Optavia is a Baltimore based health and wellness company. They were formerly known as Medifast, but have now decided to rebrand themselves as Optavia, and sell their weight loss and dietary products through multi-level marketing. Optavia products, include a wide range of diet options from muesli bars and snacks, to pre-made meals.

Here at The Finance Guy, we have the opinion that you can’t make money with MLM, but we are happy to be proven wrong, so we’ll have closer look and ask can you make money ith Optavia

How do you make money with optavia

To find out how you can make money in this MLM, we looked at a copy of the Optavia Compensation Plan. This document explains all the ways you can make money as an Optavia coach, as well as what you need to do in order to qualify for commissions.

The first thing that stands out is that they tell us that this compensation plan gives Optavia coaches the ability to shape their destinty and create a life of greater momentum. It’s not the first time we’ve heard similar claims in a compensation plan, but we’ll keep going.

They tell us that to earn from all 9 of their potential income streams, Optavia coaches need to be competent in 3 areas which are:
- Client Support
- Team Buiding
- Leadership Development

Before they go into 9 ways Optavia coaches make money, they first explain that with Optavia, there are 2 types of Volume. Compensation Volume (CV) and Qualifying Volume (QV)

Compensation Volume is used to calculate how much commission coaches can earn. All Optavia products have a CV between 0% and 100%. Commissions are based on these values. Coaches will also earn CV from people they sponsor. Coaches they personally sponsored are shown as Frontline Compensation Volume (FCV). Coaches sponsored by others in their downline will contribute to their Group Compensation Volume (GCV).

Qualifying Volume is used to help determine coaches rank in the Optavia system. Their rank will determine which commissions they do or don’t qualify to earn. Just as with CV, coaches can also earn Frontline Qualifying Volume (FQV) and Group Qualifying Volume (GQV).

Client Support Commission
The amount of commission Optavia coaches can earn is shown in the table below:

As we see from this diagram, coaches can earn commission from their frontline volume. That is the people who they have personally sponsored to join Optavia. It starts at 15%, but increases if the coach is able to sponsor 5 different éntities’.

If you do sponsor 5 or more front line coaches, then you will qualify for the client support bonus. This will increase depending on the monthly volume ordered by the people in your frontline. If they order a combined volume of 6,000 points, you will earn the maximum bonus of 13%, taking your total Optavia client commissions to 28%

Coach Consistency Bonus
If your frontline achieves certain qualifying volumes for 3 months in a row, then Optavia will pay you a lump sum bonus. The amounts your can earn are shown below:
- 2,000 FQV = $250
- 4,000 FQV = $500
- 6,000 FQV = $1,000

While these bonuses are all well and good, it’s important to remember that the person who sponsored you into Optavia can also qualify for them. In other words, the person who sponsored you has a vested interest in making you spend large amounts on Optavia every month

Coach Accelerator Bonus
This is what most MLMs refer to as a ‘fast start bonus’. Optavia makes this available to new coaches for their first 3 months. If you personally sponsor 3 frontline Optavia coaches, and they each buy 345 QV worth of product in a month, you will get a lump sum payment of $150. If you manage to do this with 5 new coaches, then they’ll give you $250.

Accelerator Assist Bonus
If someone you personally sponsored earns a Coach Accelerator Bonus, then you will also get paid the same amount.

These accelerator bonuses are a nice way to reward new coaches who ‘hit the ground running’. Having said that, they also create an incentive for the person who sponsored you to make you spend as much as possible as soon as you join. After all they need you to spend 345 QV or you won’t be eligible for their accelerator bonus. The person who sponsored them will be equally enthusiastic to make you spend because they too will get the bonus.

We might think that the Optavia accelerator bonuses are designed to make people sponsor new coaches and get them spending as much as possible as quickly as possible.

Team Growth Bonus
This is Optavia’s version of what other MLMs would call ‘downline commissions’. Optavia coaches can only start earning this payement once they achieve the rank of ‘Senior Coach’ with Optavia. The amount of commission they earn from their down line will depend on their rank as shown in the table below:

While it’s nice that Optavia is willing to pay all these commissions, it does mean that 32% of the price Optavia Coaches pay for any products goes to their upline as a team growth bonus. On top of that up to 28% will be paid to their sponsor as a client support commission.

While they may tell you how exciting it is that you can earn all these commissions, we think it’s important to remember that 60% of what you pay for your Optavia products, goes to your upline as commission. You should also keep in mind that this is before Optavia has made any profit for themselves.

A universal challenge we find with all MLMs, is that their products or services have to be very expensive in order to include all the layers of commission offered by the MLM compensation plan.

Fully Integrated Business Coach Consistency Bonus
The compensation plan tells us that you can reach a level of mastery with Optavia if you achieve their level of Fully Integrated Business Coach (FIBC). As expected the qualifications for this are volume based. To become a FIBC, you will need:
6,000 Frontline Qualifying Volume
At least 5 Front Line Optavia Frontline Senior Coach Teams
15,000 in total Group Qualifying Volume for the month

If you manage to achieve all these criteria for 3 consecutive months, then Optavia will pay you a bonus for the month of $1,000. The only way to obtain this bonus is if you have a very active downline who are purchasing a lot of Optavia products.

Once again, if you have recently joined, then your upline has a vested interest in making you buy as much Optavia products as possible every month

Executive Director Gerneration Bonus
To qualify for this bonus, you must first achieve the Optavia rank of Regional Director or higher. The amount you can earn will depend on how many Éxecutive Director Teams’ you have in your Optavia downline. Each time someone in your downline reaches the Optavia rank of Executive director, that leg in your downline will qualify. You don’t need to have personally sponsored the Optavia coach who reaches the rank.

The amount of Optavia Director Generation Bonuses paid at each rank are showed in the table below:

As you climb the Director ranks within Optavia, you will qualify for more and more and more generations of bonuses..

Elite Leadership Bonus
These are 3 additional bonuses of 0.5% each which are paid when Optavia coaches achieve the qualifying ranks for each bonus. The qualifying ranks are National Director, Global Director and Presidential Director. These bonuses are cumulative, so an Optavia coach who reaches the rank of Presidential director, will get paid all three elite leadership bonuses.

While it’s nice that you can earn all these bonuses, it’s important to remember that they represent a total of 13.5% of the price paid by coaches for Optavia products. If we include the commissions and bonuses we looked at previously, we see that when Coaches buy Optavia products, 73.5% of what they pay goes to their upline to fund the compensation plan. And this doesn’t include the other one of cash payments that coaches may earn.

Like all MLMs Optavia will tell us how proud they are of their generous compensation plans, we see it a a problem. If they are paying so much in their compensation plan, the only way the company can turn a profit, is to include it in the price paid by Optavia coaches in their MLM

How are optavia coaches promoted

In order to qualify for all the commission available in the Optavia compensation plan, coaches will need to get promoted through the ranks of their MLM. To reach each level, coaches must reach a combination of sponsoring and volume quotas. This is shown in the table below:

Are Optavia coaches making money

To find out if they are making any money in this MLM, we looked a copy of the Optavia Income Disclosure. All they have given us is a table of earnings for the previous 12 months, with very little explanation.

For example Optavia have not explained how they selected the coaches who are included in their table. Looking at the first line, which is Optavia Coaches who earned nothing. We see that they represent 22.42% of all coaches, and they were active for an average 13 months. This seems like a high average. Maybe Optavia is only showing us the data for Coahces who were active for the entire 12 moths. They have not told us how many coaches quit during the year, but we are guessing that like most MLMs, it is a very substantial number

While we are not convinced we have all the information, from the table they have given us we can see that:
- 22.42% of Optavia Coaches earned no income at all
- 2.17% of Optavia Coaches earned over $50,000 for the year (enough to replace a full time job)

Even if Optavia have given us limited information with only their most active Coaches, it still shows us that 97.83% of active Optavia Coaches earned less than a full time income

Why is it difficult to make money with Optavia

To find out why it’s hard to make money from the Optavia business opportunity, we looked at Dr Jon Tayolors 5 Step MLM evaluation. This study looks at 5 potential red flags, and Dr Taylor explained that if any MLM raises any 4 of the 5, then they should be considered a product based pyramid scheme, and not a legitimate business opportunity. They are:

Red Flag 1 - Constant Recruitment of New Members
There is a strong emphasis on recruitment in Optavia. They only way to earn some commissions such as the accelerator bonuses, is to ensure that new Optavia coaches are being constantly recruited into the downline. Optavia definitely raises red flag 1!

Red Flag 2 - Promotion Through Recruitment
As we saw, the only way to climb the ranks with Optavia is to meet their qualifying criteria, which includes building a downline. It is therefore impossible to get promoted without recruitment. Based on this, Optavia raises red flag 2

Red Flag 3 - Pay to Play
While there is no specified quota for coaches to remain active in Optavia, there is a requirement for their downline to have Group Qualifying Volume. So even if Optavia isn’t asking you to buy product every month, it’s very likely that your upline will be pressuring your to add to their GQV. Technically Optavia didn’t raise this red flag so we won’t count it.

Red Flag 4 - Most of the Rewards go to your upline
Dr Taylor warns that the compensation plans of most MLMs results in extreme inequality of payouts, he estimates that while a few people at the top make a lot of money, 99.6% of people who join MLM will lose money.

As we already noted when looking at the various commissions paid in the compensation plan, 73.5% of the price paid by Optavia coaches goes to their upline as commission. It’s safe to say Optavia has raised this red flag.

Red Flag 5 - More than 5 levels in the payout plan
Dr Taylor says 'Excessive levels in a downline is another sign participants are expected to sell primarily to their downline, rather than to the general public.  This makes it an exploitative money transfer scheme, or product-based pyramid scheme'.

Optavia did not mention any limitations to the commission paid on their bonuses. Their compensation plan suggests commission is paid on the entire downline in your team. Even if someone reaches the high ‘director ranks’ the coaches above them at the equal or higher levels will receive some commission from their entire downline. Optavia definitely raises this red flag.

Based on our understanding Optavia has raised 4/5 red flags from Dr Taylors MLM evaluation system. His study found that any opportunity which raises 4 or more flags should be considered a product-based pyramid scheme.

Dr. Taylor estimated that 99.7% of participants will lose money in a business such as Optavia. The reason is that there is no real demand for the products being sold. The business is an endless recruitment chain in which only the very few at the top will make real money.

Should you join optavia

The first thing to be aware of before joining any MLM, is that it is a sales job. You are not owning your own business, and it’s not as simple as just telling a few friends to get on board with you. The only way to succeed will be to sell large amounts of the product and sign up large numbers of complete strangers into your downline.

Before you join Optavia, it would be a good idea to try some of the products and see if you would be willing to pay full price for them. At the end of the day, if you wouldn’t buy the products without being part of the compensation plan, then you can’t expect others to do so.

It might also be a good idea to look into some reviews of the Optavia diet. One review we read found that their system simply put people on a diet where their calorie intake was reduced to between 800 and 1200 calories a day. That is half the recommended caloric intake for an adult. In other words the Optavia diet is simply starving the weight off your body. While this may result in weight loss, it might not be healthy for everyone.

is Optavia an Illegal pyramid scam

Even though MLMs closely resemble pyramid schemes, they are not illegal. The reason dates back to the 1979 case of Amway vs the FTC. After 4 years in court Amway was found to be offering a business opportunity, rather than a pyramid scam. The technicalities came down to wording in their paperwork. One example requires consultants to make retail sales.

The Amway ruling effectively opened the doors for all other MLMs to operate within the law. However we should remember that being legal doesn’t make it ethical. If you knew that less than 1% of people had a chance of generating a real income, would you feel comfortable recruiting new consultants?

We also looked at the 2018 FTC Business Guidance for MLMS. The FTC explains that several activities used by MLMs to promote their business opportunities, may be misleading and unlawful.

Another issue, is that even though these rules may be in the paperwork, they are difficult to enforce. For example, several people in MLMs have said that they have cupboards full of product. This is because of the minimum monthly purchases they need to make to remain active in the system. Even though stockpiling is against the rules, there is no way for the company to monitor it.

Being legal does not make MLM ethical. All companies are in business with the goal of selling goods and services for a profit.  Network marketing companies are able to charge a higher price because they create a customer base of loyal members who believe that by consuming these products and recruiting others to do so, they will become financially free. Keep in mind that making such promises is in breach of the FTC guidance.

As always, we’d love to hear your feedback about Optavia. Feel free to share your thoughts and feedback in the comments section below:

For more posts like this, look at our list of mlm reviews. 

iGenius, is an online education company which purports to empower people to take control of their futures. They do this by offering tools and education programs for trading Forex, Equities and Crypto markets. On top of that they also have an MLM referral program so you can make money telling your friends about it!

So far this is sounding extremely similar to iMarketsLive, who changed their name to IM Mastery. Could this be just another name change? We’ll find out in our full review of iGenius

How Do You Make Money With iGenius

To find out how we’d be making money, we looked the official iGenius opportunity page.

The first thing we learn is that the focus of iGenius is signing up new customers, and keeping them. They’ve decided that traditional advertising is not for them so instead they pay their iGenius Distributors, referral fees for signing up new members.

iGenius Bonus Plan

In traditional MLM fashion, iGenius have a complex system of paying distributors, which they call the iGenius Bonus Plan. There are several ways to earn commission, which we will look at below:

Fast Start Bonus - If you enroll a new distributor in your downline, then you will be eligible for a one off signing bonus. The amount of this bonus depends on which package the person signs up for. You can also earn a bonus if people in your downline upgrade their iGenius subscriptions. The amounts payable are shown in the image below:

Rapid Fire Bonus - you will get $25 every time someone you personally enrolled pays their monthly subscription. So if you happen to join, then the person who enrolled you, will probably do their best to keep you paying the membership for as long as possible, regardless of whether or not you are making any money from the system yourself.

The official opportunity page doesn’t go into much more detail after this point, but they do list the ‘other ways to make money’ with iGenius. We found a few active members were kind enough to share more detail, so we used what we could find to continue. This includes this copy of the iGenius Bonus Plan

Top Up Bonus - If you have 4 personal enrollments actively paying their monthly fees, and you earn less than $175 per month in iGenius commission, then they will pay the difference. This is so that you can have your own subscription for free.

It doesn’t end there! If you have 12 personally enrolled customers who are active and pay fees for 4 consecutive weeks, then you will earn a guaranteed commission of $500 for the 4 week period. iGenius wants you to keep your customers active and paying fees every week.

Binary Team Commissions - Before we go into detail about the iGenius system, we’d just like to point out that several MLMs use a binary downline structure in their bonus plans. The best way to explain it, is with the following diagram:

As we can see, you have 2 legs, a left and a right, and each member in your downline also has 2 legs. While this may resemble an ancient Egyptian structure, they will assure us it isn’t one.

The key to earning commission and advancing through the ranks in any MLM binary system, is balance. You need to maintain similar volume on each side of your downline.

iGenius is no different. The iGenius Binary Bonus system is shown below:

As we can see, the key is to keep balance in your iGenius downline. It’s important to duplicate whatever you do on one leg, on the other. You can only earn a maximum of 50% of your commission from one leg. This means your payment will always be based on the volume generated by your weaker leg.

Advancing through the ranks is pretty straight forward. All you have to do is personally enroll more people on each leg and grow your Group Volume (GV). Your GV will include points generated by people enrolled by others in your downline. So if you enroll a friend, and they enroll someone else, both their spending is part of your GV. As your GV grows, you can earn higher levels of commission. When you join you can earn 10%, but this will grow to 20% if you successfully climb the ranks.

It’s important to remember that you can only earn 50% from each leg, so your income is based on the GV from your weaker side. The surplus GV is rolled over and retained for as along as your remain active in iGenius.

This could be seen as an incentive to build your weak side and earn all the money that is ‘stored’ on the other leg, or it can be viewed as a dangling carrot to keep you active when you’re not earning much.

Things get a little more complicated once you reach the rank of ‘Presidential Ambassador’. to advance beyond this level, you have to have iGenius Presidential Ambassador legs. All this means is that you need to have people in your downline who have also reached the Presidential Ambassador rank with iGenius. It becomes an incentive for the upline to favour particular people in their group to help them reach this rank.

iGenius also has weekly and monthly ‘paylocks’’, on their binary commission. This sets a maximum you can earn in any week (or month) from your iGenius binary downline. If you generate more PV in any given pay cycle, then it will be rolled over to the next one.

It may seem strange to set an upper limit on your earnings, after all if you consistently generate more than the pay lock amount, then you’ll never use your rolled over volume. We’re sure it will make more sense later, so we’ll keep going.

Generational Match Bonus - like all MLMs, iGenius will pay you commission based on ‘generations’ in your downline. If you achieve the rank of Global Executive with iGenius, then you will eligible for the Generational match bonus

The Generational Match Bonus is shown as ‘check match generations’ in the iGenius commission table. As we can see it starts off with just 1 generation and increases to 5 depending on your rank. Depending on your rank and GV you can earn up to 10% on 5 generations in your downline.

X4 Bonus Pool - All you have to do to qualify for this, is purchase an Elite membership from iGenius, or generate 1000 worth of Personal Volume (PV).

iGenius will pay 1% of all their volume as a bonus to distributors who earn ‘shares’ in the X4 Bonus Pool. Shares are generated by selling 4,000 worth of GV in either new or upgraded business. In other words iGenius pays 1% commission as a bonus to active members who have sold a lot of new memberships in the current 4 week commission cycle.

X8 Bounus Pool - This is very similar to the X4 bonus, except it involves sharing 3% of the overall volume and to earn shares, you need to generate 8,000 worth of new or upgraded GV

NDAU Bonuses - NDAU is a cryptocurrency developed by iGenius. The member video we watched explained to us how it was created by crypto experts who had made the ‘world’s first adaptive cryptocurrency’. Allegedly it is designed to be a superior long term store of wealth.

To get an idea of how well it’s performed, we looked at the annual chart for NDAU to February 2023 as shown below:

It appears the ‘long term store of wealth’ has halved in value over the last 12 months. Perhaps the experts didn’t make this cyrpto as adaptive, as they thought they did. Maybe a better long term store of value would be just keeping your savings in the bank

Are iGenius Distributors Making Money

We found an interesting quote in the IGenius opportunity page, which claimed that 80% of members are ‘just happy paying customers’. This is of course just MLM code for ‘80% of people join the business opportunity just be paying customers’.

If you believe that 4 out of 5 people join a business just so they can be a customer, then you are more trusting than us. If you believe that this is some cover up to try and make excuses for the fact that 80% of IMarkets Members earn nothing, then we agree with you.

Why Is It difficult to Make Money With IGenius

The problem is not unique to Igenius. The fault lies within the MLM business model. In his book, Multi-level Marketing Unmasked, Jon Taylor found that 99.7% of people who join direct selling companies end up losing money.  Despite what you hear in the sales pitches, it is highly unlikely that you will make money from any network marketing company.

The reason is because MLM is a system designed to sell products to customers. When you sign up to a MLM business opportunity, you are in fact a customer. The MLMs have no intention of making you a business partner. The goal is to make profit when you spend money.

Is iGenius an Illegal Pyramid Scam

Even though MLMs closely resemble pyramids, they are not illegal. The technicalities date back to a 1979 Amway ruling. To the best of our understanding, Amway managed to word their documentation in a way that bypassed the pyramid scheme laws. This opened the doors for other MLMs to do the same.

While the paperwork may make them legal, that doesn’t mean that MLMs are ethical. If you join any MLM, you have to realize that the only way to make money is if people below you are losing money

We looked at the 2018 FTC Business Guidance for MLMs. This explains when MLM participants are acting in a way that is misleading or unlawful. Examples of breaches include pressuring downlines to purchase products, and making unsubstantiated claims about earnings potential.

As always, we’d love to hear what you think in the comments section below, especially if you want to share your experiences with iGenius

Are you wondering if you can make money in an MLM? Check our our  list of mlm reviews before you join. If you find one that’s not on the list, let us know and we’ll do our best to write a review

Pampered Chef started in 1980 and is based in Addison Illinois. They have been selling their range of housewares and kitchen products for over 40 years through home parties run by an international network of consultants. In 2002 Pampered Chef was purchased by Berkshire Hathaway and is now part of their family of companies.

Pampered Chef consultants are not employees, they are contractors selling through a Multi Level Marketing system. Here at The Finance Guy, we think you can’t make money with MLM, but we’ll give them the opportunity to prove us wrong in this review of Pampered Chef. We want to know if this is a real money making opportunity, or just another MLM money trap.

What Is The Pampered Chef Opportunity

To find out more about this ‘side hustle’, we looked at the official Pampered Chef Opportunity page. The first thing they tell us, is that this gig is all about Friendship, Freedom, and Fun. There’s also ‘flexible income’, and ‘fantastic rewards’.

All you need to do get started is follow the 3 simple steps:

Step 1 - Sign Up
Right away, they’ll give you the tools to run your business. This is in the form of a link to their website, with a referral link.. Your ‘personalised website’, will cost you $120 per year.

To demonstrate how valuable this is, we thought we’d let you try it on our site, just add whatever you want after the .net (in web address format)…. https://www.finance-guy.net/add-whatever-you-want

Step 2 - Choose A Starter Pack
Like all MLMs, the joining fee is negligible, but then they encourage you to purchase a starter pack. It’s important to remember that this purchase is not compulsory.

You can spend anywhere from US$60 to US$230 on a starter kit. The important thing to remember is that your upline earns commission on your starter purchase.

Your sponsor might tell you stories about the importance of buying inventory based on some variation of ‘having faith in yourself’, or ‘being a product of the product’… Real deal is, that the person who sponsored you earns commission from your starter purchase

They tell us that the price you pay is well below market value… this raises an interesting question as to what is market value? In our Tupperware review, we discovered that you can buy better quality goods in regular stores at lower prices…. maybe before you spend money, you should check the quality of Pampered Chef products.

Step 3 - Start The Party
You can hold parties either in person or online! It’s just like being able to sell to friends or on Amazon, so there’s anyone can do it.

According to Pampered Chef, signing up will help you ‘inspire confidence and creativity in the kitchen”. Just gonna put it out there, but similar results can probably be achieved with your current kitchen utensils and ideas from Google.

They tell us that you join Pampered Chef, you will get a work life balance and get ‘fantastic rewards’. All these vague promises are typical of most MLMs. They allude that this is a money making opportunity but there isn’t much detail.

How Do You Make Money With Pampered Chef

To find out how you make money as a consultant, we looked at the Pampered Chef Compensation plan. This document explains all the ways you can earn commission and what you need to do to qualify for it.

We’ll go through it and see what you can earn at each rank in the Pampered Chef Egyptian Triangular structure.

Consultant
All you need to do to reach the rank of ‘consultant’ with Pampered Chef, is sign up. Right away you’ll be able to sell their products for commission, and recruit others to the opportunity.

Director
It seems unusual, but the first promotion you get will be to the rank of ‘director’. While this sounds like it should be near the top of the scheme, it’s not. It could be for another reason or because they are trying to make Pampered Chef Consultants seem more successful than they really are.

To make it to this rank, you’ll need to sponsor 5 active Pampered Chef consultants. Together you’ll all need to buy enough product and then you can earn 3% commission on what your recruits buy.

Advanced Director
If one of your recruits makes it to the rank of ‘director’, then you will become an ‘Advanced Director’, with Pampered Chef. Once again you and your team will need to purchase enough product for you to reach this rank.

As an advanced director, you can now earn 4% commission on your sales, and from your ‘first generation’ of recruits. You can also earn 3% from the people they recruit (your second generation).

Senior Director
To get to this level, you need 3 first generation directors (people you sponsor), and 1 second generation director (someone sponsored by your downline).

In addition to all the advanced director commissions, as a Senior Director, you can also earn 1% from your second generation. This means you earn money when people 3 levels below you in the system spend money on Pampered Chef.

Executive Director
To reach this level, you need to have 6 1st generation directors and 2 2nd generation directors. Once again everyone needs to spend enough money for you to qualify.

Once you hit this promotion, you will be able to earn 0.5% from your third generation in Pampered Chef.

Senior Executive Director
To reach this level, you will need 9 1st, 5 2nd and 1 3rd generation director. At this point you will continue to earn even more commission from those below you Pampered Chef.

National Executive Director
This is the top rank in Pampered Chef. To get here, you’ll need 12 1st, 9 2nd and 3 3rd generation directors below you. At this level, you will have unlocked all the commissions and bonuses available through Pampered Chef.

The ongoing theme from the Pampered Chef opportunity, is that to climb to the top, you need to recruit, and you have to ensure that the people you recruit, also recruit.

What Do Pampered Chef Consultants Do

While the compensation plan basically told us that you can unlock 6 levels of commission with Pampered Chef, it didn’t really tell us much about the company or what we’d actually be doing.

To find out more we looked at a copy of the Pampered Chef Consultants Guide. The first thing we notice here, is that they encourage virtual parties as well as in person parties. This is probably an advantage in these times of social distancing. They even offer some hints and tips about how to post on Facebook in ways to avoid looking like spam….

The simplest way to explain a Pampered Chef party, is that it’s a cooking demonstration. In person, you can obviously include tastings… over Facebook, it would be like putting on your own cooking show.

It looks like Pampered Chef has borrowed from the Tupperware model, in that the idea is to find other people to ‘host’ parties. The idea being that they invite a bunch of friends and then the consultant puts on a demonstration and sells them products.

Like Tupperware, we assume that if you host a Pampered Chef party (either at home, or on Facebook), then the consultant will try and recruit you into Pampered Chef. Part of the instructions for a party is to talk to the host about the ‘benefits of being a consultant’.

There’s nothing wrong with following a successful business model, but we already found that you can’t make money with Tupperware. At the end of the day the company might be doing well, but that doesn’t mean the consultants are turning a profit.

Are Pampered Chef Consultants Making Money

We looked at Pampered Chef with Dr Jon Tayolors 5 Step MLM evaluation, and we found that it raised several flags. According to Dr Taylor, if any MLM raises more than 4 flags then your chances of turning a profit are less then 1 in 1,000, let’s take a closer look:

Red Flag 1 - Constant Recruitment of New Members
You can not climb the ranks of Pampered Chef unless you aggressively recruit. It doesn’t end there, you need the people below you to also recruit. Recruiting every host to become a consultant is part of the Pampered Chef manual

Red Flag 2 - Promotion Through Recruit
In order to climb the Pampered Chef ranks, you need to build a dowline. Your advancement in the Pampered Chef ranks depends upon you recruiting enough new consultants to qualify for each rank.

Red Flag 3 - Pay to Play
Remember climbing the ranks in Pampered Chef is all about having ‘active consultants’ in your downline. Being ‘active’ in any MLM means spending a minimum monthly amount on their products. They might tell you that it’s all part of the formula for success (being a product of the product, investing in yourself) etc, but really it’s just charging you money to be in the opporutnity.

Red Flag 4 - Most of the Rewards go to your upline
When you first sign up to be a Pampered Chef consultant, the only way to make money is from commission on your own sales. Once you start building a downline, you can earn more and more commission.

While it might be fun to earn all those different commissions, it’s also important to remember they are included in the price you pay to Pampered Chef. So every time you buy from Pampered Chef, several people above you in the system earn commission from you.

Red Flag 5 - More than 5 Levels in the Payout Plan
While their compensation plan is simple, we were able to see that Pampered Chef pays on up to 3 generations in your downline. Then they pay other ‘directors bonuses’ on additional level. It would appear that the payouts do exceed 5 levels.

Why Is It Difficult To Make Money With Pampered Chef

The problem is not unique to Pampered Chef. We think that it’s unlikely to make money with any network marketing opportunity. While the companies that make the products may be very profitable, less than 1% of the people who join any MLM will turn a profit.

The reason is that they are not offering you the chance to be a business owner. They are asking you to be their customer. At best you might be a commission based salesperson. Anyone who tells you that MLM isn’t about selling, is lying. To share the opportunity is to sell it.

Is Pampered Chef An Illegal Pyramid Scheme

Even though MLMs closely resemble pyramid schemes, they are not illegal. The reason dates back to the 1979 case of Amway vs the FTC. After 4 years in court Amway was found to be offering a business opportunity, rather than a pyramid scam. The technicalities came down to wording in their paperwork. One example requires consultants to make retail sales.

The Amway ruling effectively opened the doors for all other MLMs to operate within the law. However we should remember that being legal doesn’t make it ethical. If you knew that less than 1% of people had a chance of generating a real income, would you feel comfortable recruiting new consultants?

Another issue, is that even though these rules may be in the paperwork, they are difficult to enforce. For example, several people in MLMs have said that they have cupboards full of product. This is because of the minimum monthly purchases they need to make to remain active in the system. Even though stockpiling is against the rules, there is no way for the company to monitor it.

If you are thinking about joining Pampered Chef, we advise that you consider all your options before making final decision. If you have the skills to turn a profit in MLM, it’s more than likely that you can make even more money in a regular sales job.

We’d love to hear what you think in the comments section, especially if you can share your experiences with Pampered Chef

Are you wondering if you can make money in an MLM? Check our our  list of mlm reviews before you join. If you find one that’s not on the list, let us know and we’ll do our best to write a review

Seacret started in 2001 out of Scottsdale Arizona. Originally the company sold Dead Sea products out of kiosks at shopping malls.

In 2011, they started selling through ‘social marketing’ with the Seacret Direct opportunity. They now have a network of ‘Seacret Agents’ around the world selling their range of Seacret products, which have grown to include nutrition supplements along with the original dead sea cosmetics.

Here a The Finance Guy, we believe you can’t make money with MLM, but we’ll give them the chance to prove us wrong is this review of Seacret Direct.

What Is The Seacret Opportunity

We had a look at the official Seacret opportunity page. Here we see that if you become a Seacret Agent, you can make your dreams come true in the multi-Billion dollar skin care industry.

They go on to tell us about the immediate and unlimited earning potential with no experience needed. All you need to do is pay the $49 joining fee and you’ll be your own boss.

While dream granting unlimited income sounds all well and good, they still haven’t really told us how it all works.

How Do You Earn Money With Seacret Direct

To find out how we can earn commission from this opportunity, we looked at recent copy of the Seacret direct compensation plan. This document explains all the ways Seacret Agents can earn, as well as what they need to do to qualify.

They tell us that the compensation plan gives agents all the tools they need to build ‘substantial wealth’, and residual income.

Before agents can earn any commission with Seacret, they need to be ‘active’. Like all MLMs being active requires them to buy product

To remain active, Seacret agents need to buy 35 BV worth of products every 4 weeks, or have 4 VIP customers buying enough product to keep you active.

They suggest having an automatic ‘replenishment’ order to make sure you stay active. We think it’s a bad idea because this can lead to overbuying and ending up with a collection of unused Seacret product.

If you are active, you can earn commission from Seacret in all of the following ways:

Retail Commission
As the name suggests, this is the profit you can make if you sell products to retail customers. The official TFG opinion is that retail profit is the best way to make money. At the end of the day selling to customers is what we think business is about.

Seacret tells us that you can make up to 150% commission on retail sales. While this commission sounds enticing, it also makes us worry that maybe Seacret products are overpriced.

WOW Bonus
This is commission paid on your Elite/ViP customers… It’s very similar to retail commission but these customers agree to buy on a regular basis, so they get a discount.

Seacret Agents, can earn 20% - 25% commission on WOW sales. It would appear that there is a severe price discounts for customers who move from retail to WOW. We would wonder why the agent would want to earn so much less commission from the same sale…

Global VIP & Elite Pool
If you have customers who are willing to spend enough to become VIP customers, then you can earn shares in the pool. 2% of their spending is paid out monthly. The more VIP customers you have, the more shares you earn in the pool, as shown below:

Fast Start Bonus
Seacret is offering the common MLM incentive to hurry up an recruit everyone you know and several people you don’t know

After putting in enough effort, all we know about this bonus is that Seacret Agents can earn from $40 to $260 if the new agents they recruit spend money on Seacret products.

You can also earn a ‘Superstar Bonus’ of $100 if one of the Seacret agents you recruit reaches the superstar rank within 28 days of joining. Again this is designed to get you to recruit as much as possible as quickly as possible.

Team Commisssions
Once you start recruiting others to become Seacret Agents, you can earn commission every time they spend money on Seacret products.

Seacret runs a binary compensation plan where each person has a left leg and a right leg, as shown below:

As with all binary MLMs the amount of commission you earn depends on the balance between your legs. With Seacret, you need to have at least 1/3 of the volume on your weak side.

This prevents people from earning excessively because they recruited one good Seacret Agent. Depending on your rank, you can earn between 10% and 15% commission on your monthly Seacret Commissionable Volume (CV).

Rank Advancement Bonus
Every time you climb the Seacret ranks, you will be eligible for a one time bonus. This is like a reward for reaching the new level.

The different Seacret Agent ranks and what you need to do to reach them are shown below:

As we can see the first few steps look easy, but then it takes more and more volume to keep climbing the ranks.

If you happen to climb all the way to the top of the Ancient Egyptian structure, you will reach the rank of Crown Royale. The advancement bonus for this final promotion is listed as $1,000,000.

Leadership Check Match Bonus
This bonus is only available to Seacret Agents who reach the rank of Bronze or higher. If you get to this level, you can earn a matching bonus based on the binary commission earned by those in your downline.

The amount of commission available at each rank is shown below:

The full matching bonus is available to all Seacret Agrents who reach the rank of Diamond or above. At this level you can earn a total of 50% commissions on up to 4 generations in your downline.

It’s nice to know that these commissions are available if you reach the higher part of the ranks. If you are still working your way up, all these commissions are included in the price you pay for Seacret products.

There are other incentives such as the Drive Your Dream Bonus, and other cash incentives which again are mostly only available to those who reach the highest part of the triangle.

How Much Are Seacret Agents Earning

There are many ways to earn with Seacret, and if you get a lot of promotions, you can earn some large bonuses . However we want to know how much Seacret Agents are actually making.

We managed to find a copy of the Seacret Income Disclosure, which is presented as a single image shown below:

It’s interesting that the largest group by far is the ‘entry level’ agents. This shows us that 47.8% of Seacret Agents earn absolutely no commission.

They try and explain that these agents might be earning commission from retail sales, but we find it highly unlikely. What we are seeing is that most Seacret Agents never make it past the bottom rank.

