Compliance Department Internet Policies: Pros & Cons

In yesterday’s post, “What’s your MLM’s Internet Policy?“, I covered the three main ways an MLM’s compliance department can enable and restrict its distributers when marketing its product and opportunity online. With fine tuning internet policies a hot button topic for so many existing and emerging MLM compliance departments, and no true industry standard to choose from; How does one decide which is the best path to take? Between requiring distributors to reach a certain echelon, opening the door to all distributors, or completely locking down personal websites – what’s the best to choose?

Let’s take a closer look at the reasoning behind each path and examine the pros & cons of why MLMs are slowly shifting towards tighter, more stringent internet policies.

Independent Personal Websites for all: A compliance department nightmare

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Don’t fall asleep at the wheel! As MLMs grow at a rapid pace, so will the number of novice distributor’s personal websites which they’ll have to constantly approve and continuously monitor.

Pros: Distributors enjoy the immediate freedom of having a place online where they can develop their own personal brand, market their products and/or opportunity to prospective customers, and build their downline. It is also an attractive lure for distributors who may be weighing their options between multiple companies and are looking for an opportunity which will allow them to leverage the largest variety of tools possible.

Cons: Allowing any distributor to develop their own personal website, beyond a replicated site, opens the internet marketing door to often hundreds of new novice distributors a day. This creates a ripple effect of problems for the MLM’s compliance department, who then has to not only review all of the new sites coming in – but maintain screening on a vast amount of already existing distributor sites. Instead of educating and ensuring new distributors stay abreast of the companies internet policies, MLM compliance departments are stuck in a rat race preventing fraudulent statements from cropping while they should be preemptively preventing the problem.

“Ready to move beyond a replicated website?? Prove it.” – Compliance Department

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Some MLM compliance departments require distributors to reach a certain echelon before graduating from their replicated website. Good idea?

Pros: Only distributors who have proven a certain level of competence and success in the MLM company are allowed to have a personal site; decreasing the likelihood that the distributors who do have sites will break the MLM’s internet policy, while increasing the ability of that MLM’s compliance department to monitor and effectively screen for breaches of its internet policy. It also gives distributors incentive to stay and work hard in the MLM company; and eventually a new vehicle with which to increase their sales and downline as a reward.

Cons: Everyone knows that the attrition rate for new distributors is high, and denying them an essential tool from the get-go can decrease the attractiveness of an MLM’s opportunity and its distributor’s success. While in-person selling is still the cornerstone of network marketing, the sheer potential of the internet enables distributors to take an emerging or established MLM’s success, and their own, to epic proportions; when an MLM allows only a small portion of distributors to harness this power, it is severely limiting its competitive ability for healthy expansion.

Replicated website not working out? Well, that’s all you get!

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While the number of MLMs that completely restrict distributors from having a personal website is dwindling, there are still a good number out there that want to completely avoid most online compliance issues altogether by denying its distributors access to personal websites.

Pros: An MLM compliance department’s dream. By requiring distributors to stick with only company provided support materials, the MLM mitigates the risk it faces from distributors making false claims about its product or opportunity. If a fraudulent claim occurs, the MLM can simple say that they banned this type of activity from the start, and shift the burden to the independent distributor. While not a full proof practice, it is a strong deterrent of such activity.

Cons: Everyones’s aware of the cons associated with denying distributors true access to one the most important business tools of our time, the internet. Aside from being decreasing the attractiveness of an MLMs opportunity, existing distributors are stuck with a replicated website that underperforms, if it performs at all.

*Granted, a distributor does have the option to build their own personal brand without associating any content or talk with that of the company. But unless they are in the utmost echelons of the MLM network, it is nearly impossible for their efforts to bear fruit.

What’s the most ideal internet policy for an MLM’s compliance department?

I had to dive deeper into the pros & cons of these varied approaches before discussing the ideal internet policy that is best suited for a modern MLM to compete in today’s technology driven economy. Prospective customers and potential downline distributors want to do business with people online; replicated websites and the restriction of a distributors ability to utilize the internet is only going to hurt an MLM in the future.

So how does an MLM correctly balance its internet policy with its compliance department’s worries, and still cater to the needs of its distributors? Stay tuned for my next post where I’ll be discussing an MLM’s ideal internet policy: a balance of compliance department bliss, and distributor freedom – in which Empowerkit can play a crucial role.

Image Credits: Joelk75 (Freddy), Kevindooley (Graduation), Malias (Bare Plate)

January 7, 2011

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