Monthly Archives: October 2009 - Page 2

Arbonne Results Approach is Fast Track Because of the Failure Volume

Posted by on October 22, 2009 No comments

Even with all this data there is still a fact that some of the fastest growing networks are utilizing the Results Approach. In Arbonne it is referred to as the “Fast Track” system. But why is it “Fast Track”? What makes it “Fast Track”? And more importantly, does it last?

Results Approach Fast Track Volume Built on Failure:

The “Fast Track” cannot be caused by the efficiency of the Results Approach System. After all it is a One-on-One system so it takes more time to get in front of the same quantity of people as compared to the Group Presentation System.

So what is it about the Results Approach System that allows it to generate greater volume and do so faster? Our research indicates those networks that used the Results Approach without large upfront orders grew at or below those that used a Group Presentation System. On the other hand those networks that used the Results Approach with large upfront orders at first grew faster, then plateaued out and then declined. A comparison of a Group Presentation network and a Results Approach network reveals the cause of this.

Let’s say Consultant “A” builds her network with Group Presentations or One-on-Ones and sponsors Consultant “B”. Then Consultant “B” sponsors four others. Then after booking and holding presentations they all decide to quit (and 50 to 80% will). The only volume generated was from the Group Presentation sales. Consultant “B” and her friends probably have no inventory except their personal order. They were not successful so Consultant “A” did not get paid on them or was only compensated for the amount of success they achieved.

But if Consultant “A” builds her network with the Results Approach and sponsors Consultant “B” and Consultant “B” sponsors four others all with a $2,500 upfront order, and then they all decide to quit, there is a total of $12,500 of potential volume in Consultant “A’s” network on which she will be paid. So in this case the up-line Consultant was paid before she made the new Consultants successful. In fact she was paid even though the new Consultant failed. I call this type of revenue that comes from the upfront orders of Consultants that fail, “failure volume”.

Failure Volume and The Fast Track:

Now when we take this “Failure Volume” in the Results Approach and add it across a network, and then we compare this to a Group Presentation Network that has no “Failure Volume”, the amount of the difference results in the “Fast Track” volume. So it is not the Results Approach’s ability to produce more sales volume that makes it “Fast Track”. Rather it is the upfront volume from the 50% to 80% who fail and stop doing the business that is responsible for the “fast track” volume. Because unlike the Group Presentation System, in the Result Approach System, the upline Consultant will get paid immediately on the large upfront orders of Results Kits whether or not these Kits are moved from potential to actual consumable volume.

Let me repeat that; it is not the efficiency of the Results Approach that is generating the greater volume, it is the up front volume paid by the 50% to 80% of the Consultants who will stop doing the business but have already paid into the system. The Results Approach is “Fast Track” because of the “Failure Volume”.

All posts regarding the Arbonne Results Approach Analysis

© 2009, VoiceWind. . .Greg Loveless. All rights reserved.

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The Mathematics of Weakness in the Arbonne Results Approach

Posted by on October 22, 2009 No comments

Using the Results Approach to build an Arbonne Business, and doing this with large upfront orders will produce quick results, but the process has a weakness built into it. This weakness comes from two areas; the false volume created by potential consumable volume rather than actual consumable volume. And also from the protections built into the Arbonne compensation plan.

Your Strength is your Weakness and Your Weakness is Your Strength:

One of the concepts that I drill into my players heads is “your strength is your weakness, and your weakness is your strength”. If I have a player who has all four athletic gifts; speed, quickness, power and strength, these gifts can have a negative impact on their performance. The reason is they will rely on these strengths rather than develop their techniques and skills. As a result they will eventually plateau out. But if I have a player who does not have great quickness they will compensate by working on their hitting technique. In addition to this adjustment they will work to understand what the pitcher’s tendencies are so they can get an advantage. And because they have to understand these tendencies and patterns to be successful they use these strategies in all aspects of their game. In the later example this results in a stronger player and it all began because of a weakness. In the former it results in a weaker player and it all began because of her strengths.

The strength of the Results Approach is the drop off of the kits that encourage use of the products so the customer sees the results and wants to buy. But this strength is also a weakness. This process is really a One-on-One approach which means you have to increase your appointments to get in front of the same number of people you would if you were to do the Group Presentation System.

Failure to increase the quantity will result in slower growth. However, the fact of this slower growth gets clouded by the potential consumable volume from the Results Kits. Because there is no distinction made between potential and actual consumable volume, it appears to be much easier and just as legitimate to build a network with a few business builders who purchase Results Kits than it is to see enough people through One-on-Ones to get the same consumable volume. So there is a natural tendency for networks that are doing the Results Approach to compensate by gravitating towards large orders. So the strength of the Results Approach is also its weakness.

