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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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Table of Contents – Arbonne Results Approach Analysis

Posted by on October 24, 2009 No comments

For convenience, I have included below links to all the posts on the Arbonne Results Approach Analysis. When read in the order listed here they closely mirror the original analysis dated August 26, 2009.

All contents of this analysis and the posts herein are ©copyrighted 2009 by VoiceWind and Greg Loveless.

Part 1: Who Should Read the “Analysis of the Arbonne Results Approach”

Part 2: Overview of the “Analysis of the Arbonne Results Approach”

Part 3: Author & Data in the Analysis of the Arbonne Results Approach

Part 4: The Debate Over Systems – “Analysis of the Arbonne Results Approach”

Part 5: The Two Types of Volume in the Arbonne Results Approach

Part 6: Failure Rate in the Arbonne Results Approach

Part 7: Potential Volume is False Volume and Increases Failure Rate in the Arbonne Results Approach

Part 8: The Pyramid Scheme Tipping Point in the Arbonne Results Approach

Part 9: The Ethical Dilemma Caused by the Arbonne Results Approach

Part 10: Results Approach Temporary Balloon Effect on Existing Networks

Part 11: The Mathematics of Weakness in the Arbonne Results Approach

Part 12: Arbonne Results Approach is Fast Track Because of the Failure Volume

Part 13: Ethical & Unethical Use of the Arbonne Results Approach

Part 14: Options to Make the Arbonne Results Approach Ethically Viable

©copyrighted 2009 by VoiceWind & Greg Loveless


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

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Ethical & Unethical Use of the Arbonne Results Approach

Posted by on October 23, 2009 No comments

In light of the previous post Arbonne Results Approach is Fast Track Because of the Failure Volume it is obvious that the increase in volume in a Results Approach Network, as compared to the volume in a Group Presentation Network, comes from the volume in the large upfront orders because 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. And because there is a 50% to 80 % failure rate, a large portion of this additional volume in the Results Approach Network comes from the failure in the system.

Large Upfront Orders Make the Arbonne Results Approach Unethical:

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?

This 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 an ethical decision and, in light of this data there is really only one correct answer. 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 large upfront orders is not included in this ethic.

If you disagree, before you respond remember what John C. Maxwell says about ethics.

“There is no such thing as business ethics. Just ethics! Those who use one ethic for family, another ethic for their spiritual life and another ethic for business will always get into trouble. There are not different types of ethics. There is just ethics.”

Ethical Use of the Results Approach:

I mentioned at the beginning of this article that Linda has Consultants in her organization who do the Results Approach and are successful. If what I have just laid out is true, how can that be and why would Linda allow it; how could she ethically allow it? It has to do with balance and quantity. Those Consultants in Linda’s network who are building a successful business and use the Results Approach use it as a supplemental to the Group or One-on-One Presentations. If someone cannot get to the presentation then a Results drop off is used or they do the Results with certain people. This causes two main differences:

  1. They are not building their network with large up front orders so there is no false volume in the network.
  2. They are creating a network of consumers and the Results Approach is just another method to accomplish that.

This is why the Consultants in Linda’s network who are using the Results Approach are successful. Most use it as a supplemental to the Groups Presentation System. As a Result, the percentage of Potential Consumable Volume in their network is minimal or zero and as a result they have taken the risk of the “Potential Consumable Volume”, the “Pyramid Tipping Point” and the “Mathematics of Weakness” out of their networks all by eliminating large upfront orders. In so doing they have also altered the ethic.

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 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.

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© copyright 2009 VoiceWind & Greg Loveless

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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.

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© 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.

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© copyright 2009 VoiceWind & Greg Loveless

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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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Overview of the “Analysis of the Arbonne Results Approach”

Posted by on October 20, 2009 No comments

What is covered in this analysis?

The major themes covered in this analysis are:

  1. The Impact of the Pyramid Tipping Point
  2. The Balloon Effect on existing networks
  3. The Mathematics of Weakness
  4. Ethical Load on the Successline in the Results Approach

This Analysis was done by Greg Loveless an Arbonne Consultant and Husband of ENVP Linda Loveless. This analysis is based on the Rough Draft Letter #2 dated August 26, 2009.

Table of Contents

  1. Introduction:
  2. Two Proven Systems of Success:
  3. Advantages of the Group Presentation System:
  4. Advantages of the Results Approach:
  5. Results Approach Creates Two Types of Volume:
  6. Actual Consumable Volume:
  7. Potential Consumable Volume:
  8. Results Approach Failure Rate:
  9. Cause of Failure in Results Approach Systems:
  10. Potential Volume Creates False Volume:
  11. False Volume’s Negative Impact on a Network:
  12. Converting Potential Volume to Actual Consumable Volume:
  13. Increase of Potential Volume Amplifies System Failure:
  14. Pyramid Scheme Tipping Point:
  15. Potential Volume and Pyramid Scheme Tipping Point:
  16. How to Prevent the Pyramid Scheme Tipping Point:
  17. Pyramid Scheme Impact on Sub-networks:
  18. Transfer of Ethical Accountability:
  19. Content of the Results Approach Training:
  20. Ethical Dilemma of the Results Approach:
  21. The Only Fix for the Ethical Dilemma:
  22. Upline Benefits Come From Downline Risk:
  23. Results Approach Balloon Effect on Existing Networks:
  24. Calculating Impact of Balloon Effect on Existing Network:
  25. Down Turn of Balloon Effect Impacts Residual Income:
  26. Mathematics of Weakness (The Impact When Volume Passes Out of Pay Range):
  27. Your Strength is your Weakness and Your Weakness is your Strength:
  28. Impact to Compensation When Volume Passes Out of Pay Range:
  29. Results Approach Fast Track Volume Built on Failure:
  30. Ethical Use of the Results Approach:
  31. Impact on the Culture of Arbonne:
  32. Conclusion:
  33. Greg’s Background:

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© copyright 2009 VoiceWind & Greg Loveless

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

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