Read On To Unveil Exactly What Is So Different About Melaleuca’s CDM Structure
Melaleuca has strongly criticized MLMs and their compensation packages, and has tried to move away from this label. The company now operates a Consumer Direct Marketing (CDM) business model. However, there are many people who suggest that this is no different to a MLM structure whatsoever. This report investigates what a CDM structure entails and discovers if it is just a MLM in disguise.
What Is Consumer Direct Marketing?
With direct marketing, companies are promoting their products and services directly to the customer by leaflets, fliers, direct mail, catalogues etc. Consumer Direct Marketing replaces this media with existing consumers. CDM promotes products and services, gains new customers and business developers from exisiting consumers’ word-of-mouth referrals.
Think “recommend a friend” schemes. Jill introduces Jack to Melaleuca, Jack becomes a customer. As a thank you, Melaleuca pay Jill a commission based on Jack’s monthly bill. However, Jill has to remain a Melaleuca customer in order to continue to receive compensation. Jack can also only become a Melaleuca customer is he has been referred by Jill or another executive- he couldn’t simply go online and buy the products without a referral code.
CDM Structure VS. MLM Structure
So what’s the difference with CDM? Well…not much.
To earn commission, you need to refer a customer to Melaleuca. They join Melaleuca and you earn money from their transactions. To earn commission with MLMs, you sell products directly to the customer, and earn commission from the sale. Sounds pretty similar if you ask me.
Although you are not delivering a straight out sales pitch, you are selling Melaleuca. You need them to become customers for you to earn commission, and so you will end up trying to persuade them to join Melaleuca, just like as if you were trying to get them to buy health juice from you.
The sales approach might be softer than MLMs, but the underlying motive is the same- recruit new customers.
CDM Compensation VS. MLM Compensation
As a Marketing Executive, you will earn commission from your referrals transactions. Once you reach a certain target then you can begin develop some of your referrals into also becoming Marketing Executives, and so earning commission from their referrals. So far, it seems like a standard MLM compensation plan.
Unlike MLMs, Melaleuca’s commission percentage remains constant. You receive 7% compensation from your first level, 7% from your second level, and your third, fourth, fifth…
Because MLMs commission rate decreases with each level, you need to grow your team at a rapid rate to earn a substantial income. Melaleuca’s generous, consistent compensation plan takes away this pressure, so you can earn a good income from a smaller down-line.
The key to earning more money with Melaleuca is to encourage your referrals to purchase more products. In order to earn commission, the referral must buy a minimum of 35 product points per month, approximately $45. The CDM structure restricts the down-line to 7 generations. So, if we assume that the 6 people below you only spend $45 each month, and you are earning 7% on each transaction, this will earn you roughly $154.35 per month. You could earn more by starting more down-line chains, but you will again just be earning about $154.35 per month for each down-line. If you encourage your referrals to buy more Melaleuca products, then you will be getting 7% of maybe a $70 or $80 bill.
This is a slight difference between the two structures, with CDM placing slightly more importance on buying products rather than expanding your down-line.
CDM Inventory VS. MLM Inventory
Many MLMs require their reps to purchase a certain level of inventory each month in order to qualify for commission. However, the commission they earn can be a lot less than the amount they spent loading on inventory, resulting in a substantial loss.
With Melaleuca’s CDM structure- there is no inventory loading as you are not selling products. It is true that you need to purchase a certain amount of products every month in order to maintain eligible to receive commission, and this has faced criticism. Critics have argued that this is no different to inventory loading, and Melaleuca are simply trying to gloss over this fact.
The difference with Melaleuca’s “inventory loading” is that the products are being purchased for personal use. Think of it this way- instead of spending $45 on grocery store toiletries and detergents, you’re spending $45 on Melaleuca branded toiletries and detergents. Melaleuca products tend to be better value for money than grocery store brands, so by undergoing this “inventory loading”, you are actually saving money. The Melaleuca products you are buying are products you would be using anyway, and so there is a slim chance that you will be left with a garage of unused stock.
It is practically the same as MLM, but, again, the ephasis is slightly different. CDM inventory loading involves you buying products to replace certain household items, whilst MLM involves you buying products in addition to your exisiting regular shop.
Melaleuca-MLM In Disguise?
Well… sort of. Melaleuca’s CDM strucutre is basically the same as MLM, however, with different emphasis on differnt aspects. Pepsi and Coca-Cola are practically the same product, but with different branding. Melaelueca have taken the basic MLM structure and have altered it to be more tailored to helping and supporting customers build up a steady residual income.