Open Enrollment | Subscribe to Target Marketing HERE
Connect
Follow us on
Advertisement
 

Denny's Daily Zinger: Is This Business a Fraud?

March 19, 2014 By Denny Hatch
2
Get the Flash Player to see this rotator.
 
William Ackman, 47, is CEO of a hedge fund. He is out to destroy Herbalife International, a company founded in 1980. It sells (in its own words):

… protein shakes and snacks, vitamins and dietary supplements, energy and fitness drinks, skin and hair care products.

Ackman has bet $1 billion against it (sold short) and has called it a fraud and "the best-managed pyramid scheme in the history of the world."

The Federal Trade Commission has launched an investigation, causing Herbalife stock to plunge 17 percent.

Herbalife Is Not a Pyramid Scheme
A pyramid scheme is a fraudulent investment operation.

Herbalife is a multilevel marketing company (M-L-M) like Avon or Mary Kay Cosmetics.

The Avon model: homemaker Eileen buys cosmetics from Joyce, her Avon lady. Joyce offers Eileen the opportunity to sell Avon products, whereupon Joyce gets a commission on Eileen's sales.

Eileen has two choices: (1) sell Avon products and/or (2) recruit other sales reps to sell Avon. 

Eileen may be perfectly happy selling.

Or she may prefer to build a "down-line"—finding reps who, in turn, will recruit more reps. Eileen gets a commission on the sales of every member of her down-line.

A multi-level marketing company—à la Amway, Avon, Mary Kay and Herbalife—is not a fraudulent pyramid scheme.

It's a chance for Eileen to create a business

Takeaways to Consider

  • M-L-Ms are complex business models.
  • A good salesperson can probably make more money selling than trying to create and run a big sales organization.

Denny Hatch is a copywriter, designer and direct marketing consultant. You are invited to click on the title below and read the first 3 chapters of Denny's new book: "Write Everything Right!" No cost. No risk. No obligation. Contact him at: dennyhatch@yahoo.com

 
2

SPONSORED CONTENT

MORE ON MARKETING STRATEGY >>

FROM THE BOOKSTORE

A guide to delivering a better user experience through A/B testing: Offers best practices and lessons learned from over 100,000 experiments run by over 2,000 Optimizely customersDetails a roadmap for how to use A/B testing to personalize your customer's web experience and a practical guide to start A/B testing todayAuthors Dan Siroker and Pete Koomen are cofounders of Optimizely.com, an user-friendly testing system that more than 2,000 organizations use A/B Testing: The Most Powerful Way to Turn Clicks Into Customers

A guide to delivering a better user experience through A/B testing:
Offers best practices and lessons learned from over 100,000 experiments run by over 2,000 Optimizely customersDetails a roadmap for how to use A/B testing to personalize your customer's web experience and a practical guide to start A/B testing todayAuthors Dan...

ORDER NOW

One of the only books for fundraisers on monthly giving! Tips on how to make monthly giving work alongside other fundraising effortsHow to acquire monthly donors through different channels such as email, social media, direct mail, television and radioAnd much, much more! Monthly Giving: The Sleeping Giant

One of the only books for fundraisers on monthly giving! Tips on how to make monthly giving work alongside other fundraising effortsHow to acquire monthly donors through different channels such as email, social media, direct mail, television and radioAnd much, much more!...

ORDER NOW

 

COMMENTS

Click here to leave a comment...
Comment *
Most Recent Comments: