In this episode Jonathan Gilliam—founder and CEO of Momentum Factor (momofactor.com)—joins us to talk about the risk of distributors making illegal product claims and income claims on social media and what the industry can do to combat it. We talk about compliance monitoring, reputation management—both services Momentum Factor provides—and what you can do to train your distributors and shape your culture to prevent damage to your online reputation.
Welcome to the MLM.com podcast. I’m your host, Kenny Rawlins. In today’s episode, we’re talking with the CEO and founder of Momentum Factor, Jonathan Gilliam. Momentum factor specializes in brand protection compliance monitoring and management, online reputation management and digital marketing. Jonathan is a business technologist with strong experience in online reputation and social media program management, compliance monitoring, and digital risk management. He has written two books about the industry and we are grateful to have him on the show today.
Kenny: Hey, Jonathan. Thanks for joining us.
Jonathan: Happy to be here. Thanks for inviting me.
Kenny: So I was, in preparing for this, I was looking online and saw that your background isn’t all in direct sales. And I wanted to start out by, I’m curious how you got into focusing on the direct selling space.
Jonathan: Sure. So I guess I could go back to the start of my career. I started out in the internet security space. I had cofounded and was CEO of an internet security software firm. Later I spent seven years in the anti-fraud and security group at Deloitte Consulting. And then somehow landed at a direct seller. I was cofounder there and the chief marketing officer. I had a background in marketing, as well. So I just kind of combined that in, and when I left there in 2009 I founded our firm, Momentum Factor.
Kenny: Give me a little bit of background in what you guys specialize in and what are the biggest threats that direct selling companies are facing today?
Jonathan: Well, to answer your first question, we are an internet risk mitigation firm for direct sellers. So all of our work is online, and we are in the business of protecting direct sellers from threats that come from all the great work and some of the misguided work that the field does online, and others who have an opinion about our industry and such. So we help manage the internet in terms of compliance for direct sellers, and we also do a lot of reputation management in cleaning up Google results and making those more friendly to people and more accurate for people who visit and want to learn more about our companies in the industry. So we’re really about protecting companies online from the various hazards of being in the online world, which of course we’re all on, we’re all in now.
Kenny: Yeah, you know, and I first want to touch on your first point about helping protect companies or helping guide field leaders. Because one of the things that we all know is very unique about this industry is that rather than having a sales force that are paid employees, you’ve got a sales force that are independent consultants, independent distributors, and so a lot of them go out and create their own websites. They’ve got their own blogs, they obviously have Twitter and Facebook and everything. And a lot of the fallout from the Herbalife settlement and the Vemma action that they were under from the FTC centers on, you know, income claims and lifestyle representations. And in talking to company executives, that can just be such a daunting task to say hey, how are we to control what our field is doing? And I’ve heard you speak a couple times and that’s really where you guys come in. How, what tools are out there that make this a manageable thing? Or how do you give guidance to executives in how they can work with their field?
Jonathan: Well, you know, you’re right. It’s a really daunting challenge and that’s the reason for our flagship product called FieldWatch, is we are in the business of watching your field. And there really aren’t a lot of great tools for that. I mean, there are social listening platforms, there are, you know, you can go to Google and look around for violations of compliance. But the internet’s a really big place, and it’s really hard to manage all of the things that hundreds of thousands of reps can say about your company or about your product. And the corporate headquarters is on the hook for whatever the field says. So if the field says this product will cure your disease or this opportunity will make you $10,000 a month, that’s illegal. And the company needs to know about it and needs to manage that through its own compliance and legal processes. So our software helps companies find those violations and then triage them into a manageable queue that they can then build into a case manager. And so we kind of make that process and that search functionality sort of a one stop shop, if you will.
Kenny: I think you touched on something that a lot of people don’t really fully understand, is that you are on the hook for what your leaders are saying, and that you can’t just say “it’s the internet, it’s a big place, people say a lot of crazy stuff,” which we all know is true. But they’re saying that crazy stuff about your company. When you’re working with clients and leaders in the industry, is there training that you recommend? Or how do you recommend people work with their field to try to get ahead of it?
Jonathan: That’s a big question. You know, that’s come up a lot more in recent months. We’ve, the initial focus was all about finding those violators who are doing things that put the company at risk. Now, how do we prevent them from putting the company at risk? You know, most of the violations that happen online, the incidents that happen, are from new people who just don’t know better. They don’t have any ill will, they’re not ill intended. They just want to do the right thing and they’re excited about their opportunity, they’re excited about what the product has done for them, and they want to post it. They just don’t know what’s right and what’s wrong. It gets very legal at some point, right? And so the person says hey, this is my experience, I want to share it. Well, you can’t really do that if it violates the law. So really, a lot of that now is coming to training. So we’re actually developing a new training course here that’s going to be integrated with the FieldWatch system, and we’re real excited about that. We’ve just been working on that in the last few months. But there are lots of training systems out there. Ours will be more specific than those, and not serving the same function. But the other ones out there are, there are courses you can take and certifications you can take that can help a new person, or even a leader, someone who’s been around for a while, understand what it is they can and can’t say and what it is they can and can’t do online. It is becoming a much more heavily monitored and litigated area, and so, as we know from the last few years.
