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The Arbonne Grinder and the DM-2-AM Abyss

Posted by on December 29, 2009 No comments

There is a saying in Arbonne, “If you can get to District, you can become a NVP because what you did to get to District you just keep repeating until you are a NVP.”

There is much truth to this statement. However, there is one big difference between qualifying and maintaining District and transitioning from District to Area Manager. The difference is the significant amount of additional drag time.

Our research of this issue revealed the following facts:

  1. The quantity of Consultants who promote to District Manager but never make it to Area Manager is significant and staggering.
  2. There are several key ingredients that cause this stall out.
    • Arbonne Ricochet
    • Residual Income Quarterly Time Drag
    • Business Builder Drag is a Multiple Times Thirty
  3. Consultants can increase there success by:
    • Being aware of what we call the District Manager Grinder
    • Being aware of what we call the DM-2-AM Abyss (District Manager to Area Manager Abyss), and
    • Implement specific strategies to neutralize its effects

Contents of the Arbonne District Manager Grinder:

  1. Building to District Manager – The Process
  2. Arbonne Ricochet
  3. Arbonne Residual Income Quarterly Time Drag
  4. Arbonne Business Builders at a Difficulty Times Thirty
  5. Summary
  6. The Remedy

The Process of Building an Arbonne Business:
Success by the Numbers:

Building an Arbonne Business is a rather simple process. Call, Book, Present, Close & Follow up! Follow Up! Follow Up!

Using the process taught by Patrice Matteson of Dynamic Production a Consultant building to District would have the following numbers.

  1. A Consultant does 3 contacts a day 6 days a week
  2. This equals 18 contacts per week
  3. Times 4 weeks totals 72 contacts per month
  4. With a 6 to 1 Booking Ratio this totals 12 presentations per month
  5. Assume cancellations of 20% to 30% on average leaves 8 presentations a month
  6. Sales/Presentation: Let’s say the average sales are $400 for each group presentation
  7. This totals $3,200/month in new sales on average.

By following the above system Consultants will generate approximately $3,000 per month which is enough volume to qualify and maintain District Manager.

Overcoming Arbonne Ricochet:
Arbonne Ricochet is the process of clients, preferred clients, consultants and managers who come into an Arbonne network and then drop out. A certain percentage of ricochet is a natural process. All successful Consultants in Arbonne have some ricochet in their network.

However, the greater the percentage of ricochet in the network the more drag there is on forward movement. When the quantity of ricochet in a network reaches the same level as the quantity of new sales in the network, it will erode forward movement and tip the network into negative growth. It is at this tipping point that a Consultant is officially in what we call the Arbonne District Manager Grinder and the DM-2-AM Abyss.

There are two ways to deal with this.

  1. Reduce the quantity of ricochet
  2. Increase the quantity of new sales

Arbonne Residual Income Quarterly Drag:
Residual income is the volume generated by reorders in the network. A client, preferred client or consultant will purchase product, consume it and then come back and reorder a few months later. The volume from reorders is then added to the new sales and creates an increase in total volume. As more and more clients are added to the network, and a percentage of them come back to reorder, residual income will increase. The process would look something like the bar graph below.

The green bars represent $2,500 in new sales every month. This will also add new clients to the network each month. The gold bars represent residual income from the reorders these clients place after they consume the product.

As you can see if a Consultant works consistently and adds new clients to the network each month, as the reorders kick in, there is a corresponding increase in volume.

When a Consultant does $3,000 in direct new sales each month, and then in the fourth month 50% of those who purchased the first month come back and reorder, this will increase the volume by $1,500. So their total volume would be $3,000 in new sales plus $1,500 in reorders for a total of $4,500 in the fourth month.

Jumping out to the seventh month there is again $3,000 in new sales and 50% of those who purchased the first and fourth months reorder. This is $3,000+$1,500+$1,500 or $6,000.

Continuing this process, using the above calculations, the Consultant will hit first step Area at $10,500 in the 16th month.

This reveals two things:

  1. First, residual income is a very powerful way to build a consistent income in Arbonne. This is why it is one of the four keys ingredients to look for in a successful network marketing business according to Dr. Charles King.
  2. And second, because the residual income is tied to the use of the product, promotions are tied to the frequency rate of reorders.

