Total Life Changes’ Chief Operating Officer John Licari was recently featured in Direct Selling News magazine’s cover story on the ways recent regulatory changes are forcing direct marketers to reexamine how they define customers versus distributors.
The Direct Selling News story interviews senior executives from some of the biggest companies in the sector to gauge their responses to the Federal Trade Commission’s move to censure network marketing giant Herbalife.
Herbalife lost over $200 million in distributor refunds when it was revealed the company could not prove what percentage of its product sales, if any, actually reached customers outside of its own network of distributors—in effect, the company implicated as a pyramid scheme in the eyes of the government.
A subsequent FTC ruling stated that 80% of Herbalife’s revenue must come from actual customers lest the company face further sanctions. While these regulations are specific to Herbalife, other companies have taken notice. This has forced companies like TLC to ensure that they have greater clarity about who their customers are, versus who their distributors are.
Licari considers this an opportunity for direct sellers to refocus on end user satisfaction. “If you lead with the product, you have a chance to make a business out of