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Ambit Energy MLM Compensation Plan Review 2.0

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Introduction to Ambit Energy MLM Compensation Plan

Life’s simple pleasures have a way of being even more pleasurable when your friends are paying for them.  As you may recall, there are two Brads who are responsible for Notebook Crazy.  I am the one who devotes the entire winter to sitting on my keister, while the other Brad, who, to my knowledge, has not eaten a carb since 1998, puts all his energy into looking and behaving in such a way as to make potential buyers believe that the expensive nutritional supplements sold by multilevel marketing (MLM) companies actually work.  To make a long story short, this past New Year’s Eve, I was trumpeting about my plans to sit on my keister all winter, and the other Brad called me out on it.  It ended up with us making a bet as to whether or not I would run a certain number of miles by the spring equinox.  (I’m not going to tell you how many, because some of you will say I am a disgrace to athletes everywhere, while others will say I am a disgrace to couch potatoes everywhere.)  I have been running on the treadmill in the other Brad’s basement for two reasons.  First, in the Midwest, it is too cold to run outside in the winter.  It is too cold to do anything at all except sit on your keister and research MLM opportunities, which is what brings us to our present situation in the first place.  Second, I do not have a treadmill in my basement, since, like so many of us on the MLM scene, by basement is too full of MLM merchandise to have any room for a treadmill.  (Share this article if you feel me.)  The other Brad, however, is such a fitness fiend that, no matter how many MLM products he brings into his basement, they will scurry into formation to make room for a treadmill when he appears at the top of the stairs, the way that the toys in Toy Story do whenever Andy comes into the room.

If I succeed, the other Brad has to buy me dinner at Oley’s Pizza in Fort Wayne.  If I don’t, I have to buy him as much diet Vernors as he can drink until the summer solstice, at which point all bets are off as we arm ourselves with paintball guns and blast each other away to Kingdom come, just like we do every summer.  Of course, he has to drink the diet Vernors in my presence.  Otherwise, it wouldn’t be a matter of as much as he can drink.  It would just be a matter of the other Brad stockpiling diet Vernors at my expense, and that I cannot abide.  That isn’t how you treat a friend.

If you are experienced with MLM, you can probably already see that several careful marketing decisions have gone into this bet.  It has to be diet because, as previously mentioned, the other Brad doesn’t do carbs, so he would have no incentive to bet a three months’ supply of regular Vernors.  It has to be Vernors for several reasons.  First, the other Brad, like any Midwesterner worthy of the name, is partial to Vernors.  Second, anyone who has ever tasted Vernors knows that no one, no matter who they are, can drink an entire can of Vernors in less than twenty minutes.  It’s just too fizzy, and the ginger is just too strong.  If I were to buy the other Brad, for example, as much diet Canada Dry as he can drink until the summer solstice, it would easily make a dent in the financial gains I have made through MLM.

All this is to say, there is a difference between innocently rubbing your victory in your friend’s face and flat out, Dickens novel style exploitation.  There are MLM companies that thrive on the former and MLM companies that thrive on the latter, and the purpose of this blog is to examine which ones are which.  Today, I will be reviewing Ambit Energy.

Ambit Energy Overview and Services

Ambit Energy MLM

 

Ambit Energy is a multilevel marketing (MLM) company that deals in electricity and natural gas services.  The company was founded in 2006, and it 2010, it was the fastest growing company in the United States.  The Ambit website still advertises that statistic, but it does not tell you about the company’s rapid fall from its peak.  In 2014, it didn’t even rank among the top 2,000 fastest growing companies.  If you are familiar with ACN, the direct selling aspect of Ambit Energy is similar to that of ACN, meaning that it sells household services (ACN deals in long distance calling plans) in deregulated markets.  Whereas regulations relaxed for the entire phone service industry in the United States in 1996, and then cell phones opened up the market to even more sellers, ACN can operate anywhere, but in most states, the laws about the sale of household electricity and natural gas services do not allow companies like Ambit to operate.  Ambit Energy currently operates in 16 states and the District of Colombia.  Most of those states are either Texas, California, or somewhere on the East Coast.  The only states in the Midwest where it operates are Ohio and Illinois, which are both located squarely in the Vernors belt, but not close enough for me to have personal experience working with Ambit Energy.  What I know about the pros and cons of the Ambit Energy opportunity, I know from my extensive social network of MLM distributors.