Impact to Compensation When Volume Passes Out of Pay Range:

We have witnessed teams who have used the Results Approach to build a network from the ground up. As they did this they never made a distinction between potential and actual consumable volume. The following is how this played out. To make this easier to understand the calculations are a perfect scenario. This rarely occurs in the real world but makes the math simpler and thus easier to understand.

You join Arbonne as a Consultant and begin the Results Approach. You look for four business builders and find them in the first month. You train your team to do the same. Here is what your network will look like as it evolves over the next few months.

Get Four Business Builders:……………………. 4 X $2,500  =       $10,000 (Level #1)
They Each Get Four Business Builders:……. 16 X $2,500  =       $40,000 (Level #2)
They Each Get Four Business Builders:……. 64 X $2,500  =    $160,000 (Level #3)
They Each Get Four Business Builders:….. 256 X $2,500  =    $640,000 (Level #4)

Now to be clear, the above is a perfect scenario and the odds of it working this way are almost impossible. But I am doing this to keep the calculations simple so that you can see what happens as this system plays out.

In the Arbonne Policies and Procedures the Compensation plan lays out how a Consultant is paid on the volume in her network. A Consultant can get paid up to three levels deep on the volume in her District, Area and Region. He/she can get paid up to six levels deep on volume in her Nation.

In the Results Approach Training it is emphasized that a Consultant needs to get four (4), who each get four (16), who each get four (64), ad infinitum. As each generation is added it also adds a level of depth in the network. As this scenario plays out the business builders will pass out of the top Consultant’s pay range and as they do there will be a corresponding draw back in compensation even though volume in the network is growing.

  • 1st Month 4% on $10,000*65% = $260 (paid as Consultant)
  • 2nd Month 8% on 40,000*65% = $2,080 (paid as District Manager)
  • 3rd Month 14% on $160,000*65% = $3,120 (paid as Area Manager)
  • 4th Month 18% on $640,000*65% = $3,120 (paid as Region)
  • 5th Month 18% on $640,000*65% = $4,160 (paid as Nation)
  • 6th Month 18% on $640,000*65% = $4,160 (paid as Nation)
  • 7th Month 18% on $640,000*65% = $0 (paid as Nation)

As the volume in the network passes down a level each month, when it gets to the fourth month it passes out of your DM/AM/RVP pay range.

And once the volume gets to the seventh level it passes out of your NVP pay range. (It could pass out of the pay range on the fourth month but for the above calculations we used the maximum possible pay depth of six with the seventh month being out of the compensation pay range.)

I have spoken with numerous Consultants who built their network with large orders, got to RVP or NVP in 6 months to a year and then a year later their override checks drop back to what an Area Manager earns who is doing Group Presentations.  Now it is true that there will be volume filling in behind this volume as Consultants continue to work the business so the check does not drop all the way to zero. But unlike the Group Presentation System where the volume is 100% from consumable volume and all of it can be possible residual income, the Results Approach can have a more severe impact on the compensation. The reason for this is the results approach focuses on business builders with large orders causing the network to stack quicker; and because there is a 50% to 80% failure rate, the risk of a down turn is greater. The combination of the flame out (where a Consultant who paid the $2,500 cannot get anyone else to signup under them for $2,500 and cannot move her kits) and the volume passing out of pay range is dramatic and devastating to a network. The combination of these two as a multiple within a network that has exponential growth will in turn create an exponential down turn when they activate.

All posts regarding the Arbonne Results Approach Analysis

© copyright 2009 VoiceWind & Greg Loveless

© 2009, VoiceWind. . .Greg Loveless. All rights reserved.

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Results Approach Temporary Balloon Effect on Existing Networks

Posted by on October 21, 2009 No comments

The Balloon Effect Defined:

On numerous occasions I have had discussions with an RVP or NVP who decided to change from One-on-One, Party or Group Presentation System to the Results Approach System. When I ask if it worked they will say something like, “We saw an immediate impact on our numbers up and down the network. Those who were close to qualifying for the next level finally got there. It was amazing.”

When I ask, “How much of the volume was potential (from Results Kits) and how much was actual,” there is a blank look or a question as to what I mean. This is evidence that this person did not understand the balloon effect of Results Kits on an existing network.

Calculating the Balloon Effect on Existing Network:

What is the Balloon Effect? Say we have an RVP who has three Area Managers who each have three District Managers. One Area Manager is doing $30,000 another $25,000 and the third $20,000 each month. This RVP also has three District Managers direct to her. One is doing $8,000 another $6,000 and the third $4,000 each month. Adding in the volume from her central district we get a total monthly volume of $120,000. The network would look something like this.