Since promotions and residual income are connected this creates what I call the Arbonne Residual Income Quarterly Drag.

This simple fact greatly increases the failure rate as many Consultants assume that since they could reach the District Manager level volume of $2,500 in one month, then they can also get to Area Manager level volume of $10,000 in a few more months.

When the promotion to Area Manager does not happen as quickly as anticipated, many Consultants quit before they reach Area. It takes so long to transition from District to Area Manager that they think the system does not work or they think there is something wrong with them and that’s why they cannot get to the next level of success in Arbonne. As a result they disappear into the Grinder of the Residual Income Quarterly Time Drag and disappear into the DM-2-AM Abyss.

Arbonne Business Builders at a Difficulty Times Thirty:
Another way Consultants can transition from District to Area Manager is by adding business builders to the network. This process also known as duplication is another feature that makes network marketing so powerful. When a Consultant adds one business builder to their network, and that business builder follows the same system outlined above, the sponsoring Consultant will see an immediate $3,000 increase in their volume.

Using the process outlined above a sponsoring Consultant with a volume of $3,000 who adds two business builders to their network, who each also have $3,000 in their volume, will now have $9,000 in volume.

If adding business builders to the network can have such an immediate and dramatic increase in volume, it would appear this is the key to bypassing the DM-2-AM Abyss. But similar to the Residual Income Quarterly Time Drag, the process of adding business builders to the network also contains a time drag.

The numbers it takes to add business builders to the network looks something like this:

  1. Ask three people a day 6 days of the week
  2. This equals 72 a month
  3. With a 6 to 1 booking ratio you have 12 bookings each month
  4. One third cancel leaving 8 presentations
  5. This totals approximately 24 every three months
  6. On average a Consultant has to talk to 20 to 30 persons to find one person that is interested in the business
  7. So these numbers reveal that, on average, a business builder is found every three months
  8. And of those that show an interest a percentage ricochet out of the system.

Since we are talking averages, the first person that shows interest in the business opportunity may not remain a business builder. It may be the second, third, fourth of fifth person that is interested in the business that actually becomes a business builder. If it’s the second it will take six months. If it’s the fourth, it will take one year to find your first business builder.

The point is there is no real way to control this. As my wife says, “When it comes to Business Builders, you are working with a volunteer army and they can go AWOL at any time”. All a Consultant can do is play the numbers game and let the numbers work themselves out.

The Business Builder Multiple Times Thirty Time Drag can be compressed by any of the following:

  1. Increase the number of persons you contact.
  2. Become more skilled at the process to increase the:
    • Booking Ratio (the number of “Asks” to “Bookings”) If you can increase the Booking Ratio from 6 to 1 to 3 to 1 you have essentially doubled the number of persons in the pipeline. This is turn will cut the three months per business builder in half to 1.5 months.
    • Close Ratio (the number Bookings to Presentations)
    • Fact finding to discover a fit (If they don’t see how Arbonne fits into their life and/or dream they will not consider the business. Since they don’t know how Arbonne could work for them you have to facilitate this process by pointing to potential benefits.)
    • Targeting: while making the 100 name list, indentify those who you think would be interested in and would make great business builders.

Summary:
So what about the saying in Arbonne, “If you can get to District, you can become a NVP because what you did to get to District you just keep repeating until you are a NVP”?

There is much truth to that statement. However, even though the process to get to District is similar to what it takes to get to Area Manager, the additional time drag caused by the Residual Income Quarterly Drag and the Business Builder Multiple Times Thirty creates a Grinder that is not present in the transition from Consultant to District Manager.

The numbers reveal why this becomes a grinder and abyss. If only one in 30 persons is interested in the business and a Consultant has a 6 to 1 booking ratio that means she will have to contact 180 persons to find one potential business builder. For some these numbers are so staggering that they cannot push through it. As a result their dreams grind to a halt in the DM-2-AM Abyss. But that need not be the case. There is hope.

