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To Autoship or Not to Autoship ...

by Wendy » Wed Nov 28, 2012 2:19 pm


That is my Shakespearean Direct Sales question of the day ...

I've been a proponent of "best price for those on autoship" for years, but the past 18 months have changed my mind.

Why? We do an incredible amount of business from people who are registered as distributors, but who have no interest in building a business. What they have is an interest in a product that they LOVE and they want to buy whenever they darn well please at the very best price and with no obligation to do so monthly. It goes without saying that we all should be marketing a product that people will buy "with or without an opportunity attached." That criteria can be a challenge in this industry, but those products do exist.

Not forcing autoship allows people to purchase $500 ... $850 ... $1400 worth of product, or any amount that they want, with no obligation but with the ability to save significantly on shipping by buying in bulk. In my 15 years in this industry, I've never witnessed so many "back office" orders (i.e. orders that are either from people not on autoship, or from people who are on autoship but can't wait for their autoship date to receive product).

How FABULOUS is that?

VERY!!

No more watching non-business builders go off autoship right before autoships run. Instead? Lots of watching these same people log in and buy at random times of the month ... at the best possible pricing.

Business builders know they should be on autoship in order to ensure they create whatever volume is necessary to qualify for commissions. But the vast majority of an organization is not business builders ... so why not cater to those people, too? In the end, it's a win-win for the business builders AND for those who have opted not to build a business. i.e. the "entire" organization!

Here come the questions:

(a) Must a distributor be on autoship in order to get the best pricing in your company?

(b) Do you believe that forced autoship for wholesale pricing is the best way to go? If so, why?

Looking forward to your thoughts and ...
Merry Christmas to all!!
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Re: To Autoship or Not to Autoship ...

by ToddMorris » Wed Nov 28, 2012 2:49 pm


Hi Wendy,

I think if there's no "hoops to jump through" (whether that be autoship, or something else), in order to get the best prices on products, then it's not really wholesale pricing. This is perfectly reasonable for companies who's advertised "retail" prices are pretty much just window dressing anyway ... as in nobody actually pays those prices. But for companies with a true retail component, it makes no sense to just give the lowest prices to anybody and everybody.

I'm much more a fan of the "back up autoship" idea, where you only get your autoship at the end of the month if you haven't already generated enough volume to qualify for commissions. That being said, I can see why companies prefer the beginning of the month model. I'm sure there are plenty of people out there (in my own candle group even) who have been on autoship for months, or even years, and just simply never get around to canceling. Again it's obviously easier to "forget" at a lower level. I seriously doubt there are many people out there who are "accidentally" continuing to get $150 or $200 worth of vitamins every month.

In short, I'm not really a fan of "forced autoship", but I'm not sure that anything else has really been proven to work better.

Merry Christmas right back at ya. ;-)

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Re: To Autoship or Not to Autoship ...

by Wendy » Wed Nov 28, 2012 5:36 pm


ToddMorris wrote:Hi Wendy,

I think if there's no "hoops to jump through" (whether that be autoship, or something else), in order to get the best prices on products, then it's not really wholesale pricing. This is perfectly reasonable for companies who's advertised "retail" prices are pretty much just window dressing anyway ... as in nobody actually pays those prices. But for companies with a true retail component, it makes no sense to just give the lowest prices to anybody and everybody.

I'm much more a fan of the "back up autoship" idea, where you only get your autoship at the end of the month if you haven't already generated enough volume to qualify for commissions. That being said, I can see why companies prefer the beginning of the month model. I'm sure there are plenty of people out there (in my own candle group even) who have been on autoship for months, or even years, and just simply never get around to canceling. Again it's obviously easier to "forget" at a lower level. I seriously doubt there are many people out there who are "accidentally" continuing to get $150 or $200 worth of vitamins every month.

In short, I'm not really a fan of "forced autoship", but I'm not sure that anything else has really been proven to work better.

Merry Christmas right back at ya. ;-)

Todd


Hey Todd!

Thanks for your thoughts and I understand what you're saying, especially since your thoughts are mirroring my thoughts over the past many years.