Another 45.7% of agents are only entitled to basic commissions. Seacret tells us that this group earn an average of $171 for the year. Doing some math we see that 93.5% of Seacret Agents earned less than $200 for the year.

The final grouping which they refer to as the ‘Leaders’ group, is the top 6.5% of all Seacret Agents. If we look at the earnings within this group, we see that only the top 1.84% earn over $35,000

Remember that this is a breakdown of the ‘leaders’, so if we apply some more math, we see that only 0.12% of agents earn more than they could in a regular job. In other words, 99.88% of Seacret Agents earn less than minimum wage

Why Is It Difficult To Make Money With Seacret Direct

We believe that the problem is not unique to Seacret. The problem is with the business model. In his book, Multi-level Marketing Unmasked, Jon Taylor found that 99.7% of people who join any MLM end up losing money.  Despite what you hear in the sales pitches, it is highly unlikely that you will make money from any of these ‘business opportunities’.

The reason is because MLM is a system designed to sell products to customers. When you sign up as a Consultant, you are in fact a customer buying from Seacret. They have no intention of making you a business partner. The goal is to make profit when you buy accessories from them

Is Seacret Direct An Illegal Pyramid Scam

Even though MLMs closely resemble pyramids, they are not illegal. The technicalities date back to a 1979 Amway ruling. To the best of our understanding, Amway managed to word their documentation in a way that bypassed the pyramid scheme laws. This opened the doors for other MLMs to do the same.

While the paperwork may make them legal, that doesn’t mean that Seacret and other MLMs are ethical. If you join any MLM, you have to realize that the only way to make money is if people below you are losing money

We looked at the 2018 FTC Business Guidance for MLMs. This explains when MLM participants are acting in a way that is misleading or unlawful. Examples of breaches include pressuring downlines to purchase products, and making unsubstantiated claims about earnings potential.

As always, we’d love to hear what you think in the comments section below, especially if you an share your experiences with Seacret

Are you wondering if you can make money in an MLM? Check our our  list of mlm reviews before you join. If you find one that’s not on the list, let us know and we’ll do our best to write a review

Thirty-One Gifts was founded in 2003 out of Tennessee. They tell us that their primary goal is ‘to help women by giving them the opportunity to run their own successful business’.

They have decided to sell their range of Thirty-One Gift Products through a network of consultants. We’re not sure how using an MLM system will help women ‘run their own successful business’. But we’ll carry on with our review of Thirty-One Gifts. We want to know if this is a real opportunity, or just another MLM money pit.

What Is The Thirty-One Opportunity

We looked at the official Thirty-One Gifts opportunity page. Here we learn that you can ‘be your own boss’, and earn 25% - 35% in commission.

They are currently running their ‘best offer ever’, which is that you get to join for only $99. This will include your ‘Sunny Days Social Kit’. It’s all you need to host a party and start selling Thirty-One Gifts.

Based on their opportunity page, it looks like Thirty-One Gift parties can be hosted through social media. If you happen to host one and make $500 worth of sales, your rewards will be something like this:

First off, by ordering $500 in Personal Value (PV) for the month, you would trigger the 35% commission (rather than 25%). Then you also get some discounts to putt toward future purchases from Thirty-One Gifts.

Of course the earnings don’t end there. You can can also make even more money if you recruit others to become Thirty-One Gift Consultants.

In true MLM tradition, you can earn a commission on anything your recruits sell, as well as from people they recruit and so on in your MLM downline.

The amount you can earn from your downline will depend on your rank with Thirty-One Gifts. It’s all explained in the Thirty-One Gifts Career Path Brochure.

The short version is that you can earn more commission if you keep recruiting and growing your downline, and make sure that everyone spends lots of money on Thirty-One Gifts.

How Much Are Thirty-One Gift Consultants Earning

Thirty-One Gifts has been surprisingly helpful. Near the bottom of their opportunity page, there is a copy of their current income disclosure statement. The earnings are summarized in the table shown below:

After a little addition, we see that 98.9% of consultants earned less than $10,000 in 2019 from this opportunity to ‘run their own successful business’. In true MLM fashion, less than 1% earn more than minimum wage with Thirty-One Gifts

It’s important to remember that income is not profit. The income disclosure does not include all the time and money spent by consultants while they were trying to build their ‘side hustle’. If we were to include all expenses, we’d expect to find that most Thirty-One Gifts consultants are losing money.

Why Is It Difficult To Make Money With Thirty-One Gifts

We believe that the problem is not unique to Thirty-One Gifts. The problem is with the business model. In his book, Multi-level Marketing Unmasked, Jon Taylor found that 99.7% of people who join any MLM end up losing money.  Despite what you hear in the sales pitches, it is highly unlikely that you will make money from any of these ‘business opportunities’.

The reason is because MLM is a system designed to sell products to customers. When you sign up as a Consultant, you are in fact a customer buying from Thirty-One Gifts. They have no intention of making you a business partner. The goal is to make profit when you buy from them

Is Thirty-One Gifts An Illegal Pyramid Scam

Even though MLMs closely resemble pyramids, they are not illegal. The technicalities date back to a 1979 Amway ruling. To the best of our understanding, Amway managed to word their documentation in a way that bypassed the pyramid scheme laws. This opened the doors for other MLMs to do the same.

While the paperwork may make them legal, that doesn’t mean that Thirty-One Gifts and other MLMs are ethical. If you join any MLM, you have to realize that the only way to make money is if people below you are losing money

We looked at the 2018 FTC Business Guidance for MLMs. This explains when MLM participants are acting in a way that is misleading or unlawful. Examples of breaches include pressuring downlines to purchase products, and making unsubstantiated claims about earnings potential.

As always, we’d love to hear what you think in the comments section below, especially if you an share your experiences with Thirty-One Gifts

Are you wondering if you can make money in an MLM? Check our our  list of mlm reviews before you join. If you find one that’s not on the list, let us know and we’ll do our best to write a review

Paparazzi Accessories has done their best to keep their information to themselves. Based on the area code from their contact fax number, we are assuming that they are based in Utah. We’re not sure why they don’t want to tell us where they are or how long they’ve been in business. It could be an oversight, or it could be that Paparazzi is trying to be secretive.

They decided to produce a range of Paparazzi Accessories, which all seem to be priced at $5 each. Now as someone who doesn’t wear much jewelry, I can’t comment on this. As someone who has purchased a few pieces as gifts, I would have to say that the $5 price tag would make me more likely to buy it for a 6 year old.

Rather than using traditional sales, Paparazzi has decided to sell their accessories through a network of consultants. Here at The Finance Guy, we believe you can’t make money with MLM, but we’ll go ahead with this full review of Paparazzi, we’ll see if this is a real income opportunity, or just another MLM money trap.

What Is The Paparazzi Opportunity

According to the official Paparazzi opportunity page, getting started just takes 3 simple steps; 1. find a consultant. 2. buy a starter pack. 3. start the party. Sounds too easy!

They proudly remind us that all items are just $5 and every sale you make from your Paparazzi party can earn you between 35% and 45% in commission. Just to clarify, that’s between $1.75 and $2.25 per item. With those margins, you’d want to be making a lot of sales.

Depending on which starter kit you select, you can spend between $99 and $499 to purchase your initial inventory to get yourself ready to sell at your very own Paparazzi party.

How Do You Make Money With Paparazzi

Keeping with their theme of providing minimal information, the Paparazzi Compensation Plan has been reduced to… an image shown below:

Again we’re not certain why they’ve chosen to provide such a condensed form of their compensation plan. It could be they are trying to keep things simple or it could be that Paparazzi is being evasive with the details.

Even though Paparazzi has not given us a lot of information, it is enough to give us an idea of how their compensation plan works, so we’ll go ahead and explain as much of it as we can.

The amount of commission you can earn from Paparazzi will depend on your rank with them. You can climb the ranks by accumulating a combination of Personal Volume (PV), and Organizational Volume (OV).

Every item you buy from Paparazzi will have a point value. If you buy it yourself, it will count toward your PV. If you recruit others to become Paparazzi consultants, anything they buy will go into your OV. It doesn’t end there, you will also get OV from the people below your recruits. This is what MLMs call a ‘downline’.

Retail Commission
Again they remind us that you can earn between 35% and 45% commission selling Paparazzi accessories at parties.

They don’t explain how you increase your commission. However we can see that if you buy 1000 PV worth of product in a single order, you will get a 10% show rebate. We are assuming that’s how you get the extra 10% commission.

They explain that each $5 Paparazzi accessory is worth 2 PV. If you are paying wholesale they should charge Paparazzi consultants is $3.25 per item. So to get the extra 10% commission, you have to personally spend at least $1,625 on Paparazzi inventory in a single order.

Business Building Bonus
If you recruit others to become consultants, you will earn 15% commission from their starter pack purchase.

If you sign up as a Paparazzi consultant, the person who recruited you will probably tell you all about why the $499 starter pack is the best one. While you may get some value from buying in bulk, they could have a motive of their own. Your sponsor will earn more commission if you spend more on your Paparazzi starter pack.

Unilevel Bonus
This is commission you can earn on up to 3 levels in your down line. The people you sponsor yourself are your 1st level. The people they sponsor become your 2nd level, and so on.

Depending on your rank, you can earn between 5% and 10% commission on any Paparzzi purchased by your 1st line. To earn 5% from your 2nd and 3rd lines, you will need to be qualified.

Being qualified for unilevel commission you need to reach the required rank, as well as generate enough PV and OV.

Generation Bonus
This is very similar to the Unilevel bonus. It pays commission on levels 4-6 in your downline. If you meet all the qualification requirements, you can earn between 1% and 3% on any spending by consultants on these levels in your downline

Legacy Bonus
Following on with the theme, this is commission you can earn from levels 7-9 in your downline. To qualify for this you need to reach minimum rank of ‘A-Lister’, with Paparazzi. You will earn between 1% and 2% on these levels.

Infinity Bonus
This is another 0.5% - 1% which is paid on levels 10 and 11 in your downline. To qualify for this you need to reach the rank of ‘Luxe Jetsetter’, or better in the ancient Egyptian business structure.

Cash Bonus
Again this one is reserved for those in the top 3 ranks. If you happen to reach one of these ranks, and maintain your qualification for 2 months, then you can earn a cash bonus.

While it’s nice to know that you can earn all these bonuses if you climb to the top of the MLM triangle, you should remember that all these bonuses are included in the price paid by consultants. If you are a new consultant, then 39% of what you pay for Paparazzi will go to your upline as commission.

How Much Are Paparazzi Consultants Earning

We know it’s possible to earn all these bonuses, but that’s only if you make it near the top. To find out how much consultants are earning, we looked at the 2018 Paparazzi Income Disclosure Statement. This is the most recent version available at the time or researching.

The commissions paid out to Paparazzi consultants, at each rank, in 2018 is shown in the table below:

If we look at the last column, we see the average monthly bonuses paid. It’s interesting to us that at the ‘Producer’ rank, consultants averaged $1,820 per month. That’s annual bonuses of just under $22,000.

To get to the ‘Producer’, rank, you’d need to achieve 5 rank promotions with Paparazzi. Only 0.85% of consultants made it beyond this rank.

Doing some math we see that 99.15% of Paparazzi consultants earned less than a full time income from the opportunity.

Something else we found interesting, is the 2nd column. It shows the ‘Percent of Consultants Earning Commissions Monthly’. This wording tells us that Paparazzi is not showing us all the consultants who earn nothing in bonuses. Again it could be an oversight or it could be that Paparazzi is trying to make the opportunity seem better than it really is.

This could explain why only 6.42% are on the bottom level. If we were to include all the consultants who earned nothing, then we’d expect to see more than half the Paparazzi Consultants earned absolutely nothing.

Naturally supporters of the scheme will tell you that consultants can still earn retail profit, which is not included in the bonuses. In reality we think that there are very few retail sales going on.

Why Is It Difficult To Make Money With Paparazzi

We believe that the problem is not unique to Paparazzi. The problem is with the business model. In his book, Multi-level Marketing Unmasked, Jon Taylor found that 99.7% of people who join any MLM end up losing money.  Despite what you hear in the sales pitches, it is highly unlikely that you will make money from any of these ‘business opportunities’.

The reason is because MLM is a system designed to sell products to customers. When you sign up as a Consultant, you are in fact a customer buying from Paparazzi. They have no intention of making you a business partner. The goal is to make profit when you buy accessories from them

Is Paparazzi An Illegal Pyramid Scheme

Even though MLMs closely resemble pyramids, they are not illegal. The technicalities date back to a 1979 Amway ruling. To the best of our understanding, Amway managed to word their documentation in a way that bypassed the pyramid scheme laws. This opened the doors for other MLMs to do the same.

While the paperwork may make them legal, that doesn’t mean that Paparazzi and other MLMs are ethical. If you join any MLM, you have to realize that the only way to make money is if people below you are losing money

We looked at the 2018 FTC Business Guidance for MLMs. This explains when MLM participants are acting in a way that is misleading or unlawful. Examples of breaches include pressuring downlines to purchase products, and making unsubstantiated claims about earnings potential.

As always, we’d love to hear what you think in the comments section below, especially if you an share your experiences with Paparazzi

Are you wondering if you can make money in an MLM? Check our our  list of mlm reviews before you join. If you find one that’s not on the list, let us know and we’ll do our best to write a review

People Helping People, or PHP Agency, was started in 2009 out of Northridge California. PHP was formed with  ‘the vision of bringing life insurance to multi-cultural middle-class America while simultaneously providing an entrepreneurial opportunity to individuals in these communities.’

PHP Agency now has over 14,000 agents selling life insurance through their multi-level marketing system. Here at The Finance Guy, we believe you can’t make money with MLM, but we’ll go ahead with this full review of PHP Agency.

What Is The PHP Agency Opportunity

To get an idea of how they will be providing an entrepreneurial opportunity, we looked at an official copy of the PHP Opportunity Brochure.

The first thing we learn from this brochure, is that in 2012, Patrick appears to have started a YouTube channel, called ‘Valuetainment’. He has shared photos of himself with famous people. This is a common thing in MLMs, we see pictures of famous people because it’s supposed to make us trust the company

They then show us that over the last 25 years, the cost of living has been going up faster than wages. They urge us that ‘now is the right time to create wealth’.

They then tell us that creating wealth is a simple 4 step process shown below:

Learn Sales
PHP tells us that the average annual income for a ‘sales manager’, is just under $118,000. They conveniently forget to mention that if you join PHP Agency, you will be a commission based salesperson, not a manager.

They then tell us that 46% of salespeople never wanted to enter the industry, but are happy they did. We are not sure where this statistic comes from, it could be made up on the spot.

Become An Entrepreneur
They tell us that most college students don’t have jobs lined up before they graduate and most millionaires are self made. This is MLM speak to try and make us think that we don’t need to go to college to be in a high paid job.

The interesting facts they leave out is, that most college students don’t look for jobs before they graduate, and almost all millionaires have college degrees.

Choose The Right Industry
Here they tell us that the aging Baby Boomers are in need of retirement and other financial solutions. They then show us a graph which tells us that since 1970, the number of insurance agents has severely decreased while the population has grown.

They are trying to tell us that there is shortage of insurance salespeople, what we are seeing is that there is less demand for insurance salespeople. The process has become much simpler in the computer age. Each agent can now service more customers and many customer choose to do it themselves using online providers etc.

Choose The Right Platform
Based on nothing more than their word, they tell us that PHP Agency is the fastest growing financial services company in America. They also show us that they have an app for smartphones and a website, just like every other financial services company in the world.

The Brochure ends with more of the MLM hype we saw in the beginning. Pictures of celebrities mixed in with random people they think we should know. Then to top it off there is the reminder that PHP Agency provides all 4 steps to creating wealth.

The brochure was fun but it did leave us wondering how the system actually works, so we thought we better keep looking.

How Do You Make Money With PHP Agency

To find out how you can make money, we looked at a copy of the PHP Agency Compensation Plan, this document explains all the ways PHP agents can earn commission as well as what they need to do to qualify for it.

PHP has managed to condense all the information into a 1 page document. We’ll do our best to extract as much as we can from what they’ve given us.

In true MLM tradition, the amount you can earn depends on your rank in the PHP Agency MLM. They higher you climb the triangular system, the more you can earn.

There are 11 ranks with PHP Agency, we’ll go through them below:

Trainee
The entry level rank, all you need to do is pay the initial fee, which we believe is $150, to become part of the PHP system. There is also some sort of training known as PHP System Flow. This does trigger the Pay To Play Red Flag

While you are at the ‘trainee’ rank, you can earn 30% commission on any sales referrals you send to PHP Agency

Associate
From what we can see, all you need to do to level up to from trainee to associate, is make 3 sales, recruit 3 people and accrue 3,000 Group Volume (GV) points.

In other words you need to recruit 3 people, make 3 sales, and sell around $3,000 worth of insurance products. Keep in mind that any purchases made by your new recruits count as GV

If you reach this level, you can earn 40% from any insurance products you sell through PHP Agency. For us, the requirement to recruit triggers the promotion through recruitment red flag.

Field Assosciate
If you reach this level, you can earn 50% commission on any insurance products you sell. To get here you will need to have achieved 15 sales, have at least 15 recruits with at least 30,000 in GV. To top it off at least one of your recruits must be at the Associate level.

To achieve this level, you will also need to become a licensed insurance agent. This will involve taking some state legislated exams… If that’s not your thing, then maybe PHP isn’t for you.

So for you to be promoted, your recruits need to also recruit.. We see this as the Constant Recruitment Red Flag.

Director
All you need is 2 direct Field Associates (personally sponsored), 6 licensed agents, 30 recruits, and 30 sales. If all this adds up to 60,000 GV points with PHP Agency, then you will be promoted to this rank!

So if you constantly recruit, you will achieve this promotion through recruitment and can now earn 60% commission on your sales.

Marketing Director
Continuing the recruitment theme, to get to this level, you need 3 Field Associates. Or this can be substituted with 1 Director and 1 Field Associate

You will also need 15 licensed agents, 50 recruits, 50 sales and 100,000 GV points… The theme of recruitment coupled with sales continues…

If you reach this level with PHP Agency, then your personal sales commissions could range from 75% to 115%

We can’t really decipher how you earn more commission. PHP Agency gives us an asterix in their document, but then fails to explain further with any small print. It could be an oversight or it could be that PHP Agency is being elusive.

Senior Marketing Director
Well the theme continues… To reach this rank, you will need:
2 Marketing Directors
60 Agents in
100 Super Recruits
100 Super Base Sales
200,000 Super Base Points

Unfortunately we can’t tell you what these ‘super’ things are because PHP Agency has chosen not to share these details.

What we can see it that if you climb their Egyptian structure and reach this level, you can earn between 77% and 117% on your sales… they haven’t explained the difference, but this is your commission range!

If you happen to climb the ranks and achieve this rank, you will also be eligible for a Generational Override, as shown below:

The generational override, is the commission you earn from sales made by your recruits, and anyone they recruit. It is only available to Agents who reach the rank of Senior Marketing Director or higher.

There is total of 30% paid on up to 7 generations in your PHP Agency downline. We see the generational override as raising the more than 5 levels in the payout red flag.

Executive Marketing Director
All you have to do to reach this rank, is double your results from Marketing Director! So you’ll need:

4 Marketing Directors
120 Agents in
200 Super Recruits
200 Super Base Sales
400,000 Super Base Points

If you manage to achieve this, you can earn between 77% and 117% in commission. This is only a slight increase for doubling your business, but that is something to discuss with PHP Agency.

As you continue to grow your downline with PHP Agency, you can climb to the top of the triangular system, and earn even more, as shown below:

If you reach the top rank of ‘Chairman’s Council’, you could earn up to 152% in commissions. You will also be entitled to the generational overrides, as well as the ring and watch shown in the image above. We see this as the most of the rewards go to your upline red flag.

Are PHP Agents Making Money

PHP Agency has conveniently declined to provide any proof that their agents are earning a decent income. However based on our review of WFG and our review of Primerica, we can assume that PHP Agents earn well below the industry average.

To get an idea of how much agents are earning, we applied Dr Jon Tayolors 5 Step MLM evaluation to the PHP Opportunity. We found that it raised all 4 of 5 flags, as shown below:

Red Flag 1 - Constant Recruitment of New Members
We managed to find some of the ‘education’ PHP provides to agents. They have an entire section on how to recruit for PHP. Interestingly there was no content about financial literacy or other courses which might actually help people become educated insurance agents.

You can not succeed in PHP Agency, unless you build large downline. To do this, you will need to constantly recruit.

Red Flag 2 - Promotion Through Recruitment
As we saw in the compensation plan, to climb the ranks in PHP Agency, there is a required number of direct recruits, as well as total recruits in your downline.

Coincidentally the sales requirements are at a similar level, so you could gain these promotions if only your recruits by the insurance products.

Red Flag 4 - Most of the Rewards go to your upline
When you join as a trainee, you can earn 30% commission on any sales. If you climb all the way to the top of the triangle, then you can earn up to 152%. Plus you will start to earn generational overrides and other incentives.

As a new trainee, most of the commission from your sales will go to people in your upline.

Red Flag 5 - More than 5 levels in the payout plan
As we saw PHP agency pays generational overrides on up to 7 levels in the MLM. Dr Taylor explained that the only way to have so many levels in a payment scheme, is if the underlying service is overpriced.

The only flag not raised by PHP is Red Flag 3 - Pay to Play.
After you have paid the initial sign up fee, there is no requirement for agents to buy any products. Having said that we have no doubt that buying insurance policies is strongly encouraged in new agents.

If we look at the compensation plan, we can see that at each level, the requirement for base recruits is the same as the requirement for base sales. In other words if every recruit was also a customer, you wouldn’t need any retail customers to get promoted.

Dr Taylor explains that this is particularly harmful because there is no money coming from outside the system. The only way for the people at the top to make money, is if people at the bottom are losing it.

According to his research, Dr Taylor says that if any MLM raises 4 or more flags from his evaluation, then 99.7% of participants will lose money.

Based on this we can hypothesize that only the top 0.3% of PHP Agents are making money, while the other 99.7% of PHP Agents lose money.

Is PHP Agency An Illegal Pyramid Scheme

Even though MLMs closely resemble pyramid schemes, they are not illegal. The reason dates back to the 1979 case of Amway vs the FTC. After 4 years in court Amway was found to be offering a business opportunity, rather than a pyramid scam. The technicalities came down to wording in their paperwork. One example requires consultants to make retail sales.

The Amway ruling effectively opened the doors for all other MLMs to operate within the law. However we should remember that being legal doesn’t make it ethical. If you knew that less than 1% of people had a chance of generating a real income, would you feel comfortable recruiting new consultants?

We also looked at the 2018 FTC Business Guidance for MLMS. The FTC explains that several activities used by MLMs to promote their business opportunities, may be misleading and unlawful.

Should You Join PHP Agency

The only reason to join PHP is if you are already interested in becoming an insurance agent. If this is the case, then we encourage you to thoroughly check all your options before deciding which path is best for you.

As always, we’d love to hear what you think in the comments section below, especially if you can share your own experiences with PHP Agency

For more posts like this, look at our list of mlm reviews. 

Pure Romance was founded in 1993 and based in Ohio. They tell us that Pure Romance products are based on ‘the latest sexual health education, the best in must-have beauty products, and the hottest bedroom accessories’

Since inception, Pure Romance has grown into a global company with over 30,000 consultants participating in their network marketing system. Here The Finance Guy, we believe you can’t make money with MLM, but we’ll go ahead with this full review of Pure Romance.

Pure Romance say that they have enabled their consultants to ‘take charge of their sexual health, and just maybe, take a leap and start a life-changing career’. They also say that their self employment opportunity will help them ‘achieve their dreams’.

What Is The Pure Romance Opportunity

We looked at the official Pure Romance Opportunity page. As expected, they tell us how you will be working with the ‘best products’ and earn the ‘best income’.

All you have to do is arrange a few home parties, and the money will flow in. You can set you own hours and control your own income.

If you don’t want to arrange parties, no problem, you’ll also get your own referral link to the Pure Romance Website, so you can sell orgasms to anyone with an internet connection.

If you have no experience Pure Romance say they will support you ‘every step of the way’. While this is all well and good, it does leave us wanting more information

How Do You Make Money With Pure Romance

To find out how you earn income from this opportunity, we looked at a copy of the Pure Romance Compensation Plan. This document explains all the ways you can earn commission as well as what you need to do to qualify for it.

The first thing we notice, is that to qualify for any payments from Pure Romance, you need to become an ‘active consultant’. To do this you need to purchase $200 worth of products in your first 60 days.

To remain active you need to spend at least $200 every 2 months on Pure Romance products. If any products are returned, they will be deducted from your total. If you don’t spend your $200, you’ll be deemed inactive and will lose any benefits you’ve accrued. To us, this raises the Pay to Play red flag

If you spend enough on Pure Romance products to remain active, then like all MLMs, there are many commissions you can earn. We’ll go through them below:

Retail Commission
The name says it all, you can make money by selling sex products to your friends and family. All you have to do is find someone to host a party and then you can earn a profit on any Pure Romance stuff purchased.

The amount you can earn from each sale is based on the difference between the retail price, and your buyers discount. The amount of discount you can get depends on your rank in the Pure Romance MLM

The retail margin available at each rank, is shown in the table below:

So as a new active consultant, you can make 40% off every sale you make to a full paying customer. Pure Romance suggests that if you arrange one sex product party a week, and sell $600 worth of product, you can make $240.

If you manage to climb 2 ranks and become a ‘Senior Consultant’. You can earn 50%, so the same party, selling the same sex toys, would now earn you $300. If you keep climbing all the way to the top of the triangular scheme, you can earn up to 60%. So that would be a commission of $360 from the same $600 party.

From this table, we can see that the key to climbing the Pure Romance ranks, is to recruit. If you personally sponsor 3 active consultants, you can become a ‘Senior Consultant’. If you sponsor 30, yourself, and they sponsor 30 in turn sponsor another 30 (your downline), and 8 of your sponsors become ‘senior’, you’ll have reached the top of the not a pyramid.

Let’s not forget, that all these people in your downline have to be active, so each consultant needs to spend $200 every 2 months on Pure Romance

What we can really see here, is the Promotion Through Recruitment Red Flag. The only way to climb the ranks, is to convince others to join the Pure Romance opportunity and become active consultants.

Side Note - Orders made through your website pay less. There is a flat rate of 30% for for purchases under $40, and 40% for $40 and over.

Paying less commission for orders made on the world’s largest marketplace (the web) doesn’t make sense to us. Then again it could be intentional because Pure Romance sells directly through their own website, where they pay no commission at all.

Free Product Bonus
This is basically a 5% rebate on every $1,000 you spend with Pure Romance per month. So if you spend $1,000, you get $50 in free products.. If you spend $10,000, you get the maximum $500.

While it’s nice to get products, we’d prefer cash. If they gave you an extra $500, you could spend it on achieving your monthly sexual desires, or you could add it toward your other financial goals.

Override Bonus
This is another typical MLM commission. It is the commission you make when people in your downline buy from Pure Romance. It is a complex system, where you can earn from your referrals, as well as their referrals and so on for several ‘generations’.

The override commission you can earn depends on your rank with Pure Romance. The Overrides paid at each rank in the scheme are shown below:

As we can see here, if you climb to the top, you can earn a total of 13% in overrides from 4 levels in your downline. This is commission you can earn from all the people you have recruited as well as those they recruit, and so on (for 4 levels).

In this table, Pure Romance reminds us that you need to recruit to ascent the ancient Egyptian burial structure.

While it’s fun to think about all those bonuses you might earn if you reach the top, we’d like to point out that all these bonuses are included in the price Consultants pay to Pure Romance.

Your upline will encourage you to keep spending because they are earning commission from you. This raises the Most Of The Rewards Go To Your Upline Red Flag.

It’s generally a good idea to try and do your job the best you can, but in MLMs, the more you sell, the more the people above you earn.

Consultant Trips
If you meet whatever the criteria of the time is, you might qualify for a trip to Mexico or wherever they are going.

Living in Australia, I’d love a luxury trip to Mexico to see the sights, enjoy the food, and embrace the culture. The only problem is, that MLM trips aren’t vacations, they are conferences.

If you ‘qualify’ for a trip, what they usually mean is that you pay for your own flights and accommodation. The only thing they pay for, is access to their confernce.

I don’t know about you, but if I paid my own way to Mexico, there’s no way I’d want to spend the whole time sitting in a room with no windows hearing about Pure Romance. This isn’t a vacation, it’s a Pure Romance hype conference.

Directors Bonus
There’s a lot of words in their compensation plan, but we’ll cut it down to this. If you make it to a directors rank, you can earn even more bonuses from even more levels in your downline.

Once again, this all sounds great, but it raises the More Than 5 Levels In The Downline Red Flag.

While it’s nice to know that there are so many ways to profit from other people’s sensual pleasures, we still need more information.

How Much Are Pure Romance Consultants Earning

Credit where it is due, they have provided an online copy of the 2019 Pure Romance Income Disclosure Statement. Most MLMs make this difficult to find, so until they remove it, we must give a nod to Pure Romance

ignoring all the sales words on the page, the most important information is in the table shown below:

Like most MLMs, Pure Romance can’t tell us about customer sales because they don’t measure them. So their Income Disclosure looks at all other commissions.

Like all pyramids, 83.45% of Pure Romance Consultants earned nothing from the bottom of the scheme. Moving up the ranks things don’t get much better.

Only the top 0.13% are earning more than they could in a regular job. Applying some high school math, we find that only 1 in 769 Pure Romance Consultants earns a full time income.

Why Is It Hard To Make Money With Pure Romance

We applied Dr Jon Tayolors 5 Step MLM evaluation to this opportunity. We found that Pure Romance raises all the Red Flags. According to the research 99.3% of people who join the Pure Romance Opportunity will lose money.

The problem is not with the company, it’s with the business model. MLM is designed to help companies sell products to you. If you join Pure Romance, you are a customer, not a business partner.

Is Pure Romance An Illegal Pyramid Scam

Even though MLMs closely resemble pyramids, they are not illegal. The technicalities date back to a 1979 Amway ruling. To the best of our understanding, Amway managed to word their documentation in a way that bypassed the pyramid scheme laws. This opened the doors for other MLMs to do the same.

While the paperwork may make them legal, that doesn’t mean that Nuskin and other MLMs are ethical. If you join any MLM, you have to realize that the only way to make money is if people below you are losing money

We looked at the 2018 FTC Business Guidance for MLMs. This explains when MLM participants are acting in a way that is misleading or unlawful. Examples of breaches include pressuring downlines to purchase products, and making unsubstantiated claims about earnings potential. Based on what we’ve seen, it appears some Pure Romance Consultants are in Breach of the FTC guidance.

As always, we’d love to hear what you think in the comments section below, especially if you an share your experiences with Pure Romance

Are you wondering if you can make money in an MLM? Check our our  list of mlm reviews before you join. If you find one that’s not on the list, let us know and we’ll do our best to write a review

IM Mastery Academy, was launched in 2013. Originally known as iMarketslive, they sell their financial trading and education software.

Along with the range of IM Academy services, they claim that their software can trade for you. All you have to do is turn it on, and it will copy the trades of ‘experts’ on the Foreign Exchange market. They also offer a bunch of packages they call the IM Academies.

IM Mastery has chosen to sell the iMarketsLive system through network marketing. Here at The Finance Guy, we believe you can’t make money with MLM, but we’ll go ahead with this full review of IM Mastery Academy. We’ll find out if they have a real opportunity or just another MLM money losing scheme.

How Do You Make Money With IM Mastery Academy

If you join iMarketslive, they say their philosophy is to educate, empower, and enrich. To understand how this business opportunity works, the best document available online was a copy of the 2016 iMarketsLive Compensation Plan. This documents explains all the different ways you can earn an income through the IM Mastery Academy

Given that the company has changed names, and perhaps some of their business practices, we also looked at a less official copy of the more current IM Mastery Academy Compensation Plan. Our review will be based on information found in both documents.

The first thing we learn, is that becoming an Independent Business Owner (IBO) with IM Academy, will set you on the path to ‘securing your financial future’. We’ve heard similar claims from many MLMs in the past, but we’ll keep going.

You can join the compensation plan without buying any products. You would just need to pay the $15 monthly fee to be an IBO.

If you do become an IBO, then they do recommend that you also become a member of their ‘Platinum Package’. This package gives you access to the full range of IM Mastery Academy products and services.

The Platinum Package will cost you $324.94 upfront, then $274.95 per month. This is quite a hefty expense, but they tell us that once we see how well the products work, we’ll happily recommend them to others.

The first way you can earn is by recommending 2 friends to also buy the Platinum Package from iMarketsLive. If you do this, then you will get your package for free.

IM Mastery calls this the 2 and Free promotion. If you continue to sell any packages after that, you can get upfront commissions on each sale. This would be their version of paying retail commission.

Platinum Bonus
Like all MLMs, the commission doesn’t end at just making sales yourself. You can also make money by recruiting others to join IM Academy as IBOs.

iMarketslive is a little unique compared to other MLMs in that it pays a fixed weekly amount of residual income. The amount each IBO earns depends on their rank and their Group Volume (GV) with IM Mastery Academy.

The amount of Platinum Bonus you can earn, and the qualification requirements are shown in the image below:

As we noted earlier, if you sell 2 platinum packages you get your own one for free. We are assuming that if you sell a third one, you will become qualified as ‘Platinum 150’, and will start to earn $37.50 per week as as well as get your package free.

To get to any rank above Platinum 150, you will need to have at least three legs. Every time you sponsor a new customer or IBO, you have the choice to either start a new ‘leg’ or place them on an existing one. The need to balance legs prevents you from sponsoring just one superstar who does all the work for you.

The people you personally recruit are known as your ‘first line’. The people they recruit are your second line, and so on. Group Volume (GV) is measured from all the money spent by all the IBOs and customers in your downline.

To qualify for Platinum 600, you need to have at least 4 customers on each leg. So it is possible to achieve this with 12 referrals, if they are evenly split with 4 on each of your 3 legs. At this level you will earn $150 per week, which is quite respectable. Keep in mind there is also the minimum GV of $1,740,.

Each active Platinum package is worth 150 in GV per month. So you’d need most of your customers / IBOs to be on this package or you’d need more than 12 to hit the minimum GV.

