Brand ambassador programs have moved from a fringe marketing element in the mountain bike industry to a strategy that’s front-and-center for many companies. Most ambassador programs strive to improve the perception of a brand in the public eye through product placement on social media, blogs, in videos, and even in real life. Ellsworth recently opened their brand ambassador program for applications, and the benefits the program offers ambassadors caught my eye.
Ellsworth will provide these benefits to their ambassadors through the new program:
- 20% off a bike purchase for YOURSELF ONLY
- 20% off any softgoods or accessories in our web store
- A referral code for friends and family to put some extra cash in your pocket
- Random swag sent to you throughout the year – just for being rad
- Features on our social media and website
- Some riders will even have the opportunity to test and review new product!
Not only is the Ellsworth brand ambassador program designed to promote the brand, but it is also designed to compensate brand ambassadors when they sell a bike. Suddenly, this program seems to shift from one where regular riders are merely repping the brand, to one where riders are trying to move product. This sounds very similar to network marketing.
What is network marketing?
Network marketing is a business model in which company sales reps must purchase the company’s product for demonstration purposes, usually at a discount, and then attempt to sell that product to people they know, aka people within their “network.”
The Economics of the Ellsworth Ambassador Program
On the surface, the Ellsworth ambassador program appears suspiciously like a network marketing opportunity. To begin, the ambassador has to purchase an Ellsworth bike with their own money, at a 20% discount off MSRP. I reached out to Ellsworth to see how this price compares to their dealer cost, and Ellsworth President, Jonathan Freeman, responded saying, “In all cases, this is not below dealer cost. We don’t publicize our dealer margins.”
Once the ambassador has purchased an Ellsworth bike–with Ellsworth making more money off the sale than they would from selling a bike to the dealer–the ambassador now has a discount code to distribute to their friends and family. By distributing the code, the ambassador makes a commission off the sale, the customer receives a discount, and presumably, Ellsworth still makes more money off the referral sale than they would by selling to a dealer. While the website says this code is for “friends and family,” according to Freeman, “there is no limit to the number of new Ellsworth owners an Ambassador can bring into the Ellsworth Nation.”
Is Ellsworth creating a network marketing business?
Before we break out the pitchforks and burn the place down, it’s worth taking a closer look at the intention behind the Ellsworth ambassador program. “This program is geared toward creating community,” said Dustin Cottle, Marketing Manager for Ellsworth. “We want to identify any and everyone that is a positive influence in the [mountain biking] and Ellsworth communities and reward them for being just that — all while growing the network.”
“The referral aspect of the program is unique (I don’t believe any other manufacturer is doing it), but [it’s] not central to the program,” said Freeman. “Our primary focus is on sharing the excitement and experience of owning an Ellsworth via our Ambassadors, and helping magnify our messaging through their social activities.”
Most network marketing businesses are clearly set up as businesses, and their sales reps are generally aware of the business aspect when they sign on. “In most cases, you can sign up to become a Network Marketing Distributor online, by making an initial investment and completing an ‘Independent Distributor Agreement,'” according to an article by William Morrow published on the Huffington Post. “When you do sign up with a Network Marketing company, you are not considered an employee, usually, but seen as a representative, a dealer, or a consultant (depending on the type of company you are representing). You may even consider yourself as a business owner.” The lines do appear to be blurry, though. While Ellsworth isn’t pitching their program as a dealer recruitment initiative, the word ambassador is easily interchangeable with representative.
Even if ambassadors choose to pursue sales, how many bikes can they actually sell? While referral programs are not yet widespread in the mountain bike industry, the Ellsworth program is definitely not the only one. Guerrilla Gravity runs an ambassador program called BAMF, which also has a referral aspect to it. According to Will Montague of Guerrilla Gravity, “BAMFs get a kickback when they help sell a bike or when they podium at a race.” Since the BAMF program has been up and running for a few years now, I asked Will if they have any data on how many bikes BAMFs sell through the referral program. “The most bikes a BAMF has sold in one year is seven,” said Montague. “The average is much closer to a bike or two.”
While perhaps having a referral code could allow an Ellsworth ambassador to spread their sales reach farther than the BAMF program, which utilizes “referral cards [that they] hand out to their networks,” it appears unlikely that any single ambassador will be selling enough bikes for it to qualify as even a part-time job.
But does that matter to Ellsworth? As we’ve outlined above, every bike sold to an ambassador and even those sold by an ambassador nets Ellsworth more revenue than a bike sold to a dealer. Unfortunately most network marketing sales reps “participate at either an insignificant or nil net profit,” according to Wikipedia.
Conclusion
While the profit promises and the low overhead inherent in network marketing sounds tantalizing to brands in a struggling industry, and even if we do see some referral programs cropping up, it doesn’t appear that brands like Ellsworth are intentionally creating true network marketing businesses. Rather, the technical term that applies most closely to brand ambassador programs is “influencer marketing.”
That said, the addition of monetary kickbacks and referral programs muddies the waters. While there are some significant differences between what’s currently taking place in the mountain bike industry and network marketing, Ellsworth’s program is the closest that we’ve seen.
What do you think? Is the Ellsworth Ambassador Program an innocent effort to reward passionate mountain bikers, or a cleverly-disguised way to boost profits through free marketing? Let us know in the comments section below.
1 Comments
Mar 22, 2018
The victims of this program will ultimately fork their buddy a little cash (probably ignorantly so), slash their local dealer from the equation, and send a good 40%+ of the cash directly to Ellsworth HQ.