Here's a real example from my back office which I think creates some "food for thought":

On the 27th of November (yesterday), I can see 12 "back office" orders. Of the 12, only 5 are on autoship. The other 7 "back office" orders (including one for $1,394.39) were from people who are not on autoship and who I believe would not have placed an order if they didn't have access to the wholesale pricing without obligation of an autoship. That would have been over $2,000 in sales lost just yesterday (the equivalent of about 23 autoships at minimum qualifier). Multiple that by 365, and I think you'll see why I'm quite happy to have people buying at wholesale without commitment to autoship.

As you know, many products in this industry are not retailable. But some are. In my particular case, I have a retailable product, one that I've personally retailed and one that is being retailed within the team. And I know that you do, too.

All that aside, I'm mainly, but perhaps not exclusively, talking about the masses of people who join as distributors but never build a business. Those people fall off autoship in horrific numbers, and they never purchase again because they can't get the product at the wholesale price. So what if those masses of people who really will never build a business, but actually love the product and were willing to purchase at wholesale could do so without autoship obligation? The only way that can happen is if forced autoship for wholesale pricing is not in place. I see "back office" purchases every day in my organization. Let's take for example a $600 bulk purchase of product. That's the equivalent of about 7 autoships running (at minimum qualifier).

I've been a huge fan of backup autoship over the years, too. It makes perfect sense for business builders. BUT, it also means that potentially hundreds or thousands of people in your organization who are not going to build a business, are likely to drop off and never come back. Why? Because coming back to make even a single product purchase and wanting best pricing means that they have to login and set up another autoship that they don't want because they have no interest in the business. This re-setting of autoship, in my experience, almost never happens.

I'm not sure there's a perfect solution ... but based on the volume that I see in the back office and the numbers of people who login and purchase because they have access to wholesale pricing ... I've definitely had a change of heart about forcing autoships or any sort of minimum purchase in order to get best pricing.

As I've watched this over the past 18 months, I've had a complete turnaround in my philosophy about autoship. Hey, who says ol' networkers can't learn new tricks? :D
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Re: To Autoship or Not to Autoship ...

by ToddMorris » Wed Nov 28, 2012 5:57 pm


Wendy,

I'm sure I'm over-simplifying, but my first reaction to the idea that people will only purchase the product if they can get the "wholesale" price, is that it merely indicates that the retail price is too high.

Don't get me wrong, if people are ordering product because they want it, instead of because they "have to", that's definitely a positive in my book.

But, what is the person who ordered $1394.39 worth of product going to do with it?

It seems to me that if I know that someone can sign up, and get the products at the wholesale price without any other obligation, wouldn't it be unethical to ever sell to anybody at the retail price?

Back to your question of auto-ship or no auto-ship, I could definitely see other viable "hoops" ... such a minimum order to get the best pricing .. with no forced autoship. But I just can't see how it's possible to give everybody the same price, and still say that there are actually any "retail" sales taking place.

Todd :-)
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Re: To Autoship or Not to Autoship ...

by Wendy » Wed Nov 28, 2012 6:43 pm


ToddMorris wrote:Wendy,

I'm sure I'm over-simplifying, but my first reaction to the idea that people will only purchase the product if they can get the "wholesale" price, is that it merely indicates that the retail price is too high.

Don't get me wrong, if people are ordering product because they want it, instead of because they "have to", that's definitely a positive in my book.

But, what is the person who ordered $1394.39 worth of product going to do with it?

It seems to me that if I know that someone can sign up, and get the products at the wholesale price without any other obligation, wouldn't it be unethical to ever sell to anybody at the retail price?

Back to your question of auto-ship or no auto-ship, I could definitely see other viable "hoops" ... such a minimum order to get the best pricing .. with no forced autoship. But I just can't see how it's possible to give everybody the same price, and still say that there are actually any "retail" sales taking place.

Todd :-)


Hi, Todd

Let's not forget that people who have become distributors already know what the wholesale price is. Three months after enrollment, they realize they're not going to build a business and they don't want the product monthly. Off autoship they go, and never to return because the pricing they've had for three months now requires them to re-set their autoship ...

The person who ordered $1,394.39 is deep in the organization and from Europe. I don't know who it is or what they will do with the products. Perhaps retail it. Perhaps share with family. It could have been a family and friend order. Perhaps personal use of products for several months.