The Remedy to the Arbonne District Manager Grinder:
What we have found is when Consultants are aware of the Residual Income Quarterly Time Drag and the Business Builder Multiple Times Thirty Time Drag, they have a much greater chance of success. This is because when they hit the DM-2-AM Grinder they know it’s not their fault, or that the system doesn’t work or that Arbonne doesn’t work. They know it is a natural part of the process and if they stay in activity and keep swinging, they will eventually push through to success.

It is similar to one of my players who comes in for a pitching lesson. They are at point “A” and want to move to point “B”. Depending on the age and athletic ability of the player and which technique we are working to perfect, it could take anywhere from 3,000 to 10,000 reps before they have it in muscle memory. There is no way to short circuit this process.

As a result there are only two ways to reduce the time line:

  1. Increase the quantity of reps they do each day or
  2. Increase the number of days they work out.

However, both of these are limited by the natural forces of metabolic recovery. Just as there is a limit to the quantity of contacts per day a consultant can make each day and the length of time they can sustain this, the same is true for a pitcher’s workout.

So when new players come in for a lesson to correct a flaw one of the first things I do is count out the Muscle Memory Time Drag for them. If a player needs 5,000 reps and they follow a standard metabolic recovery schedule then they should be able pitch 100 pitches a day, four days a week. This will total 400 pitches a week or 1,200 reps a month. At that rate, “IF” they do their workouts they will meet their 5,000 rep threshold in three to four months.

But even with these facts I still have parents who want to condense this time. When that does not happen, they either think there is something wrong with the pitching system we use or they think their daughter is not cut out to be a pitcher.

Now there is nothing wrong with the pitching system because it has produced a long list of players who have had all or part of their college education paid for through scholarships. In addition, every year since 2000, this system has produced at least one or more pitchers who have thrown a perfect game. So this eliminates the system as the cause of the failure.

Since it not the system, it must be their daughter, right? Wrong! There is no way to determine that either. It could be that she does not have what it takes to be a pitcher. Or it could be she is a great pitcher but has yet to reach the repetition threshold to establish muscle memory. In other words, on this side of the threshold she has not yet reached her greatness. We will only know whether or not she is a great pitcher, when she gets to the threshold.

The same is true in Arbonne. Greatness is in the numbers. Have you done the numbers necessary for success? If you haven’t then you have not reached the repetition threshold. So you cannot say it doesn’t work. Neither can you say “I can’t be successful at this”. In other words, on this side of the threshold you have not yet reached your greatness. The only way you will know if you can reach greatness in Arbonne or not is to reach the threshold.

So the saying in Arbonne, “Don’t quit before pay day” truly applies when you look at the numbers. In the final analysis, a Consultant’s belief in the system has to be strong enough to overcome the Grinder that includes the Residual Income Quarterly Time Drag and the Business Builder Multiple Times Thirty Time Drag. Their belief has to be able to grind through chasm so the DM-2-AM Abyss does not swallow them up.

If you are reading this you could be that person that is caught in the DM-2-AM Abyss. Or as a Manager in Arbonne you may know of others who are in this position. What is important to remember is “It is not you”; “It is not them”; it is a normal part of the process. To be successful you have to continue to work the process; to work the numbers, until you hit the threshold of success. Remember, your greatness will only blossom at the threshold.

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

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Arbonne Chapter 11 Impacts Business Builder Recruiting Ethic

Posted by on December 1, 2009 No comments

The Arbonne Opportunity Presentation states that those considering being an Arbonne business builder should do their due diligence. Part of that due diligence is checking out the stability of the company. In the past Consultants who shared the Arbonne business handled this in various ways with the three most common being:

  1. In the ancient days Consultants stated that Arbonne was debt free. This fact eliminated a significant amount of financial risk.
  2. When this ended Consultants would list the years Arbonne had been in business. In addition they stated Arbonne was a financially solid company.
  3. When Harvest Partners took over Consultants would refer to Harvest Partner's financial stability.

But all this ended with the current financial difficulties Arbonne is facing as they go through a "Reorganization" or what is legally termed a "Chapter 11".

So in light of the current situation how does a Consultant handle the issue of due diligence as it pertains to Arbonne's financial stability?

There is an Ally Bank TV Commercial where an adult asks a young girl if she would like a pony. She says yes. He takes a toy pony out of his pocket and gives it to her. She says thank you. He then asks the next young girl if she wants a pony. She says yes. He calls to a pony and a real life pony comes walking out. The first girl says, "You didn't say we could have a real one." The adult says, "You didn't ask!" The announcer then says, "Even kids know its not right to hold out on somebody."

