And, Who Makes the Rules in Network Marketing?
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It’s an interesting time out online for those involved in Network Marketing, Direct Sales, MLM and Affiliate Marketing. The internet truly changed things and some might say for the better, and others might say, for worse.
What say you?
The reality is, like Pandora’s box, you can’t put it back….
The internet is here to stay and people are going to go online, looking for answers, education and options.
While they are out there, they might find another network marketing business; or they might find an affiliate program that supports their network marketing business.
As they share that with others who also want to use the tool, and someone from the same company sees it, opts in to learn more, and joins, is THAT really defined as Cross Recruiting, if it happens without your knowledge?
I don’t know all of the answers, and I do have a few opinions, which I share in this video.
PLEASE NOTE – This is not in reference to any situation that I am in with my company (as far as I know, I am in good standing!); nor to any one individual or circumstance. There has been a lot “out there” lately and I am always researching, learning and pondering.
I would LOVE your comments…
httpv://youtu.be/xgzhPEWpbCo
So, who does make the rules? Who defines Cross Recruiting? Is an innocent opt in to a landing page online, and then a sign up set someone up for potential termination from a company, if that person was already in the primary company?
Will newer, more lenient companies pave the way; or are they part of the problem?
What will the long term affects, challenges and future hold for us all?
As I was shooting this video and creating this blog post, I see where a colleague and his wife is being sued for some $10 million for “cross recruiting” into another program. And, they are no longer part of the company suing them….
I am aware of other top distributors being terminated; getting letters of intent to terminate and a lot of mud slinging online….
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Hello Jackie –
I stumbled upon your site via a Linked In discussion. I am a Patient Safety Advocate, Radio Talk Show host and co-own a company that promotes health and wellness in a 4 state region. Many of our clients belong to mlm’s – typically only 1 at a time. I just endorsed a new pain patch because of my personal positive experience with the product, and am trying to do a little self-education here on exclusivity so as not to step on any client’s toes. I appreciate your blog.
Thanks DK! I appreciate your feedback!
Hi Jackie,
As far as cross-recruiting goes, there can be mixed reviews and feelings. I think there is a way that it can be done without too much of a problem. Obviously there are times when people are struggling in a network marketing business and are most likely going to be on their way out anyway I think to solve a problem for people who struggle is not cross-recruiting as long as you may have really have the solution to their problem of course it also depends on how the person goes about it.
Interesting topic for discussion however.
-Jason
Thanks Jason! Yes, it’s a “mixed bag” for sure! Thanks for weighing in!
EXPECT Success!
Jackie Ulmer
Jackie,
Interesting website and video, along with the thoughtful discussion!
One aspect of this issue that no one has touched on yet: developing multiple streams of income will make it easier for a distributor to remain with their primary MLM company, since the early stages of building a team aren’t usually accompanied by large residuals and commissions. Having other streams of revenue coming in while growing the main MLM business would offset the leaner checks in those early stages.
Oddly enough, I was searching online for additional ways to market my own enterprise when I ran across your website, Jackie. Since we are in the same MLM, does this mean I cannot consider signing up for the products and services you promote here? I found you; you didn’t recruit me; is that cross-recruiting? Hmmmmm
Raleigh
Good thoughts there Raleigh and thanks for weighing in on that. It does raise some interesting questions, doesn’t it?
EXPECT Success!
Jackie Ulmer
This is such a great topic Jackie. Thanks for creating the video.
My thoughts…
Being an internet marketing person myself, I have no problem promoting other programs or products to my list that I created. I don’t have an issue. I built the assets and should profit from them. I personally am not a “join 3-5 mlm programs at a time” type of guy so I only have one mlm that I promote and have for years.
I pretty much feel the same way as you do about picking up the phone and pitching your downline on another company. I believe that is cross recruiting.I personally would never do that. Not because I think it is even wrong actually but it is just not my style to do.
I can see why a company has contracts but just like David Frey mentioned, I think they hurt the company more in this social media world. I think because this industry is built on relationships and they know the power of them, they are scared so they threaten with contracts.
I have a big leader who lives near me and we have talked about how she was with one company who changed the comp plan on her. She instantly went from $10,000 a month to $1,000 a month just like that. Jackie, I know you know what I am talking about too. That can be devastating to a family! There is nothing stopping the company from doing things like that.