The "hoops" for wholesale are $29.95 and the willingness to provide a SSN or Tax I.D. number. Somebody who's willing to pay $29.95 and provide their SSN, I have no problem offering the wholesale pricing which will include a fast start bonus on the initial order. I've found that those people may actually refer people down the road, even if it's just for wholesale pricing for a friend or family member.

However, all of that being said, we do retail product and I don't believe it to be out of integrity. We generate leads that are customer oriented and they expect to pay retail and I only suggest otherwise if the conversation has moved to business or if the conversation or my intuition tells me that this is a potential business builder.

Also another consideration is the fact that a retail sale is beneficial to me and to the upline, whereas an enrolled wholesale distributor is beneficial to me and my downline (dislike the word "downline" but painting a visual here) because that wholesale distributor falls to the bottom of the right or left leg and points pay upline from there, including either our right team or our left team benefitting from those points. I like that, and sometimes that's reason enough to suggest a wholesale membership and forgo the retail bonus.

Thanks for the stimulating conversation! :D
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Re: To Autoship or Not to Autoship ...

by Gery_D » Wed Nov 28, 2012 8:55 pm


You took your OP in a direction I wasn't expecting, Wendy, so I hope I recovered enough to comprehend your question correctly. Autoship advantages are more favorable to the company and to the upline in knowing where they are going in regards to their pin level bonuses. Pricing is advantageous to the customer mindset and does encourage larger volume purchases to a degree.

As a side note, I'm not a big fan of required A/S at the distributor level to qualify for bonuses but it really is an adequate safeguard against a sudden loss of volume from either a customer or distributor purchase stand point. So it only makes sense to offer it at other member levels. The better systems will allow that flexibility you mentioned in changing product or shipping date selections though that can wreak havoc sometimes for higher pin level people in a weekly pay plan but it still encorages retention at the retail consumer level. The ease of that feature, tied with the lower price points, also encourages the individual to stay on as a consumer should they decide the business is not for them.

While I see the enticment to have wholesale pricing without the benefit of autoship I'm not 100% convinced it can work for everyone as it has worked for you. I like a rewards system to encourage sales and I see the disadvantage ( to the members up line) of bumping them to retail if they fail to maintain. It Works! has three levels; retail, wholesale and distributor. As an old retailer, I'm not a big fan of the wholesale term if they aren't buying in quantity. In Vitamark we had the simplicity of one. Everyone paid the same price A/S or not, distributor or not but A/S was required to earn commissions and bonuses.

In the three levels I mentioned above we reward the regular buyer as a "Loyal Customer" with a significantly discounted price yet one just a cut above the distributor. Why shouldn't someone committed to building the business get a little better price than someone not working the business. If a rep drops qualification continuously or chooses not to work the business they are then moved to the LC. LC's aren't asked to pay additional but are required to commit to three purchases or a fee for failure to honorthe agreement. they can then come and go at LC pricing from that day forward but there are additional perks for maintaining A/S continuously after the 90 days.

What I like there is that it doesn't burden the regular customer, the length of commitment is fair and there is still an incentive for reps if they will work the business but no slap in the face if they stop. I can't say that I've really lost a lot by not letting the drop in order have a discount not knowing who dropped in and balked on price. Butr we still have drop ins ordering retail. It's a little early in the game for me to judge the occassional retail customers' return habits but you raise an interesting point that I will want my groups to keep an eye on.
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Re: To Autoship or Not to Autoship ...

by Wendy » Wed Nov 28, 2012 9:29 pm


Gery_D wrote:Why shouldn't someone committed to building the business get a little better price than someone not working the business.


Hi, Gery

Thanks for your great comments!

I'm quoting the above because that's exactly the way I felt a couple of years ago.

Now, I don't ...

I think that philosophy is looking at the small picture instead of the big picture. Yes, it would be great to have the lesser price, saving a few dollars a month. But how many people must I lose from the organization in order to lose more money than I saved because I have a lesser price for product? Not many.

I'd much rather have a large number of occasional shoppers than have to replace those occasional shoppers because they don't like the autoship.