Kenny: So I don’t know if you have any empirical data that can back this up, but I’d be curious just your gut feel. Are you seeing bigger issues with lifestyle and income claims, or product claims, and more dealing with the efficacy or the treatments and things like that?
Jonathan: They are both really rampant, if you will, online. Lifestyle, hey, I’ve got this house, I’ve got this boat, I bought my new car today. Even I can work at home as a stay at home mom is a lifestyle claim. And it’s not legal to say that online to promote your opportunity. So that’s pretty specific and pretty tight in terms of regulations and what you can and can’t do. But product claims as well. I mean, there are lots of great products out there that people have really good experiences with that they really believe in, that if they tell online or in a social post or in a blog this is how this helped me, it cured by Fibromyalgia or it helped me with my arthritis, those are illegal things to say too, and the company could really get in a lot of trouble for that. We’ve seen that in the marketplace the last few years, companies getting warning letters from the FDA and actions. So it’s just really important from a consumer behavior perspective, a consumer protection perspective, to really watch what we say online from the distributor standpoint, and from the company standpoint.
Kenny: Do you guys give any guidance or work with legal teams to help people understand what they can say? I mean, if somebody uses a particular product and they feel better, is there a way that they can put that out there that is not harmful to the company?
Jonathan: Yeah, there’s, you know, there are great lawyers in the industry who understand the limits of what you can say. It is very specific. Although the regulations can be very vague, the things that can be said are specific and there are lists of words, certain words that can be used and certain words that cannot be used. And so typically, you know, it’s illegal to offer up a product that has not been approved by the FDA as something that can cure any type of disease or malady. That’s called a disease claim. So if you post out there this helped me with my pain, well, pain is a red flag keyword with the FDA. Discomfort is not. So it gets down to these real specific words that can and can’t be said in advertising, which is what we’re all doing with these products when we talk about our experiences. And so there are ways to follow that. Now usually the company has a good idea of that, especially if you’re in the nutritional space. The company’s already consulted with FDA lawyers and they know what those claims are. So if I were in the field, I would just defer to what the company has said on their main web page, on their own social media, and use those words. That’s really kind of a safe thing you can do, because the company has been pretty, is usually very interested in making sure they don’t violate the law from the company’s perspective, of course. Not always the case, but certainly following that guidance is an easy way to say OK, I can’t say any of these disease words. I can only say discomfort, made me feel better during the day, I feel better when I wake up in the morning, those kinds of things.
Kenny: Yeah. And I think that goes back to what we talked about a little bit earlier, where the companies need to be proactive in creating the training. Because like you mentioned, you get a lot of new people who are very excited about a product that they’re using, or even an opportunity that they’re a part of, and having that training early on, it can help give them guidance as to what they can and can’t say. Sounds like that can save you a lot of pain down the road.
Jonathan: That’s true. It’s all about education, enforcement, training, and repeating, right? Because there’s always new people coming into an opportunity, and those people have not yet been trained. If you’re waiting until your annual convention to train up your team, then you’re missing a lot of people through the year who’ve come on and come off, who haven’t got that training. The other thing is most companies are really interested in market training, in business development training and helping you understand how to build your business, because that’s where their revenue comes from. And so very often, compliance training is second fiddle to that in that the resources, the creativity all go into the business building side of the business. And what we want to do is help companies implement training that works with people who really need it, which A) are new people, and secondly it’s people who have already violated the compliance terms of their agreement. So that’s something that we’re kind of running with in terms of let’s put the training where it needs to be had, which is in the hands of people that need it. So, but yeah, I think training’s really important. But you know, making sure that you enforce compliance across your field is, I think, equally as important, because that’s where regulators are looking. They’re looking on social media. They’re looking on Google. They’re looking for the one out there who’s saying I cured my cancer with this energy drink. Don’t you want to use it, too? And that is a really, really risky thing. But they’re out there, they use the same tools anybody else does when they’re searching out or direct selling industry products and services. So it’s really important to do the enforcement, it’s really important for the education, it’s really important for training, certifying those kinds of things. All of that kind of builds the fence around the risk of the company.
Kenny: Yeah. Well, I think you also made a good point in how important enforcement is, because that also is going to, you know, things like that can become kind of, they can get a momentum behind them where if you’re not enforcing it and a couple people start making those claims, that can spread throughout your field really quickly, whereas the reverse is true. If you’re doing a good job of helping to train people, then also as people step out of line correcting them, not necessarily in a punitive way but, you know, recognizing that people for the most part do have good intentions, and working with them there, that can make a big difference, I’m sure, as well, because you create a culture of compliance.
