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Sprint’s Framily plan isn’t Amway, but it’s a distant cousin of multilevel marketing

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Since writing my post about Sprint’s interesting spin on the family plan on Tuesday, I’ve received a bunch of comments about how similar Sprint’s(s s) Framily program is to the business model of Solavei, a virtual operator that adopts the same group marketing techniques as Amway to sell its service.

Those comparisons are definitely apt. By allowing customers to collectively accrue discounts by inviting others into their “Framily,” Sprint is turning its subscriber base into recruiters, which mimics Solavei’s core business model. But there are some big differences in how the two programs work, which hopefully will allow Sprint to avoid the rather nasty reputation Solavei has developed.


How Solavei works

Solavei is basically turning its customers into entrepreneurs — or spam marketers, depending on how you look at it. As a mobile virtual network operator (MVNO), Solavei is basically repackaging and reselling T-Mobile’s(s tmus) data and voices in plans ranging in price from $39 to $69 a month. But for every new customer a Solavei member recruits and keeps on the network, he or she gets $5 a month in cash.

Solavei isn’t a true multilevel marketer in the exact same sense as Amway in that members don’t earn money form their recruits’ recruits or their recruits’ recruits’ recruits and so forth. But there doesn’t seem to be any limit to the number of customers a Solavei member can recruit to that single tier — and thus no limit to the amount of income they can earn each month.

Solavei Visa cardConsequently a lot of Solavei customers have used the program to set up side businesses. Many of them have opened what amounts to online storefronts (an example). Solavei even hosts sales contests for its more ambitious recruiters. And of course, this model has created a world of spam.

When Solavei first launched last year, my Twitter account and the comment boards on my Gigaom posts were hit with a barrage of marketing marketing pitches from over-enthusiastic Solavei members. Since then Solavei has reined in many of its most aggressive recruiters, but we’re still regularly deleting Solavei third-party marketing spam from our comments sections.

I find such tactics distasteful, to say the least, and I’m sure many of you agree with me (don’t get my colleague Kevin Tofel started). But a lot of people have embraced the model. Solavei is now well past 100,000 members, which is pretty good for a boutique MVNO.

How Framily works

Framily is a kind of group plan, but instead of sharing buckets of gigabytes, minutes or messages, all members share in a group discount. Since that discount is $5 off your monthly bill for every member beyond the first, that’s a big incentive to both recruit and join a Framily group. It can easily rack up to hundreds of dollars a year in savings per member.

Sprint logo sign

The incentive structure is similar to Solavei’s but the big difference is there’s a limit to the discounts you can get, $30 per person. That means there’s no benefit to anyone once a Framily Plan grows beyond seven members (there’s an upper limit of 10 people on the same plan, as well).

Nobody is going to make a business out of Framily. And the incentives just aren’t there for anyone to engage in some of multilevel marketing’s worst practices. No one is going to go knocking on your door like the Avon Lady, and no new acquaintance of yours is going to invite you to see an “inspirational speaker.”

Sure, I anticipate Framily might produce some uncomfortable scenarios — that annoying cousin that constantly pesters you to become a seventh for his Framily group — but nothing like the abuses we see from Solavei’s self-appointed sales force.

Why Framily might work

I think Framily is quite smart — though the name is pretty stupid, it’s definitely sticks in your head. Sprint’s been in the doldrums years dealing with bad merger decisions and network missteps. Since its acquisition of Nextel, it’s seen its share of U.S. mobile subscriber market shrink from 22 percent to 17 percent. Now that its major investment from SoftBank has closed, Sprint’s financial house finally is in order. It’s time to start growing again.

the-godfather-family-album05Framily certainly isn’t a magic bullet, but it seems to me an ingenious way to supplement Sprint’s own direct marketing efforts. While a nuclear family will probably already be on the same family plan with a unified bill, Framily targets extended families, couples who haven’t yet merged expenses and even roommates. It’s a good way for Sprint to lure in new customers while incurring few acquisition costs

So yes, Sprint is copying Solavei and Amway. There’s no doubt about that. But it definitely seems to be borrowing the best aspects of the MVNO’s marketing model, while sidestepping the darker elements.

