Posted by Mike Akins on September 21, 2001 at 00:55:20:
In Reply to: Comp Plan slight of hand? posted by David Caccianiga on September 20, 2001 at 23:21:19:
Hi James,
Well said David. The 95% retention rate that is claimed by this company is a spin job. There own literature explains their retention rate in this manner. You can depend on 95% of the distributors and customers of the previous month to order that month. For example:
1st month 100%
2nd month 95% of 100% = 95%
3rd month 95% of 95% = 90%
4th month 95% of 90% = 85%
5th month 95% of 85% = 81%
6th month 95% of 81% = 77%
7th month 95% of 77% = 73%
8th month 95% of 73% = 69%
9th month 95% of 69% = 66%
10th month 95% of 66%= 63%
11th month 95% of 63%= 59%
12 th month 95% of 59%= 56%
As you can see 95% retention is actually 56%. Don't get me wrong 56% is fantastic in this industry. The average is more like 20-35% or less retention, (figured the same way.) Another factor to take into consideration is that a company that has been around awhile will have went through a great number of distributors and will have a strong customer base. Customers that stay in a program for more than four years are less likely to attrition out. This company has been around for more than a decade and a half. They have had much higher attrition rates through out their existence. Once you go through a couple million distributors you may end up with a solid base of, say 100,000 purchases. This solid base will cause the true retention rate of the company for new distributors to be illusionary. The way they calculate retention is to figure it on the overall distributorship base, including this solid purchaser base, but figure it against recent membership. Since the retention rate may have been more like 25% over a decade or so to develop this solid purchaser base, the claims of 95% or even 56% are incorrect. I hope all of this makes sense to you. If not e-mail me.
Professional Networkers has a much higher retention rate within its first several levels. Deep within my organization retention will vary because not everyone that deep utilizes my full support or teach my marketing philosophy. Following the right marketing philosophy is as important as anyother feature of the program.
Mike