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Bankruptcy Types & Arbonne Chapter 11 Restructuring

Posted by on January 31, 2010 No comments

There is much confusion over the Arbonne Restucturing through Chapter 11 Bankruptcy. The following outlines the types of bankruptcies and how the Chapter 11 Bankruptcy Arbonne has chosen to utilize works.

Most people are not aware that there are seven types of bankruptcy. Only attornies and those who have experienced bankruptcy would know this.

The seven types of bankruyptcy are:

  1. Chapter 7: For individuals & businesses. A liquidation of assests.
  2. Chapter 9: For municipalities.
  3. Chapter 11: For individuals & businesses. A restructuring of debt.
  4. Chapter 12 (a&b): For family farmers and fisherman.
  5. Chapter 13 (a&b): For individuals with regular income.


What is bankruptcy:
Bankruptcy allows a debtor who is unable to pay creditors to divide up assets among creditors.

The purpose of the bankruptcy process is to make sure all creditors are treated equally and that creditors cease all collection efforts.

Some bankruptcy procedures allow a debtor to remain in business. The increased cash flow from the restructuring allows the business to pay creditors.

When people think of bankruptcy it is usually Chapter 7 that they have in mind. In Chapter 7 all an individual's or a business' assets are liquidated and the funds are distributed to the creditors.

For example say a company had $25,000 in assets but owed $100,000 to creditors and was unable to make payment on this debt. Through Chapter 7 Bankruptcy the company's assets are sold off for $25,000. The creditors would then receive 25 cents on the dollar.

Arbonne Bankruptcy & Chapter 11 Restructuring:
Arbonne is NOT in Chapter 7 Bankruptcy. They are using Chapter 11. Chapter 11 is a restructuring of debt where the debtor, in this case Arbonne, proposes a repayment plan or compensation plan to the creditors prior to filing Chapter 11 in court.

In Arbonne's case the creditors have agreed to exchange debt Arbonne owes them for a percentage of ownership in Arbonne.

Because the court filings began last week this means the creditors have already agreed to the prepackaged plan.

Now that court filing occurred it takes approximately 45 days for the process to be finalized.

For more and current information see my post on Arbonne Chapter 11 Bankruptcy & Restructuring Links.

© 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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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 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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