A Closer Look at the Elusive Herbalife, the Sales Pitch, and ‘Mentors’.

Sales & What Could Be.

Sales done right is helping people or at least the perception of helping people.

Premise: If you are doing sales correctly, you are fundamentally helping people or at least deeply understand their needs.

1. You have identified a need which needs to be addressed (whether psychological or more concrete).
2. You have found a way of addressing the problem through user discussions or by shipping your product and interacting with the general community.
3. You know how to reach your customer, connect with them and understand their problems.
4. Based on feedback and responses you improve the product and how you reach out to your customers. If your customers don’t seem convinced, either the solution is not correct or you have not communicated it well enough.

This whole process is when sales done correctly, this is especially true for new organizations(for profit or non).

Let’s take a look at an example.

Herbalife, Mentorship, and Sales

I was doing some work on my laptop at a local Starbucks the other day and it just so happened that the individual sitting next to me was conducting recruiting for a multi-level marketing firm, Herbalife.

Welcome to Starbucks, the home of startups, small businesses on the go and multi-level marketers hoping to strike it rich by being coachable, following the process and obtaining financial freedom.

Now, I loathe multi-level marketing firms, I automatically think that there is no value and that it is very parasitic and top down. I think that they are organisms that prey on those who are looking for opportunity and different ways to get ahead and break out of the rat race.

I think that there are a variety of other ways that the human capital could be diverted to another vehicle that could bring about better change and that really grinds my gears. But I digress. Kind of.

But let’s set the scene.

The recruiter is sitting to the table by me, he waves to two people walking in. One of them he knows, (he’s part of the Herbalife clique, he’s ready to get started in following the process) the other is the potential inductee into the Herbalife family, drawn in by a potential opportunity to change his life for the better.

The recruiter was impressive, very on point. He began the conversation by letting the potential recruit know that this meeting should only take 30 minutes and set a timer for fifteen minutes to stay on track.

The first part of the conversation was to establish a background and familiarity, to tell a story.

This story particular story included a bit about the recruiter/opportunity giver, we’ll call him Joey.

Joey, tells Tommy (the candidate), how he got in touch with the opportunity. Joey was a frat boy, he partied hard, he was in leadership positions in the frat and lived a great life. You know how that life goes.

Joey states that he had to leave college and come back home because of an illness his father acquired. Joey was also in entertainment industry with a budding career, everything was going good until he was introduced to this opportunity.

This was simply an offer he couldn’t pass up. He acted on it right away and here he was talking to Tommy.

Joey the recruiter turns to Tommy and asks if he’s following and if he has any questions.

None so far. Great.

Joey then gives Tommy a vague bit of the breakdown of the opportunity. Wouldn’t it be great if he were able to buy Under Armour and be paid for it?

The business works because it is strictly word of mouth. Revenues aren’t cut by advertisement expenses, they are allocated for their people.

If Tommy can follow the process, then he can make at least $60K. How does that sound Tommy? What does that mean to you?

“Wow!” Tommy exclaims, “that’s almost what I make now per year. If I can make that much with this opportunity then that would really change some things for me. I would be able to pay off my debt and more.”

“Great”, what’s really awesome about this opportunity is the fact that it’s not DIY, you are given a system and mentors to hold your hand and guide you step by step throughout the process.

It’s like opening up McDonalds, except without the significant costs. See, opening up a McDonald’s franchise would cost you an arm and a leg, you would have to have at least $400,000 or more to open one up.

You might be able to earn substantial profits but you have to give a fee to McDonalds and you have to get the money together to be able to invest.

Now, we both wouldn’t be here if you had the money to invest in a McDonalds franchise, right?

But there is one interesting part of opening up a franchise with McDonalds, the guidance. McDonald’s corporate will give you some guidelines, they will connect you to suppliers and the equipment, they give you everything to get you successful.

What I love about this opportunity is the fact that we also have guidance, we have mentors, we have podcasts, books and even conferences. In the conferences and the events we hear about what successful people in the business have overcome, we hear about what they’ve gone through and what their life is like now and what they are earning.

Of course, none of this is to brag, it’s more about understanding that if the process is followed, success is within reach.

Joey, then states “I hope it doesn’t come off as if I’m selling you something because I’m not, the only thing I am selling is the opportunity to be mentored by some great individuals who have been there and done that. By people who have gone through the process, earn a lot and are really good at what they do.”

Now, it’s Tommy’s turn to talk. Joey asks Tommy, what he likes about the opportunity and why he is interested. Tommy rattles off a few things.

Joey, asks the recruit if he’s interested in the mentorship and why he is right for the mentorship? He asks Tommy if he is coachable .