RVP Network Tree

RVP Network Tree

In this network there are three AM’s and 9 DM’s under them and three DM’s direct to the RVP for a total of 15 business builders. Now let’s make a conservative assumption that each of these business builders has on average one business builder at the Consultant level. That would give this network a total of 30 active business builders.

This RVP decides her team is going to do the Results Approach, so all the Business Builders do $2,500 purchase of Results Kits. That’s $2,500 times 30 or $75,000 dollars of an increase to the previous month’s volume. This pushes the RVP’s volume from $120,000 to $195,000 in one month and into qualification for NVP.  Observing this the RVP believes the Results Approach works. But this is not correct. You see the entire $75,000 generated from Results Kits is all “potential consumable volume” not “actual consumable volume”. Whatever portion of the Results Kits do not get converted into actual consumable volume, will cause the RVP’s volume to drop by that amount the following month or at some point.

Down Turn of Balloon Effect Impacts Residual Income:

In addition to the down turn from the potential Results Kits that were not moved, there is another impact. Not only will her volume drop by the portion of volume that remains potential, but the potential volume will have to be consumed before residual income will kick back in. So it has a negative impact on volume and residual income for an extended period of time.

The combination of these two is what I call the “Balloon Effect”. The purchase of the Kit’s by existing Business Builders balloons the volume and in some cases pushes the Consultant to the next management level. But whatever the amount of potential consumable volume that is not converted to actual consumable volume will have to flush out of the system.

It is true that the potential volume in these Results Kits could be converted to actual consumable volume. But the only way to do this is to book appointments, which, it has been proven, can be done without the Results Kits.

Some Consultants believe what I have described will not happen to them. They will keep the string going. Well that may be so, but even when you keep the string going, if you do not convert the Results Kits from potential consumable volume to actual consumable volume you will still lose because of the protections built into the Arbonne Compensation Plan. We will deal with that next in “The Mathematics of Weakness”.

All posts regarding the Arbonne Results Approach Analysis

© copyright 2009 VoiceWind & Greg Loveless

© 2009, VoiceWind. . .Greg Loveless. All rights reserved.

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The Ethical Dilemma Caused by the Arbonne Results Approach

Posted by on October 21, 2009 No comments

Content of the Results Approach Training:

Use of Arbonne's Results Approach creates ethical issues that are not present in the One-on-One and Group Presentations. What are these ethical issues? I will outline them by taking information directly from Results Approach Trainings. The Basics of the Training:

  1. “You sign up and commit to a $2,500 order each month.”
  2. “You think of four others who would do the same.”
  3. ad infinitum
  4. After you get the Kits “You figure out a way to move them.”(The information in quotations is taken verbatim from the training.)

First, notice that both #1 and #2 above are “potential” not actual. At the time of purchase your volume is all potential except for the portion that is for personal use. In addition to that the list “you are to think of” is potential as well. Do you know for sure that those you think of will actually do the business with a $2,500 commitment? No good business person would take a financial risk until they knew the rate of risk to return.

Ethical Dilemma of the Results Approach:

There is a way around this ethical dilemma. Before the new Consultant commits she could ask those who she thinks might want to start the business if they also will commit to $2,500. But this does not take the risk out of the system it only transfers it down the food chain to someone else. And if you wait for this Consultant that is sponsored direct to you to contact those she thinks would be business builders, would you not ethically also need to allow those Consultants she is sponsoring to do the same. For this ethic to hold this would have to continue ad infinitum down the food chain. So at some point this process has to end so the deal can be struck and when it does those who are at the bottom of this food chain reside in "potential" not "actual" volume and thus are at risk. And let’s not make the ethical quantitative washout argument. Although there is a difference in the risk per person where you could have one person unable to move $2,500 in Results Kits, or two people unable to move $1,250, or five people $500, or ten people $250. In the network overall there is still a total of $2,500 in false volume for which the up-line will be compensated before they make anyone successful. So even if one attempts to explain this away by reasoning that there is only $250 of risk for each down-line Consultant the up-line Consultant still got paid on $2,500 of unconverted potential consumable volume or failure volume in her downline. Thus total ethical load for the up-line Consultant is still remains at $2,500.

The Only Fix for the Ethical Dilemma:

Knowing the failure rate of 50 to 80% in the Results Approach System and that this means there is always a percentage of the Kits that are not converted from potential to actual consumable volume, the only truly ethical way to do the Results Approach System is to offer to buy back the Results Kits that are not moved as is stated on the DSA Website. But if this ethic is applied at the start up presentation with new Consultants, how many would sign up to do the Results Approach? After all they would be exposed not only for their $2,500 but also for the kits of anyone else they bring in? If they bring in four consultants as the training recommends, that is a total of $12,500 in total exposure if the Kits don’t move! Not many would bite on this offer because the risk is too high. Consequently, this ethic is withheld in the Results Approach Trainings and glossed over with the words, “You will figure out a way”.