Chairman Infinity Bonus
As the name suggests, this bonus is only available to IBOs who reach the chairman rank or above. It is paid on top of the platinum bonus shown above. The amount of Chairman Infinity Bonus you can earn is shown below:

As we can see you can earn up to 2%, or $40,000 per leg in your downline. Unlike the platinum bonus, you can earn this on all your legs, and there is no upside limit on your weekly earnings.

It’s nice to know that IM Mastery Academy is being so generous, but keep in mind that all these commissions are included in the price you pay your platinum package.

Rank Achievement Bonus
As the name suggests, this is a one off payment you can earn for achieving a given rank with IM Mastery Academy. In order to get paid, you need to remain qualified for the for the ‘payout period’.

The rank achievement bonus and the time you need to be qualified with iMarketslive, is shown below:

Once again, all these generous bonuses are included in the price you pay to IM Mastery.

Are IM Mastery IBOs Making Money

To find out if IBO’s are making money with IM Mastery Academy, the best document we could find was the 2018 iMarkets Live Income Disclosure. This document shows all the commissions paid to IBOs at each rank during 2018.

The information was given to us in the table below:

The first thing we notice is that 45,924 of the 52,706 never made it past the entry rank of ‘IBO’. In other words 87.13% of IM Mastery IBO’s failed to achieve any promotions with iMarketslive.

If we look at the averge income for the year, we see that those at the IBO rank only made $52 for the year. But in reality, the numbers are worse!. This income only measures Active IBOs. Only 20,107 IBO’s earned any income at the entry rank. The remaining 25,817 earned absolutely nothing. From this we calculate that 40.25% of all IBO’s earned nothing from IM Mastery Academy

As expected, once those that reached the ‘Chairman’ rank or higher earned a decent annual income from iMarkets live. In 2018, there were a total of 58 IBO’s who made it to the top levels of this MLM. This represents 0.11% of all IBOs. Again doing some math we find that only 1 in 909 IBO’s earns a full time income from IM Mastery Academy

Maybe 2018 was just a bad year for the IM IBOs, so we decided to come check again and we found a copy of the 2020 IM Master Income Disclosure. Once again, they’ve done their best to tell us as little as possible, all they gave us was 1 page. The most important information was in the table shown below:

By doing a little math, we see that 99.21% of IBOs earned less than $25,000 in 2020. Keep in mind that there is a difference between income and profit. These figures do not include any expenses incurred. If we were to look at the costs involved, the results would be even worse.

Another point to consider is that IM Mastery has only included IBOs who earned a commission. They have conveniently disregarded all of the ones who earned absolutely nothing. IM have made the classic MLM statement, that ‘most people join the MLM just to be customers’.. This is their standard explanation for why so many people in the business opportunity fail to earn any income at all.

If we were to look at all IBOs who sign up to opportunity, we think we’d find that most IM Mastery IBOs are losing money.

Why Is It Difficult To Make Money With IMarketsLive

We believe that the problem is not unique to IM Mastery Academy / iMarketsLive. The problem is with the business model. In his book, Multi-level Marketing Unmasked, Jon Taylor found that 99.7% of people who join direct selling companies end up losing money.  Despite what you hear in the sales pitches, it is highly unlikely that you will make money from any network marketing company.

The reason is because MLM is a system designed to sell products to customers. When you sign up as an IBO, you are in fact a customer or IM Mastery Academy. They have no intention of making you a business partner. The goal is to make profit when you spend money.

Is IM Mastery Academy An Illegal Pyramid Scam

Even though MLMs closely resemble pyramids, they are not illegal. The technicalities date back to a 1979 Amway ruling. To the best of our understanding, Amway managed to word their documentation in a way that bypassed the pyramid scheme laws. This opened the doors for other MLMs to do the same.

While the paperwork may make them legal, that doesn’t mean that MLMs are ethical. If you join any MLM, you have to realize that the only way to make money is if people below you are losing money

We looked at the 2018 FTC Business Guidance for MLMs. This explains when MLM participants are acting in a way that is misleading or unlawful. Examples of breaches include pressuring downlines to purchase products, and making unsubstantiated claims about earnings potential. Based on what we’ve seen, it appears some IM Mastery IBOs are in breach of the FTC guidance.

As always, we’d love to hear what you think in the comments section below, especially if you an share your experiences with IM Maastery / iMarketsLive

Are you wondering if you can make money in an MLM? Check our our  list of mlm reviews before you join. If you find one that’s not on the list, let us know and we’ll do our best to write a review

Farmasi is a Turkish based Cosmetics company. On the official about Farmasi page, they say the company is 67 years old, with 80 years of experience. Not sure where the extra 13 years came from, but we’ll carry on.

In 2010 they decided to sell the Farmasi products through a network of ‘Beauty Influencers’. Since then, they say they have been experience several years of ‘triple digit growth’ in sales.

Here at The Finance Guy, we believe you can’t make money with MLM, but we’ll give them a chance to prove us wrong. We’ll do a full review of Farmasi, to find out if their opportunity is a real self employment option, or just another MLM money trap.

What Is The Farmasi Opportunity

To find out what the excitement is about, we looked at the current copy of the Farmasi Opportunity Plan. The first thing it tells us, is that if you join Farmasi, you can be happy, beautiful, and financially successful. All you have to do is use their products and benefit from their ‘highly profitable compensation plan’.

The simple formula is to use the product, recommend it to others, and become a Farmasi Product Influencer. You’ll get your own version of a webpage and a phone app, so you can work your Farmasi gig any time you want, to anyone you want.

The problem with being able to market to absolutely anyone, is that so can everyone else. If you join, you’ll be in competition with all the other Farmasi Product Influencers.

How Do You Earn Money With Farmasi

Most MLMs that we’ve looked at have made the claim that they ‘one of the best compensation plans’, so we’ll look a little closer and see what the Farmasi Compensation plan is all about. It turns out that the full compensation plan is part of the opportunity plan.

The first thing we’ll say is that this document is not well written. Firstly there’s now a reference to the company having 70 years experience. Remember in the about page it was 67 years old with 80 years experience. This discrepancy with years could be an oversight, or it could be that Farmasi is misrepresenting their information.

The compensation plan itself is not easy to read, but we’ll do our best job here to explain all the ways you can earn a commission as a Farmasi Beauty Influencer.

The first thing we deciphered is that in order to qualify for compensation, you need to remain active. To remain active, you need to generate 125 Personal Volume (PV) points. The points are accumulated by spending money with Farmasi. You will need to spend US $125 per month on Farmasi products to qualify for any commission at all. This is common in many MLMs, and it raises the Pay To Play red flag.

If you buy your monthly quota and remain active, you might earn some commission from Farmasi in one or many of the following ways:

Retail Sales
As the name suggests, this is commission you can earn if you are able to sell Farmasi products to retail customers. As an active influencer, you will be able to purchase products at 50% off the recommended retail price. If you sell at full price, you can earn a 50% commission on any sales you make at full retail price.

The retail commission you can earn could increase to as much as 75%, which we will explain as we look at the other ways to earn with Farmasi.

Personal Bonus
This is where you can increase your retail commission by up to an additional 25%. It all comes down to your total Farmasi Group Volume (GV) for the month.

Group Volume includes your PV, which could be products you sell to customers or use yourself. It also includes all the volume of any other Farmasi Beauty Influencers who you have personally sponsored

The amount of GV needed per month for each level of additional commission, is shown below:

You can earn what is known in MLMs as a ‘pass up’ bonus here. This happens when someone in your downline is at a lower level than you. So if you qualify for an extra 9%, and someone you’ve sponsored only gets 3%, then you will be paid the 6% difference in the group volume bonus. In other words, they ‘pass it up’. This does trigger the ‘most of the rewards go to your upline red flag

Leadership Bonus
If you happen to reach the top personal bonus of 25%, then you might qualify for this. The leadership bonus is paid when someone you have sponsored also hits the 25% level. You will no longer be able to earn a personal bonus from them, but now you can earn a leadership bonus.

The leadership bonus is paid on up to 6 generations in your downline. Your first generation, is the people you personally sponsor. Your 2nd generation is the people they sponsor, and so on. Getting paid on 6 generations raises the red flag - More than 5 layers in the payout plan.

The amount of leadership bonus you can earn from Farmasi is shown in the diagram below:

While it is not well explained in the compensation plan, we can see that once you get to the leadership ranks with Farmasi, you can start earning these bonuses. The higher ranks earn more commission and get access to more generations. We are not exactly sure how these bonuses are calculated (because they are so badly explained), butit looks like they are very generous.

While it’s nice to know that the Farmasi Influencers who reach the ‘Boss’ level can earn a total of 25.25% in leadership bonuses, this is not great for new influencers. All this commission is included in the prices charged to you, more than half of what you pay for Farmasi products will go to your upline as commission.

If you’ve ever wondered why people above you in any MLM keep telling you how important it is to buy products, it’s because they are making money off you.

If you make it to the top of the Farmasi ranks, you might also be entitled to a car allowance and some cash bonuses from time to time.

Are Farmasi Influencers Making Money

Well, we know that it’s possible to earn lots of different commissions from Farmasi, now we want to know how much influencers are actually earning.

We looked at what they call the Farmasi Income Disclaimer. This page claims that they can’t give us income details because they are ‘waiting till the end of the first year’.

Well they’ve been an MLM for more than 10 years, so we’re not sure what they mean by this. It could be that they haven’t updated this page since 2010, or it could be that Farmasi doesn’t want to share the earnings information because Farmasi Beauty Influencers are not making money.

Is Farmasi An Illegal Pyramid Scam

Even though MLMs closely resemble pyramids, they are not illegal. The technicalities date back to a 1979 Amway ruling. To the best of our understanding, Amway managed to word their documentation in a way that bypassed the pyramid scheme laws. This opened the doors for other MLMs to do the same.

While the paperwork may make them legal, that doesn’t mean that Monat or any other MLM is ethical. If you join, you have to realize that the only way to make money is if people below you are losing money.

It’s also important to remember that the people above you earn commission when you spend money on MLM products. When they encourage you to keep spending, it could be that they want to keep earning!

One thing we did notice is that Farmasi pays a $30 commission every time you sponsor a new Beauty Influencer. Based on our understanding of the 2018 FTC Business Guidance for MLMs, this is a breach. However this company is based in Turkey, so we can’t be sure what laws apply over there.

Should You Join Farmasi

The only reason to join any MLM, should be if you are already a happy customer. If you are not willing to buy the products at full price, then you’ll probably have hard time selling them to anyone else.

A major concern here, is in the overly generous compensation plan. The only way to pay so much commission and still turn a profit, is if Farmasi products are very over priced, or if very few Influencers earned more than minimum commission.

As always, we’d love to hear what you think in the comments below, especially if you can share your experiences with Farmasi.

Are you wondering if you can make money in an MLM? Check our our  list of mlm reviews before you join. If you find one that’s not on the list, let us know and we’ll do our best to write a review

The Blessing loom is an online money making scheme that is currently running through social media. This game has been running for a few years despite being called a pyramid scheme by consumer affairs in 2016.

Now during the current Covid madness, it seems that people are promoting this more than usual. Maybe having the economy in lock down, is a good time to push these alternate concepts of money making ideas.

We agree that this does appear to be a pure pyramid scheme. This is the internet version of the classic chain letter scam.

Even though there is absolutely no official information about this system, we’ll do our best to explain how it works in this full review of the Blessing Loom. One of the first things we found was that as recently as April 2020, NBC Connecticut warned that Blessing Loom is a scam.

What Is The Blessing Loom

The Blessing Loom is a pay to play money making game. If you are invited to play, you will no doubt get a version of their ‘pay out diagram’. They obviously think their system resembles a loom. To us it also looks like a pyramid (if viewed from above. Their diagram, and a pyramid are shown below:

The goal of the Blessing Loom game, is to make it to the middle circle, or the top of the pyramid. You start of buying into one of the 8 blue spots at the lowest outer layer. We’ve seen different versions of the game with different entry fees. Usually it’s US $100, but we have seen a version in the UK which was charging GBP 250 to join the outer loom circle.

After you join the loom, you will be invited to join a private chat group for your loom. This will be on your phone through messenger or whatsapp or something similar. In this discussion group, you will no doubt hear lots of standard MLM hype, about how the people are making so much money. They’ll claim that they have already cashed out several times, and this is like the 10th Loom they have participated in… there’s no way to say if any of these claims are true.

Once all 8 spots have been purchased, the loom splits into 2 new games, and you are now on one of the four green spots. 8 new players join, and after a 2nd split, you will be at one of the pink spots. After a third lot of 8 players has been recruited, you will have made it to the central spot.

The rules of the game are simple. You pay for a spot in the outer circle, and all the money goes to the person in the middle. In other words, if you buy a spot for $100, and just wait for the system to split 3 times, you can receive up to $800 when the next round of players joins. Once you’ve made this money, they say, you can play again.

The standard story they’ll tell you, is that if you just find 2 friends then they each find 2 friends, in no time at all, you’ll be making money. They’ll also show you a picture of a ‘populated’ loom, which may look something like this:

If we were to look just at this one diagram, you could get the impression, that there are only 15 spots on the Loom. So it looks like it just takes 14 people to join after you to get your $800 payout. So that’s your money back plus $700 in profit.

The cost of buying into the scheme may differ, but the concept is the same. You start on the outer ring, then once you climb to the center, you can get back 8 times the initial cost. In New Zealand the scam charges $200 to buy in, with the potential to $1,600 back.

If this system worked, then making money might be as simple as ‘signing up a couple of friends’. The problem is, that this just sounds too good to be true, so it probably isn’t.

In reality, reaching the top of the pyramid, or the middle of the Blessing Loom is very difficult. Every time you move up a level, the system splits, so by the time you reach the top, there will be 8 Blessing Looms running in your social network. When you are trying to recruit new members, you’ll be competing with 7 others who probably know a lot of the same people, and between the 8 of you, you’ll need to find 64 new recruits…

Every time the Blessing Loom splits, half the people who were in your group, become your competitors. This is why very few people make money because systems like this reach saturation very quickly. The diagram below shows what your network would like if you made it from the bottom to the top of this pyramid.

Is Blessing Loom An Illegal Pyramid Scam

Based on all the official warnings we have seen, it would appear that Blessing Loom is an illegal pyramid scheme. Having said that, it is one that is particularly hard to shut down. The challenge is that there is no official Blessing Loom company running the system. Each loom is essentially an independent pyramid scheme with just the 15 players in it.

So even though this is a blatant pyramid scheme, authorities would need to shut down each loom, which is very difficult, especially if they keep splitting. The New Zealand Commerce Commission, has advised that anyone caught running such a scheme can be fined. But issuing a fine to one person, and stopping one loom, will not stop the spread of this game.

Should You Join The Blessing Loom

Given that it is illegal in several countries, it’s probably not a good idea. Even if you are one of the very few who make it to the top of the Loom pyramid, then it’s you’d might find yourself in legal trouble. Even if you never get in trouble, and make some money, think about the other costs. If the only way you could make money was if your friends and family lost it, would you want to do it? With the Blessing Loom, that’s exactly what is happening. The only way to make money is to take it from others who are in your Loom.

If you are willing to run a money taking scam, then why not go all in. . The blessing loom is exceptionally easy to manipulate. There’s no need to pay to join an existing loom, when you can just create your own with yourself at the top.

It wouldn’t be very hard to create one with 7 different names that are all really just you. You could illegally start your own loom without paying to join, then find 8 people to fill the outer layer at the bottom of the pyramid. Once the pyramid splits into 2 new looms, 2 of your aliases could then receive even more entry fees, and so on. At $100 per entry, you could end up with $5,600 without putting any money in yourself.

This is where game theory comes into play. Game theory is the economic concept that, if there is a way to take advantage, then someone will do it. This system is so easy to cheat, and is so obviously a scam. The game will attract a lot of people who are willing to cheat the system..

That’s about all we an say about the Blessing Loom, but as always, we’d love to hear what you think in the comments below, especially if you have any stories to share about this system.

For more posts like this, look at our list of mlm reviews.  If you know of an MLM that isn’t on the list, let us know so we can add it to our list.

Modere was founded in 1992 out of Springville Utah. It was formerly known as ‘Neways’. Modere products include a range of personal care, health / wellness, and home care stuff. Their point of difference is that they tell us they are ‘safer, stylish, smart’. Nice sounding words.

Rather than using traditional sales avenues, Modere has chosen to sell their products through Multi-Level Marketing. They now have a growing network of ‘Social Marketing Consultants’. Here at The Finance Guy, we believe’ you can’t make money with MLM, but we’ll give Modere a chance to prove us wrong. Our review of the Modere business opporutnity will find out if this is a real self employment gig, or a just another MLM money trap..

How Do You Make Money With Modere

To find out how we’re going to make money, we looked at a copy of the Modere compensation plan. This explains all the ways you can earn commission from Modere, and what you need to do to qualify for it.

Like all MLMs, there are many ways to potentially make money with Modere. The first thing we learn, is that there are 2 basic ways to make money with Modere. You can promote the products and you can share the business opportunity. This concept is exactly the same in every MLM we’ve looked at so far.

If you do decide to become a Modere ‘Social Marketing Consultant’, you can earn from their many commissions. But first you need to qualify for all the commission. The only way to do that is to climb the ranks. Modere explains their hierarchy in the diagram below:

The activity points are obtained by spending money on Modere products. If people you recruit also buy products, then they will contribute to your ‘org points’. So if you join Modere, the person who recruited you will benefit from any products you buy. The compensation plan explains that there are many ways to earn commission with Modere. We’ll go through quickly here:

Breakout Bonus
This is only applicable for 30 days after you join Modere as a social marketing consultant. You will get a 25% rebate on your spending, plus the person who sponsored you will get 25% commission, and the person above them will get 10%. This is designed to encourage you to spend as much as possible as soon as possible.

The breakout bonus is also meant to keep you focused on recruiting. After all you can earn better commission from new recruits who buy Modere in their first 30 days. MLMs call this ‘taprooting’ they believe that once you have recruited people to the opportunity, you yourself become less likely to quit. This is why they want you to recruit as much as possible as soon as possible.

Unilevel Commissions
If you recruit other social marketers to join your Modere ‘downline’, then you can make money from their activity. It doesn’t end there though! You can also make money from anyone they recruit. Over time, this will theoretically become a source of residual income.

The amount of Unilevel commission you can earn depends on your rank with Modere. The amount and number of levels you can earn on at each rank are shown in the image below:

When you first join Modere as a ‘C1’ Social Marketing Consultant, you can only earn 3% commission from your direct referrals. If you climb the ranks and reach Modere Elite Social Marketer 3 ‘E3’, you can earn all the unilevel commission. At this rank you can earn from 8 levels in your downline with total commission adding up to 37%.

it’s important to remember that this commission is included in the price Modere charges to their consultants. So when you join 37% of what you spend with Modere goes to your upline as commission. So the people 8 levels above you have motivation to tell you to buy more Modere.A

Rank Advancement Bonus
As the name suggests, this is a one off bonus you can earn if you reach certain ranks with Modere. There is also a ‘Rank Advancement Matching Bonus’. This is a bonus you can earn if someone below you in the Modere system climbs the ranks. Your downline will get an advancement bonus, and you will get a matching bonus. For a more comprehensive explanation, check out the Modere compensation plan

Dynamic Team Leader and Director Bonus
This is an extra 5% you can earn on your top 3 levels in your downline. As the name suggests, you can only earn this if you reach one of the director ranks. It doesn’t end there! You can also earn an extra 2%-4% on your 4th team with the Modere 4 or more bonus.

These director bonuses are all well and good, but you need to make it toward the top of the pyramid to earn them, and if you' aren’t up there, these bonuses are included in the price you pay to Modere.

Customer Unilevel Commissions
These are very much like the Unilevel commissions we looked at earlier. The only difference is that this is the commission you get if you, or someone in your downline sells Modere to a retail customer. The amount you can earn on each level and Modere rank, is shown below:

There is also a ‘Modere sharing bonus’. With this, you can earn up to 20% more commission in addition to the customer commissions. The amount you earn depends on the total volume of sales generated by you and your downline. The important thing to remember is that all this commission is included in the price. So if you buy any products, then 42% of your money is going to pay commission to 5 layers of the Modere system.

Along with these commissions, you might also be able to earn cash bonuses such as the ‘Monthly selling reward’, or the ‘Consistency Selling reward’. These are both payable if you qualify at the right rank with the right volume in Modere. And of course these bonuses are included in the price you pay for Modere products.

Leadership Management Bonus
This is a matching bonus. If you reach the top management ranks within the Modere system, you can qualify to earn this bonus. The matching amount is paid on what Modere calls a ‘generation’ in your downline. If you reach the top ranks, you can earn up to 22% from 2 generations.

Are Modere Marketers Making Money

Before you decide to become a Modere Social Marketer, this is perhaps the most important question you should ask. If you were offered a job as a sales representative for any given brand, you would want to know how many sales and how much the average salesperson makes.

To answer this, we found a copy of the Modere Income Disclosure Statement. This simplified 1 page document, explains how much commission was paid to all Modere marketers in 2018.

Something interesting we notice is that Modere tells us that their focus is on growing retail customers. This is refreshing because we believe retail sales is the best way to make money in any MLM. While they have said this is their focus, and they claim to have 7 customers for every marketer, we were unable to find any proof of these claims

Modere goes on to explain that the there are 2 ways to make money with them.. put simply they are;
1. Selling product
2. Recruiting Modere Social Marketers

Credit where credit is due, the Modere Income Disclosure, has succeeded in telling us as little as possible. While specific numbers aren’t shared, the do tell us that anyone who made an order in 2017, was considered active. Based on this vague qualification, they provide the table shown below:

There’s no way to put this table in a positive light. If we assume that $50,000 is an acceptable income for hard work, then based on this table, 99.15% of Modere Marketers earned less than a full time income

In other words less than 1 in 117 active Modere marketers earns a full time income. Keep in mind, we are only basing this on the numbers provided by Modere. This is there best version of their business opporunity

Unfortunately Modere has not provide full access to their real data. For example if we included all the Modere Marketers who quit in 2017, or purchased no product, then we’d probably find that more than 99% of Modere marketers lost money in 2017

It’s possible that 2018 was just a bad year for Modere Social Marketers, so we also had a look at the 2019 Modere Income Disclosure Statement Once again, they have provided a similar one page document with the most relevant information being in a table which we’ve shown below:

An interesting difference here, is that we see an extra column, and they have changed how they calculate their figures. They’ve made our job easier because we can see from their own numbers that 99.94% of Modere Social Marketers earned less than a full time income in 2019.

Based on their own results we’d have to say it’s very unlikely that you will make money as a Modere Social Marketer

Why Is It Hard To Make Money With Modere

We looked at Modere with Dr Jon Tayolors 5 Step MLM evaluation, and we found that it raised several flags. According to Dr Taylor, if any MLM raises more than 4 flags then your chances of turning a profit are less then 1 in 1,000, let’s take a closer look:

Red Flag 1 - Constant Recruitment of New Members
You can not climb the ranks of Modere unless you aggressively recruit. It doesn’t end there, you need the people below you to also recruit.

Red Flag 2 - Promotion Through Recruit
In order to climb the Modere ranks, you need to build a dowline. Your advancement in the Modere ranks depends upon you recruiting enough victims to qualify for each rank.

Red Flag 3 - Pay to Play
Even though they've skirted around this in their documentation, if you don’t buy Modere, you will become inactive

Red Flag 4 - Most of the Rewards go to your upline
As we already found, if you are a Modere marketer, then 42% of what you spend on Modere products, goes to your upline as commission. After production and shipping costs, and company profit margins, this doesn’t leave much for you.

Red Flag 5 - More than 5 levels in the payout plan
As we saw, Modere pays unilevel commissions on up to 8 levels in your downline. Dr Taylor says 'Excessive levels in a downline is another sign participants are expected to sell primarily to their downline, rather than to the general public.  This makes it an exploitative money transfer scheme, or product-based pyramid scheme'.

According to Dr Taylor, if a business opportunity raises four or more of the flags, then 99.7% of participants will lose money. In other words, this study suggests that only 0.3% of Modere marketers will turn any profit.

Is Modere An Illegal Pyramid Scam

Even though MLMs closely resemble pyramid schemes, they are not illegal. The reason dates back to the 1979 case of Amway vs the FTC. After 4 years in court Amway was found to be offering a business opportunity, rather than a pyramid scam. The technicalities came down to wording in their paperwork. One example requires consultants to make retail sales.

The Amway ruling effectively opened the doors for all other MLMs to operate within the law. However we should remember that being legal doesn’t make it ethical. If you knew that less than 1% of people had a chance of generating a real income, would you feel comfortable recruiting new consultants?

Another issue, is that even though these rules may be in the paperwork, they are difficult to enforce. For example, several people in MLMs have said that they have cupboards full of product. This is because of the minimum monthly purchases they need to make to remain active in the system. Even though stockpiling is against the rules, there is no way for the company to monitor it.

Should You Join Modere

Before you join the business opportunity, we think you should have a good look at the Modere product catalogue It is a good idea to try some products as a customer and see how you feel about them. It’s important to believe in the products yourself. After all you won’t make money with Modere unless you sell their products.

If you are looking for a business opportunity, then keep in mind that in 2018, less than 1% of active Modere marketers earned a full time income. If you were offered a job where 99% of people were underpaid, would you accept it? We think that you should consider all your options before joining Modere or any other MLM.

As always we welcome your feedback in the comments section below.  We'd love to hear what you think about Modere, especially if you can share your personal experiences with the company

For more posts like this, look at our list of mlm reviews.  If you know of an MLM that isn’t on the list, let us know so we can add it to our list.

We recently found out about Revolution Financial from our favourite Reddit MLM group. Given that it was a combination of MLM and Finance, it was a no brainer to write a review of Revolution Financial Management

We looked at the Revolution Financial homepage. It starts with a video which says the word ‘family’ over and over again. We’re supposed to work with our family and make the work people feel like a family. It then mixes it up by repeating the word ‘teamwork’ for a bit. We then get the combination that teamwork feels like family.

After a little further digging on their website, we found that Revolution Financial is an offshoot of World Financial Management. We already did a review of WFG, but we’ll take this an opportunity to see if Revolution is any different or just a carbon copy.

What Does Revolution Financial Do

According to the Revolution website, their goal is to help American families improve their financial positions. They do this by meeting with clients, going over their financial needs, then coming back to them with recommendations. This is no different to how any financial adviser works.

We had a look at the Revolution Financial products page. We see that they offer products for both insurance and savings. They even have a debt management area. Here we found the disclosure that Revolution Financial sells products using the WFG license agreements. To us this suggests that Revolution Financial Management is just a re-branded version of World Financial Group.

There could be many reasons for the company operating under a different name. Maybe they didn’t want to share the good reputation of the WFG brand. Using a new name would mean that new prospects wouldn’t hear all the good reviews from previous WFG clients and agents. I’m sure we could all think of a few other reasons for operating under a different name.

How Do You Make Money With Revolution Financial Management

Revolution uses the WFG mulit-level marketing system. This means that if you join, there are essentially 2 ways to make money. You can sell products to customers for commission, or you can recruit a team below you. If you recruit others, you will make a share of any sales they or anyone they recruit make. This theoretically will build what’s known as passive income for you. Here at The Finance Guy, we believe you can’t make money with MLM, but many people seem to try.

We wanted to know what you’d be doing as a new recruit. To find out, we looked at a copy of the Revolution Financial new agent kit. The first thing we want to point out, is that this manual directs new agents to the mywfg website. This confirms that Revolution Financial is exactly the same as WFG.

You can find out why you can’t make money with Revolution Financial from our WFG review. To give you an idea of how they operate, we’ll use this review to take a closer look at the new agent kit. This is a Fast Start guide designed to show you exactly what you need to do to succeed in their MLM system.

On the first page of the fast start manual, we see that Revolution has used a baseball diagram to help us understand what our goals should be. This is shown below:

What we see here, is that the business appears to be fairly simple. We’re supposed to get our friends excited, ask them for referrals, sell them products and recruit them to Revolution Financial.

We also notice the line above the baseball diamond saying ‘get out of the way of your own warm market’. This line might not make much sense at first, but to us it highlights a major problem with the Revolution business model. What they are trying to say here, is that you should let your upline coach (the person who sponsored you), run all the meetings with your warm market. They will tell you that this is how you will learn, but we see it as a way for them to sell to your warm leads without paying you.

The next 3 pages are all about building a prospect list. First there’s an extensive memory jogger, where they encourage you to think of everyone you know. Their ideal prospects include ‘someone with glasses’, someone who is ‘out of state’, and someone who ‘attended a wedding’. In other words it’s everyone you know.

The goal is to write down 100 names and phone numbers. Then next to each name is space to give them a profile score. Some of the things they will get points for are ‘being married’, ‘having dependent children’, ‘being dissatisfied with their current situation.’ It may seem odd for a financial adviser to want clients who are unhappy with their situations. To us it appears that they are focused more on recruiting than providing financial advice.

Once you’ve got your list of 100 people, the next step is to identify the ‘top 25 start up list’. We assume this is the ones who score the best on the Revolution profile points. They even give you a script to use so you can start calling your friends and family.

The phone script involves calling your warm leads and asking them to help you by being a ‘training appointment'. What this means is that you can watch as your upline sits with them and tries to sell them into Revolution Financial Management. What they probably expect is that you would be doing a practice and the trainer would be helping you.

The phone script is intentionally vague. They even say that giving too much information is a ‘scenario for disaster’. Essentially when you show up at your friends place with a Revolution recruiter, they have no real idea why you’re there. It this happened to us it would feel like the Revolution recruit is using their friendship to pressure you into something you probably don’t want.

Having spent several years in financial services, this is an unusual structure. Usually during training you would go with an experienced adviser to see their clients. Then after you have your licenses you can start approaching your own leads. That way they become your clients. To us it looks like Revolution wants to turn your leads into their clients, leaving you with no clients and no warm leads for yourself.

After the phone script is a very simple 90 day plan. Revolution gives you space so set some of your own goals, but they also give you some to get started. First and foremost is recruiting, then it’s pass your exams, and after that it up to you.

The Revolution Financial Fast Start Guide could essentially be used for any MLM. Apart from the brief mention that there are licenses, they don’t appear to offer any financial education. it looks like you are on your own when it comes to studying and passing the tests. This is disappointing because if they were really helping you become a financial adviser, the first focus should be to help educate you properly before you try and prospect any clients. Instead the focus here is on using your own warm leads to try and recruit as many new members as possible.

Why Is It Difficult To Make Money With Revolution Financial

The challenge is not unique to Revolution Financial, it’s common to all MLMs. The problem is that MLM is a system which is designed to make sales for the company, not to sell franchises. If you join Revolution Financial, or any MLM, you are a customer, not a business owner.

Recruiting a ‘downline’ is never as easy as they suggest. Our review of WFG, (which is the exact system used by Revolution), found that to get 3 senior members in your downline, you would need to prospect around 2,500 people. That’s a lot of prospecting!

Another interesting fact we learned about the business model used by Revolution, is that only 1 in 4 associates gets their insurance license. Given that this license is part of the 90 day plan, we can only conclude that the other 3/4 quit. You can expect 75% of your recruits to quit Revolution within their first 90 days of joining. It could be that Revolution Financial uses a system designed to churn and burn recruits. It looks like once they’ve got your warm leads, they’re done with you.

Is Revolution Financial An Illegal Pyramid Scam

Even though MLMs closely resemble pyramid schemes, they are not illegal. The reason dates back to the 1979 case of Amway vs the FTC. After 4 years in court Amway was found to be offering a business opportunity, rather than a pyramid scam. The technicalities came down to wording in their paperwork. One example requires consultants to make retail sales.

The Amway ruling effectively opened the doors for all other MLMs to operate within the law. However we should remember that being legal doesn’t make it ethical. If you know that 75% of recruits will quit without completing a 90 day start up plan, would you feel comfortable recruiting all your friends and family? If you join Revolution Financial, that’s exactly what you’d be doing.

Even though they have managed to operate within the legal system, there are people who believe that MLMs should be classified as illegal product based pyramid schemes. Of note is Dr Jon Taylor, who identified 5 characteristics of product-based pyramid schemes, which are listed below:

1. An Endless Chain Of Recruitment

2. Promotion Through Recruitment

3. Pay To Play

4. More Than 5 Levels Of Commission

5. Most Of The Rewards Go To Your Upline

Based on Dr. Taylors definition, we believe that Revolution Financial Management resembles a product based pyramid scheme.

Should You Join Revolution Financial Management

Unless you already want to become a financial adviser, there is no reason to join Revolution Financial Management. Regardless of what they tell you in the recruitment, to be successful you will need to be a good at selling financial products.

If you are considering a career in financial advisory, then we’d suggest considering all your options. It’s quite possible that you’d be better of with a role at a regular company, where the focus is on clients, not recruiting.

As always, we’d love to hear what you think in the comments section below, especially if you an share your experiences with Revolution Financial Management

Are you wondering if you can make money in an MLM? Check our our  list of mlm reviews before you join. If you find one that’s not on the list, let us know and we’ll do our best to write a review

Origami Owl was founded in 2010 out of Chandler Arizona. Rather than using traditional sales to sell their line of Jewellery products, they use MLM. They now have thousands of ‘Independent Designers’, selling their ‘customizable jewelry’ throughout the Americas.

Here at The Finance Guy, we think you can’t make money with MLM. Having said that we’ll give them a chance to prove us wrong in this full review of Origami Owl. In particular we want to look at the business opportunity. We’ll find out if this is a real money making option, or just another MLM.

What Is The Origami Owl Opportunity

We looked at the official join Origami Owl page. It told us that if you want to become an Origami Owl designer, then you have to be ‘ready to start dreaming big’. You can make money from helping others tell stories through this customizable jewelry. No matter what your financial goals are ‘Origami Owl may be the begining of making these dreams happen’.

If you want to get onto the path to your financial dreams, all you have to do is pick the Origami Owl starter kit that best suits you. While there are a million reasons to join, the one you should focus on is ‘right now’. If you sign up this month, you will get some free jewellery. We’re not sure which month you’re reading this in, but it’s quite likely that the promotion is still running.