Nice to see the board a little more active! :D
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Re: To Autoship or Not to Autoship ...

by Steve_Fazia » Thu Nov 29, 2012 8:52 am


Hi Wendy,

Nice topic. I've always felt the autoship thing was something companies wrapped up and 'sold' to its distributors as a convenience thing so as to never miss a commission, blah blah. You are right, this has the effect of alienating good people who want the product but have no intention of building a business. However, I too have had the philosophy of better pricing for anyone who chooses autoship. Good incentive, win-win for company and distributor. But the backup autoship is the way to go, as Todd pointed out. The product is only sent automatically if you do not generate the required volume by the end of the month. I can count on one hand the number of times I've received a back up order in 20 years; I always order what I need for myself or a customer well before the back up ever kicks in.

And yes, isn't it wonderful to see those back office orders from people who simply order a product they love when they need it? No use in forcing them to stockpile something if they are not building. I believe autoship has run off some very good people who might very well still be with us buidling large groups in our industry. Make it easy and affordable to order quality products, then watch our respective companies grow even faster :)

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Re: To Autoship or Not to Autoship ...

by Gery_D » Thu Nov 29, 2012 9:19 am


Steve_Fazia wrote:No use in forcing them to stockpile something if they are not building. I believe autoship has run off some very good people who might very well still be with us buidling large groups in our industry.


How large is the autoship requirement that they can't personally use it or consume it within the family unit?
Anyone who is backlogged in product from an autoship not only isn't building, they aren't using the product so what the blazes are they even in for?

No company or plan is so good that I would spend more than I can move or consume. If they aren't building a business they aren't buying a check in profit if they're spending X and getting back less than 101% of X . If they're just there for the social aspect I recommend FaceBook. It's free.
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Re: To Autoship or Not to Autoship ...

by Steve_Fazia » Thu Nov 29, 2012 9:45 am


Gery,

Here is a specific example. Let's say I have a single person who wants one $50 bottle of XYZ health product every month. This represents a months supply for him or her. The autoship quantity is for 2 bottles monthly. How many months will this person stay on autoship :?: I believe one of Wendy's intents in initiating this discussion is to ask the question 'why drive this type of person away from a product, company, or for that matter an entire industry?' Food for thought... :)

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Re: To Autoship or Not to Autoship ...

by serious » Thu Nov 29, 2012 10:02 am


I would prefer a backup order over an autoship order. I think the problem is that many or most distributors would not order if they were not making any money.
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Re: To Autoship or Not to Autoship ...

by Dale Calvert » Thu Nov 29, 2012 1:04 pm


Wendy,

Thanks for having the guts to post this.

I DO NOT BELIEVE in autoship for anyone, accept established leaders within a company. For most newbies it takes time to develop the belief in a company and the skill sets and mindset to get their business off the ground. Life happens, and sometimes people can not get started as quickly as they had hoped. The last thing they need is 3 months of autoship orders stacking up while they are trying to get a life situation sorted out.

Requiring people to buy a certain amount of product to remain a distributor is a great way to lose many people and gain no one long term. I did an entire video training on this a couple of years ago called No Autoship and I think it is posted on You Tube.

"Leaders" in the industry need to understand that their check will grow when they focus on building people and helping them move forward and develop the right skill sets and mindsets, it is not about requiring people to purchase X number of dollars.
I believe many leaders no longer lead and tell people the truth and what they really need to hear because they are afraid they will upset someone and they will drop off autoship. Because of this fact, I believe autoship has had a very negative on the industry. If we build people, people will build the business!

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Re: To Autoship or Not to Autoship ...

by ToddMorris » Thu Nov 29, 2012 4:12 pm


serious wrote:If customers and distributors are going to be separated into two different groups, then I think we run into problems on multiple levels. First, that would mean that distributors are not "customers" and I think we all know that would be a regulatory mess.


I think you're a little confused. I know that in practice, most mlm distributors are also "customers". But from a purely regulatory perspective, it's actually MUCH better if the difference is very easily recognizable. In other words, a customer is someone who buys at the retail price, and is NOT involved in the business opportunity. A distributor is someone who purchases product at the wholesale price, then sells to retail customers.

Again, I understand that in practice this doesn't happen much in the real world of mlm. But to say that it's preferable to label distributors as customers is just flat out wrong.

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Re: To Autoship or Not to Autoship ...

by Deb_ » Thu Nov 29, 2012 4:32 pm


Dale Calvert wrote:Wendy,

Thanks for having the guts to post this.