Multilevel image courtesy of Shutterstock user AnatolyMSprint store photo courtesy of Shutterstock user Susan Law Cain

13 Responses to “Sprint’s Framily plan isn’t Amway, but it’s a distant cousin of multilevel marketing”

  1. Any time I hear Solavei, I know its nothing more than an MLM/Pyramid scheme. And the name really leaves a sour after taste in my mouth after I say it. I’d much rather say Saliva since most Solavei “entrapenuerers” seem to salivate at the idea of making money off their friends and family, Supporting a MLM is not something I’d ever think about doing, no matter who it may benefit, not practical or eithical. Sorry, but in MHO I’ll stick to much better and more practical marketing practices and pay for something I know will stick around for a while.

  2. I’m waiting for someone from Solavei to use the phrase “Learn this one weird trick…”

    Sprint’s Framily Plan has another advantage, by the way. If somebody wants to leave the Framily, all you need to do is find another friend or acquaintance who would like to join instead. Since they don’t have to share your account or minutes or data in any way, there’s no real downside to either joining one or leaving it.

  3. Chris Crespo

    I get more spam from non MLM companies then I have ever got from any one else possibly Including the mayor carriers. I dont have a large network of firends in Solavei. I’m not a professional marketer either, but I have saved hundreds of dollars last year thanks to the help from people in Solavei that don’t profit from me having joined!

  4. While sprint just make an income out of every single customer they can catch tru advertising Solavei and Ryan Wuerch its been sharing more than 80% of the company profit. If you think Solavei is mobile service only just wait..remember amazon when only sells books? Some people have eyes to see others have vision to create. We share with others what is good for us same way you share what you most like. Since when is a bad move to help others to save and get benefit?

  5. Whike sprint just make an income oit of every singke customer they can catch tru advertising Solavei and Ryan Wuerch iys been sharing more than 80% of the company profit. If you think Solavei is mobile service only just wait..remember amazon when only sells books? Some people have eyes to see others have vision to create.

  6. Jeff Mills

    As you can see Solavei reps are passionately sharing… although… it mostly due to the financial benefits of enrolling folks…

    You’ll see a lot of Sprint, ATT and Verizon people with no financial incentives whatsoever on how great their network is. I like how Solavei spends it ad dollars on people instead of Madison Ave people.

    Get stuff Kevin. Good insights into different models that both do work inside the mobile/social commerce world.

  7. My family has saved over $2,880/year since joining Solavei. We no longer have to pay a mobile service bill for our 4 phones and Solavei pays us enough to cover our grocery bill every month. I’ve never had other mobile service companies offer to pay any of my expenses. We happen to own 2 other businesses and I’m not aware of the practices this author is claiming. The people that we’ve signed up with Solavei are grateful we shared Solavei with them because they are saving money, too. How is saving money and making money a bad thing? It’s been the easiest decision we’ve ever made.

  8. Douglas Hayse

    rather pay an individual than a large corporation any day, I would rather take a recommendation from a friend than a stupid TV commercial I do not understand the stigma or ignorance referenced in this post.

    • Kevin Fitchard

      Thanks for your comments, Dwayne, but you’re pretty much making my point: a referral link, which you profit from, disguised as a comment. You don’t want me to judge Solavei member’s marketing tactics, then quit proving me right.

  9. Yes, there are similarities…Sprint is smart for getting into the “social” part of commerce. Solavei is creating the first-of-its-kind social commerce network. Mobile service being the 1st service offered, but far from the last. Solavei is at the 300,000+ member mark and growing even faster now with current changes made. It’s crazy to not become a Solavei member. Sprint allows you to obtain a great discount, but Solavei allows you to have FREE mobile service and even earn if you choose. I can’t speak for the “dark element” that you refer to, but just know that Solavei’s vision is to change the lives of millions of people, one person at a time. How? By allowing the members to obtain products and services that they ALREADY use at a much reduced rate if not FREE. No other mobile carrier offers FREE or even comes close. And mobile is only the beginning. Remember when Amazon was only books? Just wait….