The sales part is simple.  Ambit Energy representatives (called Independent Consultants) sell electricity and natural gas to as many people as they can.  According to the Ambit website, there are more than 250,000 of them.  There is no particular incentive to sell to people you know; in fact, you usually end up selling to anyone who is naïve enough to buy electricity and natural gas from an MLM.  Ambit has gained a bad reputation for its representatives selling to elderly customers and customers with a less than perfect command of the English language, that is, consumers who would be unlikely to notice the fine print about major price increases.  The upside is that Ambit offers customers a Free Energy rewards program, which is like a mini-MLM.  If an Ambit customer (whether an Independent Consultant or just a regular customer) refers 15 other customers, he or she gets free electricity.  There is something very satisfying about that, having your friends pay for some mundane thing that you could probably afford by yourself, anyway. It is probably a great feeling to turn on the lights every morning and think about which of your 15 friends is paying for it. I wouldn’t mind winning a Ferrari through my huge success in the MLM game, but what would really make me happy is if I could eat garlic knots at the other Brad’s expense until I got full.

The MLM Business Side of Ambit Energy

The thing that separates MLM from affiliate marketing is that is costs money to become a distributor for an MLM company.  Some MLM companies cost more to join than others, but it costs $429.00 to become an Independent Consultant for Ambit, which is quite steep.  Almost all MLMs also charge to keep up an active membership in order to be eligible for commissions and bonuses; Ambit charges $24.95, which is on the low end of average.  Try as I might, I could not find the names of the levels of Ambit Energy representatives nor the requirements for advancing to each level.  If it were up to me, I would name the levels Quark, Electron, Volt, Static, Alternating Current, Direct Current, Lightning, and Galvanize.  It is the rule rather than the exception with MLM that you have to work very hard to gain any sort of passive income, and when you do, that passive income is very small.  This seems to be the case with Ambit Energy.

Advantages and Disadvantages

Advantages

  • The Free Energy thing is pretty cool, especially since it is available to just plain old customers in addition to Independent Consultants. When was the last time an MLM company rewarded you with something you actually use?
  • People know what you do with electricity and natural gas. You do not need to go into a long spiel about gut bacteria or rhapsodize about amino acids to sell Ambit Energy’s services, like you do with so many “nutraceutical” MLM products.
  • Ambit sells a service, not a product, so its merchandise is not to blame for the clutter in your basement.

Disadvantages

  • Ambit Energy only operates in 16 states and the District of Columbia. Most of those states are not in the Midwest, where the best garlic knots are.
  • What with the Internet, most consumers are resourceful enough to do research on energy and natural gas prices. If you specifically market to people who aren’t, shame on you.
  • Ambit enjoyed its 15 minutes of fame in 2010 and has been in a freefall since. Do you really want to represent the 2074th fastest growing company in the United States?
  • The membership fee to become and Independent Consultant is very expensive, and with MLM, there is never a guarantee that you will get a return on your investment. By comparison, if you took the $500 that you were going to spend on joining Ambit Energy and staying active for the first three months and instead invested it in a money market account with a 0.02% interest rate, you would have $501 at the end of eight years.  You wouldn’t have to pay 25 dollars a month just to keep your 500 dollars.
  • Ambit Energy has received some very bad publicity for its unexpected price hikes. Most people in the markets where Ambit Energy operates know that.  If you choose to market only to the ones who don’t, shame on you.

Conclusion

The fact that you have to invest a lot of time, work, and money before you come out in the black is not what sets Ambit apart.  That is true of any MLM, and indeed any business.  The reason that you should not invest in Ambit is that it is a sinking ship.  Its unfair practices have been exposed, and its growth has slowed exponentially.  There are better things to do with your money and reputation.  The other issue I have with Ambit is the unexpected price hikes levied on people who can least afford them.  Spin, hype, and BS are the currency of the MLM world and, to some extent, of the business world, but you have to draw the line somewhere.  Selling overpriced vitamin supplements to people who, if they did a little bit more research, could buy the same vitamins much more cheaply at Wal-Mart is par for the course in capitalism.  Talking people into contracts with fine-print rate increases, leaving them so that they cannot afford to terminate their contracts or pay their unexpectedly high electricity bills so that, worst case scenario, their electricity gets shut off and they freeze is another matter entirely.  When it comes to dud products, you can say caveat emptor, learn from your mistakes, and be done with it.  Contracts and agreements, however, are serious business.  Both parties must fully understand their rights and obligations before entering into the contract.  I run on the other Brad’s treadmill so that I cannot lie about how far I run.  If I lose the bet, he will drink the diet Vernors I buy for him in my presence.  Neither one of us will inflate numbers just to get free ginger ale or garlic knots.  That isn’t how you treat a friend, or any human being.

If you live in one of the 34 states where Ambit Energy does not operate, you aren’t missing out on much.  There are plenty of other MLM companies out there for you to join, and I will devote the rest of this winter to helping you make the best choice, except the times when I am running on the other Brad’s treadmill.  If you live in a state that does not have Vernors, however, I feel sorry for you.  Ask any Midwesterner, and they will tell you.

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