MLM Analyst

Look, I was hoping I could generally avoid singling out individual companies when doing my analysis. But lately I’ve received so many confused comments & emails from apparent MonaVie distributors regarding the Inc. 500 list that I’ve got to clear up some things for them. I’ll try not to be unkind…

Within this site’s comments you’ll find the following,

Do you also think the INC magazine top 500 companies (in the September issue) list is also bologna because MonaVie is the only mlm that made the list. Should we also be calling that publication a bogus, bias, poorly researched and invalid lie?

And you’ll also find this gem,

When was this research taken?? Because the September addition of the Inc. 500 magazine (The annual report of the fastest growing private companies in America) states the ONLY nutritional beverage to rank was MONAVIE! Placing #1 in the Food & Beverage category, #3 in Revenue and #18 OVERALL!!  GO TAKE A CLOSER LOOK AT YOUR STATS.

If I were a MonaVie distributor, when I first heard about the Inc. 500 list placement I’d tell all my prospects about it. But after that I’d probably:

1. actually go read about it
2. figure out that it only includes private companies that proactively submitted their own annual revenue numbers
3. think to myself, “Oh, well. I guess it’s better to be on it than not on it.”
4. just keep it to myself because I didn’t want to be dishonest and manipulative by ever implying that MonaVie somehow “beat out” any other MLM companies since it appears that MonaVie was the only one who submitted their info

Just about the same process would apply to leveraging my company’s placement on a MLM Top Earners List: A) get excited, B) ignorantly tell others, C) finally learn the facts, D) and then keep it to myself because I want to be able to live with myself.

I just thought of another motivation for keeping it to yourself. What if you attracted an intelligent team member/distributor/customer who likes to read and learn facts for themselves? What if they actually read Inc. Magazine’s methodology (<- notice that link) and figured out you were either deceitful or ignorant? Either one is bad, right?

And can you image an intelligent new recruit actually looking at, and then analyzing, the methodology behind the creation of a Top Earners List? Their trust in you would be pretty well shot. You don’t want that.

See, I’ve not only avoided being unkind, I’ve actually been very nice to MonaVie people; helping them retain their recruits. You’re welcome.

I’ve recently suggested there might be better ways of measuring the appeal of a network marketing company & their opportunity. Most new network marketing members I know make the decision to join a particular company based on emotion, typically fueled by questionable information. But when a distributor is looking for a new opportunity, shouldn’t they be most interested in a company’s momentum – their recent and ongoing growth?

Why Growth & Momentum?

If a distributor joins with a company whose market share is shrinking, they’ll find it increasingly difficult to win team members, make sales and otherwise succeed.

So, I decided to look at growth & momentum. Since no network marketing companies regularly publish audited revenue numbers, we can’t use those. Plus, revenue lags momentum in this industry so it would be a late indicator.

How to Measure MLM Growth & Momentum

I think the best indicators of most trends today are found in online data. Here’s why:

1. Most people use the internet to research products & companies they are interested in.
2. There are very reliable 3rd-party services that monitor website and search traffic over time.

Every online data source has some flaws, but intelligently combining reliable sources provided me with some interesting findings. I wanted to see which MLM companies are experiencing momentum built on long-term growth.

The Results

The results might surprise you. First the chart with companies in alphabetical order:

MLM Company Momentum Comparison

And here are the results sorted by rank:

Methodology

First, to ensure I was comparing apples to apples, I had to focus my scope of companies to the largest segment in network marketing-namely those companies marketing primarily nutritional products. So I didn’t include those focused on technology or broad consumer product lines. I’ll try to find a good way to tackle those segments later. I chose 15 popular nutritional product MLMs.

I looked at website and search traffic growth over the past 3 months. You wouldn’t want to measure just 1 month since a lot can happen online to cause only a momentarily spike in a site’s traffic. But 3 months gives a good view of immediate trends = momentum.

Besides just immediate trends, it’s important to look at what companies are growing overall. A few companies I looked at were actually decreasing over the past year so their short-term growth looked more like an element of recovery than momentum building on long-term growth.

Reaching back to my past statistics training, I combined the 3 month and 1 year website traffic & search data for each of the 15 companies by standardizing their growth percentages and then giving a slightly higher weight to the 3 month score. I used data from the following services: Alexa, Compete Inc, and Google Trends.

