User Progressive Demotion
Saturday, April 7, 2018

MLM Software: Auto Termination of Distributors and Consultants


Several companies have a policy, and automated programming, that performs terminations/cancellations of Distributors/Consultants when they stop purchasing or selling.  This is leading to a growing number of existing and new MLM and Direct Selling companies to have this as part of their MLM Software Requirements.

While these features may exists, or while new or inventive rules may be added, as per your new and creative rules... be careful, as there are several issues and implications that may arise. 

Before I get to potential issues, let me first layout a logical possibility for Auto Termination Logic.

Oh, and before I layout logical possibility let me present some common requests/rules that we hear.

1.) "If Distributors/Consultants have not paid for their Back Office for 15 days, I want them terminated!"
2.) "If Distributors/Consultants have not paid for their Back Office for 15 days, I want them to loose Preferred Pricing and pay RETAIL for any personal orders!"
3.) "If Distributors/Consultants have not paid for their Back Office for 15 days
, I want them to NOT get a Commission Check!"
4.) "If Distributors/Consultants have not purchased at least $200 in products, I want them terminated!"
5.) "If Distributors/Consultants have not purchased at least $200 in products, I want them to loose Preferred Pricing and pay RETAIL for any personal orders!"
6.) "If Distributors/Consultants have not purchased at least $200 in products, I want them to NOT get a Commission Check!"


Do any of these statements sound familiar to your own, or a company you are with?
There are, potential legal issues to the statements above, but these represent the general language that I've heard from prospects or clients.

Ok, as promised, let's get into MLM Software Auto Termination Logic Potentials (irrespective of legal, best practices, stated policies or member expectations).

FYI, you can Manually terminate or request MLM Software has features to perform functions, automatically.  Again, we will discuss some potential issues/implications later.
 

We will premise the following flow of logic, based on a few expected norms.

1.) Members Pay a Back Office Fee, possibly Monthly
2.) Members have Preferred Distributor/Consultant prices on their own purchases
3.) Members may have Personal Customers Ordering in the Month
4.) Members may have Personal Distributors/Consultants and Downlines doing Sales/Orders in the Month
5.) Members may be, based on downline and past sales, qualified at some rank midway up your Compensation Plan
6.) Members may otherwise be in good standing with the Company
7.) Company wishes to implement a Demotion/Termination Plan, possibly similar to comments above

 

MLM Software: Auto Termination of Distributors and Consultants

 

Potential MLM Software Systems Plan:

(Notice closely, that I will use PSV below, NOT Personal Purchases)

Access Demotion

  1. Unpaid/Declined/Expired BO Subscription
  2. Email Template Triggered to inform Member of Access Lost

 

Commission Exclusion

  1. Removed if No Active Subscription paid within past 60 Days
  2. Removed if No PSV of $200 within past 90 Days
  3. Email Template Triggered to inform Member of Commission Lost

 

Preferred Pricing Loss

  1. Retail Priced if No Active Subscription paid within past 90 Days
  2. Retail Priced if NO PSV of $200 within past 90 Days
  3. Email Template Triggered to inform Member of Dist Price Lost

 

Pending DeActivation of Login

  1. If No Active Subscription paid within past 180 Days
  2. If NO PSV of $200 within past 180 Days
  3. Email Template Triggered to inform Member of Pending DeActivation

 

Pending DeActivation of Login *Second Notice

  1. If No Active Subscription paid within past 185 Days
  2. If NO PSV of $200 within past 185 Days
  3. Email Template Triggered to inform Member of Pending DeActivation

 

Pending DeActivation of Login *Third Notice

  1. If No Active Subscription paid within past 190 Days
  2. If NO PSV of $200 within past 190 Days
  3. Email Template Triggered to inform Member of Pending DeActivation

 

Action DeActivation of Login

  1. If No Active Subscription paid within past 195 Days
  2. If NO PSV of $200 within past 195 Days
  3. Email Template Triggered to inform Member of DeActivation

 

Pending Loss of Downline

  1. If No Active Subscription paid within past 220 Days
  2. If NO PSV of $200 within past 220 Days
  3. Email Template Triggered to inform Member of Pending Loss of Downline

 

Pending Loss of Downline *Second Notice

  1. If No Active Subscription paid within past 225 Days
  2. If NO PSV of $200 within past 225 Days
  3. Email Template Triggered to inform Member of Pending Loss of Downline

 

Pending Loss of Downline *Third Notice

  1. If No Active Subscription paid within past 230 Days
  2. If NO PSV of $200 within past 230 Days
  3. Email Template Triggered to inform Member of Pending Loss of Downline

 

Action Move Downline (Personal Customers & Personal Distributors, change Sponsor to Upline Sponsor if Available)

  1. If No Active Subscription paid within past 235 Days
  2. If NO PSV of $200 within past 235 Days
  3. Email Template Triggered to inform Member of Loss of Downline

 

Extended Action...