Ethical Fix with Arbonne's 45 Day Money Back Guarantee is Unethical:

When we have presented these ethical issues to some who do the Results Approach they respond by saying, "O, we solved that problem. There is a 45 Day Money Back Guarantee so if they don't move the Kits by that time they just return them and there is no risk." But this is not purpose of Arbonne's 45 Day Money Back Guarantee. It was designed to protect the customer in those situations where they for whatever reason do not or cannot use the product. It was not designed to be used as a business investment safety valve. And to use it this way may appear to resolve the ethical dilemma of new Consultant risk, but it adds another ethical dilemma of equal or even more severe stature.

Upline Benefits Come From Downline Risk:

Now if we can build the business via the Group Presentation System without the up front risk to the new Consultant, why then this system with risk? Very simply this reason; the up-line Consultant gets paid on the potential volume immediately at no risk to them while the down-line Consultant holds all the risk. Now those who support this system will say, “I have risk. I also placed a $2,500 order.” Yes, but your risk is minimal because you have a network under you that will compensate you and thus absorbs that financial risk. The new Consultant who is just starting out is totally exposed with no current revenue from Arbonne to pay for this $2,500 in inventory. They either have to bring others into the network under the same $2,500 of risk or they have to move the Kits and convert them to actual consumable volume. Another defense is, “But there is always a risk to building a business.” That’s true but this type of risk violates the network market approach where a Consultant can build a business with little investment and financial risk. It should be a Consultant’s own time and effort that determines her success, not how many people in her network are at risk. Another response is, “I reduce the risk because I do fact finding and only take those who have the potential to do the business.” If a Consultant is so good at fact finding that they can eliminate the failure rate in the system by selecting only those who will be successful, then they should be willing to wait for the Consultant to build the business without the risk of the up front inventory. If they are that good at fact finding and they know you will eventually be successful why would they insist on the $2,500 each month? – Because they get paid on that volume immediately even though it is all potential and not actual at that time. So this system is more about the up-line’s pocket book than it is about the success and dreams of the new Consultant. This is not the Arbonne culture. All posts regarding the Arbonne Results Approach Analysis © copyright 2009 VoiceWind & Greg Loveless

© 2009 – 2010, VoiceWind. . .Greg Loveless. All rights reserved.

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The Pyramid Scheme Tipping Point in the Arbonne Results Approach

Posted by on October 20, 2009 No comments

As the Results Approach Kits volume increases as a percentage of the total volume in a network, since this is not “actual consumable volume”, beyond the risk outline in the previous section above, there is a tipping point reached where upon the network ceases to be a viable consumer network and is in fact a pyramid. This is based on the definition of a pyramid scheme as stated on the DSA Web Site.

Potential Volume and Pyramid Scheme Tipping Point:

If a Consultant is building her network with mainly or only business builders who are placing large orders, then all of that volume is potential and is not actual consumable volume. Since research shows the failure rate is between 50 to 80%, this means a portion of this volume will never be converted from potential to actual consumable volume and by definition is a one-time purchase.

As more and more business builders are added to the network with large orders of Result Kits, the percentage of potential consumable volume, in the form of what is essentially business aids, continues to increase at a dispraportional rate to actual consumable volume. As these one-time orders flash out of the network, when the percentage of this flash out volume is greater than the actual consumable volume within the network, the network hits the pyramid scheme tipping point. At this point, the network, by definition, is a pyramid.

The following is taken from the DSA Website:

“How to tell the difference between a legitimate business and a disguised pyramid scheme”

  1. How much are you required to pay to become a distributor?
    …Pyramid schemes, on the other hand, make nearly all of their profit on signing up new recruits. Therefore, the cost to become a distributor is usually high. CAUTION: PYRAMIDS OFTEN DISGUISE ENTRY FEES AS PART OF THE PRICE CHARGED FOR REQUIRED PURCHASES OF TRAINING, COMPUTER SERVICES, PRODUCT INVENTORY, etc….
  2. Will the company buy back unsold inventory?
    IF YOU COULD BE STUCK WITH UNSOLD INVENTORY, BEWARE! Legitimate companies which require inventory purchases will usually “buy back” unsold products if you decide to quit the business. Some state laws and the DSA Code of Ethics require buy-backs for at least 90% of your original cost.
  3. IF THE ANSWER IS NO (OR NOT MANY), STAY AWAY! This is a key element. Multilevel marketing (like other methods of retailing) depends on selling to consumers and establishing a market. This requires quality products, competitively priced. Pyramid schemes, on the other hand, are not concerned with sales to end users of the product. Profits are made on volume sales to new recruits, who buy the products, not because they are useful or attractively priced, but because they must buy them to participate. Inventory purchases should never be more than you can realistically expect to sell or use yourself…

Warning Signs of Fraud

  • 5. A large fee payable before you receive anything in return

How to Prevent the Pyramid Scheme Tipping Point:

There are only two ways to prevent the Result Kit orders from being a pyramid.