I DO NOT BELIEVE in autoship for anyone, accept established leaders within a company. For most newbies it takes time to develop the belief in a company and the skill sets and mindset to get their business off the ground. Life happens, and sometimes people can not get started as quickly as they had hoped. The last thing they need is 3 months of autoship orders stacking up while they are trying to get a life situation sorted out.

Requiring people to buy a certain amount of product to remain a distributor is a great way to lose many people and gain no one long term. I did an entire video training on this a couple of years ago called No Autoship and I think it is posted on You Tube.

"Leaders" in the industry need to understand that their check will grow when they focus on building people and helping them move forward and develop the right skill sets and mindsets, it is not about requiring people to purchase X number of dollars.
I believe many leaders no longer lead and tell people the truth and what they really need to hear because they are afraid they will upset someone and they will drop off autoship. Because of this fact, I believe autoship has had a very negative on the industry. If we build people, people will build the business!

Dale


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Re: To Autoship or Not to Autoship ...

by Deb_ » Thu Nov 29, 2012 4:44 pm



Not forcing autoship allows people to purchase $500 ... $850 ... $1400 worth of product, or any amount that they want, with no obligation but with the ability to save significantly on shipping by buying in bulk.


I agree. There is nothing more exciting than looking in your back office and seeing "unexpected" orders for hundreds of dollars! :)

If people love the products they will buy. No forced auto-ship needed.

One company I know of and love will be celebrating their "big 30" next year. 30 years in business. They have NO mandatory auto-ship program and as a result extra large orders for hundreds even thousands of dollars are placed every single day and the company only continues to grow.
As you said why lose potentially hundreds of reps and customers (many of which turn into reps later because they are already sold on the products) because the whole idea of a "forced auto-ship" turns them off?

In my 15 years in this industry, I've never witnessed so many "back office" orders (i.e. orders that are either from people not on autoship, or from people who are on autoship but can't wait for their autoship date to receive product).

How FABULOUS is that?


Very fabulous! :)
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Re: To Autoship or Not to Autoship ...

by Mike_Michelozzi » Thu Nov 29, 2012 5:51 pm


Here come the questions:

(a) Must a distributor be on autoship in order to get the best pricing in your company?

NO.

(b) Do you believe that forced autoship for wholesale pricing is the best way to go? If so, why?

NO

Our best pricing is a distributorship - which we refer to as a membership as most people relate to that better with no fear they might "have to sell . . ."

I don't think most people like an auto ship these days.

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Re: To Autoship or Not to Autoship ...

by Wendy » Thu Nov 29, 2012 7:32 pm


Steve_Fazia wrote:Gery,

Here is a specific example. Let's say I have a single person who wants one $50 bottle of XYZ health product every month. This represents a months supply for him or her. The autoship quantity is for 2 bottles monthly. How many months will this person stay on autoship :?: I believe one of Wendy's intents in initiating this discussion is to ask the question 'why drive this type of person away from a product, company, or for that matter an entire industry?' Food for thought... :)

Steve



That's exactly it, Steve!

In a nutshell, those of us who have built sizable organizations know that the vast, vast majority of people in our organizations are not distributing anything to anybody. They are consumers. So why do we want to do anything that would hinder consumption by the vast majority of our organizations?

A forced autoship in order to get best pricing will hinder consumption, and we find ourselves replacing people who would likely be occasional shoppers if they weren't forced to either be on or re-set their autoships.

A forced autoship costs those consumers additional money in shipping. They have to buy in months that they may not be able to afford the product, so they flip the off switch on their autoship ... never to return. If people want to buy in bulk once or twice a year at the best price, that seems like a huge win-win to me! A couple of bulk orders a year can be as much volume as a full year of autoship. And if they stay in the game, they may actually tell someone about the products ...

Aren't we all looking for a way to cut attrition rates? Autoship may well be the scourge of the industry that creates more attrition than any other factor ...
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Re: To Autoship or Not to Autoship ...

by Wendy » Thu Nov 29, 2012 7:50 pm


Dale Calvert wrote:Wendy,

Thanks for having the guts to post this.

I DO NOT BELIEVE in autoship for anyone, accept established leaders within a company. For most newbies it takes time to develop the belief in a company and the skill sets and mindset to get their business off the ground. Life happens, and sometimes people can not get started as quickly as they had hoped. The last thing they need is 3 months of autoship orders stacking up while they are trying to get a life situation sorted out.