I tell my personal team that unless you own 51% of the shares in the company or your family does, don’t put all your eggs in one basket. You will be disappointed.
I LOVED your comment about the mlm cruises and such. Besides the upfront money, there is a TON of recruiting that goes on. Why is that okay and the other isn’t?
Again, good stuff Jackie!!
Dave
David,
I appreciate your comments and insights. How independent are we, really?
There is one thing for sure, social media and the internet did change a lot, and there is no going back.
Yes, I have been on the receiving end of a company changing comp plans, policies and engaging in “dirty practices.” Not fun.
I’m with you on the “not all eggs in one basket” approach!
I appreciate you!
EXPECT Success!
Jackie Ulmer
First, Jackie, I agree with YOUR definition of cross recruiting — in essence, going directly to other reps in your MLM company who are people you do not know and recruiting them into another MLM that would dilute their efforts in their primary company or cause them to leave it. Some companies prohibit that type of behavior. That’s probably OK — it’s in the nature of a “non-compete clause” in an employment contract that Mike McGrath mentioned.
Second, what’s wrong with joining multiple network marketing companies? Some products or services are uniquely available from those companies. My company markets a variety of services and products that are based on telecom technology, and I sell those. But I’ve also joined Herbalife because they have a meal-replacement shake I like and trust, and buying it as a rep is cheaper than buying it retail. I don’t actively promote that business, but if people ask me what I do to support good health, I’ll tell them about it. (I’m not also repping ViSalus or Isagenix or Vemma or a million other health and wellness MLM companies that compete in that market. Being a rep in three or more of those similar companies does pose that ongoing question.)
Third, the bigger question, I believe, is how companies permit or endorse your participation in online (Internet) promotion of your business. The main tenet of Network Marketing is that products are sold one-to-one, face-to-face — not with store fronts or advertising campaigns. My last company actively discouraged mentioning its name online, and I was afraid to do it for fear of being terminated — which made online promotion especially difficult. My squeeze page (or my MLSP or similar pages) could not send people directly to a video promoting that company — at least I never tested it. My present company advocates online promotion, but with guidelines that still are a little murky and need clarification from time to time.
Permitting online network marketers to conduct massive, paid advertising campaigns to promote their product or service definitely defeats the purpose and principle of direct-sales network marketing. Short of that, just where is the boundary between direct sales and mass sales (a la TV ads)?
One principle is no storefront. But Herbalife now has over 70,000 “stores” that sell its products and introduce people to reps who promote the opportunity. They can’t be called “Herbalife Centers” but they can be called “nutrition centers” and once inside Herbalife products can be bought.
Another principle is no mass advertising. But Amway advertises on TV and a massive sports stadium. So does Avon, to some extent.
Clearly, network marketing companies need to permit Internet and social media marketing. And they need to have constructive, clear and supportive regulations that allow that.
If we promote ourselves online, develop new warm markets, establish trust, and only then approach people with our business — that clearly is a path that people are following and that most companies understand and accept. And if another rep in our primary business responds to those overtures, there is no way that should be classified as “cross recruiting.”
But, as direct sellers, if we go out and blatantly boast about our company or its products all over the social media, that may be “legal” under benign company regulations, but it is lousy marketing. Abusing the privilege might be cause for termination — but who and how would that decision be made?
And that, I believe, is the real question facing the network marketing profession in the coming years.
Yep, we have a lot of good questions facing us. And, of course, at the end of the day, what matters is what the company holding the purse strings decides, I suppose….
Thanks for sharing John!
EXPECT Success!
Jackie Ulmer
I don’t believe this is an MLM or Affiliate issue. It’s more of an ethics/integrity issue. Let’s look at some ways this can be discussed outside of MLM:
My husband was a store manager for many years with Vons. If the Division Manager from Ralphs came into his store and offered him a job, that would be wrong. He would be “cross-recruiting”, or at least out of integrity. However, if Ralphs put a Store Manager wanted sign on their window and my husband went in there an applied, it becomes a whole different story. There was no cross recruiting there anywhere.