Jonathan: Yeah, and that’s something that we’re seeing some really innovative companies do. They’re building this culture of compliance. We had an event in January with, where Al Bala, the CEO of Mannatech was the MC. And he gave the first talk that day, and talked about how they have made a culture of compliance actually attractive as one of their sales points. Not just hey, don’t do these things, we have a culture of compliance. More of a hey, I can present you my opportunity, understand that we have a culture of compliance and that helps sustain your business, that helps protect your business. Rather than something you just kind of have to do as an afterthought. So they’re really integrated the idea that compliance is a strategic advantage, and not just this kind of thing, “oh gosh, I have to go take my certification course.” And they’ve integrated, they’ve brought in the sales team, the marketing team to really kind of understand how that can be enmeshed in the company. So I think what they’ve done has been really amazing.
Kenny: Yeah, no, I appreciate that insight, because I think that is very important. I want to switch gears with you for the last few minutes that we’ve got. We’ve talked a lot about kind of within the industry, how to handle reputation and compliance and things like that. It’s an interesting time right now because we’re getting a lot of pressure from outside of the industry. And in fact, I was on your guys’ website, momofactor.com, and learned something that I had no idea. I saw that AMC is looking to do a show about a woman who basically is involved in a scam, if I understand it correctly. And they’ve got Kristen Dunst and I think it’s produced by George Clooney. What are you guys seeing from kind of threats to the reputation of the industry from outside of the industry?
Jonathan: You know, what we’re seeing is that those threats are really kind of almost at a many decade high. You’ve got tina.org out there that is really challenging the industry on the compliance side and on the reputation side. You’ve got the recent John Oliver takedown which was a good hour long diatribe against the industry. You’ve got this new documentary, or not documentary, this new dramatic comedy, I guess, that Kirsten Dunst is in that’s going to be a series on a, what a pyramid scheme did to her. Not a direct selling business, but most people can’t really easily make that distinction without a lot of education. So you’ve got these press, these things happening in the public eye that are really challenging. You’ve got the whole Herbalife thing with the short sellers and the bad press there. So you know, we’ve never really seen, at least in our collectively few decades in this business, this kind of vitriol around the business.
And really, you know, it’s affecting a lot of people who really have a wonderful business with wonderful products that they bring people into and introduce to, and the way the wonderful, great companies in this industry and this channel works is by really helping people. And that’s the basic, basis of what we do. But then you have outliers or maybe bad actors who really kind of give the industry a bad name. And then you start to see that bubble up in the culture. I think the cultural issues that we’re dealing with right now from a reputation standpoint are more important than anything happening. I think once you get into pop culture with John Oliver and an AMC movie and other things, you really start to erode the credibility of the industry in general. So I think it’s really incumbent on the industry to protect its name, to protect its image, and I’m not saying we should go out and buy a bunch of ads talking about how great the industry is.
I think it starts at home. It starts with our reputation online, it starts with cleaning up our Google results. It starts with educating our field on what they can and can’t do online and what they should and shouldn’t do online even outside of compliance. Maybe it’s, should I go respond to this blog and tell them how I really feel about my company so I can counter all this negativity? Well, there are reasons to do that and reasons to not do that. And so I think as an industry, or as a channel, we need to understand how to protect our own companies, which will then protect the rest of the business, the rest of the channel. So it’s a collective effort, but it starts at home and making sure that our fields understand it, that our corporate offices understand how to protect ourselves from a reputational standpoint. Because if we have a field that’s out there doing things that they shouldn’t be doing, saying things they shouldn’t be saying, it’s going to be picked up into the culture and it’s going to seep in, and you’re going to start to have a lot harder time recruiting people, a lot harder time selling products. Your Facebook feed and posts will be unfollowed and unread because you’re just another one of those people trying to sell me something, rather than doing all the good things that we do.
Kenny: Yeah. You know, I appreciate that take, because I 100% agree with you. I think the direct selling space is a wonderful channel that can do a lot of good and does do a lot of good. You know, at the heart of most of these products and most of these opportunities is the desire to help people. I, and I’m sure you see this firsthand, meeting with the executives and meeting with leaders, it is something that they’re passionate about, is helping people. But I think you really gave some great insight there in how we, as an industry, it all starts with us. If we do a good job helping to train our field and then monitor the field and make sure they’re acting in a compliant way, it takes away a lot of the ammunition that people have. And there have been some bad actors of the years, which is unfortunate. But I think it really just, like you said, is incumbent upon us to make sure that we’re working in a way that doesn’t give ammunition to pop culture for things like yeah, John Oliver’s take and things like that. And let the actions of our field and our companies speak for themselves and be proactive in that.
