Nikken Has Changed Their Business Focus
One of the biggest objections that people have to network marketing is that they ignorantly believe that it is a pyramid scheme. I believe that should never be a concern with Nikken because all of the income earned by distributors comes from selling product. Nobody makes money directly from recruiting people into the business opportunity. You only make money from them once they start buying or selling product. Apparently this distinction isn’t enough for some regulators because there have been a few news stories in recent years of other companies coming under investigation, and outright attack, even though the income is generated solely through product sales.
To better protect themselves and the distributors, Nikken has decided to make some adjustments to the business to remove any possibility that people will mistake them for a pyramid scheme. I didn’t think there was any possibility of that before, but that is because of how I built my business. Overall, there were some things that Nikken wanted to fix.
What I understand from talking to other distributor friends, most of the income in Nikken is earned by a few people at the top of the compensation plan, and comparatively very little of the money goes to new people at the bottom. These distributors haven’t done anything wrong, it’s just the way it works for the people who work hard and get it done in a traditional network marketing approach. This is what Nikken most wanted to address with the recent changes.
Traditional Network Marketing Created the SituationThe way I was taught when I joined Nikken was to find a number of people who want to join the business and get them on at least a minimum monthly autoship of 100 PV (personal volume). I never did that. As a brand new person, you aren’t going to make any money at all by doing this until you move up in rank because commission percentages don’t kick in until then. As a brand new person you only get retail profit, but you aren’t taught to go out and retail the product so that you can make money. When you do move up in rank that first time you are still only looking at $3 – $5 of income per person you recruit and get on autoship, so you need a lot of people. The result is that new people make very little if any money.
The people higher up in the compensation plan can make a lot of money this way because they’ve worked for years and have tens of thousands of people contributing to their income. Even at $3 – $5 per person, if you have 250,000 people in your organization you can be making better than $100,000. Chances are, if your downline organization is that large, then there are at least a few people who will be making you a lot more than just $5 in a month, so the checks at the top levels can be very large. Again, they haven’t done anything wrong. I have met a few of these people in Nikken and they work very hard for their income by helping people deep in their organizations build their own teams. They earn every penny they make.
Still, on the outside it looks like a handful of people getting rich off the work of many. Just an observation here, but that looks a lot like a corporation too. Anyway, Nikken wants to change this by having the new people able to make more money right from the start.
A New Focus on Retail SalesThe Nikken compensation plan has always rewarded and encouraged retail sales though very few distributors seem to have figured that out. In a Nikken business you can make money from retail profits from your own sales and commissions on your own and your downline’s sales. As I already said, new people only earn retail profits until they start to move up in rank. Retail profit is also the single biggest piece of income that you can earn on any sale. A few friends and I figured that out and that is how we’ve built our businesses. The biggest portion of my check has always come from my own retail sales, not from commissions on my downline team.
The changes that Nikken has made have been to encourage everyone else to shift some of their focus to retail sales as well. The first thing they did was significantly lower the prices of the products. The obvious goal is to make the products look more appealing to potential retail customers, and that has worked well so far. I had about 30% more customers in November after the change than I did in October before it.
A common practice over the years was for distributors to sign up new people into the business only so that they could save money by buying the product at wholesale. The problem is that when they do that they throw away their income potential from retail profits. The lower retail prices along with a higher price to sign up as a distributor will hopefully stop that practice. Nikken rolled some of the additional business building tools into the signup price to make it less appealing for people looking to save on the retail price of the products, while at the same time lowering the annual cost of building a Nikken business.
Lower Commission VolumeThe second thing that Nikken did was to lower the commission volume on the products. There are four numbers associated with each product – retail price, wholesale price, personal volume and commission volume. The difference between the retail and wholesale price is our retail profit. Personal volume in the US is usually the same as the wholesale price and are the points that we accumulate each month to move up in rank and qualify for the various parts of the compensation plan. The last number, the commission volume (CV) is the amount that we get paid commissions on from our own sales and from the sales of our team.
For the most part, these numbers used to be 75% to 100% of the wholesale price. Now they are in most cases 50% to 75% of the wholesale price. Commission volume is the number that most Nikken distributors have been getting paid on because they focus solely on signing people up and getting those new people to buy product at wholesale. New people make 0% of the CV of the items that they purchase and are purchased by their teams. As they move up in rank they can earn up to 20% of the CV of those purchases. By reducing the CV number associated with the products, Nikken is attempting to get the distributors to think more about building up a retail customer base and not put quite as much emphasis on building a large distributor team.
As a new person you can come into Nikken now, start retailing product to customers immediately, and make as much money as you want. You don’t have to build a huge team, though you can. If you are ready to get started, leave me a comment below, contact me at the email address or phone number in the group member area ti the right, or just click here and sign up now.