The same is true when a Consultant shares the Arbonne Business Opportunity knowing Arbonne's current financial difficulties. To withhold information from a person that could alter their decision contains the same ethical load as lying to them. By withholding this information you prevent the potential business builder from knowing all the risks.

Now there is nothing wrong with risk. All businesses carry some risk. But risk, in order to be ethical, must be known by the person taking the risk. Even if I think it is worth the risk, this does not justify the ethic when someone else is making the decision for themselves and their family. The only way to justify the ethic is to give the full information to the person making the decision.

So the question is, "What is the risk to join Arbonne?" The answer, to be honest is, none of the Consultants in the field really know what the true risks are because none of them have seen the books. All the field hears is what they hear from Arbonne Corporate. So is that enough to satisfy due diligence?

When I was the Director of an IT department I would regularly receive calls from head hunters who were looking to fill a position that my skills set matched. If I was interested I would take the information the head hunter provided about the position and the company.

But my due diligence never stopped there. I never took a head hunter's word when it came to the financial stability of a company because there was a conflict of interest. The head hunter had a vested interest in making that company look as good as possible in order to get me to say yes, because my yes benefited them.

The same is true with Arbonne. Arbonne Corporate has a conflict because they have a vested interest and are naturally going to put the best possible spin on things to paint the brightest picture. And any one who is already a Consultant in Arbonne, who is building a business, also has a conflict of interest because they want what Arbonne Corporate is saying to be true and to work out because they have time and treasure invested in the process.

So in light of this what does an Arbonne Consultant who is sharing the Arbonne business need to do to meet the ethics of full disclosure? The following provides full disclosure and is the only ethical way to share the Arbonne business in the current environment.

  1. State that Arbonne has been in business for over 30 years.
  2. State that Arbonne is still a leader in the industry.
  3. State that Arbonne is currently going through a financial reorganization.
  4. To be accurate make sure to use the terms "financial restructuring through Chapter 11 Bankruptcy".
  5. State that no Consultant has seen the books, and there has been no independent audit published.
  6. And, in the Arbonne spirit, encourage them to do their own due diligence before they make a decision.

Any less than the above does not fulfill the ethical requirement for full disclosure of risk.

Once Arbonne files the articles of bankruptcy in US Court, this would give final proof that there is an agreement with the creditors as a Chapter 11 Bankruptcy can only be filed if the creditors are in agreement with the restructuring. So once there is an announcement that the papers have been filed with the court, this confirms the stability of Arbonne. Then it takes 45 to 60 days to complete the process. Once the process is complete, Consultants would no longer have to state #3, #4 & #5 listed above.  

What if you are on the other end of the conversation? What are you to do if you are being recruited by an Arbonne Consultant to do the business during this time of transition? Ultimately it is up to each individual. But there is one fact to keep in mind. You must know all the risk to weigh all the risk. So my advice is — Rah, Rah does not replace due diligence. Only facts provide due diligence.

See my updated post on Arbonne Restructuring through Chapter 11 Bankruptcy at: Arbonne Chapter 11 Bankruptcy & Restructuring Links.

See all posts on Arbonne Restructuring through Chapter 11 Bankruptcy at: www.voicewind.net/category/arbonne/arbonne-bankruptcy-arbonne/

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

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Summary and Conclusion – Arbonne Results Approach Analysis

Posted by on October 27, 2009 No comments

The following is a summary of the main points contained in original 14 posts of "The Arbonne Results Approach Analysis". For the full information on any sections below, click on the heading title link and it will take you to that post.

The Two Types of Volume in the Arbonne Results Approach:

  1. Actual Consumable Volume: In the Group Presentation and the One-on-One Systems all the volume comes from orders placed by customers who in most cases will use and consume the product which will result in a large percentage of these persons reordering. This system produces a large consumer base with residual income which makes for a stable network.
  2. Potential Consumable Volume: In the Results Approach System all the volume from the "Result Kits" is "potential consumable volume". It only becomes "actual consumable volume" when the "Result Kit" is purchased or generates a purchase of a Results Set. In addition, any volume in a network that is "potential consumable volume", since it is not being consumed, it stands outside Dr. Charles King's "consumable product definition" which is one of the keys to a successful business.

