the bulk of the money comes from a large buy-in (which you pay upfront to "join"), inventory to resell and promotional volume. Then to continue to fund "the plan," each distributor is required to set up a large "auto-ship" or to purchase a large volume of product. These monthly commitments range from $120 to $240 per month. Again, filter this through your business mind: Is there enough value in the product to hold the consumer? The obvious answer is "no."
Let's contrast Melaleuca's business model and how the money flows. Because the focus is all on the value of the brand, the money comes from brand loyalty and repeat purchase.

Consumers shop with us because we are their brand of choice. Twenty-five years in business with a 95-percent documented monthly reorder rate paints the picture that Melaleuca is driven by end-line consumption, based on authentic products that have enough value to hold the consumer.
Time and time again we hear this from customers we sit with and who we walk through this business formula: "I never really knew what Melaleuca was—I just assumed it was a MLM. I totally get it now."

As we go out building our Melaleuca business, the primary ingredient is posture, quiet confidence, being proud of who we are and what we do. The bottom line is we, as Marketing Executives, can actively compete for market share against other top manufacturers with our business partner, Melaleuca.

The ideal partner would give you what Melaleuca already gives us:
1. Company already competing in the marketplace
2. Manufacturer—not a reseller
3. Science-based non-grocery consumables
4. Green, eco-friendly
5. 25 years old
6. Nearly $1 billion in sales
7. Documented 95 percent month-to-month reorder rate
8. Debt free
9. Inc. 500 Hall of Fame
10. Better Business Bureau Hall of Fame MELALEUCA IS NOT MULTI-LEVEL MARKETING

MLM: Require large inventory purchases to earn a bonus
MELA: Simply switch stores and buy only what you need each month, no risk
MLM: Distributors purchase and resell products to customers
MELA: Customers shop direct with Melaleuca
MLM: Prices are often 3 to 4 times the actual products' value
MELA: Exceptional products at reasonable prices;
MLM: Rely on the sensational, such as juice, magnets, and other products
MELA: Real products you really use; simply redirect a portion of what you're already spending at the local store to Melaleuca
MLM: Often use unfounded gurus or celebrities to hype the products
MELA: Products developed by world-class scientists
MLM: "First in" wins; "last in" loses
MELA: Everyone can succeed—anytime
MLM: Companies often come and go
MELA: A 25-year proven track record of consistent growth
MLM: Low customer retention and repeat purchase
MELA: High customer retention and repeat purchase
MLM: Rely on prior MLM experience and networking contacts to succeed
MELA: Anyone can build a business with time and effort
MLM: Focused almost exclusively on money
MELA: Mission of helping others

1 comment:

  1. My company has almost exactly the same set-up as Melaleuca, however we freely admit we are a network marketing company. You are not doing the industry a favor by trying to cloak what you are doing in another name! Here are just two websites listing MLM companies: & which list Melaleuca as an MLM! My company is also listed there.

    I encourage you to step up and do what's right - admit you are part of the wonderful profession of network marketers!!

    Sincerely, Lori Barrett
    Switch, Shop & Share with the Youngevity