While it’s clear that they seem very excited, they haven’t actually told us anything about what you’d be doing with Origami Owl

What Does Origami Owl Do

We had a look at part of the Origami Owl catalogue, it appears to like build a bear for jewellery. You pick your locket, your chain, and some charms and essentially design your own end product. They also have watches and other accessories, which can appear to work with the charms too.

How Do You Make Money With Origami Owl

To work this out we looked at a copy of the Origami Owl Career Plan. This simplified one page version of a compensation is the best we could find. It does however give us a good idea of all the ways you can earn with Origami Owl, and what you need to do to qualify for commissions. We’ll go through them below

Retail Profit
As the name suggests, this is the amount you can earn from making retail sales. If you find customers to buy from you at the full retail price, you can earn a profit. The amount you make will vary from 20% - 50%.

Origami Owl say that the main determinant of how much you earn is the amount of product you order as Personal Volume (PV). It makes as buying in bulk usually leads to better wholesale pricing.

While it is nice to offer discounts, it could also lead to some designers overspending on inventory that they might struggle to sell later.

Sponsor Bonus
You can earn commission ranging from 6% to 10% on sales made by Origami designers you personally sponsor. To qualify for this you need to reach the rank of ‘senior designer’. or higher with Origami Owl. Reaching this rank is simple enough, all you need to do is sponsor at least 1 designer, and spend at least 100 PV on products.

The amount you can earn from your sponsor bonus depends on your rank with Origami Owl. The more people you sponsor, and the more you personally spend, the more you can earn.

Mentor Bonus
This is commission you get for purchases made by designers sponsored by people in your downlilne. In other words if you sponsor someone, and they sponsor someone else, then you earn commission from both designers. Origami Owl pays the Mentor Bonus on up to 4 levels in your downline.

To qualify for the mentor bonus, you need to reach the rank of ‘Executive Designer’, or higher with Origami Owl. To do this you need to personally sponsor at least 2 designers, and you need to spend 250 worth of PV on Origami Owl product.

The mentor bonus ranges from 3% to 7%, the amount you can earn, and the number of levels you earn it on, depends on your rank in Origami Owl.

Advancement Bonus
If you reach the rank of ‘Team Leader’, you will qualify for you first advancement bonus of $50. This is a one time payment for achieving this rank. If you continue to climb the Origami Owl MLM, you will get advancement bonuses at each rank after this. The amount increases with the ranks. If you ever make it to the very top rank of ‘Executive Field Vice President’, the bonus will be $10,000

Generation Bonus
If you reach the rank of ‘Director’, or higher with Origami Owl, you might qualify for a generation bonus. While it’s not well explained, we think this is a commission you can if designers in your downline reach the rank of director.

You can earn anywhere from 0.5% to 1% on up to 2 generations of directors. This commission is calculated on the volume of their entire business, not just the orders made by the director. That means you get an extra commission on all the orders made by all the designers sponsored by your directors in their downlines.

While all these commissions and bonuses sound well and good, it’s important to remember that they are included in the price. If you are a new Origami Owl designer, then 38% of the price you pay to Origami Owl, goes to your upline as commission.

Are Origami Owl Designers Making Money

To find out if designers are making money, we looked at the 2018 Origami Owl Income Disclosure. This document is meant to show all the commissions earned by Origami Owl designers during 2017.

The first page tells us how Origami Owl is a ‘life-changing opportunity’. Allegedly if you join Origami Owl, you can ‘start living your dreams’.

On the 2nd page, we see a brief table which details all the commissions paid to Origami Owl designers in 2017. We have included a copy of this below:

If we do a little math, we can see that 66.41% of all designers earned at least some commission during the year. This also tells us that 33.59% of Origami Owl designers earned nothing in 2017.

If we look in the average earnings column, we see that the only group who averaged more than $18,000 were the ones who reached the rank of ‘Director’, or higher. At this level the average earnings were just over $100,000 which is a good annual income. However only 0.07% of designers reach this level. This means that 99.93% of Origami Owl designers earned less than minimum wage in 2017.

Looks like this ‘life-changing opportunity’ can only works for 1 in 1428 designers. The other 1427 would be better of with a regular job!

Why Is It Difficult To Make Money With Origami Owl

Origami Owl is not alone, it’s difficult to make money with any MLM company. The problem is with the business model. It’s designed to sell products for the company, not to create new business partners. If you join Origami Owl, you are their customer, not a business partner.

While Origami Owl might give you a ready to run opportunity with a website and products, they do the same for thousands of other designers. If you join Origami Owl, your ‘business’, will be identical to all the other Origami Owl designers. You will be in competition with them for customers and for recruits.

At the end of the day, the Origami Owl opportunity is quite similar to a commission based sales job. The only way you can really turn a profit, is if you are good at sales. Whether it’s selling products to customers or the opportunity to new recruits, you need to be good at selling.

Unlike most sales jobs, there are no territories or market controls. Owl will let anyone join, so it doesn’t matter how many people are selling it in your area, they’ll happily add more. This makes it more difficult for anyone to make a profit because of market dilution. Imagine if McDonald’s opened 4 stores on the same block. None of them would turn a profit!

Is Origami Owl An Illegal Pyramid Scheme

Even though MLMs closely resemble pyramid schemes, they are not illegal. The reason dates back to the 1979 case of Amway vs the FTC. After 4 years in court Amway was found to be offering a business opportunity, rather than a pyramid scam. The technicalities came down to wording in their paperwork. One example requires consultants to make retail sales.

The Amway ruling effectively opened the doors for all other MLMs to operate within the law. However we should remember that being legal doesn’t make it ethical. If you knew that only 0.07% of designers earn over minimum wage, would you feel comfortable recruiting friends. If you want to build a downline with Origami Owl, this is exactly what you’ll need to do.

Even though they have managed to operate within the legal system, there are people who believe that MLMs should be classified as illegal product based pyramid schemes. Of note is Dr Jon Taylor, who identified 5 characteristics of product-based pyramid schemes, which are listed below:

1. An Endless Chain Of Recruitment

2. Promotion Through Recruitment

3. Pay To Play

4. More Than 5 Levels Of Commission

5. Most Of The Rewards Go To Your Upline

Based on Dr. Taylors definition, we believe that Origami Owl could be a product based pyramid scheme.

Should You Join Origami Owl

The only reason to join any sales job, is if you truly believe in the products. No matter how good you are at sales, selling a product you don’t personally believe in would be incredibly difficult.

Before you join this ‘business opportunity’, maybe take the time to buy a few products at retail price. If you think you can comfortably sell these products at full price, then maybe you can make money with Origami Owl. If you think it’s going to be as easy as just sharing the opportunity with a few friends, then you’re in for a surprise.

As always, we’d love to hear what you think in the comments section below, especially if you an share your experiences with Origami Owl

Are you wondering if you can make money in an MLM? Check our our  list of mlm reviews before you join. If you find one that’s not on the list, let us know and we’ll do our best to write a review

Asea was founded in 2007 and is based in Pleasant Grove Utah. They produce a line of nutritional supplements which aid in ‘redox signalling molecules’. According to the Asea website, redox molecules ‘optimize cellular function and overall health and wellness’.

Rather than using traditional sales avenues, Asea has chosen to sell their supplements through an international MLM network of ‘associates’. Here at The Finance Guy, we think it’s pretty tough to make money with MLM. Having said that we won’t let it stop us from doing a full review of the Asea business opportunity.

What Is The Asea Opportunity

To find out more we looked at the official Asea Opportunity page. They start off by telling us how excited we should be about the redox thing, (which you probably haven’t heard of before now). They say ‘Being involved with ASEA—the only company with a redox supplement—can impact more than just your health; it can impact your financial future’. Now that sound exciting! Only problem is that it could be a negative impact on your financial future.

They go on to tell us a bunch of stuff which really doesn’t matter very much. Statistics about college graduate earnings and how ‘70% of people who start their own business, do so because they want to be their own boss’.

The Asea opportunity page carries on with more hype, but not much content. For example we see that this is an opportunity to create ‘income your way’. Forget the regular paycheck, Asea is a great way to ‘put your residual income plan into place’.

They boast about their retention rates which by their numbers are between 45% and 60%. In other words Asea is proud that around half their associates quit every year. We can’t dispute their claim that this is an above average result for the MLM industry.

Asea goes on to tell us that now is the time if you become an associate, ‘you can own your own thriving business’. No matter who you are, or what you’re looking for, ‘ASEA offers you the chance to achieve your personal and financial goals,’.

It was all a bit vague, so we decided to have a look at this video of the Asea opportunity:

The video starts off with some disturbing claims that ‘it is often found that 7 out of 10 households are financially stressed and would love an additional income’. We then hear that the Asea redox signalling technology is the start of the next big wave. This is your opportunity to jump on early! We then find out that Asea is the only one making these products with ‘life changing benefits’. They claim this is a formula for ‘a tremendous financial opportunity’.

The video claims that ‘a pharmaceutical company’, made a multi-million dollar offer for the business, with the condition that everyone stop using the product. Rather than take the money, Asea decided to keep the ‘life changing benefits’ available through network marketing. It could be true but this sounds like it could be this is a made up story about Asea

We hear some familiar claims about MLM, including;
- work from home
- be your own boss
- work for yourself, not by yourself
- get training from people in your upline
- the potential to earn unlimited income

We’ve heard all the standard lines about the benefits of MLM. In the past they’ve proven to be nothing more than hype, but maybe Asea is different. The video goes on for a few more minutes about the power of residual income. It then reminds us again that Asea has unique products that nobody has heard of yet. It then finishes off with an explanation of how to join Asea

While the video definitely showed us that someone is very excited, it didn’t give us much real information. We still don’t know why the products are good for us or what it is that they do. While we know there is an opportunity to join the MLM as an Asea Associate, we don’t know how the business works.

How Do You Make Money As An Asea Associate

To find out how associates make money, we looked at the Asea compensation page. This explains all the ways that we can make money from the Asea business opportunity. This was a little light on detail, so we also looked at a full copy of the Asea Compensation Plan. We’ll go through each of the 8 ways to earn with Asea:

1. Retail Sales
If you can find retail customers, you can earn commission by selling them Asea products. This can either be done in person, or through a link to your Asea webpage. If sales are made online, then the Commissionable Volume (CV), is automatically added to your lesser leg. This will make more sense as we go along.

2. Preferred Customer Bonus
If your customers sign up for autoship, they can buy Asea products at the wholesale prices. You still get $25 every time they buy a case of product. To qualify for this bonus you must purchase 100 PV worth of Asea per month. This personal volume will ensure that you are an ‘active’ Asea Associate

3. Fast Start Bonus
When you personally sponsor a new Asea Associate into your downline, and they buy product as part of their sign up process, you can earn a fast start bonus. This bonus is not just paid to you, people on 2 levels in your upline can also earn fast start bonuses from your recruits. The Asea fast start bonuses available, are shown in the image below:

As we can see, the amount of fast start bonus you can earn from Asea depends on how much the new recruit spends on their starter pack. Put simply you can earn US $20 for every case they buy. The fun doesn’t end there though. If someone in your first or second level downline earns a fast start, then so will you (but it will be a smaller amount). If you are a new recruit, it’s important to remember that 3 levels of your upline earn commission from your Asea enrollement pack. So ask yourself this. When they try to encourage you to buy big on your first purchase is it good for you or is it good for them?

4. Director Bonus
If you reach the rank of ‘director’, within 2 weeks of joining Asea, they’ll pay you $50. To us this seems a bit nonsensical. All we really see that Asea is trying to rush new recruits to into growing their downlines.

5. Team Commissions
Asea uses what’s known in MLM as ‘binary downline’. To earn downline commission in these systems, you need to be active and qualified. By balanced we mean you get paid based on the volume in your ‘weaker leg’. To understand how this works we’ll start with this image of a binary MLM system:

You Asea downline will look something like this, (but please don’t call it a pyramid). As we can see your recruits will be split into 2 legs, left and right. To earn a team commission from Asea, you will need to have at least 300 worth of Group Voume (GV) on each leg. The amount you get paid will be 10% of the GV in your lesser leg. In other words the most team commission you can earn with Asea is 5%.

To be qualified, you need to personally spend 100 PV per month on Asea products. To be qualified for team commission, you need to have at least one associate in each leg who is also active and spending 100 worth of volume.

Given that you get paid on the weekly volume of your ‘lesser leg’, you may wonder what happens to the left over volume on your strong leg. Well not to worry because it is carried over as long as you remain active. It is possible to accumulate more volume than you can use in your strong leg. This is why it is very important to remain balanced in a binary compensation plan.

The problem we have with binary compensation, is that it allows the company to keep the benefits if you happen to recruit a superstar performer in one leg but not the other.

6. Executive Momentum Bonus
If you reach one of the Asea ‘Executive’ranks you might qualify for this bonus. You have to be ranked at least Bronze or higher in the Asea MLM then you can share in this monthly pool. The bonus is calculated on 2% of all Asea volume. The amount you get will depend on your rank and your group volume for that month. For us the problem is that this bonus is included in the price paid by Asea associates.

7. Check Match
As the name suggests, you can earn a matching bonus on any commission earned by associates in your downline. This is paid on up to 7 levels in your downline. The amount of check matching bonus you can earn depends on your rank and on how many associates you have in your downline. Each time you personally sponsor someone, they become a new ‘leg’ in your downline. The more legs you have the more check matching you can earn.

8. Diamond Pool
If you reach one of the ‘Diamond’ ranks with Asea, then you can earn a share of this bonus. Asea pays out 3% of their global volume as a diamond bonus. The amount you can earn depends on your rank, and the volume you have generated in your Asea downline.

How Do You Get Promoted With Asea

LIke all MLMs, to advance through the ranks with Asea you need to grow your volume and recruit associates. The different ranks and their qualification criteria are shown in the image below:

Are Asea Associates Making Money

To find out how much associates are making, we looked at the 2019 Asea Income Disclosure Statement. This document shows how much commission was paid to associates at various ranks in Asea. The information they provided, is shown in the image below:

The first thing we notice is that they have only shown the earnings for those who made past the associate rank. This represents 13.68% of all active Asea associates. In other words 86.32% of all active Asea associates never achieved any advancement. Furthermore the majority of associates are not included in this income disclosure.

If we look at the average monthly earnings, we notice that at the rank of ‘silver’, associates start to earn close to a full time income. Having said that only 0.2% of associates make it to this rank or higher. In other words 99.80% of active Asea associates earn less than a full time income.

Why Is It So Difficult To Make Money With Asea

The problem with the Asea opportunity is not unique to them. It’s difficult to make money with any MLM system. The reason for this is because network marketing is designed to sell products and make money for the corporation. As an Asea associate, you’re their customer, not a company shareholder.

No matter what anyone tells, you the Asea opportunity is a sales job. To be successful you need to be good at finding customers and making sales. Simply sharing the opportunity won’t make you any money unless someone in the downline is buying product.

Is Asea An Illegal Pyramid Scam

Even though MLMs closely resemble pyramid schemes, they are not illegal. The reason dates back to the 1979 case of Amway vs the FTC. After 4 years in court Amway was found to be offering a business opportunity, rather than a pyramid scam. The technicalities came down to wording in their paperwork. One example requires consultants to make retail sales.

The Amway ruling effectively opened the doors for all other MLMs to operate within the law. However we should remember that being legal doesn’t make it ethical. Would you feel comfortable recruiting for a business opportunity if less than 1 in 500 associates earned a full time income? That’s what you’d need to do to build a downline with Asea.

As always, we’d love to hear what you think in the comments section below, especially if you an share your experiences with Asea

Are you wondering if you can make money in an MLM? Check our our  list of mlm reviews before you join. If you find one that’s not on the list, let us know and we’ll do our best to write a review

Stella and Dot was founded in 2004 by Jessica Herrin and Blythe Harris. The company is named after their grandmothers. Rather than using traditional sales, Stella and Dot use a network of ‘Stylists’ to sell their lines of jewellery, handbags and clothes.

Here at The Finance Guy, we believe you can't make money with network marketing, but we won’t let that stop us from doing a full review of Stella and Dot. We want to know if this is a real money making opportunity, or just another MLM.

What Is The Stella And Dot Opportunity

We looked at the official Stella and Dot stylist opportunity page, which turned out to be little more than a sign up page. It has only a very brief outline of how the MLM part works. It explains that as a stylist you can earn commission, work your own hours and get discounts on Stella and Dot products.

They then go on to show us the different starter packs. You can choose from a selection of either $99 or $59 packs to get yourself started as a Stella and Dot Stylist.

We then see some photos of women who have become successful Stella and Dot stylists, along with some quotes from them about the business. We then see in nice bold letters that ‘when women support each other, incredible things happen’.

This very vague information is all we could find on the website, so we looked a little further. We managed to watch a youTube video presentation of the Stella and Dot opportunity

The video presentation was by one of the co-founders, which is nice to see. The first thing they tell us is that their passion is to help you fund yours. This is common MLM speak which is that this is the opportunity to be financially free and chase your dreams.

The video then goes on to tell us that now is the right time to become a Stella and Dot Stylist because they are about to have a ‘breakthrough’ decade. Apparently the last decade was just a rehearsal, but now that they have new clothes lines and some tools for ‘social selling’ over the internet, the opportunity is ready to really take off…

This is the opportunity to turn you ‘passion for fashion,’ into a flexible source of income. Like all MLMs, one of the biggest features, is the ability to become financially free working your own flexible hours.

Another benefit common to most MLMs, is that as a stylist, you’ll get your very own Stella and Dot website. This means that you can sell to anyone in the world with an internet connection. All you have to do is share you personal link.

They call the ability to sell through your smartphone, ‘conversational commerce’. Allegedly this makes it easier to build repeat customers. How this is better than sites such as Amazon which also let you shop from your phone, we are not sure.

The business model sounds simple enough, first you save money with a discount on products you would have bought anyway. Then when you ‘wear it and share it’ you can earn commission when others buy it through your link.

The video then explains that you can earn even more income if you become a mentor and recruit others to become Stella and Dot stylists. This is what is known in MLM as building a downline. The general idea is that you start earning commission from your sales as well as all the sales from all the people below you in the MLM system.

How Do You Make Money With Stella And Dot

While the video gave us an outline of the Stella and Dot opportunity, we want to understand exactly how much stylists can earn, and what they need to do for their commissions. To help us with this, we found a copy of the Stella and Dot compensation plan.

Stella and Dot have somehow managed to keep their compensation plan down to just 2 pages, but hopefully we’ll be able to extract some useful information from it. Below are the different ways you can earn commission from Stella and Dot:

Personal Sales Commission
This is what most MLMs would call ‘retail commission’. It is simply the profit you can make from selling Stella and Dot products to customers. It starts of at 25% for accessories and 20% for apparel. It’s possible to earn higher rates of sales commission, if you become a ‘monthly power seller’, in any given month. All you have to do is order enough Stella and Dot products to make up the Personal Qualifying Volume (PQV). The PQV needed and the higher commissions possible are shown below:

Each of Stella and Dot products will have a point value for PQV. They explain that you get around 1 point for every U.S $1 you spend. This is based only on the product prices not any other costs such as shipping etc. From this we see that in order to qualify for the power seller bonus, you need to order at least $2,500 worth of product in a month.

While it’s nice to see that it’s possible to earn more commission, to us, it could also be that they are encouraging stylists to over-order. It’s possible that some stylists will order Stella and Dot products to qualify for the next bonus, not because they need the product. This would mean that Stella and Dot are encouraging Stylists to overspend.

Team Sales Commissions
These are the earnings you can make if you recruit others to become Stella and Dot stylists. If you sponsor someone to your downline, you will earn commission every time they buy product. It doesn’t end there, you can also earn commission on the people they recruit.

The team sales commissions you can earn with Stella and Dot are shown in the table below:

As we can see, the amount of team commission you can earn, depends on your rank in Stella and Dot. Before you can earn any team sales commission you need to reach the rank of ‘Lead Stylist’, or higher. You’ll start of earning 4% from anyone you personally recruit. You earn the maximum team commission once you reach the rank of ‘Senior Director’, or higher.

If you make it to the top ranks of Stella and Dot, you can earn 12% commission from anyone you personally sponsor in your first line. You can also earn on an extra 3 lines in your downline. the total commissions you can earn are:
LIne 1 - 12%
Line 2 - 7%
Line 3 - 3%
Line 4 - 2%

As we can see, there is a total of 24% in team sales commissions paid on a total of 4 levels in your downline. This all sounds well and good but we should remember that these commissions are included in the price you pay for products. In other words, if you are a new Stylist, 24% of what you pay to Stella and Dot, goes to your upline as commission.

Star+ Team Commissions
This is an additional 1% commission that is payable on any star team volume regardless of what line they sit on in your downline. While not properly explained, we believe that if someone in your downline reaches the rank of ‘star stylist’, they are the top of a ‘star team’. Everyone below them in the downline will contribute to the 1% Star+ Team commission

You can only start earning Star+ commission once you reach the rank of ‘Associate Director’, or higher. Once you reach the ‘Star Director’ level, you can earn the Star+ commission on 2 generations. This means that you get paid not just on the first star in your downline, but also on the next one below them in their downline. If you reach the top rank of ‘Double Diamond Director’, you can earn this on up to generations of stars in your downline.

Once again, it’s nice to know that you can make all this commission, but it is all included in the prices you pay. In other words the 5% of what you pay to Stella and Dot goes to people in your upline as Star+ Team commissions.

How Do You Get Promoted With Stella And Dot

If you want to earn the full commission with Stella and Dot, you will need to climb the ranks of their MLM system. To reach any given rank, you need to be ‘qualified’. The qualifying criteria for each Stella and Dot rank are shown in the table below:

As we can see, gaining promotions requires a combination of volume and ‘qualified legs’. To become a ‘Lead Stylist’, you need to spend at least $500 per month, and have one qualified leg. If someone in your downline also spends $500 on Stella and Dot in a month, then the leg they are in becomes ‘qualified’.

If you want to make it to ‘Associate Director’, you’ll need 3 qualified legs, and at least one person in your downline needs to have reached the rank of ‘Star Stylist’. You’re personal volume requirment will now be $2,000 plus you have a group volume requirement of $20,000 for the month. Group volume is money spent by everyone in your downline (this includes stylists who spend less than $500 for the month). That all adds up to a lot of Stella and Dot purchases per month.

Once you reach the rank of ‘Star Stylist’, you can use ‘Alternate Leader PQV’. This means that rather than having to personally order $2,000 worth of product per month, you can order just $500 per month. To qualify for this, you need to personally sponsor a new stylist, and have them spend $500 on Stella and Dot during their initial ‘jump start’ month. If you are a new stylist, the person who sponsored you might try and encourage you to buy $500 of products right away (as a jump start). While they might tell you it’s in your best interest, it could be that asking you to spend $500 saves them spending $1,500 in the same month.

How Much Are Stella And Dot Stylists Earning

To find out how much Stylists are earning, we looked at the 2018 Stella and Dot income disclosure statement. The most noticeable part of the disclosure, is the table shown below:

The first thing we notice is that 71.3% are at the initial ‘stylist’, rank. This is a bit disturbing because it tells us that only 28.7% of Stylists have achieved any promotion at all with Stella and Dot.

The next thing we notice is that only 1.7% of stylists make it to the rank of ‘Director’, or higher, where the average income is over $35,000. In other words 98.3% of Stella and Dot Stylists earn less than minimum wage.

As unlikely as it may sound, this table actually shows the Stella and Dot opportunity in a good light. Only stylists who earned a commission are included in the above data. In the print below, they explain that 68% of Stella and Dot Stylists earned no commission at all in 2018

If we were to include all the stylists, we’d find that only 0.54% of Stella and Dot Stylists earned more than $35,000 in 2018. In other words, 99.46% of Stella and Dot stylists earn less than minimum wage.

Another group not included in this income disclosure, is all the stylists that quit in 2018. It’s quite likely that most of the stylists who earned nothing with Stella and Dot in 2018 will drop out of the MLM in 2019. In other words we could estimate that close to half the Stella and Dot Stylists quit every year. If we were to include those which drop out in the income disclosure, the results would only get worse.

Why Is It Hard To Make Money With Stella And Dot

The problem with the Stella and Dot opportunity is not unique to them. It’s difficult to make money with any MLM system. The reason for this is because network marketing is designed to sell products and make money for the corporation. If you become a Stella and Dot Stylist, you’re their customer, not a company shareholder.

While ‘conversational commerce’ from your phone sounds, easy, it’s also very competitive. You can easily promote Stella and Dot from your phone, to anyone with an internet connection. The problem is, so can all the other Stella and Dot Stylists.

Just like any business, to be successful, you need to be good at attracting customers. If you join this opportunity you will be in competition for customers with all the other Stella and Dot Stylists. Unless you have access to a unique market or have a strategy that nobody else is using, it’s going to be very difficult to make money with Stella and Dot

Is Stella And Dot An Illegal Pyramid Scam

Even though MLMs closely resemble pyramid schemes, they are not illegal. The reason dates back to the 1979 case of Amway vs the FTC. After 4 years in court Amway was found to be offering a business opportunity, rather than a pyramid scam. The technicalities came down to wording in their paperwork. One example requires consultants to make retail sales.

The Amway ruling effectively opened the doors for all other MLMs to operate within the law. However we should remember that being legal doesn’t make it ethical. If you knew that more than half the stylists quit each year, and less than 1% earn over minimum wage, would you feel comfortable recruiting friends. If you want to build a downline with Stella and Dot, this is exactly what you’ll need to do.

Even though they have managed to operate within the legal system, there are people who believe that MLMs should be classified as illegal product based pyramid schemes. Of note is Dr Jon Taylor, who identified 5 characteristics of product-based pyramid schemes.

We’ll look at each of these characteristics and see if they apply to Stella and Dot:

1. An Endless Chain Of Recruitment
As we saw in the compensation plan, recruitment plays a key role. The only way to reach the higher ranks in Stella and Dot is to personally recruit new stylists, and have them do the same.

Dr Taylor found that in an endless chain of recruitment, it doesn’t take long before the system hits what he calls ‘de-facto saturation’. By this he means that the system has been offered to so many people within your community that finding new recruits becomes increasingly difficult. He notes that this can happen very quickly.

2. Promotion Through Recruitment
The ranks in Stella and Dot have specific downline and volume requirements. You are promoted for buyiing product and recruiting others to do the same. There is no requirement to make retail sales.

It was Dr Taylor’s opinion that ‘if participants must recruit to be successful, or if the pay plan’s primary rewards are for building a downline, it should be considered a recruiting MLM, and hence an illegal pyramid scheme.’

3. Pay To Play
If you want to earn commission with Stella and Dot, you need to meet your monthly PQV figure of at least $500 per month. This minimum monthly purchase is regardless of how much you actually need or how much you have in inventory. This is what is meant by ‘pay to play’.

These ongoing purchases can add up to thousands of dollars. Dr Taylor warns that when you spend money on pay to play product, you are ‘paying pyramid investment fees to “play the game,” one of the earmarks of a product-based pyramid scheme.’

4. More Than 5 Levels Of Commission
If we look at the Team commissions (including Star+ Team Commissions), we can see 9 levels of commission in the Stella and Dot system. This becomes problematic because all that commission is included in the price charged to Stylists. Having so many levels in the compensation plan makes the products too expensive and therefore not competitive with others in the market.

Dr Taylor explains that having too many levels of commission turns the system into a recruitment based pyramid. This is because people are more interested in climbing the levels than they are in making retail sales. If you have even attended a MLM presentation, you’d probably agree that most of their focus is on recruiting and not on selling products.

5. Most Of The Rewards Go To Your Upline
When you order product form Stella and Dot, 29% of what you spend is paid to your upline as commission. If you decide to make a retail sale (at full price), you could earn up to 25%. What we see here is that the total commissions paid to the upline is more than what can be earned selling to customers.

Dr Taylor found that this results in excessive incentive to recruit, and not enough incentive to make retail sales. Once again he points out that this would identify the opportunity as a recruitment based product pyramid scheme.

Should You Join Stella And Dot

The only way to make money with this opportunity is if you make sales. You are either selling the products to retail customers, or the opportunity to prospective stylists. Anyone who tells you this isn’t a sales job, is mistaken.

Before you join the business opportunity, you should make sure that you like the products. Have a look at the Stella and Dot products. If you’re not willing to buy the products at full retail price, you’ll find it very hard to convince others to.

Even if you like the products and are an excellent salesperson, we suggest you consider this alongside other options. In our opinion, if you have the sales skills to make money with Stella and Dot, you’ll probably earn even more in a regular sales job.

As always, we’d love to hear what you think in the comments section below, especially if you an share your experiences with Stella and Dot

Are you wondering if you can make money in an MLM? Check our our  list of mlm reviews before you join. If you find one that’s not on the list, let us know and we’ll do our best to write a review

Senegence was founded in 1999 by Joni Rogers-Kante. After becoming a top level consultant with Mary Kay, she decided to use a similar business plan. Lipsense cosmetics are sold through a network of independent distributors.

Since inception the company has grown into a multinational system. It is often referred to as LIpsense (their most popular product). In the UK, it is known as Sheersence. Here at The Finance Guy, we believe you can’t make money with MLM. In this full review of Lipsense we’ll find out if Senegence is a real money making opportunity, or just another MLM money hole.

What Is The Senegence Opportunity

According to the official Senegence Opportunity page, becoming an independent distributor will come with ‘boundless opportunities’, with professional support. They then tell us that you can earn commission from selling Senegence cosmetics. However you can also make money by sponsoring others to become Senegence Distributors, and then earn a commission from any Lipsense they sell.

The fun doesn’t end there, along with commission, you can also earn holidays and a new car… According to the Senegence opportunity, you can earn yourself a new car in just a few months. If that’s not enough, you can also see the world by earning yourself ‘Lips trips’.

While this vague hype may sound interesting, to us, it lacked details. We want to know how Senegence is going to put us on the path to financial freedom. It’s not enough to just tell us that Lipsense will make our mouths look pretty. So we kept going with our research.

How Do You Make Money With Senegence

We wanted to know how selling Lipsense (and other Senegence cosmetics), would make us rich. To learn more, we looked at this we watched a short youTube video about Sengence:

The 14 minute video was all about the the Senegence Compensation Plan. This explains all the ways you can make money selling Senegence products, as well as what you need to do to qualify. If you’re in a hurry, we also found a 2 page version of the Lipsense Compensation plan.

The first thing they tell us about is customer sales. In our opinion, retail sales is the best way to make money with Senegence The commission you can earn from selling Lipsense to customers depends on your monthly volume. The amount you can earn and the volume required is shown below:

As we can see, the key to earning retail commission, is volume. The more you spend on Senegence products, the more PV points you’ll acquire. Once you’ve hit 750 PV points for the month, you can earn the maximum 50% retail commission.

If you are having a very quiet month, ( or a personal usage month), you might only qualify for 20%. The important thing to remember is that no matter what you are paid, the full 50% mark up is included in the Senegence SRP. Half of what you charge to your customers is sales commission!

Downline Commisisions
Selling Lipsense to customers isn’t the only way to make money with Senegence. You can also earn money from building a ‘downline’. This is MLM speak for sponsoring other Senegence distributors. You can earn commission from the sales of any Senegence distributors you sponsor

Your dowline commissions don’t end with the people you sponsor, you can also earn commission from the people they sponsor. All you have to do is spend enough PV per month and you can qualify for up to 5 lines of Senegence downline commission, as shown below:

You can earn downline commission on up to 5 levels in your Senegencence org. All you have to do is spend is generate 300 PV worth of Lipsense products per month..

Building a downline is as simple as sharing the opportunity with a few friends, then having them do the same thing. This is what MLM people call ‘duplication’. It is the theory that all you have to do is repeat the process and you’ll be successful. If duplication works out, then your Lipsense business will look something like this:

The diagram above shows how you can build a downline with Senegence. As we see, you can earn commission on up to 5 generations in your downline. In theory if everyone just shares the opportunity with a few friends, then by the time you reach 5 levels, you’ll have a very substantial downline.

To qualify for the 5th line commission, you need to generate enough group volume. You also need to personally spend at least 200 PV on Senegence per month. For us this is a problem because it’s an incentive to hyper-consume.

One you are earn on 5 levels, you can earn a total of 70% commission from your Senegence downline. Unlike personal sales, downline commission is included in the Senegence distributor price. That means when you buy Lipsense or any other products, 70% of what you pay to Senegence goes to your upline as commission.

Group Sales Volume
This is quite similar to downline commission, in that it’s paid on the activity of your downline. One notable difference is that in order to qualify for this, you need to spend more than 100 PV per month. To qualify for more than one line of GSV, you need to spend at least 300 PV per month.

Senegence GSV is only paid on volume over 100 PV per month. We don’t like this because it can lead to distributors buying Senegence products just to qualify for commission. Even worse, it can lead to uplines encouraging hyper-consumption of Senegence products so that they can earn GSV

Like downline commission, it is paid on up to 5 levels, as shown below.

As we can see here, if your downline meets the qualifying volume, you can earn up to 25% in total Group Sales Volume Bonuses. All you need to do is convince them to spend over 100 PV per month. You will also need to convince 5 distributors at each level to spend 300 PV per month. We are not sure if that’s 300 each or between them as Senegence did not clarify this well in their compensation plan.

They have been vague, but they are giving the impression that Senegence pay a total of 95% in commissions. It’s important to remember that these commissions are all included in the price paid by distributors. The only way this system can be profitable for Senegence, is if Lipsense products are severely overpriced, or if very few distributors qualify for full compensation.

Are Senegence Distributors Making Money

While there are plenty of claims online that you can make money selling LIpsense, most of them appear to be trying to recruit us. We also found some reviews which suggest that it’s very difficult to make money with Senegence.

One Senegence review by a British distributor explains why she will not review. After a year with Sheersense, even with 80 customers she is losing money with Lipsense. We agree with her assessment that to turn a profit, you need to spend a lot of time and effort into selling product, and recruiting a downline.

She also gives us some interesting insights about how Senegence works. To us, it sounds like Senegence is just like every other MLM. Especially worrying to us, is the way they encourage people to keep buying product every month. If you attend one of their meetings, you might hear them say ‘you can’t sell from an empty cart’.

The review suggests, and we agree that most sales are being made to Senegence distributors, and not to customers. The problem with this is that there isn’t enough retail spending, so the only way to make money is if people in your downline are losing money.