  1. Sell all the kits which would then convert the volume from potential consumable volume to actual consumable volume.
  2. Or have an equal amount of volume in “NEW” customer sales to balance out the potential volume that will not be converted.

Both of these options are proven to have a deficit.

  1. As previously discussed, because the failure rate is between 50 to 80%, sooner or later Item #1 does not occur. This is true no matter how much one hopes and believes it can be done. This means the majority of the profits in this network are from recruits and business kits, which by definition makes this network a pyramid.
  2. Due to the failure rate of 50 to 80% there are rarely enough NEW customer sales to balance out the Results Kits that were not converted from potential consumable volume to actual consumable volume. The potential of failure is increased exponetially when large up front orders are part of the local network. If a Consultant signs up four other Consultants with a $2,500 order each, if none of these kits move then to compensate for this so the network does not hit the pyramid tipping point the Consultant would have to have $10,000 in actual consumable volume orders. But the hard cold facts are this does not happen in networks that use the Results Approach.

So neither of the above addresses the ethical issue of those Consultants who reside in that portion of the sub-network where the process failed and as a result were personally impacted. It can be argued on a percentage basis that the overall network is not a pyramid, but for those who were impacted by the sub-network that was processing as a pyramid, the pyramid impact was 100%.

For some it may be a legitimate debate as to what percentage of potential consumable volume from Results Approach Kits there must be in a network to create a tipping point that would transforms the network from a legitimate consumer network into a pyramid scheme. But when the rate of failure is taken into account in the Results Approach this becomes crystal clear as any potential volume that is not converted to actual volume is by definition front loading and thus makes the system a pyramid.

And let’s take intent out of it. According to the law and also the DSA web site, intent does not determine whether a network is legitimate or a pyramid. It is how the funds are generated that determines this. And in the scenario we just outlined with the potential volume, the failure rate and the tipping point, “Houston, we have a pyramid!”

So to summarize, the percentage of volume in a Consultant ’s network that is generated by Results Approach Kits, since this is potential and not actual consumable volume, this type of volume in the network, by definition, makes it a pyramid. And if you have a 50% to 80% failure rate in converting the Results Kit volume from potential consumable volume to actual consumable volume, then the majority of the profits in this network are generated by business builders, not consumers so by definition you have a pyramid network.

Pyramid Scheme Impact on Sub-networks:

Further complicating the issue is that even though networks that have large percentages of potential consumable volume are, in and of themselves, by definition a pyramid, these networks are not evaluated as to their own performance. Rather, their effects are washed out by absorbing their percentage of potential volume into the greater actual volume of the up-line’s network. And because the up-line network is usually a larger network the potential consumable volume as a percentage of the overall volume makes it appear that the overall network is no where near the tipping point of a pyramid scheme. But none of this addresses the effects on the localized sub-network where the majority of the potential volume from the Results Kits flames out and results in a pyramid.

Before accepting a position in graduate school I asked my lead professor what my percentages of finding a job with their degree would be. He said, “If you find a job its 100%. If you don’t, its 0%! Those are the hard cold facts for you. To be truthful, in this case group percentages do not apply?” And he was right.

When we apply this logic to a network that has a sub-network processing as a pyramid we cannot apply the overall network percentage to the person effected, but must apply the percentages within the sub-network. The sub-networks that fail may be only 5% of the total volume so it is easy for a Consultant to justify this. But for the Consultant in a network who is holding 10 Results Approach Kits that they cannot move, they do not feel this impact as a portion of the total network, or 5%.  They feel 100% of the impact! And if they were impacted because the sub-network in which they reside is processing as a pyramid scheme, they are impacted 100% by a pyramid scheme. Failure to deal with this ethical issue taints the network involved, those that put such a system into motion, those that allow it to continue, those who profit from it and the company as well.

Transfer of Ethical Accountability:

What is even more irritating with regard to the above is when we have presented these facts to some Consultants they do not refute the substance of the facts or the truth of their impact. Rather, they defend their actions by saying, “They are Independent Consultant’s and can do their business however they choose.” It is interesting that this response does not refute or deny the substance and thus the truth of the ethical lapse; it only transfers the stated guilt down the food chain to another person. And it may be true that the other Consultant can run their business as they choose, but by placing this scenario into effect, or at the minimum allowing it, one is then responsible for the dominoes that fall as a result, especially when, as an up-line Consultant, you are benefiting financially from it.

