ACN Business Model and Marketing Strategy

Four entrepreneurs got together one day in 1993 and decided to form a business plan. They had a legal pad, ideas, and a mutual dissatisfaction of the direct sales experiences that were available in the jobs market at the time. Together they determined that their new company should be able to correct the mistakes that all four had encountered in previous positions. Thus the ACN business model was born.

In many ways, the ACN business model is based on multi-level marketing. Independent sales agents, patterned after the Amway business model, are called Independent Business Owners [IBOs]. Instead of selling laundry soap and makeup, however, ACN representatives are selling telecommunications services, television services, and even energy to the customer base. Today ACN is operating in over 20 countries and is based in Concord, NC.

Why Is ACN An Enticing Business Opportunity?

What makes ACN an intriguing sales opportunity is that the company offers services that people are already using. Many of the services can be switched to ACN effortlessly and customers save money because of it. Salespeople then earn a commission on each sale they are able to make. Customers don’t change their buying habits, get the high speed internet, VoIP, and phone services that are needed, and everybody wins.

ACN IBOs also have access to two downstreams instead of just one. There is the traditional downstream where residual income is earned by salespeople that have been directly recruited to a person’s team. Salespeople also earn a portion of the utility bills that they have contracted with customers as long as the customer stays signed up with ACN.

The ACN Business Model Has Seen a Few Hiccups

As the legal counsel for ACN often says, “We know that there is bad press on the internet about us. We just choose to ignore it.” The bad press originates from two incidents that occurred in Montana and Pennsylvania respectively. In Montana, a Cease and Desist order was issued against ACN because of what was deemed to be a pyramid scheme structure. After investigation, however, Montana discovered it was an isolated incident of local IBOs acting inappropriately.

In the Pennsylvania incident, there were numerous complaints of IBOs “slamming” customers. Slamming refers to the changing of a customer’s utility without their explicit permission to do so. These cases were also locally isolated and settled by ACN.

A pending class action lawsuit is also pending in North Carolina.

How Does ACN Make Money With Their Business Model?

There are two ways that ACN profits. The first is from the actual sale of utilities and services that customers need. Natural gas, electricity, landline phones, and several other services all fall into the categories that ACN manages. They make money from the energy that is used and share a portion of those profits with sales representatives.

The other way that ACN makes money is with the buy-in process that new IBOs must use to get started as a sales representative. The Trainer application fee is $499 and is a required cost. There is also an annual renewal fee of $149 that must be paid every year. ACN also offers IBOs an optional Business Assistant that is $40 per month. There are also regular ACN training events that cost more than $100 to attend, plus expenses, that IBOs are strongly encouraged to attend.

There is a 10 business day cancellation period for new IBOs. A cancellation within that time will give the IBO a complete refund of their fees. Cancellation after the 10 business days will not bring a full refund. IBOs must also maintain a minimum number of customer points every month. Personal commissions are at 1% until 30 customer points are reached. Each point is reflective of $1 per month earned. It takes 20 customers at $40 per month to earn this level of commission. To earn 10% commission, representatives must have 60 customer points per month.

This means some representatives are receiving 1% and others are receiving 10%. ACN pockets the rest.
One interesting point in the ACN business model is that cold marketing techniques are not allowed. This limits IBOs to selling services to personal acquaintances or increasing their downstream.

As with an MLM opportunity, making money can be difficult and it requires the building of a downstream to be effective. The ACN business model may not be for everyone, but it has helped the company to build an effective international presence.

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