Pros and Cons of Accumulation
What is accumulation?
In typical marketing plans, accumulation is a system of rewards that allows the distributor to save up purchase products and accumulate the point value to reach the next rank. For example: If I need 10,000 points to go from 5% to 10%, I can purchase 3,000 points in the first month, 2,000 in the second and the remainder 5,000 in the final month so I would achieve the rank.
Advantages of Accumulation
• It gives the distributor a longer time frame (sometimes no time frame) to move
from one rank to another giving them less pressure and less stress
• Volume gained from sales in previous months doesn’t get flushed away.
Meaning, you can gather the volume, go away on a 3 month holiday, and you can start immediately again as though you haven’t left.
• Protected against the effects of demotion (see later posts)
Disadvantages of Accumulation
• Encourages Front Loading and Buying Position (see later posts)
• No time frame means no pressure. No pressure means no incentive to go out
and look for sales so giving too much time frame also works both ways.
• If there are no repeat sales in the business, you will have a hollow organization. Most people stop buying or recruiting once they hit a new level in an accumulation system. In other wards, since there are no quotas, you can have 10 Super Diamond Ambassadors in your organization who don’t buy anything.
Downline Building Strategies
To overcome the shortfalls of accumulation, educate your team to be good product users. Emphasize on teaching them to buy stuff that has a high consumption and higher repeat sales (like vitamins or skin care products). This way, you will not only have income from recruiting opportunity seekers, when each downline has their own set of customers and are consumers themselves; they will generate more volume from their own purchases than from recruiting a new downline.
Remember: repeat sales are what keeps a business running long term.
Just like a normal business, it is very important to have market demand. The reason why
the government has scrutinized the network marketing industry or has so many rules
and regulations is because most unscrupulous companies use the product as an excuse
to run a business. How do you spot one such company? Simple. The market will saturate with many people accumulating lots of product but once there are no repeat sales, the company will collapse and those former distributors will be left with tons of stock that nobody wants. The litmus test would be this: If the company were to disappear tomorrow, will you immediately think of how to get rid of or liquidate your stocks, or find out where to get more of them tomorrow on wards?
Starting your Own Company
In addition to having good repeat sales, the company must also focus on enforcing an 80/20 or 70/30 rule where 70-80 percent of the products purchased by a distributor
should be sold to customers and the remainder 20-30 percent is used for personal
consumption. This will counteract the negative effects distributors accumulating products only for the sole purpose of reaching the next rank faster.
Next post: Buying Position Until then.. see ya later…