All posts regarding the Arbonne Results Approach Analysis

© copyright 2009 VoiceWind & Greg Loveless

© 2009, VoiceWind. . .Greg Loveless. All rights reserved.

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Potential Volume is False Volume and Increases Failure Rate in the Arbonne Results Approach

Posted by on October 20, 2009 No comments

Potential Volume Creates False Volume:

The advantage of the Group Presentation System is if you have a business builder quit, their up-line will still continue to get volume from those customers that were brought in because as they consume the product they will come back and reorder. But in the Results Approach if a business builder quits after placing the $2,500 order, but before they moved the Kits, there are no consumers to reorder. Consequently, all this volume is what I call “false volume” in the network. It is not consumable volume and thus it was technically a one time purchase.

On the other hand, we found that those Success lines where there was a balance of volume from Results Kits (and let’s make clear these are Results Kits without large orders) and regular orders from customers who were consuming the product, the failure rate was far lower. And in those lines where the Results approach was not used at all the failure rate was even lower still.

Knowing this, what does it mean for the “potential volume” in the Results approach? If we are honest and accept that some failure will occur then we have to acknowledge that there is always a risk that a certain percentage of the volume from Results Approach Business Builder Kits (from 50% to 80%) will never be converted from “potential consumable volume” into “actual consumable volume” and thus into residual income.

False Volume’s Negative Impact on a Network:

Here is how this plays out in a network:

  1. As the volume from Results Kits increases there will be a corresponding increase in “potential consumable volume” in the network.
  2. As the “potential volume” in the network increases, so does the risk this potential consumable volume will never be converted to actual consumable volume.
  3. If there is no consumable volume to replace this potential volume, then the percentage of volume in your network that was generated through Results Kits is the amount of the down turn that will occur in your business.
  4. The greater the ratio of Results Kits volume is to the total network volume, the greater the risk of a down turn and the larger this dollar amount will be.

So the more Consultants you have who use the Results Approach System, the higher the potential consumable volume there is in your network. And any of this potential volume that is not converted to actual volume is false volume. And the higher the false volume is in your network, the greater the down turn will be and the more difficult it will be to overcome. And in some cases, as history has proven, nearly impossible to overcome.

Converting Potential Volume to Actual Consumable Volume:

There are only two ways to move Results Kit volume from Potential to Actual.

  1. The first is the Consultant who purchased the Result Kit receives a check for that Results Kit. At that point in time that portion of the volume moves from potential volume into actual consumable volume.
  2. The second way is when a replacement kit is purchased to cover the original  results kit.

Here is the tricky part. In Item #1 above, since this transaction occurs off the Arbonne books, there is no way to know from the Web Stats that they received a check for one of the kits they had ordered in a previous order. So there is no way to know that this potential volume has been converted to actual consumable volume. And as for Item #2; the only way to know that this occurred is by researching what each person in a network ordered and keep a running total from month to month. And who does that?

Why is it important to make the distinction between potential consumable volume and actual consumable volume and what portion of this is not converted? Because, in Web Stat history we can see the detrimental effects “potential” business builder kit volume has had on Linda’s network. Time after time we see those who came into the business through the Result Approach, and often with large orders, only to have this process flame out.

Increase of Potential Volume Amplifies System Failure:

The potential for failure when the Results Approach is implemented is amplified by the fact that the Results Approach is advertised as the Business Building System of choice when a Consultant does not have time, or does not want to do parties. But just as when a Consultant does One-on-Ones rather than Group Presentations, they have to increase the quantity of appointments to get in front of the same amount of clients as they would with the Group Presentation System.  The same holds true for the Results Approach. A Consultant using the Results Approach is basically building the actual consumable volume in their network one person at a time so they will have to increase their activity to make up this difference.

But we found many did not increase the number of appointments to compensate for this disparity. Rather the size of the order is increased to compensate for this divergence. And this is most often done with business builder Results Approach Kits which are only “potential consumable volume” not actual. As the size and quantity of the Results Kits Orders increases there is a corresponding increase in risk of failure. In fact it is magnified several times over in these networks.

All posts regarding the Arbonne Results Approach Analysis

© copyright 2009 VoiceWind & Greg Loveless

© 2009, VoiceWind. . .Greg Loveless. All rights reserved.

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Failure Rate in the Arbonne Results Approach

Posted by on October 20, 2009 No comments

Results Approach Failure Rate:

In the Results Approach System when you have a business builder she will place the standard Results Approach recommended $2,500 order. At the time of purchase this is not consumable volume but business builder volume or potential consumable volume. Now some will say, “But I or they will move it.” Are you sure? What do the numbers say? What do the statistics reveal about the percentage of Kits that are moved as compared to those Kits that are not moved? You can’t say with confidence that they will move it unless you know the numbers!

