The Cross Sponsoring Dilemma

Sep 4, 2014Company Leadership

by Michael L. Sheffield

Although our firm focuses on consulting and coaching support for Network Marketing executives, I, as an MLM company startup resource, regularly receive questions at our website from distributors seeking advice. The following question was posed to me recently, and I thought the DSJ readers might benefit from my advice to this frustrated distributor.(This is one in a series of articles by MLM company startup expert Michael L. Sheffield.)

Question: I recently joined an MLM company and have been building a sales team. Last week, one of my downline members attended an opportunity meeting and was solicited by another distributor to join a completely different company. I am concerned about having my people go to meetings now. It doesn’t seem fair. What should I do?

This is an issue of questionable integrity and unethical behavior as well as a direct violation the Policies and Procedures, Rules and Regulations mandated by most MLM companies today. Obviously, you have worked hard to recruit your downline. Motivating your distributors into action and building product and company loyalty is hard enough without being sabotaged by others in your same company.

As you would expect, there are many companies looking for ways to recruit new distributors. While I, as an MLM company startup consultant, personally recommend monogamy when it comes to the company you represent, it is not uncommon today to see people be members of more than one company at the same time. You should always assume that this is the case. This is usually allowed under the company rules, but there are usually strict rules a company sets forth pertaining to conduct around what is called “crossline sponsoring.

Crossline sponsoring happens when a distributor performs the act of sponsoring or attempting to sponsor someone within a company where they are both members into a competing company’s business opportunity. Crossline sponsoring usually indicates the violator is crossing lines of sponsorship to steal another company member’s recruit. However, it can also mean that they solicit someone that was not recruited directly by them but is somewhere in the depth of their own downline and sponsored by a downline member.

When you joined your company, you signed a distributor contract. If you look closely at it, it will probably indicate that the Rules and Regulations set forth by the company are considered an extension of this contract. These regulations are usually issued as a separate document and inserted in your distributor manual. Crossline sponsoring is most likely a restricted action in this Rules and Regulations document. If not, it absolutely should be.

Crossline sponsoring, if discovered, usually results in a severe reprimand of the violating distributor by the company that many times leads to termination of the offending person’s distributorship. The reasons are obvious. Much of the bonding of the organization’s members is developed during business opportunity meetings, rallies and training programs. You want to feel that these meetings are a safe haven for your new or potential recruits. In fact, my experience has shown that the social interaction with other people in the same company but different sales organizations is critical for building good corporate culture through group dynamics.

One thing that makes this system work is development of trust and a spirit of cooperation among all the different distributor groups. The Rules and Regulations of the company that have been agreed to by each distributor should create a level of confidence that the company will offer protection from unethical people who attempt to steal away a fellow downline distributor for another company opportunity.

As an (MLM company startup consultant) expert witness for the MLM industry, I have testified in a number of cases related to this issue. Many times the violating person may not have read the rules and doesn’t realize that this is ethically wrong. Unfortunately in an equal number of cases, they are just breaking the rules. I should point out that the rules usually say that they can talk to the people that they personally sponsor about other opportunities but not anyone deeper in the genealogy tree.

The best way to protect yourself from this situation is to build a strong and positive relationship with your sales organization. People don’t jump ship that easily when they have bonded to their upline sponsor, the company products and the company itself. It is not out of order for you to register a complaint with your company on this issue if you are absolutely convinced that this is happening. It is your business and income that can be affected. Protect your interest like any serious business person.