As I’m discussing a lot of the high-level issues in MLM Compliance, it’s also important to see how a specific MLM’s Internet Policies are shaping the way distributors utilize online marketing. Each Friday I’ll be covering an individual MLM’s Internet Policy; what it allows distributors to do and what it restricts. This week: Nu Skin, an extremely successful MLM that sells cosmetics and nutritional supplements.

Nu Skin’s Approach to Online MLM Compliance

While you can read Nu Skin’s full Internet Policy, detailed in Section 7 of their 2010 Policies & Procedures, let’s cover the main points of interest.

Permitted Internet Activities
– Distributors are required to use ONLY Company provided replicated websites to sell products.

– Distributors may use a generic business opportunity website and/or splash page with links to the Company website. These pages must remain generic and may not contain any Company trademarks, copy, images, etc. Naturally, they also must not contain any false or misleading information.

– Distributors can only use the Internet (Social Media, Networking Sites, Blogs, etc) to do 3 things: Communicate preliminary information about Nu Skin or involvement with Nu Skin, direct users to a replicated website or registered Blue Diamond Internet Marketing Site, and post Company produced Business Support Materials that have been approved for the Internet.

– **It is important to keep in mind that Nu Skin has the sole discretion as to whether a distributors use of the Internet is permitted or prohibited, and these guidelines may change at anytime.

A few brief examples of permitted and non-permitted use of the Internet by non-Blue Diamond distributors are given in the manual, but nothing exhaustive to the point where distributors can really know what’s right and wrong when leveraging the Internet to grow their business:

– Distributors can “post information that you are a Nu Skin distributor, information about Nu Skin events you have participated in, and preliminary information about Nu Skin”, and direct readers to their Company provided replicated websites for more information.

– Distributors can also “blog in a particular post that you sell ageLOC products, how much they cost, and that others can sign up as Distributors”, and to get in contact if interested in discussing business.

Not very exhaustive right? Well if a distributor isn’t a Blue Diamond (the top .15% echelon of distributors earning an Monthly Average Commission of almost $45,000), what’s covered above is how far they’re allowed to wade into the pool of online marketing.

The remaining 99% of distributors are required to rely on their Company provided replicated website to sell products and recruit more people to their downlines. Currently, successful non-Blue Diamond distributors put a keen focus on their generic business opportunity sites, while seeding the content they produce via Social Media. Connecting these efforts back to the Company provided replicated website so readers can convert is step critical to many distributors ultimate success.

MLM Compliance at the Cost of Marketing Effectiveness

On top of the permissions listed above, Nu Skin distributors are also restricted from a number of activities that further constrain their ability to drive people to their generic business opportunity site – and ultimately on to the replicated website where conversions happen.

Distributor Restrictions

– Using Company or third party intellectual property or proprietary information in URLs, meta-tags, or in any other form of Internet use is prohibited -distributors are also restricted from registering their generic business opportunity sites with search engines or directories using any of this information.

– Distributors are not permitted to use sponsored links or pay for placement advertising with search engines or web directories.

– Distributors may ONLY promote their generic website through one-on-one personal contact.

– Distributors may provide links to their website or pages ONLY from other websites that have been registered with the Company.

So, beyond the factors of distributors having only generic business opportunity sites and limited options via Social Media, they are then further restricted from being able to promote their personal site via advertising or any other means besides one-on-one personal contact.

I know I’m not the only one who sees the flaw in this. From an MLM Compliance standpoint Nu Skin’s Internet Policy is completely understandable, but from the distributors standpoint it’s like operating their business with one hand tied behind their backs. Nu Skin distributors are very active on many networking sites, discussing ways to improve their online marketing, and not always in via compliant avenues. There are countless examples of Nu Skin distributors really trying to make the Internet work for them, but fail at connecting all the pieces in a way that drives traffic to their underperforming replicated websites.

** I didn’t cover the perks that Nu Skin’s Blue Diamond distributors enjoy since it is such a small percentage of the total Company. Achieving that position by being successful and creating a vast downline, it’s surprising they haven’t championed for their downlines to have more options; not only increase their own recruitment rates, but the retention of the distributors who enabled them to reach such stature in the first place.

Better Support = Better MLM Compliance

Many of the restrictions above stem from a compliance department’s need to ensure that the many distributors who constantly join their Company don’t lead the entire house of cards to fall by breaking the rules and drawing attention from the FTC. Instead of addressing the pain caused by ineffective replicated websites that not longer address the needs of a modern distributors, companies such as Nu Skin are forced to restrict and limit their distributors ability to use the Internet out of fear.

An understandable fear of course – but there are better solutions that a Company such as Nu Skin can provide that not only meet the needs of its distributors, but offer the Company a level of MLM Compliance previously unavailable within the industry. Any distributor joining an MLM in 2011 and beyond is going to have the expectation that they can utilize Social Media and some form of a personal website to promote their products and opportunity. For any innovative MLM looking towards continued success, putting a band-aid on the flexibility its distributors have online is only going to lead to more problems than it solves. MLM compliance is poised for BIG changes in 2011.

Images Credits: EdinbourghGreens (MLM Compliance Permission), RachaelVoorhees (Permit Only), LaurenManning (Flying Buttresses)