I have sat through hundreds of Arbonne Opportunity meetings and trainings and I often hear it stated that only three percent of the population will do what is necessary, and do what is necessary long enough, to build a successful business. As a coach who works with elite athletes from age 8 to the collegiate level I know this to be true. So if this is true, then it is possible that a significant number of those who sign up to do the business will not do what is necessary and/or will not do what is necessary long enough to succeed. In other words, no matter how good their intentions are, some will not move the Results Kits from potential to actual consumable volume.

So what are the numbers? From the statistics we have collected on three NVP’s and three RVP’s the rate of failure ranges from 50% to as high as 80%. This should not be surprising if we accept the fact that only three percent of the population will do what is necessary to succeed.

But here is something that is surprising. Our research also found the following:

  1. The failure rate is higher among those who used the Results Approach System compared to the Group Presentation System.
  2. There is a correlation between the quantity of Results Approach Volume in a Network and the rate of failure in that network.

Cause of Failure in Results Approach Systems:

Why? What is going on? Very simply this – the more volume there is in Results Kits, the more volume you have that is “potential consumable volume”.  And the more “potential consumable volume” there is in a network, the greater quantity of volume there is that will be at risk of not being converted into “actual consumable volume”.

If this potential volume is not converted to actual consumable volume there is no possibility of reorders, which means there is no possibility of residual income.

In addition we found that the less consumable volume there is, the less residual income you have and thus the more volume you have that could be a one-time purchase. This scenario always increases the potential for failure in that portion of the network where it resides.

All posts regarding the Arbonne Results Approach Analysis

© copyright 2009 VoiceWind & Greg Loveless

© 2009, VoiceWind. . .Greg Loveless. All rights reserved.

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The Two Types of Volume in the Arbonne Results Approach

Posted by on October 20, 2009 No comments

Results Approach Creates Two Types of Volume:

The Results Approach System, unlike the Group Presentation and One-on-One Systems, generates not one, but two types of volume that show up in the Retail Volume total in Arbonne Web Stats.

  1. Consumable Retail Volume: This is standard consumable retail volume from Consultants or Preferred Clients who purchase products they will consume. This is “actual consumable volume”.
  2. Results Kits Volume: This is any retail volume that comes from Results Kits or Business Building Kits that have yet to be purchased by a customer.  This is “potential consumable volume”.

Actual Consumable Volume:

In the Group Presentation System let’s say a Consultant starts her business and does ten group presentations in that first month. She averages $500 per presentation for a total of $5,000 in retail volume. She does the same thing the second month, and the third month and so on.

As stated in the Arbonne Opportunity and Results Presentations, according to Dr. Charles King, one of the keys to a successful business is a consumable product. Why? – Because as customers consume the product they will come back and reorder. The volume of these reorders grows as a Consultant consistently adds new customers to the network each month.

The following graph shows how a consumable product can increase retail volume through residual orders.

Residual Income Graph

In the above graph the green bars represent $2,500 in new sales each month. The gold represents reorder compounding on a quarterly basis.  In April, those who ordered in January come back and reorder. In July, those who ordered in January and April come back and reorder.

Potential Consumable Volume:

Results Kits Volume: This is any retail volume that comes from Results Kits or Business Building Kits that have yet to be purchased by a customer.

It needs to be understood that any volume from Results Kits purchased to be dropped off cannot be counted as “Consumable Retail Volume” at the time of purchase. It can only be counted as “Consumable” when it is purchased by a customer for use. Why? – Because as long as that product is a Results Kit it is not being used by a person who will consume the product and then reorder. So until the volume from the Results Kits is converted to consumable volume it is possible that this volume is a one time event. If it is, then there will be no reorder and no residual income.

So the “potential consumable volume” in the Results Approach does not meet Dr. Charles King’s definition of consumable volume that will cause reorders. Even though Dr. Charles King is quoted in the Results Approach with the implication that this approach meets his standard, in fact it does not.

We cannot lose sight of the importance of this distinction and the impact this has on the Standard Group Presentation System of Success. It may seem insignificant but just as a network grows exponentially so also does the volume from Results Kits.

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© copyright 2009 VoiceWind & Greg Loveless

© 2009, VoiceWind. . .Greg Loveless. All rights reserved.

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The Debate Over Systems – “Analysis of the Arbonne Results Approach”

Posted by on October 20, 2009 No comments

The Debate:

There is much debate within Arbonne as to the legitimacy and effectiveness of using the Results Approach to build a successful and sustainable Arbonne business. We understand this debate because Linda has Consultants in her successline who do Group Presentations, One-on-Ones and Result Approach. This is based on statistical analysis and from actual historical data within my wife’s, Linda Loveless’ Webstats. However, to be completely honest, there have been some in Linda’s and other success lines who have been negatively impacted by the Results Approach. In our research we have found there are two main reasons for this.