I think it all has to do with the difference between being the “Hunter” or the “Hunted”. If you take a Genealogy list and actively call/email the people on that list, or on your team, or members of an MLM Company, they I feel you are out of integrity and could be considered cross-recruiting. However, if someone from your company got on your list (they signed themselves up – you didn’t ask them to), and maybe even joined your company (again, it was entirely their decision), I don’t see that as being an integrity issue. This is a free country, and last time I looked people are free to do what they want as long as they don’t hurt anyone.
What’s the point of calling us Independent Distributors if we really don’t have the independence? I’ve got to agree with David Frey that if companies want you to stay loyal to them, they should make it enticing for you to do so. If you’re not making enough money (which may be your own fault, that doesn’t really matter), or if you’re not happy in a company, let them move on. You don’t want the negativity in your company anyway!
That’s just my opinion.
Lynn — I think your Vons and Ralphes example is appropriate. Nevertheless, that type of recruitment is rampant. That is how “headhunters” earn their living.
Would “cross recruiting” be irrelevant if we hired third parties to recruit for us?
I mean, the life blood of any business, is selling and recruiting. If a business doesn’t produce and then sell great products, and in the process recruit people to do that work, it won’t stay in business.
And that’s what network marketers do. Find and sell great products, and recruit people to help us do that.
‘S crazy.
Love the points you make, Lynn, and I agree.
And, I think your analogy rocks as well! Thanks!
EXPECT Success!
Jackie Ulmer
Dear Jackie,
Great question and great comments!
I do not see the contract going away; too much at stake.
We talk about “our own business” but at best it is a partnership. I find it interesting that so many reps are not even familiar with the policies and procedures they agreed to when they enrolled.
The Internet is the catalyst for change and specifically the social media platforms. As David Frey so well detailed, a company’s adverse actions will not pass on quietly to soon be forgotten. Those executives need to consider the potential damage their actions will have and determine if they will stay afloat.
Frank’s suggestion of a cross recruiting policy passed down by the DSA would be helpful. Mike M’s point about non competing products or services is also a good one.
My opinion would be that it is a contractual partnership and if you do not learn what you agreed to, you cannot expect to be pardoned based on a claim of ignorance.
Wishing You Plenty To Live,
Tom
Hi Jackie, here’s my 2 cents:
I think some people are just “serial joiners”. They don’t really work the business they’re in, and when they see the top name in their upline jump ship, they will follow like sheep, and join the new company online under them without ever contacting anyone. They get attached to the person, not the company. Just because they are in the downline and joined, that doesn’t mean they were lured away or cross recruited.
That new company will also disappoint them because they’re not willing to do the work on their own business, feeling important by riding on the coat tails of those who are successfully building a large business. Those people usually complain that their upline didn’t do enough to help them., so they had to try something new.
Monkey see, monkey do attitudes abound on Social Media. Is that cross recruiting, or something a person can’t really control with all the Social Media hoopla?
Now, if a top person moving to the other company actively woos & schmooses his/her downline to the other company with them, with full awareness of a contract they signed, wouldn’t that be considered poaching?
Thanks for sharing Barb, and yes, there are instances of poaching, which I address in the video.
There sure are those serial joiners, aren’t there? Sheesh!
EXPECT Success!
Jackie Ulmer
Jackie,
I personally think that as time goes on the lines between traditional MLM companies and
affiliate programs is going to become increasingly blurred as each adopts what it considers
the better part of the other into its own business model. The Network Marketing Company of
the future looks like a hybrid of the two.
As a rule, I don’t proactively check before offering my primary or affiliate program, but
if I have prior knowledge (from their LinkedIn or Facebook profile or other publicly
available info) that they are in my primary company, I don’t even go there.
As for the rest of it I post in public forums and I never attempt to recruit someone who
didn’t initiate contact with me first (usually trying to get me into their deal – I’ll
listen to anybodys pitch but they have to agree to listen to mine first).
More importantly, if Networkers are independent contractors and Network Marketing is
supposed to be superior to regular employment, Network marketing companies that try to
restrict their distrubutors, have two problems to deal with, one a legal problem and the
other an image problem.
The legal issue is the definition of the term independent contractor. You can hire an
independent contractor to do something (produce a certain result, or accomplish a
particular task) but you can only direct them with regard to the particular project. Once
you get past a certain legal threshold of direct control over what they do on your behalf
or how they do it the legally have to be treated as employees with the commensurate
benefits and protections. As an independent contractor, a network marketing company can
tell me how to market for them, but they cannot legally tell me I cannot market for someone
else and call me an independent contractor (unless I don’t read my contract before I agree
to it).
The image problem is related to the legal problem. A traditional employer can mandate
certain protections (limited term non-compete clauses, confidentiality agreements) to
mitigate harm to themselves if an employee leaves to join a competitor, but they generally
cannot and as a rule do not forbid other companies to pursue their employees. If Networkers
don’t have the same freedom to shop around as traditional employees , how are we superior in
the eyes of those outside the industry looking in?
I think the whole idea of cross recruiting is a little strange. I mean, if people are not happy where they are at, they’ll either leave or stop working the business.
If companies want to aleviate the issue of cross recruiting, why don’t they create an opportunity that is so lucrative and fun, no distributor would want to leave.
I think all these stupid contracts are ridiculous. Think about it. If the company isn’t good enough to provide an opportunity and experience that is second to none so that a leader would not want to leave, why should they have the to institute a dumb contract that legally forbids that person from working a second company?
Companies always talk about “protecting” their distributors with these contracts. Well, by golly, create an opportunity that is so darn awesome that no one will want to leave. THAT IS THE ULTIMATE FORM OF PROTECTION!
And if you can’t do that, you deserve to lose distributors to another company. This is the American way. It’s called competition folks. Competition makes companies better!!
Now let’s talk about specific cross recruiting. We live in 2013. We live in a day of completely transparent information flow because of social media. SOCIAL MEDIA IS NOT GOING AWAY FOLKS!
With social media, everyone in your network knows when a leader leaves a company and they WILL get inquiries. Not only that, some will join your next company under WITHOUT YOU EVEN KNOWING they were a member of your old company. Why? Because today, you can sign up for a new company on the internet without any physical paperwork.
Should a distributor be held accountable for someone who signed up under from their old company without their knowledge? Heck NO! Of course not. That’s stupid. People should have their free agency on where they want to work and how many companies they want to work.
Many leaders have generic email lists. If they send out an email to their list to promote a new company and someone from their old company joins without them knowing it, should they be held liable. NO! THAT’S SILLY!
MLM companies need to get with the times. Don’t they know that if they terminate a distributor (and especially when the distributor believes they got a raw deal) it’s going to get out on social media and they are going to have one PR nightmare after another. THIS IS THE INTERNET AGE!!!
The reputation of the company can be destroyed in short order through social media and especially if you get a distributor who knows how to post stuff on sites like Scam.com, RipoffReport.com, Fraud.org, Complaintsboard.com, Hotscams.com, Consumerfraudreporting.org, ConsumerAffairs.com, ftc.gov, BBB.org, Ripoffrevenge.com, Badbusinessbureau.com etc…
When you post complaints to these sites, THEY DON’T GO AWAY. THEY STAY IN THE SEARCH ENGINES.
I will tell you unequivocally that an MLM company will end up doing itself more harm than good when it terminates a distributor because the internet and social media has brought the power back to the people.
I love the “power to the people” concept. You are so right, David, those comments on those sites don’t go away and it is damaging to a company to have something like that as a top result in a search engine display for the company name.
The internet HAS changed things and this IS 2013….wake up!
EXPECT Success!
Jackie Ulmer
Here’s my simple comment. If the first company took care of their distributors and was everything they claim it is, people won’t leave. This happens in the business world all the time. Are there “Non compete clauses” yes. If the other company doesn’t directly compete with the primary company, I don’t think it’s an issue. In fact, if the secondary helped the person recruit more people. why wouldn’t they welcome that? Silly, ego driven knee jerk reaction from some higher ups.
Very good point Mike!
This is an interesting post Jackie. I think this should be a topic for the DSA to create a solid set of rules.
This topic is going to be a serious subject as the “internet natives” millennium generation starts to embrace the work at home business sector and are not as loyal to the sponsoring corporation as we are.
I think each company should make a statement about what cross recruiting is and not in legalese.
Considering what just happened in our primary business it should be a concern for everyone.
I like the concept in theory about the DSA, but what about non DSA companies? Good stuff to chew on!