Distributor Guidance = Effective Compliance

In a past post, I covered how most companies are approaching online MLM compliance by dictating distributor restrictions via their Internet Policies. While this approach does address what distributors shouldn’t be doing, more often than not it fails to help the distributor understand what they are allowed to do online to promote their products/services, opportunity, or both.

By offering distributors ‘compliant guidance’ about conducting business online, an MLM company can do itself a multitude of favors. For one, it gives distributors, new and existing, a great starting point to move product and increase their downlines beyond warm markets in a way that minimizes the risk of scrutiny and legal action from the FTC. Secondly, if the MLM not only offers guidance to its distributors, but also tailors the way it enforces compliance based on these guidelines, a lot of headaches felt by distributors and the company can ultimately be avoided.

Guidance: The key to MLM Compliance

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Distributors join an MLM filled with a strong entrepreneurial spirit and drive to succeed on their own. Working for themselves, they know their earning potential is only limited by the amount of work they put behind the product or service they’re selling. A critical skill set many of them lack however is how to use the Internet to expand their business, or if they’re already trying different ways to leverage the web, how to do so in a way that’s effective while still remaining compliant with their MLM’s Internet Policies.

Two examples of MLMs who have taken steps toward guiding distributors on how to conduct business online are Nature’s Sunshine Products and Numis Network. NSP not only provides Internet Guidelines, but also details examples and makes suggestions about how to correctly position the product without creating a compliance liability. Similarly, Numis has a series of compliance videos, you can check one out here, on the types of verbiage and positioning that are not only effective, but compliant.

So how can MLM compliance include providing guidance to distributors conducting business online?

Guidelines: A Road Map to Success

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Every MLM, established and emerging, realizes that the Internet is continually growing in importance to the success of its distributors. So, what’s good for a distributor is good for the MLM company, right? Not when misleading claims or outlandish statements run the MLM a risk of going out of business or paying a crippling fine to the FTC. Making sure distributors know what they can say is just as important as restricting what distributors can’t.

What distributors need to be fully aware of:

  • If permitted to have a personal website beyond their company provided replicated site: What are they allowed to use this website for? Fully disclosing not only what distributors aren’t allowed to do in terms of: purpose, content, logos, and copy should be augmented by suggested ways to effectively use the privilege offered by the MLM. Drawing comparisons between questionable & acceptable content can go a long way when developing compliant distributors. By highlight good and poor ways of maintaining their websites, MLMs can get distributors off on the right foot – increasing the success, retention, and growth of their company.
  • If permitted to use Social Media: How have the most successful distributors used Social Media effectively, and how have they stayed compliant? How are they providing value to prospective customers & potential downline candidates without skirting over the compliance line? Providing clear guidance to acceptable content and messaging up front will prevent unnecessary headaches later.

This may seem straight-forward, but even a brief glance at the top MLM blogs and forums, one can plainly see the high level of confusion and misinformation being circulated between distributors from different companies. It’s comparable to giving a group of random distributors a football, putting them on the field, and telling them not to go out of bounds – while never telling them how to play the game .Whenever the only focus of MLM compliance is on what not to do, problems will inevitably arise.

MLM Compliance: Where it needs to go

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From all of my posts thus far, it should be clear that while I understand the absolutely essential role an MLM’s compliance department plays for each company – I’m at a loss about why so many companies are relient on replicated websites that don’t perform. In response, MLMs across the board have opened up personal websites & Social Media (both to some extent) in an apparent effort to placate the needs of their distributors. For the longest time MLMs didn’t have the option to provide the necessary tools to play the preemptive compliance game – but now that the technology has caught up with the needs of the industry, MLMS can now not only offer the necessary tools in-house, but also monitor and correct distributors at will.

I covered the 3 ways preemptive compliance can be achieved in my last post, and would love some feedback from thought leaders about the notion of providing clear and enforceable guidelines to distributors in the future.


Images Credits: JackLiefer (Keys to Guidance), JustinTravels (Compliance Roadmap), SuperMac (MLM Compliance Walkway)

January 12, 2011

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