Jacob Baytelman - Full stack developer, project manager, CTO
A story about online marketing, funnels and branding
Several years ago a well-known European MLM company did something innovative.
But firstly let me explain, just in case somebody does not know. Multi-level marketing
is based on intellectual distribution. It means that the company builds a network of
distributors, who sell the company's products and spread the word and invite other
people to become distributors, in other words, sponsor them. The company shares its revenue with sponsors
and the renumeration depends directly on the amount
of their group sales. This scheme is based primarily on reputation of sponsors, their
selling and team-building skills and ability to invite new people to the business and
to teach them how to reproduce these 2 basic actions: sell and sponsor.
This business model has been working for years until someting new happened.
This company gathered thousands of sponsors for a terrific annual conference with
lots of cool stuff and proclaimed the new message: "Let us go to the Internet. Let us make
a huge wave".
No wonder, thousands of sponsors started blogs, vlogs, web sites, forums, etc. and
filled the Web with gigabytes of info about this company. Directly or indirectly all
mentions of the company's brand were linked to the official web site of the company.
The funnel was built, rather a huge one and either the temptation took over the minds
of the company's owners or it was a part of the plan - hard to say, but one day
the shit hit the fan.
The key issue about any multi-level company is the precise structure of distributors'
teams. I will explain: if I invite you to the company, I register you and you become
a part of my team, likewise everybody you invite from now on to your team, automatically
become also a part of my "bigger" team. So intellectual distribution is paid for and
my efforts are guaranteed to lead to my team growth. The only way to bring new
distributors to the company was via such personally sponsor-referenced registration.
When I said that the shit hit the fan the following happened: the company opened unlimited
registration of the new distributors on their official web site without any referral scheme!
Thus, the main principle of intellectual distribution was undermined. After this change
my work of spreading the word about this company no longer guaranteed my own success.
I could spend time and efforts on telling people about this company or writing blogs or
promoting my web site and all these efforts led to the growth of the awareness about
the company's brand which in its turn stimulated direct traffic to the official web site
of the company and direct subscriptions there.
They sucked the output of the funnel they had previously created by the efforts
of the thousand of their distributors. It worked like a charm!
Here endeth the lesson on internet marketing: leverage the audience (possibly somebody
else's one) to build a funnel and open your mouth wide on the narrow side of it.
Is that all? Well, not exactly. Many leaders of the distribution teams of this company taught
us another great lesson (I just wonder how expensive their own pay for this knowledge was).
Since then they have been investing in development of their own personal brands firstly,
rather than the brand of the company. Because they can fully control it.