Another Lipsense review by The Outline, has trouble telling the difference between MLMs and pyramid schemes. They share some more real life experiences from a Sengence distributor going by the alias ‘Michelle’.

Michelle explains that when she joined, she was told to focus heavily on recruiting a downline. Her upline claimed recruiting was the key to success. As a result she did not put much time or effort into building a retail customer base. After 8 months, Michelle had recruited an impressive 26 new distributors into her downline. Her Senegence business was $6,000 in debt, even though she had been very successful in recruiting a downline.

.The Outline offers the opinion that Michelle was buying more Senegence products than she needed so that she could qualify for monthly downline commissions. This is a common problem in most MLMs, and it is one of the reasons why The Outline believes that MLMs such as Lipsense are Pyramids

We kept going with another Senegence Distributor experience we found on MLM Truth. They interviewed a former Lipsense distributor they called ‘Madison’, who gave a very detailed account of her 5 years with Senegence.

Madison tells a similar story to Michelle, in that no matter how much time and effort she put in, she could not make money with Senegence. Even though Madison genuinely liked the products, she didn’t feel they were being sold ethically. She was not willing to to pressure her customers into joining the opportunity. She also didn’t want to force her downline to buy more product than they needed each month.

Madison shares a very interesting story about the moment that made her finally decide to quit Lipsense. She was at a meeting and overheard 2 high ranking Senegence ladies tell each other that ‘80% of the distributors in the room would never earn any money at all’. They agreed it only mattered that they all spent money. This could have been an isolated case of two bad distributors, or it could be that MLM is a predatory system.

Madison also brought light to an unusual practice which we think might be happening at a few MLMs. She explained that Senegence often made certain products ‘unavailable’, for short periods of time. The reason was to create the illusion that they were very popular, and created hype. That way when they were ‘made available’ again, the distributors would urgently place orders. Not only that, they probably ordered more stock than they needed because they thought it might be unavailable again soon.

Why Is It Difficult To Make Money With Senegence

We believe that the problem is not unique to Lipsense. The problem is with the business model. In his book, Multi-level Marketing Unmasked, Jon Taylor found that 99.7% of people who join direct selling companies end up losing money.  Despite what you hear in the sales pitches, it is highly unlikely that you will make money from any network marketing company.

Network marketing is a way for companies to sell products without employing a sales force and without having to spend money on traditional advertising and promotions.  Instead they build a network of loyal ‘Distributors’, who are willing to pay unusually high prices for the added hopes and dreams of financial freedom.

Dr. Taylor has also provided a 5 Step MLM evaluation, which is designed to show you if you have a chance of turning a profit with any MLM opportunity. We looked at each of the 5 flags for Senegence, as shown below:

Red Flag 1 - Constant Recruitment of New Members
As we saw in the stories we looked at, Senegence focuses strongly on constant recruitment. Distributors are even told to build their downline rather than their customer base. We also saw that they are told to try and turn every customer into a Senegence Distributor.

Red Flag 2 - Promotion Through Recruitment
Like all MLMs you can earn more with Senegence as you climb the ranks. We had a look at the Senegence ranks, and how distributors qualify. As expected, there is a requirement to personally recruit new distributors to reach each rank. If you don’t recruit, you can’t reach the full earnings potential.

Red Flag 3 - Pay to Play
While there are no compulsory ongoing fees, you can only earn commission if you spend at least 100 US Dollars on Senegence every month. If you don’t place personal orders, you won’t be able to earn commission from your downline.

Dr. Taylor found that this can lead to hyper-consumption. Distributors are buying product because they want to be part of the compensation plan, not because they actually want the products. This is why several MLM participants admit to having collected stockpiles of product. If they were buying for personal use, or to sell to retail customers, stockpiling would not happen.

Red Flag 4 - Most of the Rewards go to your upline
As we noted earlier, you can earn downline commissions and group sales volume bonuses adding up to a total of 95%. While this is great if you have a substantial downline, these commissions are included in the price you pay. Most of what you pay for Senegence products goes to your upline as commission.

Red Flag 5 - More than 5 levels in the payout plan
Dr Taylor says 'Excessive levels in a downline is another sign participants are expected to sell primarily to their downline, rather than to the general public.  This makes it an exploitative money transfer scheme, or product-based pyramid scheme'.

Is Senegence An Illegal Pyramid Scheme

Even though MLMs closely resemble pyramid schemes, they are not illegal. The reason dates back to the 1979 case of Amway vs the FTC. After 4 years in court Amway was found to be offering a business opportunity, rather than a pyramid scam. The technicalities came down to wording in their paperwork. One example requires consultants to make retail sales.

The Amway ruling effectively opened the doors for all other MLMs to operate within the law. However we should remember that being legal doesn’t make it ethical. If you knew that less than 1% of people had a chance of generating a real income, would you feel comfortable recruiting new distributors?

In the story we read about ‘Michelle’, she shed some light on this. She explained that when distributors place an order, they have to check a box stating that they have sold (or are personally using) 70% of your Lipsense products.

The check box is for compliance. If distributors complain about being pressured into buying too much product, then Senegence can say ‘well you checked the box, so it’s your own fault’. Features like this mean that it is legal. Having said that, based on the stories we found, it’s easy to see how some could think Senegence is a pyramid scheme.

Should You Join Lipsense

We think that the only reason to join any MLM, is if you are already using their products, and are happy enough to recommend them to others. At the end of the day, you can’t make money in MLM unless you make a lot of sales.

If you are a good salesperson, and you have the ability to be part of the 1% who turn a profit in Lipsense, then we suggest that you look at all your options before becoming an Ambassador. It’s quite likely that you can make more money in a regular sales job than you would in the Senegence opportunity.

As always, we’d love to hear what you think in the comments section below, especially if you an share your experiences with Senegence

Are you wondering if you can make money in an MLM? Check our our  list of mlm reviews before you join. If you find one that’s not on the list, let us know and we’ll do our best to write a review

Founded in 1988 in Chesterfield, Missouri, Reliv produces a large range of dietary supplements. They say that they are ‘backed by science’, and use all natural ingredients to promote ‘optimal nutrition’.

Rather than using traditional marketing through stores, Reliv uses a network of ‘independent distributors’ to promote their products in a MLM system. Here at The Finance Guy, we think you can’t make money with network marketing, but we’re willing to be proven wrong. In this full review of Reliv, we’ll find out if their business opportunity can make you money, or if it’s just another MLM.

What Is The Reliv Opportunity

To find out what it’s all about, we looked at the official Reliv opportunity page. Here we learn that you can ‘be the best boss you’ve ever had’. Then there’s some stuff about how consumable products are great for repeat customers. There’s even the standard claim that this is the best compensation plan in the industry.

So far Rliv hasn’t shown us anything we haven’t seen before. We’ve heard about the ‘benefits of consumable products’ and almost every MLM claims to have ‘the best compensation plan’. To find out what make Reliv different, watched a short youTube video about their compensation plan.

The video started off by telling us that there is a health crisis. They claim that only 14% of us eat the proper amount of fruit and vegetables, furthermore we could spend 75% less on healthcare if we all ate properly. It then moves on to tell us about our financial distress. They tell us that 75% of us live pay check to pay check. To make things wore, most of us have credit card debt, loans, and will have to work past retirement age.

Are you where you want to be with your health, your finances, and your life? If not then relax, because Reliv has the answers. They tell us, you can ‘live your dream lifestyle through the Reliv vision’. They tell us a bit more about their wonderful health boosting products, then get back to the business opportunity.

It doesn’t take long, for us to hear a familiar mantra… ‘you’re in business for yourself, not by yourself’. MLM companies enjoy this slogan because it makes them feel like they are offering the opportunity to be your own boss, but also have the support of a major corporation.

What they are really saying is that you can sell their products, and use their systems. They’ll handle things like production and shipping. They’ll even give you access to their online tools so you can promote and sell their products. To us, this is similar to a regular sales for commission job.

It took over 8 minutes, but the video finally gets to the points we want to hear:

How Do You Make Money With Reliv

The video explains that there are 5 ways to make money with Reliv, as shown below:

The video goes into each in detail, but to help us understand them even better, we also found a copy of the Reliv compensation plan. This document explains all the ways you can earn money with Reliv, as well as what you need to do to qualify to earn.

The first thing we notice is that before you can earn any commission from Reliv, you need to make sure that you are ‘active’. To remain active, you need to buy at least 50 Personal Volume (PV) points worth of Reliv products every month. While this may not sound like a big deal, it can be a problem. In many MLMs we’ve found that people spend more on staying active, than they earn in commission. This can lead to stockpiling product and losing money.

There are 5 ways to make money with Reliv, we’ll go through them below:

1. Retail Profits
The amount of retail margin you can earn selling Reliv products, depends on your rank with Reliv. Your rank depends on how much personal and group volume PGPV points you generate each month. This is a combination of the points for products purchased by you, your customers, and any distributors in your downline.

The amount of retail commission you can earn at each rank, and the PGPV required, are shown below:

As we can see, you can start earning 20% retail commission right away. As your business grows (and your monthly volume increases), this will increase. Once you reach the ‘Master Affiliate’ rank, you will be earning the maximum 40% retail commission. We think that retail sales is the best way to make money in any MLM. After all without retail customers, all the money is coming from existing distributors.

2. Wholesale Profits
This commission is the difference between your retail profit level, and that of those in your downline. For example, if you are a Master Affiliate, you will be entitled to 40%. If you sponsor a brand new retail distributor, their retail commission will be 20%. You will earn a 20% wholesale profit on any volume ordered by the retail distributor.

3. Override Commissions
Reliv describe this as the ‘most lucrative’ commission. It can only be earned by those distributors who reach the ‘Master Affiliate’ rank. If someone in your downline also reaches the rank of Master Affiliate, then you will not be eligible for any wholesale profit commission from them. You can however earn an override commission on any volume their group generates. This is paid on up to 5 levels of Master Affiliates, as shown below:

As we can see, it is possible to earn a total of 23% in override commissions from up to 5 generations of Master Affiliates in your downline. While this all looks very generous, to us it is a concern because it’s included in the price Reliv charges their distributors.

If you are a new distributor, then 20% of what you pay goes to your upline as ‘wholesale commission’ then another 23% goes to other Master Affiliates as override commission. That means that a total of 43% of what Reliv distributors spend on products, goes to their upline as commission.

If you manage to sponsor more than 2 Master Affiliates, then you could qualify for the Star Director bonus. This is paid in addition to your override commission, and is paid on unlimited generations of master affiliate in your downline. The more master affiliates you personally sponsor, the more you earn, as shown below:

Once again these bonuses would be great if you are able to grow your downline. Having said that we should remember that the only way for Reliv to pay all these commissions if if they are included in the prices charged to distributors.

4. Cash Bonuses and Trips
At any time Reliv may run special promotions where distributors are able to qualify for special cash bonuses or trips. Unfortunately we couldn’t find any information about current promotions. It could be that the information is only available to active distributors or it could be that there aren’t any running at the time or researching.

5. Ambassador Program
If you reach the ‘Managing Director’ rank with Reliv, you might qualify for the Ambassador program. This is an invitation only bonus which pays out 4.5% of total sales volume as bonuses to the top Reliv distributors. Your share of the Ambassador commission depends on how much volume your downline generates, and how many distributors you have sponsored (and who then got themselves promoted).

It should be no surprise but what we see is another 4.5% loaded onto the price distributors pay for Reliv products. All in all, we are seeing a sytem where it looks possible to earn a lot of money, but we think it’s unlikely.

How Much Are Reliv Distributors Earning

To find out how much distributors are earning, we looked at the 2017 Reliv Income Disclosure Statement. They start of, as most MLMs do, with a story about how most distributors join just for product and use the opportunity to share Reliv with a few friends and make a few dollars. Only very few join it with the goal of making a career of Reliv.

They then give us a table showing the breakdown of earnings for all distributors who earned commission in 2017. We used their data to create the table below:

The first thing we notice is that there is a severe disparity in the earnings. It seems that the only ones who are earning a full time income are the 0.47% who reach the PDR rank. This also tells us that 99.53% of Reliv distributors earned less than a full time income in 2017.

Remember that these figures only represent the distributors who earned a commission. The income disclosure suggests that only 16.35% earned a commission. In other words, 83.65% of Reliv distributors earned no commission at all in 2017.

If we were to include these all distributors in the income table, we’d find that only 0.07% of Reliv distributors earned a full time income. Or 99.3% of Reliv Distributors earned less than a full time income from this business opportunity

Why Is It Hard To Make Money With Reliv

We believe that the problem is not unique to Reliv. The problem is with the business model. In his book, Multi-level Marketing Unmasked, Jon Taylor found that 99.7% of people who join direct selling companies end up losing money.  Despite what you hear in the sales pitches, it is highly unlikely that you will make money from any network marketing company.

Network marketing is a way for companies to sell products without employing a sales force and without having to spend money on traditional advertising and promotions.  Instead they build a network of loyal ‘Ambassadors’, who are willing to pay unusually high prices for the added hopes and dreams of financial freedom.

Dr. Taylor has also provided a 5 Step MLM evaluation, which is designed to show you if you have a chance of turning a profit with any MLM opportunity. We looked at each of the 5 flags for Reliv, as shown below:

Red Flag 1 - Constant Recruitment of New Members and Red Flag 2 - Promotion Through Recruitment
If you want to earn anything more than 20% for retail sales, you need to recruit. The only way to climb the ranks with Reliv, is to grow your downline. To maintain your income and rank you will need to replace all the distributors who quit each year. This means you will need to constantly recruit to maintain your Reliv downline.

Red Flag 3 - Pay to Play
If you don’t purchase your PV worth of Reliv products each month, you won’t qualify for any commission. This is known as pay to play. Dr. Taylor found that this can lead to hyper-consumption. Distributors are buying product because they want to be part of the compensation plan, not because they actually want the products. This is why several MLM participants admit to having collected stockpiles of product. If they were buying for personal use, or to sell to retail customers, stockpiling would not happen.

Red Flag 4 - Most of the Rewards go to your upline
If you are a new distributor with Reliv, you can only earn 20% retail commission. However more than 43% of what you spend goes to your upline as commission. This means that people above you in the system earn more double what you do from your sales. When people in your upline encourage you to keep spending money, it’s important to realise that they are earning commission from your spending.

Red Flag 5 - More than 5 levels in the payout plan
The compensation plan pays overrides and Ambassador commissions to unlimited levels in your downline. Dr Taylor says 'Excessive levels in a downline is another sign participants are expected to sell primarily to their downline, rather than to the general public.  This makes it an exploitative money transfer scheme, or product-based pyramid scheme'.

Is Reliv An Illegal Pyramid Scheme

Even though MLMs closely resemble pyramid schemes, they are not illegal. The reason dates back to the 1979 case of Amway vs the FTC. After 4 years in court Amway was found to be offering a business opportunity, rather than a pyramid scam. The technicalities came down to wording in their paperwork. One example requires consultants to make retail sales.

The Amway ruling effectively opened the doors for all other MLMs to operate within the law. However we should remember that being legal doesn’t make it ethical. If you knew that less than 1% of people had a chance of generating a real income, would you feel comfortable recruiting new consultants?

Another issue, is that even though these rules may be in the paperwork, they are difficult to enforce. For example, several people in MLMs have said that they have cupboards full of product. This is because of the minimum monthly purchases they need to make to remain active in the system. Even though stockpiling is against the rules, there is no way for the company to monitor it.

Remember that there is a difference between being legal and being ethical. Would you feel comfortable recruiting people to an opportunity if you knew that 99.7% of them would make more money with a regular job?

Should You Join Reliv

We think that the only reason to join any MLM, is if you are already using their products, and are happy enough to recommend them to others. At the end of the day, you can’t make money in MLM unless you make a lot of sales.

If you are a good salesperson, and you have the ability to be part of the 1% who turn a profit in Reliv, then we suggest that you look at all your options before becoming an Ambassador. It’s quite likely that you can make more money in a regular sales job than you would in the Reliv opportunity.

As always, we’d love to hear what you think in the comments section below, especially if you an share your experiences with Reliv

Are you wondering if you can make money in an MLM? Check our our  list of mlm reviews before you join. If you find one that’s not on the list, let us know and we’ll do our best to write a review

Zilis was founded in 2015 in Texas. The word Zilis, comes from Swahili words, which translate to ‘multiplying nutrition’. The produce a range of water soluble Zilis Ultra products, which are all hemp based. Like Hempworx, they claim that the industry will grow by 700% by the end of 2020 (around 2 years from when they made the claim).

Rather than using traditional methods, Zilis sell their products through a network of ‘Independent Ambassadors’. Here at The Finance Guy, we believe that you can’t make money with MLM, but in this full review of Zilis, we’ll give them a chance to prove us wrong. We’ll take a closer look at the Zilis opportunity, and find out if this is a legitimate money maker, or just another MLM

What is the Zilis Opportunity

According to the official Zilis opportunity page, Zilis is ‘a unique model that offers the greatest financial opportunities in the social marketing world today’. Now we’ve heard similar claims from most MLMs we’ve reviewed, but we’ll see if this one turns out to be true.

Zilis tell us that in this fast growing industy, they are giving ‘everyone the opportunity to build long-term successful businesses, and be prosperous’. It goes on to tell us that this is a great time to join Zilis. The page left us feeling like we hadn’t actually learned anything, so we also looked at a YouTube video of the Zilis opporutnity:

The first half of the video tells us all about how wonderful the Zilis Ultra cell products are. They explain that they have ‘new science’ which has discovered that CBD is actually an essential system in the human body.

Zilis then tell us that because of their superior extraction methods, they get better quality CBD oils. They even explain that because of the wide range of ingredients they extract, their products have an ‘entourage effect’.

We were curious, so we looked up the entourage effect ourselves. It turns out that it has more to do with the counteracting the negative effects of THC. This is interesting to us because these CBD products don’t have significant amounts of THC.

The second half of the video, tells us about their ‘very unique career path’ available to you with Zilis. It claims that all you have to do is build two teams (one left and one right), then let the system duplicate.

We decided to look for more information, so we read through the Zilis compensation plan. This document explains all the ways Zilis ambassadors can earn money, and what they need to do to earn it.

Like the video, the compensation plan starts off telling us about the Zilis career path. They say that the success of Zilis Ambassadors is their priority. The compensation plan uses powerful direct selling structures. They call it a ‘strong recipe for Ambassadors to achieve success’.

We then hear about the ‘Pay it Forward’ motto, where Zilis donate a portion of all sales toward feeding children in need. It’s nice to know that they have charitable activities. Having said that, the focus of this review is whether or not becoming a Zilis Ambassador is a good business opportunity.

The compensation plan explains that there is 7 ways to earn with Zilis. We’ll go through them each below:

Retail Profit
This is the profit you make when you sell products to retail customers. Zilis call this ‘the foundation’ of your business. Zilis say you can earn up to 100% retail profit. They then explain that your customers can get a discount of 50% if they sign up for autoship and become ‘preferred customers’. They do not explain retail profit in more detail than that. This is a concern to us because we don’t understand exactly what you earn from each type of customer.

Fast Start Bonus
When you personally sponsor a new Zilis Ambassador, you can earn a fast start bonus. The amount you earn, depends on which starter pack they purchase. The amounts paid for each starter pack are shown below:

We’d like to point out that if you join Zilis, it is in your sponsor’s best interest for you to join on the most expensive starter pack. If you join with the basic $99 pack, they get no Fast Start Bonus. If you pay $1,299 for the Gold starter pack, they’ll get a bonus of $130. Don’t feel pressured to join on a more expensive pack if you don’t want to. At the end of the day, if the system really works, then you’ll make your way to a residual income from any starter pack

Binary Team Builder
Depending on your rank with Zilis, you can earn up to $25,000 per week from this bonus. Like the fast start bonus, this commission is calculated from the start up packs of new Ambassadors in your downline. The main difference is that you earn this form Ambassadors who were sponsored from people other than you in your downline.

The binary system means you have a left leg and a right leg. Your binary team building commission can be as much as 20% of the Business Volume (BV) from the smaller of your legs. The % and the maximum team builder commission you can earn per week, is based on your rank with Zilis. This is shown in the diagram below:

As we can see, if you are a relatively new Ambassador, at the ‘associate’ rank, you can only earn $250 per week at 10%. If you make it all the way to ‘Triple Diamond’, you can earn up to $25,000 per week at 20%.

It’s important to remember that if you are are about to join Zilis, then all these bonuses are included in your starter pack price. Your sponsor and everyone in their upline will encourage you to join at the gold level because up to 30% of the starter pack cost goes to your upline as commission.

If you happen to earn a Binary Team Builder commission, then you will notice that you are only paid the balance on your weaker leg. This means that you will be left with some unused BV on your stronger leg. Not to worry, Zilis lets you roll over up to 1 Million points of BV on your strong leg as ‘stored volume’. All you have to do is remain active with 100 BV on autoship, and 150 in other BV. This may sound reasonable, but it could also sound like Zilis is encouraging over-consumption of their products.

Infinity Fast Start
This is just like the fast start bonus, except it’s only available to Zilis Ambassadors who have reached the leadership ranks. Once you reach the rank of ‘Area’, or above, you can start earning these bonuses when you personally enrol new ambassadors. The amount you can earn is shown below:

These generous bonuses are designed to ensure that once Ambassadors reach the leadership ranks, they keep recruiting. However for us it is a concern because these bonuses are included in the price of all Zilis starter packs

Generational Bonuses
This is what is known in the MLM industry as residual income. Essentially you can earn commission on all the volume generated from everyone you recruit, as well as everyone they recruit down to 6 generations. The amount you can earn at each generation depends on your rank in the Zilis system, and is shown below:

As we can see, once you reach the ‘National’ rank, you can earn a total of 24% in commission from 6 generations. The problem with this is that these commissions are based on the wholesale BV paid by Ambassadors. In other words 24% of the price paid by Zilis Ambassadors goes to their upline as commision.

Infinity Matching Bonus
This is another bonus that is only available to those who reach the leadership ranks. If someone you personally sponsor reaches the same rank as you, then Zilis will pay you a matching bonus. The amount you earn, as always, depends on your rank, as shown below:

As we can see, start earning matching bonuses once you reach the ‘area’ rank. Once you reach the ‘Presedential’ rank, the matching bonus reaches the maximum of 40%. Remember that there is a total of 24% in generational bonuses. So with a some maths, we worked out that the infinity bonus pays up to 9.6% on BV. Once again, this is included in the wholesale price. Therefore, we calculate that 33.6% of the price paid by Zilis Ambassadors goes to their upline as commission.

Benefits
Zilis offers some other benefits, which don’t come in the form of direct payment. One they call a ‘Blessing benefit’, where Zilis will donate to a charitable cause in your community on a monthly basis. Another offers reimbursements on health insurance premiums. There’s even a Jeep bonus, where depending on your rank, Zilis will contribute between $400 and $1,200 a month toward your lease or loan payment on a Zilis Jeep.

Global Bonus Pool
Every 3 months Zilis pays out 2% of all Volume to qualifying Ambassadors ranked ‘Regional’ or higher. As always this bonus is loaded into the wholesale price, making the products 2% more expensive.

How Do You Get Promoted With Zilis

As we saw from the compensation plan, your rank as a Zilis Ambassador is an important factor in how much you can earn. The higher your rank, the better your earning potential. It’s important to understand what you need to do if you want to climb those ranks. Below is a chart showing all the Zilis Ambassador ranks, as well as what you need to do to qualify for each:

As we can see, getting promoted with Zilis comes down to growing your downline. As you continue to personally sponsor new Ambassadors and increase your sponsor tree volume, you should climb the ranks. It is interesting to see that there is also a requirement to grow your personal volume (PV).

How Much Are Zilis Ambassadors Earning

We found a copy of the Zilis Income Disclosure Statement. Unfortunately they have not given us much information. They claim that as of April 2016, the company was too new, so all they could tell us was that according to industry standards, they expect Zilis Ambassadors to earn less than $300 per year.

Despite the fact that they now have over 3 years of data, Zilis has not released an up to date income disclosure. This could be an oversight, or it could be that the actual data shows that most Zilis Ambassadors lose money

Why is it Hard to Make Money With Zilis

We believe that the problem is not unique to Zilis. The problem is with the business model. In his book, Multi-level Marketing Unmasked, Jon Taylor found that 99.7% of people who join direct selling companies end up losing money.  Despite what you hear in the sales pitches, it is highly unlikely that you will make money from any network marketing company.

Network marketing is a way for companies to sell products without employing a sales force and without having to spend money on traditional advertising and promotions.  Instead they build a network of loyal ‘Ambassadors’, who are willing to pay unusually high prices for the added hopes and dreams of financial freedom.

Dr. Taylor has also provided a 5 Step MLM evaluation, which is designed to show you if you have a chance of turning a profit with any MLM opportunity. We looked at each of the 5 flags for Zilis, as shown below:

Red Flag 1 - Constant Recruitment of New Members and Red Flag 2 - Promotion Through Recruitment
The fast start bonuses are a direct incentive for all Ambassadors to keep recruiting. On top of this, to maintain any rank in Zilis, you need to have a minimum number of personally sponsored Ambassadors.

While it may be enough in theory to just recruit a few friends. In reality you will need to constantly recruit to replace those that either become inactive or quit altogether.

The Zilis compensation plan is designed to encourage constant recruitment of new Ambassadors. Further you can not climb the ranks unless you are personally recruiting new Zilis Ambassadors.

Red Flag 3 - Pay to Play
To remain active and to qualify for commission, you need to buy enough Zilis products to meet the PV quota at each rank. This often leads to members of MLMs purchasing more product than they can personally consume or sell to retail customers. They are buying product in order to play the MLM system, not because they need or want more product.

Red Flag 4 - Most of the Rewards go to your upline
If you an ‘associate’ with Zilis, you can only earn 5% in generational bonuses from 1 level. An additional 19% will be paid to people in 5 levels above you in your upline. On top of this another 2% of the wholesale price goes toward paying the top levels in the system their infinity bonuses.

Unfortunately most people never make to the senior levels of an MLM. Therefore the majority of Ambassadors are earning more for their upline than they are for themselves.

Red Flag 5 - More than 5 levels in the payout plan
Dr Taylor says 'Excessive levels in a downline is another sign participants are expected to sell primarily to their downline, rather than to the general public.  This makes it an exploitative money transfer scheme, or product-based pyramid scheme'.

As we have demonstrated, Zilis raises all 5 red flags in Dr Taylor’s evaluation. According to his research, your chances of making money as a Zilis Ambassador are less than 1 in 100

Is Zilis an Illegal Pyramid Scam

Even though MLMs closely resemble pyramid schemes, they are not illegal. The reason dates back to the 1979 case of Amway vs the FTC. After 4 years in court Amway was found to be offering a business opportunity, rather than a pyramid scam. The technicalities came down to wording in their paperwork. One example requires consultants to make retail sales.

The Amway ruling effectively opened the doors for all other MLMs to operate within the law. However we should remember that being legal doesn’t make it ethical. If you knew that less than 1% of people had a chance of generating a real income, would you feel comfortable recruiting new consultants?

Another issue, is that even though these rules may be in the paperwork, they are difficult to enforce. For example, several people in MLMs have said that they have cupboards full of product. This is because of the minimum monthly purchases they need to make to remain active in the system. Even though stockpiling is against the rules, there is no way for the company to monitor it.

Should You Join Zilis

We think that the only reason to join any MLM, is if you are already using their products, and are happy enough to recommend them to others. At the end of the day, you can’t make money in MLM unless you make a lot of sales.

If you are a good salesperson, and you have the ability to be part of the 1% who turn a profit in Zilis, then we suggest that you look at all your options before becoming an Ambassador. It’s quite likely that you can make more money in a regular sales job than you would in the Zilis opportunity.

As always, we’d love to hear what you think in the comments section below, especially if you an share your experiences with Zilis

Are you wondering if you can make money in an MLM? Check our our  list of mlm reviews before you join. If you find one that’s not on the list, let us know and we’ll do our best to write a review

Zurvita is a Texas based supplement company which started in 2008. Rather than using traditional methods they use a network of independent consultants to promote the range of Zurvita products.

Here at The Finance Guy, we think that you can’t make money with MLM, but we’ll be happy to be proved wrong. In this full review of Zurvita, we’ll find out if they offer a money making opportunity or if they’re just another MLM money trap.

What is the Zurvita Opportunity

According to the official Zurvita opportunity page, they have created an opportunity that can help anyone. All you need to do is share Zurvita product with others, and you can create additional income. This page has an embedded video, which suggest you participate in the ‘team all star program’. They claim that by following the all star method, you can expect to earn $2,300 in your first 60 days with Zurvita.

The video alludes that their ‘secret to success’, is a combination of their product, their company, and an app for your mobile phone. They describe this as ‘one of the greatest money making opportunities in history’. They even claim that the app ‘does all the prospecting, presenting and selling for you’. We have seen the app, but to us, Zurvita sounds too good to be true.

We then learn a little bit about the products. They can help a wide range of issues which we all suffer, with their ‘all in one wellness drink’. Thanks to their blend of super foods, all you have to do, is feel the benefits of Zurvita and share the results with others. Allegedly after that, ‘how much you earn is up to you’.

While this all sounds very exciting, it didn’t give us much information, so we kept looking. We found another official page about sharing Zurvita. Here we learn that Zurvita provides all the tools needed to achieve your dreams.

Again we are told that if you become a Zurvita independent consultant, they’ll give you all the tools you need to succeed. These include a copy of their website, and access to their mobile app. While it’s nice to hear all these claims about how great the system is, we still don’t know how it works.

How do you Make Money With Zurvita

We found a copy of the Zurvita compensation plan, which explains how consultants earn commission. The first thing we notice is that Zurvita claims to offer a generous plan which is ‘far superior to others’. We’ve heard similar plans from most MLMs we’ve reviewed, and so far they’ve all turned out to be much the same.

The document goes on to explain the different ways to earn with Zurvita, we’ll explain them all in deatail, we even watched a video they made explaining the Zurvita opportunity

The video starts off telling us that the average annual household income in the US is $55,775, which just isn’t enough. It then infers that you can generate this sort of income in your first year with Zurvita.

Again they mention the all star start. All you need to do is follow their system and you’ll be on the path to riches. It’s as simple as finding a few customers, and recruiting just 2 friends to join up as Zurvita consultants. Then of course have them do the same so the system ‘duplicates’. If you can recruit 2 consultants and find 5 customers in your first 30 days, you can earn some sort of cash bonus. This is shown in the image below:

This overly simplified explanation is common to most MLMs. They like to give the impression, that making money is as easy as telling a few friends to join. Then the process ‘duplicates’. Duplication is MLM speak for ‘your friends recruit their friends’. In theory, as this process continues, your team will grow exponentially. We believe that in reality building a team with Zurvita is much more difficult.

The video goes on to describe some of the different ways you can make money with the Zurvita compensation plan. We decided to read the document ourselves and explain them below:

Personal Sales
You can earn up to 20% commission from sales you make to retail customers. If you sign on preferred customers, they will get a discount in exchange for signing up for monthly orders. Zurvita will pay you a commission of 20% based on the BV points value of their orders. Hopefully this will make more sense as we go along.

There is also a customer acquisition bonus. When you sign a preferred customer Zurvita may pay you between $30 and $50, depending on which products they buy with their first order.

Monthly Sales
This is very similar to personal sales, except this is the 20% commission you can earn from any Zurvita consultants you personally sponsor. These are known as your ‘front line’.

You can also earn a one off ‘Builders Bonus’ of between $50 and $100 for each consultant you sponsor. The amount you earn will depend on which starters pack they buy. There are several options for becoming a consultant. All of them come with replicated Zurvita website as well as access to their app and other support tools.

As you build your Zurvita business, and sponsor new consultants, you will start to build your downline. Each consultant you personally sponsor on your front line, will be a ‘leg’. Anyone sponsored by them, (or under them), will be in your downline levels. This is illustrated in the diagram below:

All Star Bonuses
In your first 30 days as a new Zurvita consultant, you will have the chance to qualify for the customer and the team all star bonuses. The customer bonus is earned when you enrol 5 preferred customers. You can earn $250 for the customer bonus.

The team all star bonus is $800. To earn this you need to recruit at least 2 new consultants, and have them order a combined total of at least 3,000 TBV (Team Bonus Volume). We find this interesting because it looks like an incentive to ask new consultants to overspend.

Team Bonus
Every time you accumulate 3,000 TBV in your downlilne, you could earn a $400 team bonus. To qualify you need to ensure that no more than 50% of your volume comes from one leg. You can earn more than one team bonus in any given month, all you have to do is generate the TBV.

You can increase your team bonuses to $600, if you buy or lease an approved car, and let Zurvita put their advertising on it.

Overrides
Overrides are what MLM like to call your ‘residual income’. Depending on your rank in Zurvita, you can earn commission on up to 8 levels in your downline. We made the table below to show what overrides can be earned at each rank.

The team all star bonus is $800. To earn this you need to recruit at least 2 new consultants, and have them order a combined total of at least 3,000 TBV (Team Bonus Volume). We find this interesting because it looks like an incentive to ask new consultants to overspend.

Team Bonus
Every time you accumulate 3,000 TBV in your downlilne, you could earn a $400 team bonus. To qualify you need to ensure that no more than 50% of your volume comes from one leg. You can earn more than one team bonus in any given month, all you have to do is generate the TBV.

You can increase your team bonuses to $600, if you buy or lease an approved car, and let Zurvita put their advertising on it.

Overrides
Overrides are what MLM like to call your ‘residual income’. Depending on your rank in Zurvita, you can earn commission on up to 8 levels in your downline. We made the table below to show what overrides can be earned at each rank.

The team all star bonus is $800. To earn this you need to recruit at least 2 new consultants, and have them order a combined total of at least 3,000 TBV (Team Bonus Volume). We find this interesting because it looks like an incentive to ask new consultants to overspend.

Team Bonus
Every time you accumulate 3,000 TBV in your downlilne, you could earn a $400 team bonus. To qualify you need to ensure that no more than 50% of your volume comes from one leg. You can earn more than one team bonus in any given month, all you have to do is generate the TBV.

You can increase your team bonuses to $600, if you buy or lease an approved car, and let Zurvita put their advertising on it.

