Are the direct selling business models deploying MLM compensation plans sustainable?
Direct selling consulting for operations deploying single level or multilevel marketing compensation plans known as direct selling MLM consultancy by officials of direct selling companies as well as direct sellers around the world. This type of management consultancy plays a very important role in getting to understand the Direct Selling industry as a whole and then deploying strategies to drive efficiently in the right direction.
Direct selling model is a very smart and beneficial form of promotion of products and services for corporations who wish to take advantage of word of mouth commendation advertising.
In the current scenario, this word of mouth marketing approach has, and still is being used quite effectively throughout the countries providing value for money products as well as unique opportunities for progressive entrepreneurs. Sadly, although a few of the direct selling companies operate ethically, there are others, that bend the rules for personal gain and benefit.
The challenge being faced by the common man is how to identify the ethical from the unethical.
Question people ask about direct selling is “Is it the right thing to do?”
The concept of direct selling gives it an edge over other forms of retail because it leverages loyalty, product belief, recommendations, as well as financial benefits.
It is a dream scenario for companies when their customers become their promoters and the delivery team.
A direct selling MLM consulting firm plays a very important role in the current scenario when all terminologies being used throughout the industry are contradictory, and not easy to interpret. This causes confusion among all stakeholders including but not limited to corporate officials of Direct selling SL/MLM companies, direct sellers, government officials and support services (Software development firms, Law firms, and C.A/CPA firms, etc).
This confusion works to the advantage of the unethical promoters who are continually seeking ways to implement so-called “get-rich-quick” schemes making it essential that a complete and in-depth Compliance Policy be incorporated for all direct sales programs.
“What can be measured can be managed”
Through many years of firsthand experience Strategy India - the MLM Consultants developed a customizable ``Fund provision and Management`` spreadsheet being seen as a valuable tool for managing a successful business. Through this tool, the direct selling consultants can evaluate if a direct selling operation is sustainable.
To quote one such unethical operation: “Who cares about sustainability because we have already given product/s with established market value to our direct sellers who have paid us? And therefore the loop is closed.”
Wrong! Wrong! Wrong!
The concept of direct selling is having a network of product advocates (direct sellers), consuming the product and promoting those products to friends and relatives thereby increasing consumers and sales. All of this takes an investment of time, hard work, and money which is generally done by the direct sellers. Many join and toil but only a few succeed in building substantial networks of product advocates. It is, therefore, the moral duty of all direct selling companies to ensure that their model is not only ethical but sustainable.
Apart from usefulness to the management of the direct selling companies, to see and, keep in check the bearing of their business, this tool (Fund provision and Management spreadsheet) is also very useful in forensic auditing by investigation agencies and law enforcement agencies to evaluate if all laws of the land have been followed or the loop holes have been exploited to siphon off money abroad, unpaid import duties, wrong product classification to save duties, non-compliance with the DIPP policy in force, improper fund provisioning for the incomes committed in the compensation plan, GSTLiability of the direct sellers, illegal transfer of money for seamless / world plans, etc.
“More than 97% of direct selling - MLM companies in the world would fail this audit.”
Apart from the above, it is the direct selling consulting firm’s responsibility to make sure that company officials holding senior key positions understand the concept fully. The more confident and clear the company officials are the more will be their contribution towards the company.
The current laws / guidelines developed and practiced by various governments and associations including but not limited to FTC, ACCC, WFDSA, DSA, etc around the world needs to be upgraded to curtail malpractices by direct selling companies and destroy scams.
Therefore, it is important for ethical direct selling companies who realize the importance of being fair to all stakeholders to follow self regulation guidelines regardless of other direct selling companies’ orientation.
The guidelines (Self-regulation guidelines) are developed by the team at Strategy India Worldwide – the MLM consultancy for direct selling – single level / MLM companies around the world.These would be upgraded every quarter to make sure that every stakeholder gets a fair deal and the business model is sustainable.