Conclusion

I’ll admit, I was fairly surprised at the results. At the top you have some more established companies like Xango and Shaklee generating buzz and building momentum, next to, and sometimes above, newer companies like Vemma, Zrii and Agel. I wonder why.

Could it be new product launches, company marketing & support, the elusive “critical mass?” What do you think? Like any research, there is more to dig into here. Maybe I can expose the drivers if I look at search engine keywords, traffic patterns, product launch activity, etc.

Whatever the drivers happen to be, this seems to be the type of data I’d be relying on if I was considering joining an MLM company and building a successful network marketing business – partly because it’s the sort of market growth data that successful traditional businesses rely on when they launch into new markets.

FYI: Here is the full article on MLM Companies with Momentum with some revisions.

I was looking at the (very warped) “before” and (still warped) “after” tables in my recent post about the changing MLM 500 Earners List wondering how well one could trust the self-reported income figures of most top distributors – especially those posted on a publicly open site like the MLM earners list. At first glance you might think there is a lot of benefit to be gained from reporting the highest possible numbers, regardless of their validity.

If I was a distributor anxiously recruiting people into my downline I might state the largest imagined number as frequently as possible. If there was some public list where I was able to submit whatever average monthly income number I felt like…well, you get the point.

What if you were part of some top earner’s downline? Would you be tempted to submit to some free-for-all public list the highest rumored number you’ve heard to help support your claims that you belong to the best organization in the best company? After doing so would you blog and comment all over the web to promote your organization? Haven’t we all read dozens of such posts and comments? Can you trust them?

Finally I wonder about the companies who are anxious to publish their distributor numbers online. If most normal companies, including most reputable MLM companies, wouldn’t reveal their sensitive internal numbers online which companies would be desperate enough to release such numbers?

My research on MLM company momentum seems to indicate that the companies most anxious to publish their distributor numbers (for those of you keeping score that would be MonaVie and Amway) are actually those experiencing NEGATIVE momentum & growth. Perhaps a slightly altered Shakespearean quote applies, “The company doth promote too much, methinks.”

Want to know which companies seem to be experiencing the greatest momentum? I’m still crunching some numbers but it’ll be out soon.

BTW, I can see why a short-sighted distributor or company might want to publish some high earnings figures. But what is that really saying about the opportunity for all other distributors? Could it be that their compensation structure is so top heavy that the cash is only flowing to a few elite? Here’s my analysis on that topic, appropriately titled Which MLM Comp Plans Screw the Typical Distributor?.

At the bottom of this post you’ll find the top 20 earners list as it looked in mid-May and how it looked a few days ago. As most people following the list know, the initial version was very heavily weighed toward MonaVie and Amway.

Since it was so obviously inaccurate and weighted, it led me to wonder how legitimate it was and whether there were any ulterior motives in releasing it. If you’ve read my latest post you’ll remember that I suggested a more effective way at analyzing the value of any particular MLM opportunity from the view of a potential distributor. I think I’ve nailed down a pretty insightful methodology measuring momentum, which you’ll see in my next post.

For now, check out the before and after view of the top 20 earners. Notice that whereas MonaVie and Amway used to fill 15 of the top 20 spots, they now occupy “only” 10 of the top 20. If the list was more accurate I wonder if those 2 companies combined would have more like 4-5 of the top 20. My insiders tell me that the list publishers still haven’t actively reached out to request information from some of the biggest MLM companies, especially those based outside of the U.S.

The obvious inaccuracies haven’t stopped distributors and even some companies (ok, 1 in particular) from referencing the list as evidence of their opportunity’s superiority.

Oh well. Coming from more traditional businesses, perhaps I expect too much. But then again if the industry wants to be taken seriously shouldn’t everybody in network marketing, companies & distributors alike, expect more?

How the Top 500 MLM Earners table looked in May 2009

How the Top 500 MLM Earners table looked in September 2009

I wonder if the rounding to the nearest $50,000 that occurs with #s 11-20 means that those are imaginary numbers or otherwise guesses.

This post explores the motivations of MLM companies that publish their distributor earnings numbers.