Jonathan: Yeah, I totally agree, Kenny. I think that just all of the compliance and reputational risk areas of direct selling can be solved by us—can be solved by the channel itself. We don’t need regulators to tell us to do it. We can do it. And that’s the struggle that we’re in now, is that we have regulators fencing us in and telling us from their perspective what we should be doing. And that really limits our ability to do the great work that we do when outsiders who don’t understand our channel come in and tell us how to do it. We understand it, and so I think it’s just really incumbent upon us, upon the associations, upon the corporate entities to really put their money where their mouth is and really fight to retain the great work that we do in this channel. I, again, I think right now is a critical moment, which we haven’t seen in the lifetime of this firm, and most of us haven’t seen since the 70’s. And so I think now is the time for people to really understand what they need to do to keep the channel safe. And that’s watching our field and responding and making sure that what we do, that it’s always going to be public now that we’re all online, is of an honorable and honest nature and that appeals to the greater good.
Kenny: You know, I really, I appreciate that insight. And I know we’re close to out of time. I appreciate your time. I want to get one last thought from you. What do you see that’s the most exciting thing going on in the industry right now, and where do you think we’ll be in the next couple of years?
Jonathan: You know, that’s a good question. I think as far as the next couple of years, I think the wheels have been set in motion for tighter regulation on the industry. I think the Vemma and Herbalife agreements are settled, and the FTC has their marching orders. There are lots of rumors about what Trump will do. Maybe the deregulation will help us, that sort of thing. But the regulatory fix is in, and the people at FTC and FDA are going to continue to do their work. They still have their jobs. They might have a little bit different guidance at the top, but they have their order which have come from the recent agreements. The danger to this channel is complacency, right? Some companies tend to put their heads in the sand or they wait til the first soldier drops, right, in this business? Well, I’d say it’s already happened. Two soldiers have dropped, and there are more to come. So we have to be vigilant, and again, in protecting.
To answer the other part of your question, I think the most exciting thing from this renewed focus on us is that A) we’re being challenged, right? We’re being challenged by regulators, we’re being challenged by outsiders to be better. And they’re challenging us to focus on our customers, right? That’s what we’re here to do. We’re not just commission plan builders. We’re innovators, we’re product experts, we’re problem solvers, and we’re blessed with it still. Even with all the technology disruption that’s happened out there, you know, we have a very relevant sales channel with which to grow our businesses and improve lives and help others. You know, it’s truly remarkable the opportunity we have. Now if we can focus on customers and products, I already feel the shift happening among even the really big MLM companies, the really big network market companies that are really about building their plan. They’re starting to focus on building more customers. They’re changing their commission plan. I think that’s exciting, because what you have there is better products, more innovative products that people really want to buy. And so the shift is happening. That’s pretty exciting.
Kenny: Yeah. And I appreciate that, because I totally agree with you. I think while it can be a little bit intimidating to have that focus of regulators and pop culture on us, I do think it gives us a challenge but also an opportunity to really shine, and to come out of this and have people better aware of some of the great elements of network marketing. And my focus in my career day to day is compensation plans. And so people think oh, well, does this bother you that there’s so much negative focus? And really, the answer is no. I’d rather see us focused on the products and on helping people, and I understand as well as anybody that the compensation plan is very important. But really, at the end of the day we need to be an industry that’s helping people, that’s providing quality products to customers who want them, and then yeah, we’ll continue to innovate and help people to, you know, drive their desire to be entrepreneurs. But that needs to be the forefront in the industry, is the products and the innovations and using the power of peer to peer selling.
Jonathan: Yep. And that’s one of the things that really is the bright spot, is the social media world that we’re in has just been tailor made for what we do. And if we don’t screw it up with a bunch of false claims or reputational risks or just over posting and over communicating to people, you really have a chance to leverage that. And then we have leveraged it into what is just really a new channel. We didn’t sell like this ten years ago, and now we do. So I think that’s real exciting, and where that takes us, who knows? But I’m glad that you and I will be there for the ride, Kenny.
Kenny: Exactly. Well, thank you for your time, Jonathan. People can check out your website at momofactor.com, and we appreciate you making the time for us.
Jonathan: Yeah, thanks so much. And I’ll do it again whenever you’re ready.
Kenny: OK, thanks Jonathan.
Jonathan: OK. Thanks Kenny. Bye bye.
Kenny: Thank you again for joining us for today’s episode of the MLM.com podcast. You can support us by rating us on iTunes or reaching out through MLM.com. We’d love to hear your feedback and the issues you would like to hear addressed. Also a special thanks to Jonathan for his time and expertise. And a thanks to the MLM.com editorial staff for their support, especially Jana Bangerter and Adam Holdaway for their production support. I’m Kenny Rawlins. I hope you’ll join us next time.