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.