Requiring people to buy a certain amount of product to remain a distributor is a great way to lose many people and gain no one long term. I did an entire video training on this a couple of years ago called No Autoship and I think it is posted on You Tube.

"Leaders" in the industry need to understand that their check will grow when they focus on building people and helping them move forward and develop the right skill sets and mindsets, it is not about requiring people to purchase X number of dollars.
I believe many leaders no longer lead and tell people the truth and what they really need to hear because they are afraid they will upset someone and they will drop off autoship. Because of this fact, I believe autoship has had a very negative on the industry. If we build people, people will build the business!

Dale


Thank you VERY much, Dale, for reinforcing and stating so eloquently what I've come to believe over the past 18 months ...

When I initially joined a company with no autoship requirement for wholesale pricing, I viewed it as a negative. Now, watching the large number of bulk orders coming in daily, I am 100% confident that I would have a much smaller percentage of the volume that I see in the back office if those people were forced on autoship for wholesale pricing. It's my first experience in 15 years with this type of structure and it's been very eye opening and very positive ...

Many thanks for your comments!
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Re: To Autoship or Not to Autoship ...

by Wendy » Thu Nov 29, 2012 8:05 pm


Mike_Michelozzi wrote:Here come the questions:

(a) Must a distributor be on autoship in order to get the best pricing in your company?

NO.

(b) Do you believe that forced autoship for wholesale pricing is the best way to go? If so, why?

NO

Our best pricing is a distributorship - which we refer to as a membership as most people relate to that better with no fear they might "have to sell . . ."

I don't think most people like an auto ship these days.

HM


Thanks Mike!

I also refer to the distributorship as a membership in cases where people have asked for wholesale pricing and have no interest in business building.

Since it's technically still a distributorship, I let them know that I'll need their SSN and that the company will view them as distributors and will send them corporate update emails from which they can unsubscribe at any time. If they're not happy with that, we revert to retail where no SSN is required.

You've got it right when you say that you "don't think most people like an autoship these days." I wonder when companies will wake up to that fact ... "Most People" ... "Most" ... No wonder we find ourselves in the position of having to replace people who could have been happy customers shopping at their own convenience whenever they needed the product ...
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Re: To Autoship or Not to Autoship ...

by Gery_D » Thu Nov 29, 2012 8:06 pm


Steve_Fazia wrote:Gery,

Here is a specific example. Let's say I have a single person who wants one $50 bottle of XYZ health product every month. This represents a months supply for him or her. The autoship quantity is for 2 bottles monthly. How many months will this person stay on autoship :?: I believe one of Wendy's intents in initiating this discussion is to ask the question 'why drive this type of person away from a product, company, or for that matter an entire industry?' Food for thought... :)

Steve



Well I had a well laid out reply to all of this earlier and guess I didn't post it. I'll try to put it in a nutshell and hope for the best. First I understand what Wendy is saying and I agree in part. However if your company is going to require you to have a certain volume to achieve a discounted price there should be an option to spread the point or dollar value across a number of products and not burden someone with more than they can utilize in a given time frame. If the company is a one trick pony and there are no other products then they are 1. forcing me to over spend and 2. preventing me from benefiting from add on sales, in a sense capping my commission per customer and diluting my profitability. Thus the company is not distributor friendly and fails a litmus test in my book.

Buyers expect to have to do something to get better than retail prices and a $29 or so fee to get it makes the retail price stand out as a joke in most cases. You want my price? Make it up to me in commitment to additional purchases or buy X amount of a product where X > 1 or Total Sale > $Z. If you want to try it before you decide to make that commitment I can appreciate that. Here's my retail price. If you like the product and want more, here's my loyal customer program where you pay about the same as I do. You'll recoup the difference in that retail purchase in just a couple of items and the benefits grow the longer you stay on the program. Your website should make that clear on the product page and offer it again at cart checkout if you aren't one on one with the customer.

It's a win X 3 more times than it's a loser for any one party IMO. There are a dozen marketing philosophies out there. I don't believe any of them are perfect. If one was we would all be using it and guess what happens next. Everyone starts jockeying for a new gimmick guaranteeing that at least one of the three parties, most likely the company or the rep if not both, will have their bottom line reduced again.
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