  1. In some cases the Consultant did not understand how the Results Approach was impacting their numbers.
  2. They were not doing the Results Approach System correctly.
  3. They did not understand the weaknesses of the Results Approach.

As a speaker and trainer I teach that long term success is always built around a system of success. As a coach for nearly 30 years I use systems to teach players and teams to perform successfully. These systems are implemented, tested in battle, and then adjusted to improve them.  Through this process they are perfected over many years. As a result, before we made any adjustments to our “Systems of Success” we would analyze how this change would impact the entire system. In some cases no matter how appealing the change(s) appeared to be, analysis revealed the change would be detrimental to the overall performance of the system of success so the changes were not implemented. The same holds true with the Results Approach. One needs to understand what changes when the Results Approach is implemented and how this impacts all aspects of the business.

Two Proven Systems of Success:

During the early days of Arbonne there were two systems that were proven to build a successful Arbonne business:

  1. Parties or what is also referred to as Group Presentations.
  2. One-On-Ones (this is really a group presentation done one person at a time)
  3. A Consultant can get in front of multiple individuals in one presentation increasing the number of new exposures.
  4. Because these group presentations are booked through another person the Consultant is gaining access to a new warm market.
  5. Most, if not all of the purchases at these events are personal orders that will be consumed. This results in reorders which is also termed Residual Income.
  6. The One-On-One System is really a Group Presentation, one person at a time. So to make it effective a Consultant has to increase the number of One-On-One appointments to equal the head count quantity that is accomplished by having 6, 8, 10 or 12 parties a month. (My wife Linda built her Arbonne business through One-On-Ones. She owned and operated a Design/Alterations business and when clients came over for a fitting she would share Arbonne with them.  Through this process she made sales and found business builders.)
  7. In both the Group Presentation System and the One-On-One System there are new Consultants or Preferred Clients continually added to the Network. As the quantity of customers in a network increases over time residual income also increases as these customers reorder.

Advantages of the Results Approach:

  1. The customer is given the product to use so they can see the Results. (Do not make the assumption that handing a person a Results Kit will automatically result in them using the product. By marking the Results Kits we could determine if they pushed the pump and we were surprised at how often people said they used the product or the product broke them out only to discover that they had not pushed a single pump. We are currently doing research to determine what the “rate-of-use” is when using the Results  Kit as opposed to a presentation or a sample pack.)
  2. It focuses on basically one product which is a definite advantage. The customer only has to consider that product and is not overwhelmed with an entire catalogue of products. And any time a customer is overwhelmed they are essentially confused and a confused mind always says NO!

All posts regarding the Arbonne Results Approach Analysis © copyright 2009 VoiceWind & Greg Loveless

© 2009 – 2010, VoiceWind. . .Greg Loveless. All rights reserved.

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Author & Data in the Analysis of the Arbonne Results Approach

Posted by on October 20, 2009 No comments

The Background of the Author, the Data & the Analysis:

Greg Loveless is the Husband of Linda Loveless, Executive National Vice President and Arbonne Independent Consultant.

Linda owned and operated a design dress making business when in 1996 she started her Arbonne Business on a part time basis. Linda’s sponsor, Kim Hoffman, shared a sample pack with Linda. Linda fell in love with the product, shared the product with others or others asked what she was using. From this she started to receive what she calls “Thank you checks” from Arbonne. The biggest impact came in the form of Bonuses from RSVP (Right Start Value Packs). In fact Linda was asked to speak at an Arbonne Training Conference because she was number three in the entire company sponsoring people into Arbonne with an RSPV.

Linda built her business with One-on-Ones and sample packs. Over time she found business builders and through this duplication process she built a six figure income. Linda has over 100 NVP’s and RVP’s in her downline. Through a business tool provided by Arbonne to all Consultants called WebStats, Linda can see the activity of those in her downline. By analyzing this information we can see:

  1. What those who have been successful did and are doing to be successful.
  2. What those who were successful but are no longer successful did and did not do.
  3. What those who were never successful did and did not do.

The analysis is based on the following data:

  1. WebStats
  2. Arbonne’s Policey and Procedures
  3. DSA web site (DSA or The Direct Selling Association is the governing body to which Arbonne is a member)
  4. Trainings on Arbonne’s www.arbonneuniversity.com

All posts regarding the Arbonne Results Approach Analysis

© copyright 2009 VoiceWind & Greg Loveless

© 2009, VoiceWind. . .Greg Loveless. All rights reserved.

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