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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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Arbonne Results Approach is Fast Track Because of the Failure Volume

Posted by on October 22, 2009 No comments

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

Results Approach Fast Track Volume Built on Failure:

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

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

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

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

Failure Volume and The Fast Track:

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

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

All posts regarding the Arbonne Results Approach Analysis

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

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The Mathematics of Weakness in the Arbonne Results Approach

Posted by on October 22, 2009 No comments

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

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

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

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

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

Impact to Compensation When Volume Passes Out of Pay Range:

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

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

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

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

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

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

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

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

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

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

All posts regarding the Arbonne Results Approach Analysis

© copyright 2009 VoiceWind & Greg Loveless

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

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Results Approach Temporary Balloon Effect on Existing Networks

Posted by on October 21, 2009 No comments

The Balloon Effect Defined:

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

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

Calculating the Balloon Effect on Existing Network:

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

RVP Network Tree

RVP Network Tree

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

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

Down Turn of Balloon Effect Impacts Residual Income:

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

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

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

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

All posts regarding the Arbonne Results Approach Analysis

© copyright 2009 VoiceWind & Greg Loveless

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

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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.

All posts regarding the Arbonne Results Approach Analysis

© copyright 2009 VoiceWind & Greg Loveless

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

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