Electricity Goes MLM?

When I used to publish my MLM newsletter a while back, I couldn’t wait to see the headlines.

From one month to the next it was amazing to see the headline “_________ goes MLM”. It was something new every month.

One month, a consulting client told me the headline would soon be “Mare’s Milk Goes MLM!” Then when I charged his credit card after doing my work, it was no good and by the time I billed him by mail, he’d filed for bankruptcy.

Oh well, better for those unsuspecting horses I suppose.

But as I was surfing the ‘net I saw that “Electricity” had “gone MLM” again.

At least in Texas where the utilities are deregulated.

This isn’t the first time it’s been tried.

A kid (i.e. under 30 as I recall, but the age for kids keeps climbing as I get older) took a chart of the compensation plan for another MLM basically and built an MLM about a plan to deregulate Electricity back in the 90’s. I think it was in California.

He was smart… he chose a compensation plan that paid out most of its money based on enrolling and training distributors (and it was big money too, sometimes 6 figures per month) instead of moving product.

This was as illegal as you know what then and is now, though some companies seemed to do a fine job avoiding such technicalities.

Pardon my flash back on this. I had it though because I clicked on a sig file in some email I received about one such “MLM/Electricity” deal.

These sites are popping up rather frequently now under the domain name http://xxxxxxx.igniteinc.biz/. (You’ll have to type in a name like bill, tom, dick, harry, louise or something and see what pops up… I don’t want to get anyone in trouble by posting on this company.) Or you can read more on our sister blog here.
My purpose here is not to say anything good or bad about this opportunity, but to remind you about some simple facts of MLM.

To know if this is a “good deal” or not, you have to remember that MLM or network marketing is an alternative distribution system.

It takes the costs associated with moving a product from the company to the consumer and shares those dollars with the sales force.

And that’s the only place the money comes from.

In fields like telecommuncations that might be 6 to 12% of the monthly billing.

In the area of cell phones, it might be an up front fee of up to $120 with no monthly residual.

With webhosting firms, it might be 10 to 25% of the billing.

With advertising, it might be up to 40% of the ad.

It varies completely by industry.

But that percentage is what’s available to spread across a downline.

And not one cent more unless you pad the price some how or charge for “training” or some other stunt to bring the price above “market”.

So what percentage, on average, does the electricity industry spend to get it’s “product” to “market”?

I have no idea.

All the companies I know are complete monopolies.

Market? You have to beg them to cut on your power and they treat you like their personal wallet whenever they want to jack up the rates!

Market? That implies you might be human and have real choices besides erecting your own windmill.

So my question is… where are the commissions going to come from… what part of the end cost of electricity is going to fund these commissions?

And will end users buy this power alternative without being part of the marketing network… will it be attractive to the end user?

Just wondering out loud.

It’s interesting though.

The problem in telecom when deregulation hits is this… if my phone goes out, will someone from “Company X” really come and fix it?

In my case they did.

But the Baby Bell’s have the system rigged in their favor so they’ll always have the lower price because they have the infrastructure to deliver the service, i.e. wires.

I look forward to learning more. They had a flash presentation but I was on dial up and it was impossible to use it.