Overrides
Overrides are what MLM like to call your ‘residual income’. Depending on your rank in Zurvita, you can earn commission on up to 8 levels in your downline. We made the table below to show what overrides can be earned at each rank.

As we can see, once you reach the rank of ‘Zurvita Presedential Director’, you can earn a 5% override on 8 levels in your downline. While this is all good for those who reach these ranks, for the rest it’s not. All these commissions are included in the price paid by consultants. If you are a ‘Business Consultant’, then 40% of what you pay to Zurvita, goes to your upline as commission.

Infinity Overrides
The commission doesn’t end at 8 levels. Once you reach the level of Presidential Director, you can earn an additional commission form level 9 down through your entire downline. The infinity override cancels out if someone else in your downline reaches same rank as you. The infinity bonuses paid by Zurvita at each rank, is shown below:.

Once again, these bonuses are included in the price charged by Zurvita to consultants. This means that in total 44.75% of what consultants pay to Zurvita goes to their upline as commission.

On top of all these commissions, you can also earn one of bonuses for achieving promotions in Zurvita. Once you reach the rank of Premier Consultant, you can earn a $500 bonus. This bonus increases for every rank you achieve after this level.

With all these generous commissions, it certainly looks possible to make money from Zurvita. All you need to do is share the products, share the opportunity, and work your way up the system.

Are Zurvita Consultants Making Money

To find out if Zurvita consultants are making money, we first looked at page 24 of the compensation plan. This was a copy of their income disclosure from August 2014 to July 2015. During this period, it appears most consultants didn’t make much money.

That might have been a bad year, so we also found a copy of the 2016 Zurvita Income Disclosure. This showed all commissions paid to consultants in 2016. We didn’t like the way they presented the data, so instead we used it to create the table below:

The video we shared suggests that you can make $55,775 in your first year with Zurvita. However when we look at the results from 2016, only 0.38% earned at this level or above. In other words, 99.62% of Zurvita Consultants earn less than a full time income.

It’s important to remember that there is a different between income and profit. The figures shown in the table above, do not include any expenses. Remember you will incur some costs in running your Zurvita consultant business. If we were to include all expenses, we believe we’d find that most Zurvita consultants are losing money.

Why is it Difficult to Make Money With Zurvita

We believe that the problem is not unique to Zurvita. The problem is with MLM as a business model. In his book, Multi-level Marketing Unmasked, Jon Taylor found that 99.7% of people who join any MLM, end up losing money.  Despite what you hear in the sales pitches, it is highly unlikely that you will make money from any network marketing company.

MLM is a way for companies to sell products without employing a sales force and without having to spend money on traditional advertising and promotions.  Instead they build a network of loyal believers who are willing to pay unusually high prices for the added hopes and dreams of financial freedom.

The compensation plan may look appealing, but it makes the products more expensive. Even at their wholesale prices, there is a 44.75% price loading on Zurvita products. This is just to pay commissions to your upline. This is before Zurvita covers their own costs of production or includes a profit margin.

The only way to make money with Zurvita, is if you make a lot of sales. Any salesperson will tell you that the best way to make sales, is with a good quality product.

While we didn’t try any ourselves, we did read a Zurvita product review. Which found that the products are not FDA approved. There is no evidence that they provide any benefits. Some ingredients in Zurvita can cause harmful side effects.

MLM is a way for companies to sell products without employing a sales force and without having to spend money on traditional advertising and promotions.  Instead they build a network of loyal believers who are willing to pay unusually high prices for the added hopes and dreams of financial freedom.

The compensation plan may look appealing, but it makes the products more expensive. Even at their wholesale prices, there is a 44.75% price loading on Zurvita products. This is just to pay commissions to your upline. This is before Zurvita covers their own costs of production or includes a profit margin.

The only way to make money with Zurvita, is if you make a lot of sales. Any salesperson will tell you that the best way to make sales, is with a good quality product.

While we didn’t try any ourselves, we did read a Zurvita product review. Which found that the products are not FDA approved. There is no evidence that they provide any benefits. Some ingredients in Zurvita can cause harmful side effects.

MLM is a way for companies to sell products without employing a sales force and without having to spend money on traditional advertising and promotions.  Instead they build a network of loyal believers who are willing to pay unusually high prices for the added hopes and dreams of financial freedom.

The compensation plan may look appealing, but it makes the products more expensive. Even at their wholesale prices, there is a 44.75% price loading on Zurvita products. This is just to pay commissions to your upline. This is before Zurvita covers their own costs of production or includes a profit margin.

The only way to make money with Zurvita, is if you make a lot of sales. Any salesperson will tell you that the best way to make sales, is with a good quality product.

While we didn’t try any ourselves, we did read a Zurvita product review. Which found that the products are not FDA approved. There is no evidence that they provide any benefits. Some ingredients in Zurvita can cause harmful side effects.

Is Zurvita an Illegal Pyramid Scam

Even though MLMs closely resemble pyramid schemes, they are not illegal. The reason dates back to the 1979 case of Amway vs the FTC. After 4 years in court Amway was found to be offering a business opportunity, rather than a pyramid scam. The technicalities came down to wording in their paperwork. One example requires consultants to make retail sales.

The Amway ruling effectively opened the doors for all other MLMs to operate within the law. However we should remember that being legal doesn’t make it ethical. If you knew that less than 1% of people had a chance of generating a real income, would you feel comfortable recruiting new consultants?

Another issue, is that even though these rules may be in the paperwork, they are difficult to enforce. For example, several people in MLMs have said that they have cupboards full of product. This is because of the minimum monthly purchases they need to make to remain active in the system. Even though stockpiling is against the rules, there is no way for the company to monitor it.

We don’t believe that Zurvita consultants are trying to scam new recruits. It’s more likely that they themselves believe the promotional hype. They think that if they keep sharing, they’ll one day be wealthy Sadly, most will never achieve any real results, as the chances of success with Zurvita are less than 1/200

Should You Join Zurvita

The only reason you should join any MLM, is if you are already a customer, and you believe in the products. If you are happy paying full retail price for Zurvita products without any commissions, then you might be able to sell them to others.

If you are looking for an opportunity to earn extra money, then we suggest you look at all your options before deciding to join Zurvita. If you have the incredible sales skills it takes to make money with Zurvita, it’s quite likely that you could use those skill to make even more money in a regular sales job.

As always, we’d love to hear what you think in the comments section below, especially if you an share your experiences with Zurvita

Are you wondering if you can make money in an MLM? Check our our  list of mlm reviews before you join. If you find one that’s not on the list, let us know and we’ll do our best to write a review

Based in Santa Monica California, Beautycounter was founded in 2013. They have a range of skin care and cosmetics products, which they say are free of dangerous chemicals.

Rather than using traditional methods to promote their products, Beautycounter has over 33,000 independent consultants who sell the products through their mulit-level marketing system.

Here at The Finance Guy, we believe that you can’t make money with MLM, but in this full review of Beautycounter, we’ll give them a chance to prove their opportunity isn’t just another MLM.

What is the Beautycounter Opportunity

To help us understand the opportunity, we found a youtube video made by a Beautycounter consultant who is at the director level:

The video starts off telling us how excited she is, before informing us that Beautycounter is a ‘B-Corporation’. This means that they have made some effort to be socially and environmentally responsible. This is definitely a positive as it’s nice to know that they are doing their best to create cosmetics which don’t pollute the planet.

We then learn that after several years using beauty products, the representative learned that they contain dangerous chemicals. Luckily for us, Beautycounter only uses safe ingredients!

We then learn that the products aren’t just for women, there’s also a line for babies and for children. And of course there’s Beautycounter products for men. You can have the whole family on these products with their all safe ingredients.

According to this Beautycounter director, the products are 85% organic. She then tells us that all we need to do to join, is buy a $98 starter kit. It even comes with some cream and a lipstick….There’s also some brochures and a booklet. It’s everything you need to start sharing this business.

She then rambles on about how you can earn 20% commission selling Beautycounter, but you can earn even more if you grow your business. The video finishes with her excitedly telling us about how she has a great upline and I guess that means we should join her team.

While the video did give us a few details about Beautycounter, we still wanted to know more, so we looked at the official page of the Beautycounter opportunity. As expected the page has some photos of happy looking consultants. There are some quotes about how it changed their lives.

Beautycounter tells us that this opportunity is ‘where lipstick meets legacy’. They claim to provide a ‘platform which empowers you to create your own career’. If you become a consultant you’ll get your own Beautycounter website so sell from.

You can choose to sell online, in person (1 on 1) or in group ‘pop-up’ parties. We see that there is some online training, and Beautycounter tell us they provide ‘all the tools you need to run a successful business’. We are then reminded that all it takes to get you up and running, is the $98 starter pack.

While it’s nice to know that there are some excited consultants, and that there are some standard online tools, we still had more questions. We still don’t understand how this opportunity is going to make us rich.

How do you Make Money With Beautycounter

To find out how consultants earn commission, we had a look at the Beautycounter compensation plan. At just a single page, Beautycounter officially has the most concise compensation plan we’ve seen to date. Having said that, we can still get an idea of how it works. Like all MLMs, there are lots of ways to make money:

Retail Commission
Just like the video said, you can earn a 25% commission on any sales you make. We assume this includes sales made through your website. This is is useful because it means that if customers buy online themselves you automatically get a commission. This allows you to focus on promoting your website and generating sales. You don’t need to worry about handling products and delivering them to clients.

Personal Sales Bonus
If you generate enough Personal Volume sales, you can earn bonus commissions. The compensation plan explains that this is based volume of sales made to your customers. Therefore this bonus should be considered as additional retail profit. The amount you can earn and the PV required is shown below:

Override Commissions
These are the commissions you can earn from your downline. If you sponsor others to become Beautycounter consultants, then any product they order will count as your Business Volume (BV). The amount of commission you can earn depends on your rank in the system. They override commissions and qualifications at for each rank are shown below:

If you sign on as a new consultant, you can earn a 5% override on any orders placed by other consultants you have personally sponsored. Once you start climbing the ranks, you can earn more commission from more levels in your downline. It’s important to note that the commission is paid on Commissionable Value (CV), which is 75% of PV. So when they say 5%, you are actually ending up with 3.75%. This makes the compensation plan a little confusing. We are not sure why they have done this, but it looks like an attempt to make the Beautycounter compensation look better than it really is.

Even after the adjustment from PV to CV, you can still earn quite a bit of commission once you reach the Director ranks in Beautycounter. While this all looks very generous, to us it is a red flag. All these commissions are included in the price charged by Beautycounter to consultants. This means that is you are a new consultant, then 22.75% of what you pay to Beautycouner, goes to your upline as commission.

Director Generation Overrides
If you do manage to reach the rank of ‘Director’ with Beautycounter, then you will qualify to earn this additional commission, as shown below:

If someone in your downline becomes a director, then you no longer will get standard overrides from them. Instead they become a ‘generation’, and you earn a flat override from their entire downline volume. If someone in their downline becomes a director, this becomes your 2nd generation and so on. As we can see, director generation overrides are paid on up to 4 generations.

Once again the amount paid is based on CV, so when they say 3%, it’s actually 2.25% of PV. Even so these commissions can still add up to an extra 9% in trailing commissions. This means that for new consultants 31.75% of what you pay to Beautycounter, goes to your upline as commission.

These generous commissions means that even at their ‘discounted’ prices, the products need to be expensive. After all, they have to pay for the compensation plan, as well as normal costs of production, then there is still the profit margin for Beautycounter.

While we can see that it’s possible (for those at the higher ranks) to make money, we still wanted to know more, so we kept researching

Are Beautycounter Consultants Making Money

To find out how much consultants are earning, we looked at the 2017 Beautycounter Income Disclosure Statement. The first thing we notice is that Beautycounter had a total of 33,408 ‘registered consultants’, and 29,000 active consultants. This tells us that in 2017, there was a total of 62,408 Beautycounter consultants.

They explain that the difference between the two is that ‘active consultants’ earned at least one commission in 2017. They are also telling us that registered consultants did not earn a commission. In other words 53.53% of Beautycounter consultants earned no commission in 2017

Beautycounter then proudly tell us that in 2017, they paid $80 Million in commissions to consultants. However when we consider that there were a total of 63,408 consultants, it’s not a great result, it averages to less than $1,300 per each. In other words, on average, Beautycounter consultants earned less than $110 per month.

Beautycounter has given us information about how much consultants at each rank earned in 2017. We included the 'registered consultants’ and created the table below:

As we can see, the vast majority of consultants earned very little commission with Beautycounter. Only those who reached the rank of ‘Senior Director’, or higher earned a full time income. 99.12% of Beautycounter consultants earned less than a full time income from this opportunity.

Let’s not forget that there is a difference between income and profit. The earnings shown do not include the expenses consultants incur running their Beautycounter business. If we were to include expenses it’s quite likely that we’d find that most Beautycounter consultants are losing money.

We wanted to see if things have improved since we fist wrote this review. We did a separate write up on the 2019 Beautycounter Income Disclosure. Like most MLMs, Beautycounter have decided to provide us with less information than they had previously. Even with the reduced transparency, we see that less than 1.1% of active consultants earn more than minimum wage.

Why is it Difficult to Make Money with Beautycounter

We believe that the problem is not unique to Beautycounter. The problem is with MLM as a business model. In his book, Multi-level Marketing Unmasked, Jon Taylor found that 99.7% of people who join direct selling companies end up losing money.  Despite what you hear in the sales pitches, it is highly unlikely that you will make money from any network marketing company.

MLM is a way for companies to sell products without employing a sales force and without having to spend money on traditional advertising and promotions.  Instead they build a network of loyal believers who are willing to pay unusually high prices for the added hopes and dreams of financial freedom.

The compensation plan may look appealing, but it makes the products more expensive. Even at their wholesale prices, there is a 31.25% price loading to pay the commissions to the MLM.

The only way to make money with Beautycounter, is if you make a lot of sales. Any salesperson will tell you that the best way to make sales, is with a good quality product.

While we didn’t try any of the products ourselves we did find an independent review of Beautycounter products. While the products were found to be good, the review noted that, Beautycounter products are not as good as competitor products. In our opinion, this would make it difficult to generate consistent retail sales. After all if your customers find that other chemical free products are better, they are likely to switch.

Is Beautycounter an Illegal Pyramid Scam

Even though MLMs closely resemble pyramid schemes, they are not illegal. The reason dates back to the 1979 case of Amway vs the FTC. After 4 years in court Amway was found to be offering a business opportunity, rather than a pyramid scam. The technicalities came down to wording in their paperwork. One example requires consultants to make retail sales.

The Amway ruling effectively opened the doors for all other MLMs to operate within the law. However we should remember that being legal doesn’t make it ethical. If you knew that less than 1% of people had a chance of generating a real income, would you feel comfortable recruiting new consultants?

Another issue, is that even though these rules may be in the paperwork, they are difficult to enforce. For example, several people in MLMs have said that they have cupboards full of product. This is because of the minimum monthly purchases they need to make to remain active in the system. Even though stockpiling is against the rules, there is no way for the company to monitor it.

Should You Join Beautycounter

The only reason you should join any MLM, is if you are already a customer, and you believe in the products. If you are happy paying full retail price for the products without any commissions, then you might be able to sell to others.

If you are looking for an opportunity to earn extra money, then we suggest you look at all your options before deciding to join Beautycounter. If you have the incredible sales skills it takes to make money with Beautycounter, it’s quite likely that you could use those skill to make even more money in a regular sales job.

As always, we’d love to hear what you think in the comments section below, especially if you an share your experiences with Beautycounter

Are you wondering if you can make money in an MLM? Check our our  list of mlm reviews before you join. If you find one that’s not on the list, let us know and we’ll do our best to write a review

The American Communication Network, or ACN, was founded in 1993 in Concord, North Carolina. It was started by a bunch of guys who had ‘countless years of direct sales experience’. Based on their own dissatisfaction with other MLMs, (possibly caused by trying and failing), they decided to start one themselves.

ACN now has a global network of Independent Business Owners (IBOs), who promote their services through their network marketing system. They are now the largest direct seller of telecommunications in the world. We’re not sure who is the 2nd largest or if there are any others using MLM to sell these services.

Here at The Finance Guy, we believe that you can't make money with network marketing, but let’s see how they go. In this full review of ACN, we’ll find out if you can make money, or if this just another network marketing scheme.

What Does ACN Do

ACN services include phone, internet, gas, power, tv, security, and more. ACN doesn’t limit their services to residential, they also supply their services to businesses. To us, it looks like ACN offers most of your monthly home and business services.

These are services which are used in almost every home in the modern world. There’s no doubt that there’s a huge market for these services, the only question is, can ACN capture a significant market share.

What is the ACN Opportunity

To find out more about the ACN opportunity, we watched a short video, which has since been taken offline, so we’ll just share what we learned when it was available.

The video explained that this is your opportunity to earn an income from the essential services that everyone uses. It’s a ready made online business. There’s a global market of almost $2 Trillion, this is your chance to be a part of it.

We all use at least one of the ACN services, so if you join, and find just 5 friends to also join, you might get these services for free!

The ACN opportunity doesn’t end at free services, you can also earn residual income with ‘your own online ACN business’. Every time one of your referrals pays a bill, you’ll get a commission. It doesn’t end there though, you can also earn from their referrals. This is what MLMs call a ‘downline’.

The video ends with some information about the charitable work done by ACN in feeding hungry children. While this is a worthy cause, we still want to know more about how this opportunity works.

We decided to look through the official ACN opportunity page. Along with the above video, they also give us some information. We found out that ACN gives us a chance to be part of ‘the you economy’. It then repeats what we heard in the video. If you refer people, you get paid every time they pay a bill. If they refer their friends, you get even more.

The opportunity page then tells us that if we join ACN, we will have the support of our upline. Even though we are building our own downline, we don’t have to do it alone. This is a purported benefit of joining any MLM. We still need to understand how ACN is going to make us wealthy.

How do You Make Money with ACN

To find out the answer to this question, we looked at the 2019 ACN compensation plan. This document explains all the ways to earn commission as an ACN IBO, as well as what you need to do to earn it.

The first thing they tell us, is that ‘your goal should be to work through the earned positions’. To help us understand how to do this, they provided this diagram:

What we see here, is that to climb the ranks, you need to build a downline. The more you can get your downline to spend with ACN, the better. It looks like the best way to grow as an IBO, is to recruit new members to become ACN IBOs. For us, this raises Red Flag 2 - Promotion Through Recruitment

Monthly Residual Commissions
They tell us that over time, this will be your main source of residual income as an ACN IBO. It is the income that you will start to earn, when your recruits start building their billings. In effect, you are getting paid a commission for the work done by the people in your downline. According to MLM theory, this will eventually go onto autopilot as the system keeps growing from the effort of those in the downline.

Personal Commissions
As as you acquire your own customers, you can earn between 1% and 10% commission on their monthly bills. The amount of commission you can earn, depends on how many customers you have signed, as shown below;

As we can see from the image above, your personal commissions will increase as you acquire more customers. This is something we find refreshing about ACN, as they are making an effort to encourage retail sales. Having said that, earning less than 5% hardly makes it worthwhile, so some IBOs might not bother trying to acquire 39 customers for 1%-3%

Overriding Residual Commission
These are commissions paid on the bills from people in your downline. This includes people you recruit, people they recruit, and all their customers. The table below is ACN’s attempt to explain residual commissions:

While this table may not be overly informative, we can see a total of 23% in total commissions on 7 levels plus some generations of RVP and SVP. This lucrative compensation plan may look good, but these 23% of commissions are included in the prices ACN charges.

If you sign up for any service, then close to 1/4 of your ACN bill is going to people above you in the MLM. This would make it difficult for ACN to offer competitive services to the end customer. After all, they have to pay these commissions on top of their own costs and they still want to make a profit.

Customer Acquisition Bonuses
While this may sound like a commission for signing on new customers, it isn’t. This bonus is paid when people you sponsor level up within 30 days of joining. It’s what most other MLMs would call a ‘fast start bonus’. It’s designed to encourage new recruits to get going as quickly as possible. In our review of WFG, we discovered that this is referred to as ‘tap-rooting’.

The idea is to get IBOs to recruit while they are still new, and before they lose enthusiasm. WFG also found that IBOs who have recruited at least one new member, become less likely to quit the MLM

The compensation plan goes on to explain the points system available for selling various services. However that would only be relevant to your own area, so if you care enough to know, go ahead and look it up :)

Are ACN IBO’s Making Money

Sadly, the only version of an ACN disclosure, we could find was the image below, which was part of the video we shared above:

While there is very limited data, this disclaimer does raise some concern. For one, it suggests that that the inferred ‘dream’ results of the ACN opportunity, are only available to less than 1% of IBOs. Further there decision not to show us the real IBO earnings, leaves us thinking that less than 1% of ACN IBOs are making money.

Why is it Difficult to Make Money With ACN

We believe that the problem is not unique to ACN. MLM as a business model is flawed. In his book, Multi-level Marketing Unmasked, Jon Taylor found that 99.7% of people who join direct selling companies end up losing money.  Despite what you hear in the sales pitches, it is highly unlikely that you will make money from any network marketing company.

MLM is a way for companies to sell products without employing a sales force and without having to spend money on traditional advertising and promotions.  Instead they build a network of loyal believers who are willing to pay unusually high prices for the added hopes and dreams of financial freedom.

While the compensation plan may look generous, you should remember that all those commissions are included in the price. If you sign up for a service through ACN, then 23% of your bill will go to people in your upline as commission. As a customer you are paying for the compensation plan to the MLM as well as an additional margin for ACN to cover costs and turn a profit.

ACN consumer reviews, suggest that their services are overpriced and of lower quality. Several customers have complained about being unable to cancel services once they were unhappy. Others are claiming that ACN is a scam.

Is ACN an Illegal Pyramid Scam

Even though MLMs closely resemble pyramid schemes, they are not illegal. The reason dates back to the 1979 case of Amway vs the FTC. After 4 years in court Amway was found to be offering a business opportunity, rather than a pyramid scam. The technicalities came down to wording in their paperwork. One example requires IBOs to make retail sales.

The Amway ruling effectively opened the doors for all other MLMs to operate within the law. However we should remember that being legal doesn’t make it ethical.

Having said that, back in 2005, the Australian courts ruled that ACN is a pyramid Scam. We’re not sure how they changed their structure since this ruling, but ACN is still operating in Australia.

As always, we’d love to hear what you think in the comments section below, especially if you an share your experiences with ACN

Are you wondering if you can make money in an MLM? Check our our  list of mlm reviews before you join. If you find one that’s not on the list, let us know and we’ll do our best to write a review

In May 2017, Hempworx merged with My Daily Choice (MDC). As a result you can now purchase Hempworx with all the other MDC products. Based on our research, MDC offers the option to focus all your energy on Hempworx. MDC just runs the system in the background.

What is Hempworx

Hempworx provides high quality CBD oils made on their hemp farms in Kentucky. It’s important to remember that Hemp, and CBD oils, come from a strain of the Cannabis plant that contains very little THC. This means that the products will not have ‘recreational’ side effects.

While you may not be able to write hip music with Hempworx, there are a lot of purported benefits of CBD Oils. According to the Hempworx website, they produce very high quality CBD oils. The oil is extracted through a combination of Carbon Dioxide and drying

Rather than using traditional avenues, MDC uses network marketing to sell Hempworx products. Here at The Finance Guy, we believe you can’t make money with MLM, but we’ll gladly be proven wrong! Our full review of Hempworx will find out if this is a real money making opportunity, or just another MLM

Wahat is the Hempworx Opportunity

We watched a youtube video by Hempworx which explains their opportunity

The Hempworx business opportunity is simple enough. According to their page, it’s a chance to be part of the fast growing cannabis industry. Hempworx tells us that the Cannabis industry will expand by 700% by 2020 If you become a Hempworx Affiliate, then you can have your own piece of that pie.

My Daily Choice will help you promote your Hempworx products with their online tools. They’ve created a Hempworx ‘business in a box’. If you sign up, you’ll get a copy of their pre-made webpage, as well as an app for your phone and some tracking tools.

While this is all well and good, it’s nothing new. We’ve seen these tools offered by other MLMs too. We want to know what makes Hempworx a good business opportunity.

How do you Make Money With Hempworx

To find out how we can make money, we looked at the Hempworx compensation plan. This document explains all the commissions you can earn from Hempworx, as well as how to qualify for them.

To join Hempworx, you’ll have to pay a once off joining fee of $20, which they say is to set you up with all their systems, and their ‘success starter kit’. You will also need to buy some product. Depending on which starter pack you choose, you’ll spend anywhere from $69 - $599 on product.

The deal with the starter kits, is that the more you spend the more Business Volume (BV) points you’ll earn. We’ll learn more about BV points as we go along.

Jump Start Bonus
This bonus is paid on all orders made in the first month by new affiliates and ‘preferred customers’. MDC proudly tell us that this bonus adds up to 85% of BV and goes down to 10 levels. The Hempworx Jump Start payouts are shown below:

If a new recruit joins your Hempworx downine, then you can earn commission as shown above. Having said, that, if you are a new recruit, then for the first month, 85% of your BV spending will be paid to people in your upline. They may tell you that the Jump Start Bonus is an incentive to get new people on board, but for us it raises Red Flag 1 - Constant Recruitment of New Members

As a new affiliate, you’ll probably find that your sponsor, and several people in your upline are all encouraging you to purchase product and get yourself set up early. While it may sound like they are being helpful and taking an interest in your new venture. It’s important to remember that they are earning commission from your spending.

Binary Commission
MDC uses a binary compensation plan to pay Hempworx Affiliates. In a binary downline, your business has 2 legs, as shown below:

When you recruit new Hempworx affiliates, you can place them either on your left leg or your right leg. In theory all you need to do is concentrate on the outer legs. If the people you recruit also go on to recruit new affiliates, then they will fill the inner parts of your legs for you.

Before you can earn any commission from MDC, you will need to buy at least 40 BV worth of Hempworx products per month. They may tell you that this is because being a ‘product of the product', makes you successful. For us this raises Red Flag 3 - Pay to Play

Once you’ve purchased your qualifying quota, you’ll be able to start earning commission from the people in your downline. To earn a binary commission, you need to have at least 300 BV on both your downline legs. If your legs have different BV values, then your ‘paid leg’ will be the one with the lower volume.

The amount of commission you can earn each month with Hempworx, will depend on your rank. The binary commission paid at each rank in the MDC system is shown below:

When you first join as an ‘Active Affiliate’, you can earn 8% binary commission. As you climb the ranks this will gradually increase. If you make it to the top ‘Super’ rank, you’ll be earning 20%. MDC tell us that this is ‘one of the most aggressive’ payouts in the industry, but we’ve heard similar claims from almost every MLM we look at. To us this raises Red Flag 4 - Most of the Rewards go to your upline

Leadership Check Matching
MDC offers you the ability to earn bonuses based on the Hempworx commissions paid to your downline. Depending on your rank, you can earn these bonuses on up to 10 levels. They proudly tell us that this ‘sets them apart’ from others in the industry. For us, this raises Red Flag 5 - More than 5 levels in the payout plan

If you continue to grow your Hempworx downline, you might qualify for some of the other incentives such as the Global Bonus Pool, a car lease or even an expense account. As always, your incentives will increase as you climb the MDC ranks. The only way to climb the ranks is to sponsor as many new Hempworx affiliates as possible, and encourage them to spend monthly BV. This raises Red Flag 2 - Promotion Through Recruitment

How Much are Hempworx Affiliates Earning

To answer this question, we found a copy of the MDC / Hempworx Income Disclosure Statement. This document shows the commissions paid by MDC to all affiliates between January 2017 and July 2018. This includes all Hempworx affiliates. Using the information in this disclosure, we created the table below:

The first thing we notice here, is that after a bit of addition, we find that 99.85% of Affiliates earned less than a full time annual income with MDC / Hempworx. This may well be one of the most aggressive compensation plans in the industry, but only 1/666 affiliates earns more than they would with a regular job.

The income disclosure statement only includes affiliates who remained part of Hempworx / MDC during the time the figures were measured. It does not factor in those who quit. If we were to include these, then things only get worse. MDC tell us that over 70% of affiliates quit Hempworx within their first 12 months. We can safely assume that they earned very little if any commission at all.

Another thing we notice, is that it’s lonely at the top. Of the 120,926 MDC affiliates included in this income disclosure, only 3 have reached the top ‘Super Affiliate’ rank. While the presentations may show you how much you can earn if you climb the ranks, very few ever achieve this. To us, this feels like Hempworx are dangling carrots.

Why is it Difficult to Make Money With Hempworx

We believe that the problem is with the network marketing business model.  It's not designed to help people make money or gain financial freedom.  The system is designed to promote and sell products.  MLM is profitable for the companies which produce the products, but not for the members who join the business opportunity.

MLM is a way for companies to sell products without employing a sales force and without having to spend money on traditional advertising and promotions.  Instead they build a network of loyal believers who are willing to pay unusually high prices for the added hopes and dreams of financial freedom.

We applied Jon Tayolors 5 Step MLM evaluation to Hempworx, and found that it raises all 5 flags. According to research this means that your chances of turning a profit with the MDC opportunity are less than 1%.

The market for cannabis and related products is one of the fastest growing in the world. This however is not a guarantee of success. We should not assume that just because Hempworx is involved with CBD oils, you can automatically be successful with this opportunity.

Even if Hempworx as a company is successful and turns vast profits, this does not mean you can make money with the MDC opportunity. At the end of the day MLM is designed to make you a customer, not a business partner. If you sign up to be a Hempworx affiliate and spend your monthly BV, then you’ll be buying their products, and sending them profits. You will not make any money unless you are very good at selling both the products and the opportunity to others.

Another problem is the high attrition rate. More than 70% of the new affiliates you recruit will quit within 12 months of joining Hempworx. This makes building downline more difficult because it’s not enough to just recruit. To grow your business you need to first replace all those who quit each month.

If you were offered a job where 7/10 people quit each year, would you accept it? Well that’s what you are doing if you join Hempworx

Is Hempworx an Illegal Pyramid Scam

Even though MLMs resemble illegal pyramid schemes, they are legal as long as there is a product or service attached to them.  We don't think that Hempworx affiliates are trying to scam their new recruits.  It's more likely that they themselves believe that this opportunity will one day make them wealthy.

Being legal does not make MLM ethical. All companies are in business with the goal of selling goods and services for a profit.  Network marketing companies are able to charge a higher price because they create a customer base of loyal members who believe that by consuming these products and recruiting others to do the same, they will become financially free. In reality you are more likely to lose money and quit within your first year.

As always we welcome your feedback in the comments section below.  We'd love to hear what you think about Hempworx, especially if you can share your personal experiences with the company

For more posts like this, look at our list of mlm reviews. 

Monat started out of Florida in 2014. They sell their collection of hair products through a network of ‘Market Partners’. Monat market partners use both direct sales and social marketing to promote the products.

Here at The Finance Guy, we believe you can’t make money with MLM, but we’ll give Monat a chance to prove us wrong! In this full review of Monat, we’ll find out if this is a money making opportunity, or just another MLM.

What is the Monat Opportunity

After writing this review, we decided to make an 8 minute video about the Monat Opportunity, any likes and subscribes will be greatly appreciated, and will help us get better equipment and improve the quality of future videos:

To find out what all the excitement is about, we watched this video:

From this video, we learned that the name Monat, stands for ‘Modern Nature’. So I guess we’ve been saying the name wrong… They also tell us that they sell ‘naturally based haircare products’.

The video tells us that this is a ‘different kind of opportunity’, it’s a chance to become part of the ‘social selling movement’. After all Facebook and Instagram have ‘changed the industry’.

The video claims that with Monat, you decide how much you earn. By selling these ‘products that work’, you can ‘fulfill your dreams’. In our opinion, this was just another MLM hype video, so we decided to keep looking.

We looked at the official Monat opportunity page. Here we learn that through ‘Social Marketing,’ Monat will open the doors to our dreams. It also tells us that as a Monat market partner, we’ll benefit from ‘one of the most competitive compensation plans in the industry.’ It’s amazing how almost every MLM we review has ‘one of the best compensation plans’.

So far the Monat opportunity is looking like every other MLM we’ve reviewed. There is a lot of talk about dreams coming true, and claims about being the best in the industry. What we don’t see is any information about how it’s going to make us wealthy.

How do You Make Money With Monat

To find out how we actually make money, we looked at a copy of the Canadian Monat Compensation Plan. This document explains the ways we can earn commission from Monat, as well as what we need to do to qualify for it. We see that there are 5 ways to earn with Monat, as shown in the image below:

VIP and Retail Sales
You can make a 15% margin on sales to VIP customers, or 30% to retail customers. We believe that selling to customers is the best way to make money with any MLM. Regardless of what they tell you Monat is a sales job.

Any salesperson will tell you that the best way to make money, is with a good product. It’s a good idea to use Monat yourself before you join their opportunity. Make sure you believe in Monat products as a customer before you try to sell them to others.

Unilevel Commissions
If you sponsor others to become Monat Market partners, then you can benefit from their purchasing activity. They might tell you that being a successful market partner is as easy as sharing with your friends. To us this raises Red Flag 1 - Constant Recruitment of New Members

The amount of unilevel commission you can earn from Monat depends on your rank in the system. As you climb the ranks, you will qualify for higher rates of commission. You will also start earning on more levels in your downlline. In other words you can also earn commission from the new partners brought in by those who you sponsored.

The amount of Unilevel commission paid at each rank is shown in the diagram below:

The way you climb the ranks with Monat, is by growing your downline, and making sure that everyone is purchasing enough product. We see this as Red Flag 2 - Promotion Through Recruitment.

If you make it to the top rank, you can earn commissions totaling 29%. This is nice for those at the top, but if you are a brand new market partner, then 29% of what you spend on Monat products goes to your upline as commission. This raises Red Flag 4 - Most of the Rewards go to your upline

Group Volume Bonus
Once you reach the rank of ‘managing market builder, you can qualify for group volume bonuses. This a 2% override on all levels in your downline. It only cuts out when someone below you also qualifies as a MMB.