Failure Rate in the Arbonne Results Approach:

  1. Only 3% of the population actual does what it takes, and does what it takes long enough to be successful.
  2. As a result of the above there is always failure in the system.
  3. But the data from our analysis showed that the failure rate was significantly increased in those networks that used the Results Approach.
  4. The greater the percentage of volume in a network that is from the Results Approach, the greater the failure rate.
  5. The cause of this is the "potential consumable volume" from the Results Kits. The more "potential consumable volume" there is the greater the risk that this "potential consumable volume" will never be converted from potential to "actual consumable volume".

There are two issues caused by the data we outlined above.

  1. The first is the Result Kits are never converted into consumable volume which means that line flashes out and dies. Because if they cannot move their kits, they are not going to bring anyone else into Arbonne.
  2. This impacts residual income. In a Group or One-on-One Presentation System all volume has the potential to be residual income, for those Kits that are not moved there is a 0% chance that there will be a reorder. Thus the impact on residual income is dramatic and devastating due to the 50 to 80% failure rate and the 0% of reorders from Result Kits that are not moved.

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

  1. Because there is a known 50% to 80% failure rate in networks that do the Results Approach.
  2. And because this menas 50% to 80% of the upfront potential volume from Result Kits will never be converted to actual consumable volume.
  3. This means the "potential consumable volume" in a network is false volume.
  4. The greater the percentage of false volume in a network, the greater the odds are that this network will fail.

The Pyramid Scheme Tipping Point in the Arbonne Results Approach:

  1. The key element that distinguishes a legitimate Multilevel Marketing Network from a Pyramid Scheme is a legitimate network is compensated for selling product to consumers and establishing a market.
  2. Pyramid Schemes on the other hand make their profit on volume sales to new recruits who buy the product.
  3. As the DSA Website says: "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."

What does this mean for the Results Approach?

  1. Since the Result Kits are product sold to recruits
  2. Since there is a known 50% to 80% failure rate
  3. That means 50% to 80% of the recruits will be left holding product
  4. This percentage tips an Arbonne business from a legitimate network into a pyramid
  5. The attempt to escape this reality by saying the percentage of failure volume compared to the overall volume in the network is minimal does not address the ethical and legal issues.
  6. Even if the total percentage of failure volume in the entire network stays below the tipping point, this does not mean the localized network that was processing 100% as a pyramid scheme is now legitimate.
  7. Those impacted by a localized network processing 100% as a pyramid, are impacted 100% by a pyramid scheme.
  8. 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 Responsibility:

The practice by Upline Consultants and by Arbonne Corporate of using the Independent Consultant Agreement as a sheild to protect themselves is not a legitimate ethical option and, now with notification, is not a legitimate legal option either. This is especially true in light of the fact that there is a business model that will eliminate the upfront potential volume so Arbonne Corporate does not have to walk this tight rope.

 

The Ethical Dilemma Caused by the Arbonne Results Approach:

Any upfront purchase of Results Kits places the new business builder in an ethical dilemma because their upfront risk can only be reduced by adding more business builders to the network with the same upfront risk they have so they can be compensated. Here are some ways out of this ethical dilemma.

  1. The new recruit could wait and see if she can find four people to place the same upfront order thereby reducing or eliminating her risk. But then the new recruit would have to allow her new recruits to do the same. The problem is that this can go on ad infinitum down the food chain. But this fails because at some point this process has to end and when it does someone is holding "potential" not "actual consumable volume".
  2. The Upline Consultant can guarantee to buy back any "potential" volume that is not moved. But this ethic is not offered because it would place new recruits at a high risk and thus no one would bite on the offer.
  3. Upline Consultant could (and this has been done) explain to the new recruit that they have 45 days to move the product and if they cannot they can return it to Arbonne under the 45 money back guarantee. But this is not an ethical solution as this 45 day money back guarantee was implemented for the customer not to reduce a business builders risk.

So if there is a system that can build an Arbonne business without the upfront risk, why this system with risk?