  1. Upon moving Downline and PCust, change sponsor/placement of this Dist ro 100001 or other id designated as default terminated tree


And, how about some reporting

Report Page that demonstrates Count and List of persons at Each State of the above, on any day you run the report.

 


Second Thoughts on Your Termination Plans..? Just Wait!

If you read through the above logic, either you've realized that you under-thought and under-planned your own termination policies, or that your MLM Software is clearly not up-to-par.  A deep Hmmmm can be heard... and you may actually go up and read through it a few more times.

 


Concerns for implementing in your MLM Software
Rather than drag this out, with paragraphs of opinion, I will present simple bullet points and limit expanded comments.

 


Consider:

  1. To some, Termination means Deletion of an Account. Deletion of an account can disrupt stored order connections/mapping and past/historical reporting.
  2. Termination manually would surely require that you or your admins stay very true to your stated termination policies, and that those policies have been well reviewed by your MLM Attorney.
  3. Termination automatically, via MLM Software had better be set according to your policies and MLM Attorney's confirmation.When a Termination occurs, items like moving downlines, order credits, etc become disrupted and to undo that should the distributor believe a mistake occurred would be very difficult to undo without further implications by new sponsors.
  4. Removal/Excluding from commissions can also create a lot of issues, so again, be sure you have clear policies established, that all are aware of, and your MLM Attorney has approved of. 
  5. By now, consider the Complaints sent to Attorneys General or the Better Business Bureau, based on such actions.  Even if a Distributor/Consultant is believed to understand, and have accepted the policies, such actions will often draw a considerable percentage of persons that disagree with the actions, have their own reasons for why they are right, and via the internet and social media... well, are now on a path of verbal and public attacks.
  6. By any stretch, stating that you wish to Remove Commissions, Remove Preferred Pricing, move Downlines or Terminate someone.... based on them Not Purchasing $200 in a Month is a BIG RED FLAG.  I DOUBT, VERY SERIOUSLY, that your MLM ATTORNEY will approve that. If they do, it woul dbe with some loop-hole I would not expect. 
  7. Terminating or Loss of Commissions or Loss of Downline, for a member with a credit card failure for their Back Office Payment..., while being out of the country for a couple weeks, returning to a failed marriage and divource.... this is the kind of thing that you will get out of your Distributors.  How can you manually or automatically perform terminations?  You would have to think through the demotion process, policies, have input from your MLM Consultant AND your MLM Attorney.
  8. Moving Downlines, then finding the memebr had a life crisis... moving people back, customers and distributors can be very difficult, disrupt a lot of reports and mapping, as well as the member that received the downline... now having them ripped away, to give it back.
  9. ??... Should I go on, raising points, or is it becoming clear, how difficult such a policy can be, especially if not implemenenting a logical demotion process, as I laid out at the start.  Consider the flow I laid out at the top of this article, as it does think through and provide a viable path of demotion.


More Important, LEARN This, or if you Have Heard it before... RE-COMMIT it to MEMORY!!!  "No Purchase Necessary.." this a Key Element that MLM and Direct Selling Companies need to adopt and abide by.  To Demote, Remove Commissions, Terminate for not paying a Back Office, BUT doing Sales... is that Reasonable?

Terminating because they do not PURCHASE $200 in a Month or 6 months... is that Reasonable?  I would say NOT!
Saying "$200 in PSV has not occurred, and that PSV is Customer Sales, or Customer Sales PLUS Personal Orders"... now that may be ok.. Ask your Attorney.

Remember, when someone joins an MLM or Direct Selling Business, they are often considering an opportunity to market your company's products or services for some financial benefit/commission/bonuses.  Most would expect that a termination for not being active for a year would be reasonable... possibly 6 months... but think about this.
Most would not consider that a Back Office payment failing would cause a commission loss, loss of donwline, or termiation... most would say this is completely not right!

This is an important subject. I highly recommend you speak with one of our MLM Consultants AND your MLM Attorney if you intend to implement a termination policy based on items above. I am certain that you should have a termination policy, related to misrepresentation of the company, products, compensation plan.  This article is related to termination based on Back Office Charges, Purchases, PSV, Active Status.

If you have questions, contact us for Consulting at 888-221-0106 support@inspetta.com
We truly desire our MLM Software to provide the features and functions you need, while encouraging ethical behaviour in the MLM and Direct Selling Industries.
We reserve the right to turn down any client, for any reason.
 

 

 

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For more information, call (888) 221-0106 or 619-770-7107 or send your compensation plan for a free review to support@inspetta.com  Corp: https://inspetta.com Online Info: https://mlmsoftwarecentral.com



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