The big questions? Will Herbalife actually cut off these wholesale customers from the income opportunity (making them true customers) and will said wholesale customers stick around after being cutoff from earning anything?
Herbalife to track wholesale customers in April
As good an admission as any that there are some serious problems with Herbalife’s current compensation plan and business model, the company announced today that it ‘will more clearly identify the wholesale customers among its 3.2 million distributors from April’
The big questions?
Will Herbalife actually cut off these wholesale customers from the income opportunity (making them true customers) and will said wholesale customers stick around after being cutoff from earning anything?
Herbalife disclosed that the decision to create a wholesale customer class in April came about after it held ‘short discussions with Carl Icahn‘.
Icahn is an investor in the company who currently holds a ‘13 percent stake in the company‘. Why an MLM company is only now taking action and direction (from a stock investor no less) I have no idea.
On an investor call, CEO Michael Johnson stated that ‘beyond that (discussions with Icahn), there’s nothing concrete to report‘. Whether or not a regulator has stuck their finger into the Herbalife pie and prompted their decision remains to be seen.
Distributors cannot be preferred (wholesale) customers, the two classes are at odds with eachother definition wise.
Anything short of creating a wholesale customer class cut off from the compensation plan will prove today’s announcement to be nothing short of marketing spin.
Now that they’ve made the announcement (who didn’t see it coming?), Herbalife have to follow through. Otherwise they are pretty much confirming that without constant recruitment of new distributors their business won’t survive, making it a pyramid scheme.
You can’t claim that most of your distributors are wholesale customers not interested in making money and then refuse to create a true wholesale customer class because it will kill your business.
there’s no way herbalife will make a preferred customer class cut off from the income opportunity . they might as well sign their own death warrant.
they will insist that 25 % discount is available only to distributors and allowing direct retail from the company at this discount will kill the market for their true distributors. so if anyone wants to enjoy the 25 % discount they have to make the sacrifice of joining as distributors, and can be given another fancy neo name.
in short they will classify their distributors in different categories but NO preferred customers.
if i had money like ackman does, i would have bet on this .