Because the Upline Consultant gets paid immediately on the up front volume from the Result Kits even though this is all potential and not actual consumable volume. 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.

 

Results Approach Temporary Balloon Effect on Existing Networks:

Beyond the ethical and legal there is the simple fact that the potential consumable volume in the Results Approach creates a balloon effect on an existing network.

What is the balloon effect?

  1. Let's say you have an existing RVP network that is doing $120,000 a month in volume. This volume is all product sold to consumers so it is actual consumable volume.
  2. This network has 30 active business builders in it.
  3. The RVP decides they are going to do the Results Approach and all 30 business builders purchase $2,500 in Result Kits.
  4. $2,500 in Result Kits times 30 Business Builders equals $75,000 in additional income over the existing actual consumable income in the network.
  5. This $75,000 added to the $120,000 totals $195,000 and pushes this RVP into qualification.
  6. But the additional $75,000 is all potential consumable volume and what ever portion is not converted from potential to actual consumable volume will eventually flush out of the network.
  7. The amount of potential consumable volume that is not converted to actual consumable volume will be the amount of eventual down turn in the network.

The Mathematics of Weakness in the Arbonne Results Approach:

  1. The Results Approach is really a One-on-One System.
  2. Thus the fact that a Consultant using a One-on-One System has to compensate for this by increasing activity is a weakness of the Results Approach.
  3. To compensate for this the upfront quantity of Results Approach Kits are increased .
  4. But this causes the network to build faster with business builders and consequently with less consumers.
  5. As a result the potential consumable volume form the upfront orders moves down the network levels more rapidly.
  6. This in turn causes the volume from the Results Kits to more quickly pass out of the pay range of the Upline Consultant. When this happens their paycheck suddenly decreases accordingly.
  7. The only way to correct this is for this Upline Consultant to add more business builders into the system directly to her or to build a consumer network.
  8. The result of the above scenario is what I call "The Mathematics of Weakness" in the Result Approach.

Arbonne Results Approach is Fast Track Because of the Failure Volume:

  1. Because the Results Approach is really a One-on-One System, the increased volume cannot be attributed to the efficiency of the system.
  2. 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.
  3. So where does the "Fast Track" volume come from?
  4. In a non-Results Approach System if a Consultant starts and then quits, the Upline Sponsor only gets paid on the amount of success that person had while they did the business.
  5. But in a Results Approach System, if a Consultant starts and then quits, the Upline Sponsor will get paid on all the volume in the upfront orders or the front loaded volume.
  6. So in the second case the up-line Consultant was paid before she made the new Consultants successful. In fact she was paid even though the new Consultant may have failed. I call this type of revenue that comes from the upfront orders of Consultants that fail, “failure volume”.

Ethical & Unethical Use of the Arbonne Results Approach:

  1. Because in the Results Approach System the Upline gets paid on this volume whether or not those in her downline can move the Results Kits and convert that volume from potential to actual consumable volume.
  2. And because there is a 50% to 80 % failure rate.
  3. And because a large portion of this additional volume in the Results Approach Network comes from the failure in the system.
  4. In light of this everyone has to ask themselves this question. Do I want to build an Arbonne business with a system that will produce more revenue, when all or most of this additional revenue is generated by the failure in the system?
  5. In light of the information above, "Large Upfront Orders Make the Arbonne Results Approach Unethical".
  6. The above is not an incidental consequence. These facts change everything. When data indicates that the additional revenue is generated by the failure in the system, a decision to use the Results Approach System as opposed to any other system ceases to be a business strategy decision. Rather, it is now both an ethical decision and a legal decision, and, in light of this data there is really only one correct answer.
  7. The data we have uncovered would indicates that there is an ethical way to build an Arbonne business using the Results Approach, but a Results Approach System which includes upfront retail volume that the Upline Consultant gets paid on prior to it being actual consumable volume; this system is not included in this ethic.

