Promises made and not kept?

Originally sent and posted by Kim Klaver for her newsletter subscribers-December 2004.

Over the last decade, there have been massive failures in our industry, both of companies and tens of thousands of distributors. It's become a familiar story: promises made and not kept, hype and allure that turned out to be false once someone got into the business. Each failure affects all of us in the industry.

One of the most spectacular examples is the recent bankruptcy of VarTec-Excel Communications. This is a company whose reps I have worked with for almost 9 years.

On December 3, 2004, the Dallas Morning News reported that in October, 2004, its last month of operations, Excel had 106,426 U.S. representatives. Then one Friday in November 2004, the owners of Excel, VarTec, declared bankruptcy. Suddenly all these people, overnight, had lost their company. This is not a good thing. Within days, the word had raced through the network marketing community across North America.

Some of the information that was reported at the hearings was quite surprising to those who believed there were lots of people making lots of money there based on what the recruiters were selling in the front of the room and online, etc..

According to the Dallas paper, during Excel's last full month of operation - October 2004, one of VarTec's corporate executives testified that

"Most Excel independent representatives earn little or no commission, and at least 90 percent of the people who join don't stay a second year. A person who wants to sell Excel products is required to pay a $399 first-year fee, with a $199 annual fee for following years."

And then the paper added that the executive, Joe D'Angelo, stated that:

"As of October, Excel had 106,426 U.S. representatives eligible to earn commissions and that 64,967 actually earned commissions. Of those, 98.1 percent earned $100 or less. Only 99, or 0.2 percent, earned more than $1,000 for the month."

They're not alone...

Excel is not the only company with such pitiful numbers. I have consulted with reps of perhaps 100 companies over the last 10 years, and most of their numbers are not far from those that were published for Excel in the Dallas Morning News above.

Excel's demise notwithstanding, I believe the direct sales/network marketing business model is one of the most sophisticated business models available. We have plenty of evidence that it DOES work. The problem is NOT the business model. It's people who go for the money first, and care about what they're doing, second.