Generation Bonus
If you reach the rank of MMB, and so does someone in your downline, then they become, what’s known as a ‘Monat generation’. Like the Unilevel commission, you can earn more generation bonuses as you climb the Monat ranks. The Generation bonuses possible are shown below:

The Monat compensation plan certainly looks generous. But we see another 20% in generation bonuses, which are included in the wholesale price members pay for Monat products. This raises Red Flag 5 - More than 5 levels in the payout plan

To qualify for any payments at all from Monat, you need to remain active. To do this you need to personally buy 200 PV worth of Monat products per month. This is an example of Red Flag 3 - Pay to Play

As we’ve seen Monat raises all 5 flags in Dr Jon Tayolor’s 5 Step MLM evaluation. According to his research, if any mlm raises more than 3 flags, then the chances of members making a profit are less than 1%

How Much are Monat Market Partners Earning

The last page of the Monat compensation plan shows their ‘Statement of Typical Participant Earnings’. Monat appear to have gone out of their way to give us a little information as possible.

They tell us that if you reach the rank of MMB with Monat, then you can expect annual earnings of between $22, and $1,188. Even at the top of that range, Managing Market Builders earn less than $100 per month.

Keep in mind that there is a difference between income and profit. If we were to include expenses, we expect we’d find that most Monat market partners are losing money.

Update
We have recently found a copy and written a separate Monat Income Disclosure review. As we expected only 1 in 909 Monat market partners earns a full time income.

Why is it Difficult to Make Money with Monat

In our opinion the problem is not unique to Monat, , it is with network marketing. MLM is a system which is designed to help the company make sales. It is not designed to offer franchises or create business owners. If you join any MLM, you are a customer not a business partner.

Monat might have one of the best compensation plans in the MLM industry, but that doesn’t mean you can turn a profit with them. Social selling, might sound like a fun new way to operate, but we see some major flaws.

A major problem with all MLMs, is the focus is on recruitment instead of selling. Most of the spending in MLMs, is by members. This means very little money is coming from customers. The result is that we think the only way to make money in Monat, is if people in your downline are losing money.

Another problem with their model of ‘social selling’. It’s true, Facebook and Instagram are a great way to reach a lot of people. Having said that, it also means a lot of other Monat partners are trying to reach the same people. If you hear about Monat from social media, then you can bet that a lot of your contacts are also hearing about it. If you become a market partner, you’ll be in competition with everyone else who is trying to promote Monat to your contacts.

Is Monat an Illegal Pyramid Scheme

Even though MLMs closely resemble pyramids, they are not illegal. The technicalities date back to a 1979 Amway ruling. To the best of our understanding, Amway managed to word their documentation in a way that bypassed the pyramid scheme laws. This opened the doors for other MLMs to do the same.

While the paperwork may make them legal, that doesn’t mean that Monat or any other MLM is ethical. If you join, you have to realize that the only way to make money is if people below you are losing money.

It’s also important to remember that the people above you earn commission when you spend money on MLM products. When they encourage you to keep spending, it could be that they want to keep earning!

We looked at the 2018 FTC Business Guidance for MLMs, which sets out how MLMs are allowed to promote their business opportunities. It turns out that Monat market partners are in breach of the FTC guidelines. When they pressure their downlines to purchase product, or if they make unsubstantiated promises about the earning potential of the opportunity.

Should You Join Monat

The only reason you should join any sales opportunity, is if you believe in the products as a customer. If all you are looking for is the opportunity to earn some extra cash, then we’d suggest looking at all your options before deciding to join Monat or any other hustle.

As always, we’d love to hear what you think in the comments section below, especially if you an share your experiences with Monat.

You can also check out our  list of mlm reviews and let us know if you want us to look at any that aren’t on the list

Kyani was founded in 2007 and is based in Idaho USA. The Kyani products claim to help you achieve ‘maximum wellness’. Rather than using traditional marketing, Kyani has decided use an international network of distributors to sell their products through mulit-level marketing.

Here at The Finance Guy, we believe you can’t make money with MLM, but we’re happy to be proven wrong! Our full review of Kyani will find out if this is a legitimate work from home opportunity, or just another MLM.

What is Kyani

Before we join any opportunity, we like to know more about it. To make money as a Kyani distributor, you need to sell product. We thought it would be important to learn more about the product, so we watched a short youtube video on Kyani

The first thing we notice, is that this video is narrated by someone with a British accent, so we know we can trust him. He starts off by reinforcing our suspicion that proteins, nutrients, minerals and other stuff, is an important part of our diet!

He goes on to tell us that ‘extensive research’, has gone into creating the ‘Kyani Triangle of Health’., as the name somewhat suggests, there are 3 products which you need for your optimum wellness. According to the video, the products are:

Sunrise
This is a combo of over 20 ‘super-foods’...with the headliner being the Alaskan Blueberry, which Kyani refers to as the ‘king of fruits.’. Together this concoction gives you the ‘total blend of vitamins and minerals’ . It even has antioxidants to fight off the toxins which daily life throws at you! The video even claims that this pill ‘increases brain function’, who doesn’t want to be a little brainier?

Sunset
This is the supplement you take in the evening. It has Omega 3 oils ‘derived from wild Alaskan Salmon’. Not sure why why, it matters, but apparently berries and fish are better in Alaska. Living in Australia, where Salmon is farmed and the wild ones swim free, we’re not sure what the difference is. Among the many purported benefits are ‘healthier skin and hair’.

Nitro
This ‘turbo-charges your health’. Just to remind you it was said in a British accent, so it must be true! This product aims to boost Nitric Oxide in the body. It’s true, you need Nitric Oxide to live, but if you’re not dead, then you’re probably already getting it. Among the benefits of this supplement is ‘better sexual health’ , oh wait we’ve heard there’s already a pill for that.

Despite our best web-surfing efforts, we were unable to find any independent research which supported Kyani products. We’re not saying they’re lying, but it appears there’s no evidence to support the benefits of Kyanis products.

What is the Kyani Opportunity

To find out more, we started at the official Kyani Opportunity page. Essentially this is a collection of videos convincing us that Kyani is the key to financial freedom. According to the text, you can ‘achieve your dreams’. If that’s not enough, you can also ‘positively influence the lives and health of others’. Once again depite our online efforts we found there was no external research supporting Kyani’s claims.

While it’s nice to know that this is the answer to our dreams, we still have some questions. We still don’t understand how the opportunity will get us to financial freedom. We decided to keep our research going

How do You Make Money With Kyani

Or efforts to find out how you make money with Kyani, lead us to a copy of the Kyani compensation plan. Allegedly this system will help you achieve ‘more health, more wealth, more life’. Sounds pretty good! Then, on page 2,, we see this image which explains the opportunity a little more…

The Kyani ‘Sponsor Tree’, looks a lot like a pyramid, but we won’t let that discourage us. Like all MLMs if you want to make money from Kyani, you need to Pay to Play. You must order 100 QV worth of product per month to be ‘qualified’ for commission.

Kyani also offers you the chance for Promotion Through Recruitment. If you recruit others, and they do the same, then you Kyani placement tree will grow. As your downlines grow and generate Qualifying Volume (QV), you can climb the Kyani ranks.

The different ranks, and their qualification criteria are shown in the image below:

Your rank is determined by the amount of Group Qualifying Volume (GQV), spent by your downline. You’ll also need to ensure that the spending is spread across at least 3 of your ‘Kyani Legs’’. Every time you place a personal recruit in the first level of your sponsor tree, they become the start of a new leg.

Your first level recruits, and those directly below them will generate GQV for the same leg. This becomes important when determining your rank. Along with generating a total GQV, there is also a requirement to generate a minimum portion from outside your strongest leg or strongest 2 legs. You can only get promoted in Kyani, if you have multiple legs generating GQV.

In theory you can be successful in Kyani if you just recruit 3 friends. In reality, this business will require Constant Recruitment of New Members. If you can recruit a lot of people, and convince them to buy a lot of Kyani product, then you will climb the ranks in this business opportunity.

In typical MLM fashion, there are many ways to earn with Kyani. Having said that, they mostly involve recruiting others and getting them to generate GQV for you.

In our opinion, the only way to make real money with Kyani, (or any MLM), is to make sales to real customers. In Kyani, this will earn you either the Retail Profit Bonus, or the Customer Bonus. If customers sign up to buy directly from Kyani, then you will earn an automatic customer bonus. Retail profit is made when you personally sell product to customers.

There are a few other ways you can make money with Kyani, which are all linked to your downline. Essentially, you can make money by recruiting others and convincing them to spend money on Kyani. If the people you recruit, also recruit new members, then theoretically, your downline will grow. In time you will start earning bonuses including:
- Team Bonus
- Sponsor Bonus
- Fast Start Bonus

Like most MLMs we’ve looked at, there are also a collection of bonuses you can only earn at the higher ranks in the scheme. These include a matching bonus, a diamond pool, and an infinity bonus. While it’s nice to know that it’s possible to earn all these different forms of income, it does concern us that Most of the Rewards go to your upline

Are Kyani Distributors Making Money

We found a copy of the 2015 US Kyani Income Disclosure. This document explains how much commission was paid to all US based Kyani distributors in 2015. The first thing we notice, is that 37.8% of active distributors earned more than $10 in 2015. This should be a substantial red flag. It tells us that 62.2% of Kyani Distributors earned less than $10 in 2015. These are all distributors who joined the business opportunity, they are not customers!

If we look at the distributors who are earning more than $10, we see that only the ones who make to at least the Emerald rank are earning full time income. Some quick math shows us that only 0.42% achieved this in 2015. This means that 99.58% of active Kyani distributors earned less than a full time income.

Kyani claims to offer an opportunity to help you ‘achieve your dreams’, but less than 1/200 people are making a full time income. It is our opinion, that a regular job is a better opportunity than Kyani

Why is it Difficult to Make Money With Kyani

We believe that the problem is not with Kyani, it’s with multi-level marketing. MLM is a system which is designed to market products. The goal of Kyani, or any mlm, is to make you their customer. They want to sell you products, not make you a business partner.

If you join the Kyani business opportunity, you are essentially becoming a salesperson. You are selling the products to customers, and the opportunity to new recruits. Any salesperson will tell you that the best way to make money, is with quality products. If you have the skills to make money with Kyani, then it is quite likely that you’d make even more money with a normal sales job.

If you were looking for a regular sales role, would you accept a job if your chances of making a full time income were less than 1%? At the end of the day, that’s what you’d be doing if you join Kyani.

Is Kyani an Illegal Pyramid Scam

Even though MLMs such as Kyani closely resemble illegal pyramids, they are legal. This dates back a 1979 Amway case, which essentially set rules for how to operate a legal pyramid.

Even though MLMs are legal, that does not mean they are ethical. At the end of the day, if you join, they will ask you to recruit your friends and family to also join. If you recruit 200 people to Kyani, then 1 of them might end up making a full time income. Do you want to be the person that convince the other 199 people to lose money?

As always, we’d love to hear what you have to say in the comments section below, especially if you can share your own experiences with Kyani

Take a look at our  list of mlm reviews and let us know if there’s an opportunity you think we should review!

Juice Plus+ is a line of dietary supplements produced by National Safety Associates (NSA). NSA is based in Collierville Tennessee, and has been producing Juice Plus+ since 1993. The company has also sold fire protection and water filtration systems.

NSA has been using network marketing to sell their products since 1986. Here at The Finance Guy, we think you can’t make money with MLM, but we’re happy to be proven wrong. In our full review of Juice Plus+, we’ll find out if this is a real business opportunity, or just another MLM

What is Juice Plus

The Juice Plus+ Products are a range of dietary supplements designed to give you the goodness of fruit vegetables. There’s even supplements for grains to give you fiber and antioxidants. Their range of capsules claims to be ‘almost as good as the real thing’.

The Juice plus story, is that we our normal diets aren’t healthy enough, so their supplements are here to help. They are offering the benefits of a healthy balanced diet, without the need for eating all that natural healthy food.

What is the Juice Plus+ Opportunity

We had a look at the Juice Plus business model. It claims to be a unique blend of concepts with ‘minimal risk and unlimited potential’. It’s a little early but it seems that Juice Plus+ is too good to be true.

To make money with Juice Plus+ all you need to do is embrace their philosophy of ‘Embrace. Share. Inspire’. If you join, you’ll get your own ‘Juice Plus+ Virtual Franchise’.

Once you’ve joined, they’ll help you followed the Juice Plus+ proven system. Following these simple steps will allegedly help you turn your small investment into financial freedom!

While Juice Plus didn’t share a lot of information, we did learn that a key to success is ‘sharing and growing your business’. This is MLM speak for saying you need to recruit people to make money.

How do You Make Money With Juice Plus+

To find out how you actually earn money we had to find an unofficial copy of the Juice Plus compensation plan. This document explains all the different ways you can make money with Juice Plus. As the version we found was not from the company, we hope it is up to date and accurate.

Retail Profit
If you join any MLM, you are taking on a sales role. The only way to make money, is to make sales. Your retail profit is simply the difference between what you pay for products, and what you charge your customers for the same products.

Commission
Every Juice Plus product you buy will have a points value. These points are important because they influence your rank in Juice Plus+. As you climb the ranks, the amount of commission you can earn will increase. This is shown in the table below:

As we can see, when you first join as a ‘Virtual Franchisee’, you will not be entitled to any commission at all. However if you accumulate 2,000 points per month, then you can get a 6% commission. This commission is paid monthly on the volume generated by your entire business.

If you managed to keep growing your business and can generate 12,000 points worth of points, then you can achieve the rank of ‘Sales Coordinator’. At this rank your commission will be 22%.

To gain promotions and earn commission, you don’t have to do it all alone. The points generated by others you recruit will count toward your business. So if you convince others to become Juice Plus+ franchisees, you can earn commission on any products they buy.

It’s nice to know that you can earn all this money simply by telling your friends to join your MLM downline. However it’s also important to remember that the people who recruited you to Juice Plus+ are making commission on your purchases. Convincing you to join and buy product is in their best interest!

Bonuses and Benefits
If you achieve specific goals such you may earn one off or recurring bonuses. These can be for activities such as:
- achieving a new rank
- recruiting new franchisees and helping them get ‘promoted’
- etc etc

Basically the higher up the Juice Plus+ you go, the more you can make in these payments. Some may be non - cash benefits, such as discounts on Juice Plus seminars. As Juice Plus+ has not provided detailed information, it is difficult for us to be certain.

How Much Are Juice Plus Members Earning

There are many ways to make money with Juice Plus+, but we want to know if the system works. A good way to find out is to look at how much current franchisees are earning. It took some effort, but we managed to find the Australian copy of the 2017 Juice Plus+ income disclosure, shown in the table below:

While these results only represent the Australian Juice Plus+ Franchisees, we are going to assume that things are pretty similar all over the world. The first thing we notice is that it’s good to be a National Marketing Director with Juice Plus+

If you reach the top level in the Juice Plus+ system, you can earn over $100,000 per year! We have no doubt that the NMDs in Juice Plus are doing well. The problem is that they are the only ones earning over full time minimum wage.

The NMDs represent 0.9% of all people who join Juice Plus+. In other words 99.1% earn less than minimum wage with Juice Plus+. If you’re looking for an opportunity to make money, you’d be better off with a regular job!

Let’s not forget that the commissions earned from Juice Plus don’t include expenses! Keep in mind that if you decide to join Juice Plus then you’ll need to put in time and money to grow your downline. If we were to look at the net income, we believe that after expenses, most Juice Plus+ franchisees are losing money

Why is it Difficult to Make Money With Juice Plus

The reason it’s hard to make money with Juice Plus, or any MLM, is because of the business model. We looked at Juice Plus using Dr Jon Tayolors 5 Step MLM evaluation. According to his research, if you join Juice Plus+, you have less than 1% chance of making money. His research is inline with our findings from their own income summary.

The reason it’s difficult to make money with Juice Plus, is because the system is designed for the company to make money. Their goal is to make you a Juice Plus+ customer, not a business partner.

If you join Juice Plus, or any other network marketing deal, it is a sales job. The only way to make money, is to make sales. As any salesperson will tell, you the best way to make sales, is with a good product.

A Review of Juice Plus+ Products

We looked at a review of Juice Plus+ written by Health Plus. They agree that fruit and vegetables are good for you, and that Juice Plus products might be helpful. It’s hardly convincing!

We decided to keep looking, so we read an unbiased review of Juice Plus+ by ancestral nutrition. This review done by a qualified dietitian, found that Juice Plus+ contains ingredients which may cause cancer

Another review of Juice Plus, by First Step Nutrition was also less than positive. The found that:
Juice Plus+ contains too much sugar
Juice Plus+ is not a substitute for health eating
The positive claims about Juice Plus+ could be placebos
Juice Plus+ supplements contain too much sugar

Should You Join Juice Plus+

Our research found that less than 1% of people make money with Juice Plus, and their products aren’t as healthy as real food. Less than 1% earn a full time income with Juice Plus+

If you are looking to sell supplements which ‘aren’t as good as natural food’, then this might be right for you. If you are looking for real business opportunity we suggest doing more research. Our study has found that it’s quite likely that you will lose money with Juice Plus+

If you are considering joining Juice Plus, then we suggest you evaluate all your options. Keep in mind that it is quite likely that you will lose money with Juice Plus+.

If you are already taking Juice Plus supplements, and you feel they are better than natural foods, then maybe you can make money with Juice Plus+. At the end of the day you can’t make money unless you make sales.

Is Juice Plus+ a Pyramid Scam

Even though Juice Plus+ closely resembles a pyramid scam, it isn’t illegal. There are technicalities which date back to a 1979 Amway ruling.

To the best of our understanding, Amway managed to word their documentation in a way that bypassed the pyramid scheme laws. This opened the doors for other MLMs (including Juice Plus), to do the same.

Juice Plus might be legal, but that does not mean it’s ethical. Keep in mind that more than 99 / 100 people will earn less than minimum wage with Juice Plus+. How would you feel if your friend recommended that you join a scheme where less than 1% succeed? How would you feel recommending the same scheme to your other friends?

As always, we’d love to hear what you have to say in the comments section below, especially if you can share your own experiences with Juice Plus.

Take a look at our  list of mlm reviews and let us know if there’s an opportunity you think we should review!

Nu Skin was founded in 1984 in Provo Utah. There are a wide range of cosmetic and skincare products made by Nu Skin. Since inception the company has grown and products are now available in more than 50 markets worldwide.

Rather than using traditional avenues to sell their products, Nu Skin has a network of over 1 million independent distributors. Nu Skin distributors earn money through a mulit-level marketing system. Here at The Finance Guy, we believe that you can’t make money with MLM, but we’ll take a closer look at Nu Skin to see if they are any different.

What is the Nu Skin Opportunity

We found a short video which explains the opportunity, we also looked at the Nu Skin Success Formula, they both explain that all you need to do is follow their 5 steps.

Dream - This is exactly what it sounds like. Nu Skin want you to think about your dreams. In particular your financial dreams. Where do you want to travel, what car do you want to own, where will you live. Focusing on dreams is supposed to motivate you

Set Goals - If dreams are the end result, then goals are the steps along the way. It’s important that goals are measurable. They should aim to achieve a specific result within a set time.

Believe - By this, they mean believe in your goals. If you believe you can achieve them, then you are more likely to push yourself toward them. We think it’s also important to set realistic goals

Take Action - It should be no surprise that success requires action. The only way to achieve your goals and your dreams, is to take the daily action required to get you there.

Lead - Nu Skin explains that your success, depends on the success of your downline. In other words, it doesn’t end with your goals and dreams. You have to help the people you recruit stay focused on their daily action too.

We agree that setting goals and working toward them is a good idea. It’s a success formula that can be applied to anything. We’ve seen similar goal setting strategies before. This is not unique to Nu Skin. We want to know how the Nu Skin opportunity works.

How do Nu Skin Distributors Make Money

To find out how you can make money as a distributor, we looked at the Nu Skin compensation plan. This document explains how much commission you can earn with Nu Skin, and what you need to do to earn it.

The system is summarised in three words, Share, Build, Lead. This could describe any MLM we’ve ever looked at. All you need to do to make money, is ‘share’ their range of products and services. Then you ‘build’ a downline of new recruits under yourself. Then ‘Lead’ them to do the same. Theoretically this should result in your team growing to huge numbers as everyone keeps recruiting new members.

Sharing
If you share Nu Skin, you can earn a retail profit. This is a simple as finding customers who are willing to pay full retail price for Nu Skin products. If customer want to order online, and get a discount, they can become ‘registered customers’. You can still earn 5% - 25% in sharing bonuses for any orders made by registered customers

Building
You can also earn money by building with Nu Skin. To do this you need to accumulate ‘blocks’. For every 500 worth of sales points, you get one Nu Skin block. If the sales come directly from customers or members who you have personally recruited, then you get a ‘sharing block’. If the volume comes from people recruited by someone else in your downline, then you can earn building block. All blocks reset every month.

If you accumulate enough blocks over 6 months, then you could qualify to be a ‘brand representative’. Once you’ve reached this rank, you can earn ‘building bonus’. This bonus is measured against the ‘Commissionable Sales Volume’ (CSV).

Your building bonus can range from 5% - 40% of you CSV. The amount you earn depends on how many building blocks are in your downline, as shown below:

As we can see, you can earn a 5% bonus for your first 2 building blocks. You then earn 10% on the 3rd block, 15% on the 4th etc. By the time you’r organization is 16 blocks worth of CSV, you can earn the full 40%. The building bonus is paid weekly on any new blocks you’ve accumulated. The amount you earn each week is based on the number of blocks you’ve built for the calendar month

Leading
If you build a big enough team, you may be able to lead with Nu Skin. If people you sponsor become Nu Skin brand representatives, then you may be eligible to earn the ‘leading bonus’.

You can earn from 2.5% - 10% on the commissionable sales of your team as a leading bonus. If you continue to build your Nu Skin business, then you could have ‘leadership teams’ in your downline.

If this all sounds a little confusing, you’re not alone. To us the Nu Skin compensation plan doesn’t make sense. Why would anyone sign up to a business that they don’t fully understand? I guess it comes down to the $$

How Much are Nu Skin Distributors Earning

To find out how much you can earn, we looked at the 2018 Nu Skin Distributor Compensation Summary. One of the first things we notice is that they claim ‘many people become Nu Skin distributors just to buy the products’. Call us skeptical but to us this sounds like an excuse for why most distributors lose money.

We read along and see that of the ‘active distributors’, in 2017, the average annual commission was $1,806.36. In other words on average Nu Skin Distributors earn less than $35 per week.

To make things even worse, they tell us that only 15.42% of distributors earn commission every month. In other words in any given month, 84.58% of Nu Skin distributors get no commission at all.

We then look at the table of Nu Skin Distributors who did earn commission in 2017. The highlights are shown below:

If we look at the 2017 annual commissions, we see that the ‘Ruby Executives’ averaged $33,576. That’s less than a full time job! Only 0.44% of distributors made more than this. Doing a little math, we see that in 2017, 99.56% of Nu Skin distributors earned less than a full time income

We checked back again and did a seperate write up for the 2019 Nu Skin Income Distribution. Unfortunately for Nu Skin Affiliates, things did not get any better. In fact our research found that 25% of ‘leaders’ quit Nu Skin in 2019.

Why is it Difficult to Make Money With Nu Skin

We think it’s hard to make money with Nu Skin because they use MLM. If you sign up with any network marketing company, their goal is to make money selling you products, they aren’t trying to make you a business partner.

We applied Dr Jon Tayolors 5 Step MLM evaluation to Nu Skin, and found that it raises all 5 flags. According to his research, if a MLM raises 4 flags then your chances of making money are less than 1%.

If you are looking for a money making opportunity, then we suggest that you look at all your options before signing with Nu Skin!

Is Nu Skin an Illegal Pyramid Scam

Even though MLMs closely resemble pyramids, they are not illegal. The technicalities date back to a 1979 Amway ruling. To the best of our understanding, Amway managed to word their documentation in a way that bypassed the pyramid scheme laws. This opened the doors for other MLMs to do the same.

While the paperwork may make them legal, that doesn’t mean that Nu Skin and other MLMs are ethical. If you join any MLM, you have to realize that the only way to make money is if people below you are losing money

We looked at the 2018 FTC Business Guidance for MLMs. This explains when MLM participants are acting in a way that is misleading or unlawful. Examples of breaches include pressuring downlines to purchase products, and making unsubstantiated claims about earnings potential. Based on what we’ve seen, it appears some Nu Skin distributors are in breach of the FTC guidance.

Should You Join Nu Skin

If you are already paying full retail for Nu Skin products and are happy to recommend them to others, then maybe you should join. If you are looking for a way to earn a little extra money, then we suggest you look at other options. It’s quite likely that a regular job will pay you more than you’d make with Nu Skin

As always, we’d love to hear what you think in the comments section below, especially if you an share your experiences with Nu Skin.

Are you wondering if you can make money with MLM? Check our our  list of mlm reviews before you join. If you find one that’s not on the list, let us know and we’ll do our best to write a review

Younique is a cosmetics company founded in Utah in 2012. Since inception Younique has grown to become an international brand being sold through a network of almost 1 million ‘presenters’. The idea being that the presenters can earn an income by using Younique products and referring others to do the same. Their philosophy is ‘Love it, Share it, Live it’.

Here at The Finance Guy, we believe that you can’t make money with MLM, but we’ll take a closer look at Younique and see if they are the exception.

What is the Younique Opportunity

The first thing we learned is that the Younique opportunity gives presenters the ability to reach their potential for ‘personal growth and financial reward’. We also find that Younique is different from other direct sales companies because they sell almost exclusively through social media.

We then see that there was a trip to Cancun, and if you join Younique, you can get paid very quickly. There’s even a Younique Visa Debit Card. To learn more, we watched this video:

From this video we learned that:
- For US $99, you get a black box that will ‘change your life’
- You can earn 20% - 30% commission, all you have to do is direct people to your Younique website
- The worst that can happen, is that you get a box full of $240 worth of makeup

While it’s nice to know that the lady in this video ‘replaced her income as a mortgage broker’. We still don’t understand how much we can earn with Younique. We also don’t know how much she was previously earning, so we thought we better keep looking

How do You Make Money With Younique

You can earn a commission on any purchases made through your Younique website (including your own makeup). If you sponsor others to become Younique presenters, then you might be able to earn a commission on any sales they make too!

The amount of commission you can earn will depend on your rank in the Younique MLM. The ranks and commissions payable are shown below:

Once you reach the green level and become an ‘Elite Presenter’, the commission you earn from your own website increases to 30%. At this level you can also earn some royalties from people below you in the network.

Maximum earnings come once you have reach the black level of ‘Exclusive Presenter’. If you reach this rank, then you can earn commissions from all the way down to the third generation in your Younique downline.

To us this generous commission structure raises a concern. If we look at the commissions paid to the top ‘black status’ presenters, it adds up to 48%. If Younique can afford to pay this much commission, and still make a profit, then it means it is included in the prices they charge.

How Do You Qualify for Promotion with Younique

If you want to make your way up the ranks from White Status all the way to Black status, then you need to qualify. Each rank has specific qualification requirements shown below:

Before Hyou can earn any commission at all, your website needs to generate $125 in PRS (Personal Retail Sales) every 3 months. The good news is that once you’ve accumulated a lifetime PRS of $500, you automatically get promoted to the Yellow Status, and earn 25%. It’s refreshing to see that this promotion is based purely on your PRS.

To qualify for payments above the Entry Presenter ranks, you need to generate monthly PRS. On top of that your downline will also need to generate monthly ‘Company Wholesale Sales’. For example, to qualify as ‘Pink’, and earn the 3% ‘Circle Royalty’, you need to meet the monthly qualifications. Every month you’d need at least $250 from your own website, and $2,000 from people in your downline. You’d also need at east 1 personally sponsored qualified presenter

To continue to achieve promotions, you need to keep sponsoring qualified presenters, have them do the same, and generate as much monthly ‘Company Wholesale Sales’ as possible.

Like other MLMs, there are other ways to earn with Younique. These include a ‘fast start’, and a ‘car bonus’. These things all sound great, but we think it looks very difficult to earn full commission as a Younique presenter.

How Much are Younique Presenters Making

The best way to assess any business opportunity, is to look at how well it is doing for existing members. According to the talented ladies club, Younique presenters are making less than $14 per month. That’s not a great start but we’ll keep looking

Younique decided not to provide us with an income disclosure, so we had to do our own research. We found a copy of the 2016 Younique SEC Filings. These reports show us how much Younique was paying out to presenters in 2016. We made a quick calculation, shown in the table below:

As we see from the 2016 Younique financial reports, ‘Presenter Incentives’ represented 22.06% of total revenue. So even though the Younique compensation plan offers up to 48% in commission, less than half of that was paid. We are not suggesting that Younique did anything wrong, it’s more likely that most Younique Presenters never make it past the White Entry Level rank

Younique told us that they now have almost 1,000,000 presenters world wide. That tells us that on average each presenter received around $87.39, for the entire year of 2016. While it’s possible that they had less presenters 2 years ago (in 2016), let’s pretend they only had half a million. At this level, the average annual income for Younique Presenters was $174.70

This may be a system which offers ‘financial reward’, but on average, Younique presenters are making less than $4 a week.

Why is it Hard to Make Money With Younique

In our opinion, the problem is not with Younique, it is with network marketing. MLM is a system which is designed to help the company make sales. It is not designed to offer franchises or create business owners. If you join any MLM, you are a customer not a business owner

Younique are proud of the fact that they focus on social media. While it may be true that they use social media more than other MLMs, this is not necessarily a good thing. Think of it this way, we wrote this review from West Australia, is that anywhere near where you are?

The point we are making, is that the internet is global. It’s great that you can promote your Younique website to anyone with a connection and a credit card, but so can everyone else! This means that you are in the same market and in competition with ever other Younique presenter

Do you know someone who promotes Younique online? If you do, then if you become a presenter you are going into competition with them. If you know people in common, then you are both trying to sell them the same makeup. Every Younique Presenter has the ability to sell to your customers. If you recruit people within in your social network, you are just diluting your own profits

We found a page claims to teach you how to make money with Younique. We were expecting to find some hints and tips. All we found was a constant reminder that Younique pays commission daily, followed by an attempt to recruit us to Younique, or sell us products. In other words the page was designed for them to make money. It’s important to remember that the people in your upline are making money off you. It’s in their best interest to tell you how great things can be, and keep you spending money.

Is Younique an Illegal Pyramid Scam

While Younique, and most MLMs resembles a pyramid scam, it is legal. We believe the reason goes back to the 1979 FTC Amway ruling. While MLMs may be legal, that does not mean that they are ethical. Would you ‘recruit’ a friend to a gig that pays less than $200 a year. If you build a Younique downline, that’s what you’re doing…

We don’t believe that Younique presenters are trying to scam you. It’s more likely that they themselves believe that this is their ticket to financial freedom. Having said that based on the 2018 FTC Business Guidance for MLMs, their actions can be considered unlawful and deceptive.

Should You Join Younique

If you are interested in selling makeup for a living, then it’s quite possible that you can make more than $200 a year with a different opportunity. We suggest that you look at all your options before deciding on Younique or anything else.

As always, we’d love to hear what you think in the comments section below, especially if you can share your experiences with Younique

For more posts like this, look at our list of mlm reviews.  If you know of an MLM that isn’t on the list, let us know so we can add it to our list.

Lularoe is a clothing company based in Corona California. They have been designing and producing their own line of fashion since 2013. Rather than using traditional avenues, Lularoe uses a Network Marketing downline of ‘retailers’, to sell their clothes.

Here at The Finance Guy, we believe that you can’t make money with MLM, but we’ll take a closer look at Lularoe to see if they are the exception. We want to know if becoming a Lularoe retailer is a money making opportunity, or just another MLM.

What is the Lularoe Opportunity

We looked at the official Lularoe Opportunity, and we learned that if you become a retailer, you can:
Be Your Own Boss
Have More Time for What Matters
Live the Best Life
Achieve Your Dreams

It all sounds wonderful, but we still don’t understand how it all works, so we looked at this video:

This video got some alarm bells ringing! First is the fact that it costs $5,000 - $6,000 to get started with Lularoe. Now that might not sound like much for a new business, but in MLM terms, it is very expensive!

If the high start up costs aren’t enough, we then learn that you need to spend even more money on set up costs such as hangers, clothes racks etc. Don’t have that sort of money available? Well the video suggests that you simply find the money by borrowing from friends and family, or using a low rate credit card.

To us, this is a major concern! They are suggesting that you get into debt to start your Lularoe reailer business. It’s important to understand that if you borrow money, you are increasing your risk. After all, if your Lularoe business doesn’t succeed, you’ll still be in debt

The video goes on to explain that the average Lularoe retailer makes their money back within 3 - 4 months. She also claims that she herself broke even on her money much faster than that! It certainly sounds appealing, however we did find it interesting, her personal link is no longer valid. We therefore get the impression that this Lularoe retailer is now out of business

We shouldn’t take this one retailer as the rule, so we thought we better take a more detailed look at the Lularoe Opportunity

How Do You Make Money With Lularoe

To understand how retailers make money, we thought we better look at the compensation plan, or as they call it, the Lularoe Bonus Plan. The video told us that retailers can make $16 - $17 per item sold. That is assuming that clothes are sold at the full SRP and does not include any other costs of sales

Like all MLMs retail sales are not the only way to make money with Lularoe. You can also generate an income from building a dowline and earn commission from the activities of your recruits.

Before you can earn any ‘residual commission’, you need to qualiify as a ‘Lularoe Sponsor’. To do this you need to complete at least 10 pop-up boutiques, and generate at least $10,000 in sales. To some, this may look like they want you to grow your business before you sponsor others. To others it may look like Lularoe is tempting retailers to spend up to $10,000 on inventory to promote themselves

If you do manage to qualify as a Lularoe sponsor, then you can earn a 5% commission on the wholesale price of any clothes bought by other retailers you invite to join Lularoe. But you could earn even more!

If you continue to grow your Lularoe business (and have those you recruit do the same), might make it to the level of ‘Trainer’. At this point you can also earn 3% on the purchases of your second generation, or the friends of your friends who are recruited.

To become a Lularoe trainer, you need to meet the requirements shown below:

If you continue to grow your Lularoe business, you might qualify to be a ‘coach’ and earn an additional 1%. Keep going and you could become a ‘Mentor’ and earn even more. We’d love to say that we understand how much you can earn at this level, but the best we can offer is this diagram:

There’s also a leadership pool, and a fast start bonus, but you can read all about them in the bonus plan. To us they were uninteresting. What we really wanted to know is, does this opportunity really work.