Options to Make the Arbonne Results Approach Ethically Viable:

  1. The first option is for Arbonne Corporate to issue a directive. But specific direction could be a violation of this independent consultant relationship. As a result any option that could only be enforced by corporate fiat is not workable in the case of Arbonne.
  2. The second option falls into the category of the slippery slop. In these cases a recommendation is provided by the Arbonne Corporate that would keep the Arbonne Results Approach within the ethical guidelines such as only 2 or 3 Results Approach Kits are allowed. This would then reduce the large upfront orders that result in front loading and then push the network over the pyramid scheme tipping point. However, due to Arbonne Corporates inability to enforce this limit without violating the Independent Consultant relationship this option is not workable.
  3. The third options is the use of sample packs in conjunction with the Results Approach Kits. This is one option that Arbonne Corporate attempted to implement. For details visit the Arbonne University Results Approach Training. But enforcement of this once again runs into the conflicts as Arbonne Corporate directing an Independent Consultant. To be absolutely open and honest about this, and with all due respect to Arbonne Corporate, this strategy was less a solution to the ethical issues the Results Approach inflicted upon the Arbonne field and appears to be more of a basic CYA for Arbonne Corporate. Because the only issue the sample pack addressed was cleanliness and thus Arbonne Corporate liability in this regard. The training did not address the ethical and legal issue of the upfront volume from the Result Kits. In fact the Arbonne University Training made this issue even worse because a new Consultant can still be enticed into purchasing a large quantity of these Result Kits which still places the new Consultant at risk, and the Arbonne Results Approach Training appears to give the Arbonne seal of approval to this system. Thus Arbonne is complicit in this risk. This strategy implemented by Arbonne in this Results Approach Training, was legalese, and created a wall of protection around Arbonne Corporate while at the same time it left those in the field totally vulnerable to the very same ethic from which Arbonne Corporate had protected itself. In essence, the field had been left to swim with the sharks as Arbonne profited from this system.
  4. A fourth option would be for Arbonne Corporate to force the Sponsoring Consultant to buy back any Result Approach Kits that are not sold. This would bring even those Consultant’s networks that use large upfront Results Approach orders in line with the standards as set out by the DSA web site. But Arbonne Corporate would once again be on shaky ground when it came to enforcing this on an Independent Consultant. Not to mention there would be a lot of “he said, she said” and no one wins in these situations which would ultimately leave Arbonne exposed.
  5. A fifth option would be for Arbonne Corporate itself to buy back the Kits. But this would only provide greater incentive to those Consultants who were pushing the unethical boundaries with the Result Approach Kits to push them even farther. After all, if you have a sugar daddy who is going to pick up the tab if those you sponsor cannot move the Result Approach Kits, why worry about whether the prospect can actually move the kits. Do the hard sale and move on to the next. Can anyone say Fannie May and Freddie Mac.
  6. The sixth option would be to leave the Results Approach System in tact but this allows a consumable product with retail volume to be purchased as a business aid which allows the upline Consultant to benefit monetarily from this volume. So to prevent Consultants from returning any Results Approach Kits that are purchased in large quantities to Arbonne, or to prevent these Result Approach Kits from appearing on E-bay,  each Result Approach Kit would have to be tagged with a unique ID so it could be traced back to the source. This option is not feasible because it is cost prohibitive.

Our Recommendation that Creates an Ethic Proof Results Approach System:

The only viable option would be for Arbonne to provide Consultants with testers that have a 3 to 7 day supply and are self contained. This solution has the following advantages:

  1. It eliminates the potential contamination that the full size systems are susceptible to.
  2. It does not require a directive or edict from Arbonne Corporate thus protecting the legal separation between Arbonne Corporate and the Independent Consultant’s business.
  3. It would allow Arbonne Corporate to categorize these testers as a business aids. This is important because items that are classified as Business Aids have no retail volume attached to them. Consequently this would take away the incentive to up-line Consultants to push large upfront orders so they could receive monetary compensation on Results Approach Kits.
  4. It would eliminate the need for Arbonne to dance the ethical line by on the one hand supporting the Results Approach System (Trainings, etc.) and on the other hand recommending that Consultants:
    • Use sample packs in conjunction with the Results Approach Kits (which they cannot enforce)
    • That the Consultants are responsible for any contamination to the Results Approach Kits (which again they cannot enforce)
    • Try to prevent front loading by questioning those who order large quantities of RE9 Systems (which again they cannot enforce)

© 2009 – 2010, 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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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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