Tommy responds with yes, he is interested in mentorship and growing and that he is right for mentorship because he’s committed, coachable, hard working and reliable.

Joey, says that’s great. You see, I need to make sure that you are coachable and right for mentorship because I want to make sure that the people we bring on board are right for our mentors. Our mentors are interested in providing their valuable time to people who are committed and serious about the opportunity.

Perfect. The next part of the process is to attend an event with our mentors. We are having an event this coming Thursday at 7 PM in a Sheraton Hotel, will you be able to make it? This is important because it’s the first meeting with the mentors and it’s important to proceed in the process.

Tommy says yes I can make it.

Perfect.

Joey — I think this is going to be great. I think that you are right for the position. You seem like a winner to me and I only want to work with winners. I’m counting on you, I’m going to leave this meeting and get on a conference call with our mentors and let them know that you are interested and that you will be meeting them.

See you on Thursday.

Joey understands the sales process that we’ve outlined early on. He practiced his pitch. He stopped the timer, and completed the Starbucks meeting within 30 minutes.

1. He knew the problem and identified a need that needs to be addressed— this one is very psychological and concrete. The potential recruit needs an opportunity to earn more to concretely change his life, get out of debt and live better.
2. Joey has the solution. A system that will change the lives of Tommy’s all around.
3. Joey knows how to reach his potential recruits/customers/salespeople. He will find them through word of mouth and others from his network will bring other people into the network.
4. Joey understands the needs of the consumer and crafts his message accordingly. He never talks about the process of selling, what is being sold and how it will all work out. Everything he talks about is centered around Tommy, and how Tommy will be able to change his life if he takes a simple step and meets the mentors. If Tommy says yes, he is now progressed into the next level of the marketing funnel.

The initial part of the sales funnel is the easiest for the potential recruit, all the potential recruit has to do is go to a meeting. He’s got something to lose, he already stated that he’s reliable and trustworthy, he doesn’t want to let his buddy down (the person who referred him to the opportunity). He’s invested and he doesn’t want to be the bad guy. He doesn’t want to let himself down or the referrer.

The ball is now in Tommy’s court. He can either be a person of his word or he can opt out.

It’s just like two dots, or candy crush or angry birds, the initial process is really simple for the new user, all they have to do is just this one thing, then it gets a little harder and then a little harder but if the system is designed properly, they will keep on progressing.

Joey never gives it a name, he never talks about the process of selling, he never talks about the fact that they’ll be selling supplements, questionable energy drinks, etc. He just talks about the mentorship, and taking the next step.

Tommy is qualifying himself and doing the work, it’s all up to him now and by the time that meeting is completed, Joey makes the conference calls, and he’s waving to the next set of people.

Same pitch. Same story. Same solution. Somewhat tailored to the new recruit. Joey is following a process, he’s a true believer, he’s about it and he’ll keep dealing hope and building his network.

Joey believes that he is a part of something, that he’s building something and that if he follows the process to letter, that he too, will become a mentor one day. All he has to do is keep on working out, take his shakes, and keep talking to more people.

Herbalife Meeting

I’m fascinated by Herbalife because it is a public company. HLF (NYSE) is currently trading at $53.26.

Wikipedia states that HLF or “Herbalife Nutrition is a global multi-level marketing corporation that develops, markets, and sells nutrition supplements, weight management, sports nutrition, and personal-care products. The company was founded by Mark Hughes in 1980, and it employs an estimated 8,000 people worldwide.”

Herbalife seems to be topping estimates and growing. They’ve had a rocky road, Bill Ackman tried to take them down, but Herbalife pushed back.

From Yahoo, Goudis, the CEO of Herbalife, “At its core, Herbalife is a direct seller of nutrition products. The more people — or ‘entrepreneurs’ as Goudis calls them — selling its products to the masses, the better it does. If these sellers could hawk more product with existing contacts, Herbalife wins even more.”

I may not like the process but Herbalife is definitely doing something right.

Goudis again, on answering what Herbalife does “We are a global nutrition company and we sell results. It’s that simple. We compete in categories that are growing such as weight management, wellness and sports.” If you look at the five-year compounded annual growth rate for weight management its 5.3%, wellness is 5.8% and sports is 11%. We play in the mega trends that are going on around the world that are undeniable. One is the obesity epidemic. Another is healthy aging where people want to be healthy as they age. Another is skyrocketing health care costs.”

Herbalife has a process, they have believers and they’re growing. Herbalife and its mentors clearly understand sales, target markets and customer personas.

Herbalife gets high off of its own supply while also selling to others and wins. Getting high off of its own supply is part of the business model.

Despite the bad press, the analysis done on the company, and the fact that everyone knows that they are an MLM, they are still selling.

I’m starting to think that there is something to reality distortion.