How Much are Lularoe Retailers Earning

To find out how much Lularoe retailers are making, we looked at the 2016 Lularoe Income Disclosure statement. The commissions paid in 2016 are shown in the table below:

Before we look at the above table, notice that 72.63% of Lularoe retailers did not qualify so earned absolutely no commission at all in 2016. Another 27.33% Earned less than $45,000. In other words 99.96% of Lularoe Retailers earned less than a full time income in 2016

As we continue to look at the income disclosure, things get a little confusing… For example, if we add up the ‘eligible retailers’ in the ‘Sponsor’, and ‘Trainer’, categories, we get 117.72%. If we add up all the eligible retailers, we get 120.24%. It could be that our math is off, or it could be that Lularoe is trying to make their opportunity look better than it really is

While the data available is inconclusive, we are left with the opinion that most Lularoe Retailers are losing money. Even by their numbers less than 1% earn a full time income. The most prominent video we could find about Lularoe was from a retailer who quit just 2 years after posting it.

Why is it Difficult to Make Money With Lularoe

We think that the reason it’s hard to make money with any MLM, is because it’s a flawed system! There is no doubt that many network marketing companies are very profitable, but that’s not what we are looking at. Our research suggests that less than 1% of people who become Lularoe retailers will turn a profit.

Even though Lularoe might be making a good profit, that does not mean that you can make money by becoming a retailer. At the end of the day if you join any MLM, you become a customer of that company, not a business partner. Their goal is to sell you product, not to make you a business partner

Another issue we have with Lularoe, is that as far as MLMs go, this one is expensive. It costs a lot to join, and it appears that it costs a lot to maintain. While there is nothing in the documentation, we have found evidence that Lularoe retailers are investing a lot of money in their ‘pop-up’ stores. In fact several have gone so far as to purchase trucks such as the one shown below:

What we see when we look at Lularoe, is a very risky venture. To sign up, you’ll need to invest at lease $5,000. Then to make the the business work, you might end up purchasing a truck, paying to have it painted and fitted to a ‘mobile pop up’. Even if you do everything that successful Lularoe retailers do, you still have to consider that only 1 in 2,500 Lularoe retailers earns a full time income

Should You Join Lularoe

The only reason to join any MLM, is if you are already using their product and are happy to refer them to others. At the end of the day, network marketing is sales, if you’re not looking for a sales job, then this isn’t for you!

If you are a salesperson, and you want to sell clothing, then we suggest that you consider other options before committing to the Lularoe opportunity. Even with their inconclusive numbers, less than 1% of Lularoe retailer are making a full time income. Let’s not forget that this income doesn’t include expenses. It’s quite possible that most Lularoe retailers lose money

As always we welcome your feedback in the comments section below.  We'd love to hear what you think about Lularoe, especially if you can share your personal experiences with the company

For more posts like this, look at our list of mlm reviews. 

Based in Chula Vista California, Youngevity, describe themselves as an Omni-Direct lifestyle company. since starting in 1996, they have grown their business and now offer more than 5,500 Youngevity products. They claim that their products can help you ‘live younger longer’.

Rather than using traditional marketing, Youngevity uses a network of distributors to sell their products. Here at The Finance Guy, we believe that you can’t make money with network marketing, but we’ll give Youngevity a chance to prove us wrong.

With $163 Million in revenue, Youngevity secured the no 76 spot on the 2017 DSN Global 100 list. We can see that Youngevity as a company is making money, but we want to know if the people who become distributors are making money.

What is the Youngevity Opportunity

According to the official Youngevity Opportunity page, this is your chance to ‘make better happen’. All you have to do is use ‘social selling’, to promote Youngevity, and in return you’ll get a healthy life with ‘serious financial rewards’.

The Youngevity opportunity video explains that this is a ‘proven’ system that ‘anyone can follow’. Allegedly by following this system, the glass ceiling is removed and anyone can become a millionaire. To us it sounds too good to be true

The video goes on to tell us that someone we’ve never heard of is a world leading nutrition expert. Then we hear about which products we need to buy first to get us on the path to financial freedom. All we need to do is buy Youngevity products, then convince others to do the same.

We’ve now heard from people who have done well. We’ve been told about the ‘unlimited earning potential’. While it’s nice to see fancy cars boats and houses, we still don’t understand how Youngevity is going to make us rich.

How do You Make Money With Youngevity

To find out how distributors become millionaires, we looked at the Youngevity Compensation plan. We have to give Youngevity credit for creating the least informative compensation plan we’ve seen to date. Where most MLMs provide lengthy explanations, Youngevity has managed to condense there’s down to just 5 pages!

The key information is shown in the table below:

As we see, when you first become a Youngevity Distributor, you start at the rank of ‘associate’. At this level you can earn retail commission, but you can also make 5% ‘residual’ income from any sales made by other distributors you sponsor to join Youngevity.

You can also earn another 5% if your recruits also go on to sponsor new distributors. As an associate, you can earn on 2 levels in your downline. The good news is that it’s easy to earn more, all you have to do is increase your own spending from 50 to 100 points per month. This will get you promoted to the rank of ‘brand associate’.

As a ‘brand associate’, you can now earn 8% on 2 levels in your downline, plus 7% on the third level. Your are now earning commission from friends of your friends friends! While this all sounds enticing, for us, the requirement to spend money every month raises Red Flag 3 - Pay to Play

To continue climbing the ranks in the Youngevity system, you need to keep increasing your personal spending. You also need to meet the downline requirements. For example, to become a ‘senior associate’, you need to personally spend 200 points per month. You also need to have at least 3 recruits in your downline, who spend a combined total of at least 1,000 points per month.

You can continue to promote your way through Youngevity if you grow your downline and meet the qualifications for each rank. Active distributors may tell you that it’s a simple formula of ‘social selling’ through ‘sharing the opportunity’. To us, it raises, Red Flag 2 - Promotion Through Recruitment

Once you reach the fist executive level, you can earn commission from up to 9 levels in your downline. You might here how this is the benefit of ‘residual income’, but for us it raises Red Flag 5 - More than 5 levels in the payout plan

The rewards you can earn from Youngevity continue to grow as you climb the ranks. Once you make it to the ranks of ‘4 Star Executive’. You could be earning commissions totalling 57% from 9 levels in your downline. Sure it would be great to reach this level, but what if you are a new associate? When you buy Youngevity products at their ‘wholesale’ price, 57% of what you pay is commission to your upline. This raises Red Flag 4 - Most of the Rewards go to your upline

Are Youngevity Distributors Making Money

Unfortunately Youngevity has not provided any real data about distributor earnings. We even looked at the 2017 Youngevity Annual Report. We did find some evidence that the opportunity might not be performing as promised.

In the compensation plan, it suggests that Youngevity is paying commission of 57% to the various levels in the MLM. Plus there are other benefits such as cars and other bonuses. However in the annual report, ‘Distributor Compensation’ only represented 39.74% of revenue. This suggests that not all benefits are being paid because very few distributors qualify for full payment.

The annual report also states that: ‘There is a high rate of turnover among distributors’. In other words people are quitting at a high rate. This left us wondering why are so many quitting if the system was making them wealthy?

The high drop out rate means that in order to grow a downline, you’d need to recruit enough distributors to replace all those who quit each year. This raises Red Flag 1 - Constant Recruitment of New Members

We found that Youngevity raised all 5 flags of Dr Jon Tayolors 5 Step MLM evaluation. According to Dr Taylor’s research, because 4 or more flags were raised, your chances of making money with Youngevity are less than 1%.

Is Youngevity an Illegal Pyramid Scam

Even though MLMs resemble illegal pyramid schemes, they manage to remain legal as long as there is a product or service attached to them.  We don't think that Youngevity distributors are trying to scam their new recruits.  It's more likely that they themselves believe that the system will one day make them wealthy.

Being legal does not make MLM ethical. All companies are in business with the goal of selling goods and services for a profit.  Network marketing companies are able to charge a higher price because they create a customer base of loyal members who believe that by consuming these products and recruiting others to do so, they will become financially free

If you join Youngevity, or any other MLM, we believe that their goal is to make you a customer. They want you to spend money on their products, they are not trying to make you a business partner. The fact that Youngevity has avoided sharing any real income disclosure, leads us to speculate that most Youngevity Distributors are losing money

Should You Join Youngevity

The only reason to join Youngevity or any other MLM, is if you are already spending money on their products and are happy to recommend them to others. At the end of the day, the only way to make money in MLM, is to be very good at sales.

If you are looking for a business opportunity, we suggest that you look at other options before joining Youngevity. You might find that you can make more money with a regular sales job. We do not like the lack of transparency. If Youngevity distributors were making money, then the company would share this information. The fact that they haven’t suggests that most Youngevity Distributors are losing money.

As always we welcome your feedback in the comments section below.  We'd love to hear what you think about Youngevity, especially if you can share your personal experiences with the company

For more posts like this, look at our list of mlm reviews. 

Based in Scottsdale Arizona, Plexus describe themselves as a ‘health and happiness company’. Rather than using traditional marketing, they have decided to use MLM to promote their products. Here at The Finance Guy, we believe that you can’t make money with network marketing, but we’re happy to be proven wrong.

Plexus produces weight loss, nutrition and skin care products which they purport will help you toward both health and happiness. If that’s not enough, then there’s also a business opportunity which can set you financially free!

What is the Plexus Opportunity

We thought we’d let Plexus explain the opportunity themselves so we watched their video about the opportunity

The video is an interesting mix of hype and product promotion. We hear from a few people whose lives have been changed. We learn how becoming a Plexus Ambassador put them on the path to financial freedom. Then we hear all about how these products can make us happier, thinner, healthier etc. What we don’t learn, is how the opportunity will make us money.

How Do You Make Money With Plexus

To find out how Ambassadors earn an income, we looked at the Plexus Compensation Plan. This document explains how much you can earn with Plexus, and what you have to do to qualify for payments.

The first thing we notice is that this system is ‘predictable and profitable’. They’re off to a good start! Predictable profits sounds pretty much like sure money! What could go wrong? Are we imagining things or is this already looking too good to be true?

The next thing we see, is that 50% of the ‘commissionable’ volume is paid out every month. This might sound good, but we don’t like it. It tells us that the price paid by ambassadors is loaded to include these generous payouts. This concerns us because it raises Red Flag 4 - Most of the Rewards go to your upline

Plexus proudly tells us that they pay up to 7 levels down. This may sound appealing as you can get rewards for friends of friends friends who you’ll never meet, but for us, this raises Red Flag 5 - More than 5 levels in the payout plan

Moving on through the compensation plan, we see that you have to qualify to earn commission with Plexus. First there is a nominal annual fee, then you need to purchase at 100 PV worth of product per month. Active Plexus Ambassadors will argue that you need to be a ‘product of the product’, but for us this raises Red Flag 3 - Pay to Play

Once you are qualified to earn commission, you can earn even more, if you grow your downline. Once you have personally sponsored at least 7 new Plexus Ambassadors and have met the points criteria, you could become a Diamond Ambassador. At this level you will qualify for the maximum downlilne commissions. Once again, this may sound good, but to us, it raises Red Flag 2 - Promotion Through Recruitment

While it seems to possible to make money from Plexus, it requires a lot of work. In particular, you would need to have a very substantial downline. Building a downline isn’t enough, you also need to maintain it. Every time someone in your ‘organization’ quits, you need to replace them. Building an income with Plexus raises Red Flag 1 - Constant Recruitment of New Members

The compensation plan goes on to tell us more about what you could earn with Plexus, but to us it just seems that they are making Plexus products overpriced. After all, all the benefits of the compensation plan, are included in the ‘wholesale’ price paid by ambassadors.

We found that Plexus raised all 5 flags of Dr Jon Tayolors 5 Step MLM evaluation. According to Dr Taylor’s research, because 4 or more flags were raised, your chances of making money with Plexus are less than 1%. Having said that, we’ll keep going with our research

How Much Money Are Plexus Ambassadors Making

To find out how much Plexus Ambassadors are earning, we looked at the US 2016 Plexus Income Disclosure Statement. This document tell us how much U.S Plexus ambassadors were paid in 2016. The results are shown in the image below:

A bit of addition shows us that 99.5% of Plexus Ambassadors earned less than $31,000 in 2016. If the system is supposed to be predictable and profitable, then why do so few earn a full time living from the Plexus opportunity?

While is is possible that you could make it to the 0.06% who earned closed to $500,000 in 2016, it is unlikely. In fact you would be better off with a regular job. After all only 1 in 200 Plexus Ambassadors earned a full time income in 2016

Why Is It Difficult To Make Money With Plexus

We believe that the problem is not unique to Plexus. The problem is with the business model. In his book, Multi-level Marketing Unmasked, Jon Taylor found that 99.7% of people who join direct selling companies end up losing money.  Despite what you hear in the sales pitches, it is highly unlikely that you will make money from any network marketing company.

Network marketing is a way for companies to sell products without employing a sales force and without having to spend money on traditional advertising and promotions.  Instead they build a network of loyal ‘Ambassadors’, who are willing to pay unusually high prices for the added hopes and dreams of financial freedom.

At the end of the day to be a successful Plexus Ambassador, you will need to make sales. Any salesperson will tell you that the best way to make money, is to start with a well priced good quality product or service. It doesn’t need to ‘sell itself’, but it does need to at least be competitive in the market.

How Good Are Plexus Proucts

We did not try any Plexus products ourselves and are not qualified to assess the ingredients. Therefore we relied on the others for information about the quality of the products. We did our best to find what we believe to be trustworthy sources of information.

The first page we found was a review of Plexus slim. The first thing they mention is that there have been no independent studies on Plexus Slim. This is a bit of a concern because if the product is so great, why wouldn’t they have studies supporting it?

This review also told us there is no evidence that the ingredients in Plexus Slim help weight loss in humans. It’s possible that when combined, 4 ingredients are more effective, but there is no study proving that.

A study of Plexus products done by University Health News, had similar findings. They even remind us that while Plexus claim their products are ‘clinically proven’, but there is no evidence that any studies have been done. Further more they tell us that the supplement industry is prone to contamination and adulteration. Because there is no proof of any quality control, they can’t tell whether or not Plexus products could cause harmful side effects.

Is Plexus a Pyramid Scam

Even though MLMs resemble illegal pyramid schemes, they are legal. The reason dates back to the 1979 case of Amway vs the FTC. After 4 years in court Amway was found to be offering a business opportunity, rather than a pyramid scam. The technicalities came down to wording in their paperwork. One example requires consultants to make retail sales.

We don't think that Plexus Ambassadors are trying to scam their new recruits.  It's more likely that they themselves believe that the system will one day make them wealthy.

Being legal does not make MLM ethical. All companies are in business with the goal of selling goods and services for a profit.  Network marketing companies are able to charge a higher price because they create a customer base of loyal members who believe that by consuming these products and recruiting others to do so, they will become financially free

It is our opinion, that if you join Plexus, or any other MLM, their goal, is to make you a customer. They want to sell you products, they aren’t interested in making you a business partner

Should You Join Plexus

The only reason you should join Plexus, is if you are already spending over $100 per month on their products and want to recommend them to others.  Even if this is the case, you might want to look at what other brands are charging for similar products.  You might find that Plexus is not price competitive

If your only motivation for joining Plexus is to make extra money, then we think you should consider other options before proceeding.  Our calculations found that less than 0.5% of all Plexus Ambassadors are generating enough commission to replace a full time income. We could be wrong, but we think it’s possible that you’d have a better chance of success with a normal job

As with most MLM companies, it is possible to make money with Plexus, but it is very unlikely.  If you have the skills to make money with the Plexus opportunity, then we believe you'd make more money applying those skills to start your own business.  

As always we welcome your feedback in the comments section below.  We'd love to hear what you think about Plexus, especially if you can share your personal experiences with the company

For more posts like this, look at our list of mlm reviews.  If you know of an MLM that isn’t on the list, let us know so we can add it to our list.

After a brief survey on the antiMLM subreddit we decided it was time to review It Works! Founded in 2001 in Grand Rapids Michigan, the company has expanded rapidly. In 2012, It Works! reported that annual global sales were over US $100 Million. It Works! has decided to promote their wide range of products through network marketing.

At the Finance Guy, we believe that you can't make money with network marketing, but we decided to do a full review of It Works! We want to find out if this really is an original money making opportunity, or if it's just another MLM

What is the It Works! Opportunity

This question has been answered for us by the company. We watched their video about the It Works opportunity

The first thing we notice from this video, is that the opportunity is very exciting. It even purports to have some sort of ‘secret’, which can make all your financial dreams come true.

The excitement doesn’t end there, we then hear a bit about the products. The ‘reviews’, tell us that the products are also fantastic. We got the impression that, whatever you’re looking for It Works!

According to the video, this is a ‘rewarding opportunity’, which will ‘change your life’. It sounded pretty good, we wanted to know how if worked.

There’s a lot more in the video, including;
- People telling us how their lives changed
- People telling us about the greatness of the products
- Constant reminders that It Works!
- Other stuff, but who could pay attention?

The CEO describes this as a ‘vehicle to set you free’, and claims that It Works! will ‘teach you to invest in yourself’. This MLM can help you achieve ‘complete financial freedom’.

While the video managed to make a lot of claims about how wonderful life is once your join, it doesn’t really explain how It Works!

How Do You Make Money With It Works!

To find out how this mlm will set you financially free, we looked at the It Works! compensation plan. This document explains the different ways to earn and what you need to do to qualify for payment. It Works! describes this as ‘your guide to achieving your optimum earnings potential’. It certainly sounds good, but we’ve heard similar promises before!

It Works! describes their system as ‘relationship building’, but we think this is just code for ‘sales’. They have broken the system down into 3 key areas which are:

Retail Customers - Like any business, you need customers. It Works! describes these as the people who make random purchases. If you had a store, this would be like random customers walking off the street and making a purchase

Loyal Customers - This would be what an every day store would call ‘regulars’. The main difference with It Works!, is that these customers get ‘wholesale’ prices if they agree to sign up for at least 3 months worth of products on ‘autoship’.

Distributors - Unlike regular stores, these are customers who decide that they too would like to run a business just like yours. If you sponsor them to ‘duplicate’ the process, then you can profit from their activity.

If you’re new to It Works!, then you’re in luck! There’s a guide for ‘your first 30 days’. There’s only 2 things you need to do in your first month, which are:

1. Become Commission Qualified - This is easy, all you have to do accumulate 400 Personal Bonus Volume (BPV). Fortunately you don’t have to spend all the money yourself, as the activity of any customer (retail or loyal) is also included. There is also a requirement that at least 80 points of this in on autoship…

2. Earn Free Product - If you gather 4 ‘Qualified Active Loyal Customers’, in your first 30 days, then you can earn $120 in product credit. While it’s nice to be able to spend money with It Works!, we’d prefer cash, which could be spent on anything…

3. Get Wrap Rewards - If you continue to enroll customers, then you may be entitled earn points which can be used to purchase an It Works! Wrap, or an It Works! Facial Applicator. We don’t know what these products are, but we’d prefer cash over vouchers. If they products are good, then we might buy them, but it would be nice to have the choice.

4. Qualify for the Fast Start Bonus - If within your first 30 days, you sign up a new distributor, and they spend 80 PV and also sign up 2 Loyal Customers, you can earn $100.

If you enroll customers or new distributors, you can earn commission from any It Works! products they buy. If people you have enrolled also enroll others, you can earn from their spending too! You can earn 10% on 2 levels of distributors and customers. There is also a 5% bonus for any that you personally enroll. If you want to earn even more commission, then you need to get yourself promoted in the It Works! system

How Do You Climb the It Works! Ranks

Each new distributor you personally recruit to It Works! becomes a new ‘leg’ in your team. As they go on to also recruit new distributors, this will build layers in your ‘downline’. If a leg in your downline is generating at least 400 worth of Group Volume in a month, it becomes a ‘qualified leg’.

AS long as you remain commission qualified, you can earn commission on any qualified legs in your downline. As you accumulate more qualified legs, you can climb the It Works! ranks. This is shown in the table below:

As we see in the table above, you can reach the rank of ‘Emerald’ if you develop 4 qualified legs in your downline. Once you are promoted to Emerald, you can earn commission from 6 levels in your downline.

It’s worth noting that due to ‘compression’ commission is paid down to 6 levels of commission qualified distributors. Any distributors who are not commission qualified will be counted as part of the level above them. In this way, your downline is ‘compressed’ into 6 qualified levels

The ability to earn commission doesn’t end at Diamond! As distributors in your downline start reaching the rank of Diamond, you may qualify for ‘Diamond Generation Bonuses’. Each new Diamond distributor is the beginning of their own generation. As with distributor commissions, can earn Diamond payouts on several levels, as shown below:

If you work hard, and recruit distributors who do the same, you can climb the It Works Ranks! As we’ve shown, it is possible to earn commission from several levels and generations in your downline. Having said that, it also means that if you are a new It Works! distributor,, then 47% of what you spend on your It Works! products, goes to your upline as commission

How Much Are It Works! Distributors Earning

To find out how much distributors are earning, we looked at the It Works! Income Disclosure. The version we found shows us how much commission was paid to It Works! distributors in Australia in 2016.

We were only able to find the Australian version. This could be because we are located in Australia, or it could be a coincidence that this is the only copy available. We will assume that the global income for It Works! distributors is similar. The data is shown below:

After a bit of math, we made some disturbing discoveries which are:

98.89% of It Works! Distributors earned less than a full time income - The minimum full time annual wage in Australia is $40,000. In 2016, less than 2% of It Works! Distributors earned above minimum wage from this opportunity

Average annual income for all It Works! distributors was $2,976 - Even though some distributors are earning Diamond bonuses, on Average Distributors made less than $60 per week from It Works!

Expenses are not included - It’s important to remember that there’s a difference between income and profit. In order to earn these commissions, distributors had to spend money on product. They also would have to spend time and money promoting and growing their business. We believe that after expenses most distributors lost money with It Works!

To see if things got any better, we also wrote a separate write up for the 2018 It Works Income Disclosure Statement. Unsurprisingly, the results were very similar.

We also had a look at what they’re saying about It Works! on Glassdoor. The reviews from current and former distributors seem to confirm that it’s difficult to make money. The theme we start to see it that, you need to be good at sales to make money with It Works!

Why is it Difficult to Make Money With It Works!

We believe that the problem is with the network marketing business model.  It's not designed to help people make money or gain financial freedom.  The system is designed to promote and sell products.  MLM is profitable for the companies which produce the products, but not for the members who join the business opportunity.

MLM is a way for companies to sell products without employing a sales force and without having to spend money on traditional advertising and promotions.  Instead they build a network of loyal believers who are willing to pay unusually high prices for the added hopes and dreams of financial freedom.

We applied Jon Tayolors 5 Step MLM evaluation to It Works! We found that all 5 red flags were raised. Dr Taylors research suggests that because at least 4 flags are raised, there is less than 1% chance of turning profit with It Works!

The company might be turning a profit, but that doesn’t mean that you will be profitable from the opportunity. Just because a small amount of distributors are making a lot of money, doesn’t mean that the system works for everyone.

For example, during our research, we found a page about how to make money with it works! It was created in early 2018, and it’s based on an interview with a current distributor. She excitedly talks about the company. She even has a strategy for making over $40,000 in bonuses in the next 4 months. Despite only making around $100 per month in commission at the time of the interview, she feels she is less than 6 months away from earning upward of $30,000 per month by August 2018.

We checked in November 2018, and her distributor link is no longer active. She may have had a strategy for success, but it appears that after this interview, she quit It Works! in less than 1 year. Even though she believed in the system and was working hard to share the opportunity, it appears to have failed her. We assume that just like most MLMs, around half the It Works! distributors quit every year.

Is It Works! an Illegal Pyramid Scheme

Even though MLMs resemble illegal pyramid schemes, they are legal as long as there is a product or service attached to them. This dates back to a 1972 legal battle between Amway and the FTC. The result was that Amway was able to stay in business, but they had to put a lot of rules in their paperwork. These include such things as not stockpiling product.

 We don't think that It Works! distributors are trying to scam their new recruits.  It's more likely that they themselves believe that ‘It Works!’, and this opportunity will one day make them wealthy.

We looked at the 2018 FTC guidance for MLMs, and based on that we believe that some It Works distributors are acting in deceptive and unlawful ways.

Being legal does not make MLM ethical. All companies are in business with the goal of selling goods and services for a profit.  Network marketing companies are able to charge a higher price because they create a customer base of loyal members who believe that by consuming these products and recruiting others to do the same, they will become financially free.

Should You Join It Works!

The only reason to join any MLM, is if you are already buying their products, and are happy enough to recommend them to others. The only way to make Money with It Works!, is to sell a lot of product. If you’re not looking for a sales job, then this isn’t for you

If you are considering It Works! as a business opporutnity, then we suggest that you also look at other options. Before you join, perhaps spend some time getting familiar with the It Works! products, and make sure that you’d feel comfortable promoting them.

As always we welcome your feedback in the comments section below.  We'd love to hear what you think about It Works, especially if you can share your personal experiences with the company

For more posts like this, look at our list of mlm reviews. 

Arbonne was founded in Norway in 1975. In 1980, co-founder Petter Morck set up international headquarters in Irvine California. According to the Arbonne website, the company uses science, to produce products which promote healthy living.

Rather than using traditional promotions, Arbonne uses multi-level marketing to sell their products. They say that as of 2017, they have almost 320,000 Independent Arbonne Consultants around the world pushing their products

Here at the Finance Guy, we believe that you can't make money with network marketing, but we won’t let that stop us from doing a full review of the Arbonne opportunity

What is the Arbonne Opportunity

According to the official Arbonne opportunity page, it’s your chance to join a ‘community of life changers’. You can earn an income, inflict change, and have fun. Sounds like a great deal! Then again most MLMs sound pretty good when we first look at them. We decided we better take a closer look, we started off by watching a youTube video they made about the Arbonne opportunity

In the video, there were some very excited Arbonne consultants. They want to share how great the opportunity has been in their lives. There is even an ‘Abronne manifesto’, of motivational messages printed in the background.

The video tells us that Arbonne was established with the goal of delivering pure, safe and beneficial products.

We found it refreshing, that one Arbonne consultant explains that ‘their role is to sell Arbonne products’. If you join the opportunity, then they say they’ll train you to do the same.

While the video seemed very positive about the Arbonne opportunity, it still left us needing more information, so we carried on with our own research.

How Do You Earn Money With Arbonne

To find out how you actually make money, we looked at the compensation plan. Or as they call it, the Arbonne Success Plan. This document explains all the different ways you can earn an income as an Arbonne consultant. We’ll take a look at them below:

Client Commissions
If you sell Arbonne to retail clients, you can earn a commission of up to 35% (if products are sold at the suggested retail price). We think that retail sales are the best way to make money with Arbonne, or any other MLM for that matter. If you’re not looking for a sales job, then MLM might not be for you

Overrides
If you decide to recruit others to become Arbonne consultants, then you may be entitled to earn override commissions on any products they buy. Your direct recruits will be known as as your ‘first generation’ in Arbonne

It doesn’t end there, if your recruits also start recruiting others, then you may also earn commission from your ‘second generation’. This is the second level down from you in the MLM…

The amount of override commission you can earn each month will depend upon your rank in the Arbonne MLM, as well as the overall volume of products purchased by you and your team.

When you join, your initial rank will be as a ‘consultant’. At the entry level, you can earn up to 6% override commission. This is based on the total Arbonne products purchased in the calendar month, by all the consultants you have personally sponsored.

To qualify for the 6% consultant override, you’ll need to generate 500 PQV points in the same month. PQV is ‘Personal Qualifying Volume’, in the US, you get around 1 PQV point for ever $1 you directly spend on Arbonne products. If you register any retail clients, then their purchases will also count toward your PQV.

To us, this raises Red Flag 3 - Pay to Play, in Dr Jon Tayolors 5 Step MLM evaluation. To us, this ‘opportunity’,, looks like a system where you can’t make money with Arbonne unless you spend a lot on their products.

If you keep recruiting and build your downline organization, then you can earn more. As your organization grows, you will accumulate OV (Organizational Volume), and as you meet the required OV points, you can climb the Arbonne ranks. For us, this is Red Flag 2 - Promotion Through Recruitment

The commissions you can earn at each rank in Arbonne are shown in the table below:

If we look at the ‘National Vice President’ rank, we can see that it is possible to earn overrides adding up to 50%! That sounds pretty good or does it? The price for new consultants is 35% below the SRP… but these commissions are not based on SRP.

Overrides are based on the price paid by other consultants in your downline. This is all well and good if you are a ‘National Vice President’, but what if you’re just a new consultant? If you have just signed up, then 50% of what you pay for Arbonne products goes to your upline as commission

While some may see this as an opportunity to build a long term business, we see Red Flag 4 - Most of the Rewards go to your upline

If you do manage to make it to the top ‘National Vice President Level’, then you may be entitled to a lot of commission. Having said that, you will still need to meet your spending requirements.

At the top level, you’ll need to generate 160,000 ‘central points’ per month. These central points include all your spending, and that of your direct retail customers (both regular and preferred)… Even so $160,000 per month is a lot of Arbonne products to be buying/selling

Fortunately you don’t need to sell $160,000 of Arbonne per month yourself…. Your ‘Central volume’ is not just your own activity. It also includes the sales made by everyone in your Arbonne organization who has not yet reached the same rank a you.

This concerns us because the people above you in Arbonne earn more if you’re never promoted. Getting paid something from unlimited consultants in your downline may sound good, but it does raise Red Flag 5 - More than 5 levels in the payout plan

If you want to make more than just your retail sales commissions with Arbonne, then you need to raise Red Flag 1 - Constant Recruitment of New Members

Mercedes-Benz Bonus
If you manage to become a ‘Vice President’, with Arbonne, then you may be entitled to a luxury Arbonne Merc… if you want an even better car, just increase your Arbonne Organizational Points

While it is nice to get a company car, there are a few things about this which concern us

1. All Mercs must be white with Arbonne labels included - The car you can ‘earn’ from Arbonne, is essentially an advertising billboard. They should pay you to do it, not make you earn it!

2. There is no choice - Do you want a white Mercedes? Would you prefer a red Porsche, how about a luxury holiday? Arbonne is ‘paying you’, with a car of their choice, with their own advertising included. We’d rather just receive the cash and spend it on something we want for ourselves

3. Arbonne doesn’t buy you a car - You will not be given a car, you will receive a monthly payment towards it… the success plan doesn’t state whether or not this is a full payment, but we assume it is not. If you want an Arbonne Mercedes, you will need to kick in your own funds on top of the Arbonne bonus

Cash Bonuses
At all ranks in Arbonne, you may be entitled to earn random cash bonuses. Arbonne randomly decides how to pay these, and how you need to qualify. It is possible to earn a cash bonus at any Arbonne rank. All you have to do, is meet whatever qualification criteria they decide to set

The cash bonuses are nonsensical, they’re almost not worth mentioning, except we already included them…

Based on what we’ve found so far, Arbonne looks just like another typical MLM, but there is still more to research to be done…

Are Arbonne Consultant Making Money

When assessing any business opportunity, it’s a good idea to look at how well others are doing with the same deal. Before you invest your time, effort and money, you should take a look at their track record.

The best performance report we could find, is the USA 2017 Arbonne Consultant Compensation Summary. While this document is limited to just USA, it does give us an idea of how good the Arbonne opportunity is. Let’s see what we learned…

The first thing we notice, is that that Arbonne paid over $173 Million in bonuses to consultants in the US alone. USA had over 227,000 Arbonne Consultants in 2017

Arbonne has kindly created a table showing the 2017 ‘Average Annual Income of Active USA Arbonne Consultants’ here’s a copy if you’d like to see:

According to this table, 62% of Arbonne consultants averaged less than $1,000 in commission in 2017. That’s before we consider that those people had to purchase products to earn that commission. It’s quite possible that most Arbonne Consultants lost money in 2017

As we continued to read through the text, things only got worse. We learned that the table only included the 27,300 US consultants who earned commission in 2017. In other words 88% of US Arbonne consultants earned absolutely nothing in 2017

Before we continue, we’d like to point out that we are not including customers or preferred customers, our research is only looking at those who join the Arbonne business opportunity

We find it interesting, that the average annual commission for ‘Regional Vice Presidents’ was only $23,951… That’s less than $500 a week! To make things worse, our math told us, that this income put them in the top 0.3% of all Arbonne consultants

Our math could be wrong, but it probably isn’t, and the findings aren’t good for Arbonne. Our research has lead us to believe that 99.7% of Arbonne Consultants are losing money

It could be that 2017 was a bad year for Arbonne. to make sure we also looked at the UK 2018 Arbonne Income Disclosure. The UK table of earnings is shown below:

Once again we see a disappointing result. Only 3% of Arbonne consultants earned a full time income in 2018. The table only includes consultants who actually earned an income. They tell us that 88% of Arbonne consultants earned no commission at all in 2018

If we adjust the figures in their table to include all Arbonne consultants who participated in the income opportunity, then we see that only 0.3% earned a full time income. In other words 99.7% earned less than they would with a regular job from the Arbonne opportunity in 2018

If we were to include all the expenses incurred, this would confirm that most consultants lose money on the Arbonne Opportunity

Update
We have written a separate post for the 2019 Arbonne Income disclosure.

Why is it Hard to Make Money With Arbonne

We believe that the problem is not with Arbonne or their products. The problem is with network marketing! MLM is a business model which is designed to market products. It is not a franchising system.

As we have seen, Arbonne has raised all 5 red flags from Jon Tayolors 5 Step MLM evaluation. His studies have found that if a company raises 4 flags, then the chances of making money are less than 1%. He has also found that overall, 99.7% of people who enter any MLM will lose money

MLM often makes money for the company selling the products. This doesn’t mean that you can make money in their direct sales force. At the end of the day, the goal of any MLM is to make you buy products. The system wants you to be a customer, not a business partner

Another reason it may be hard to make money with Arbonne is because of the products. At the end of the day, this opportunity is a sales job. Any salesperson will tell you that you make the best money selling quality products at a good price. Even though consultants may claim that they are high quality, it seems that Arbonne are overpriced compared other similar products.

How Good Are Arbonne Products

We read a review of Arbonne by Meghan Telpner, who found that the products aren’t as good as they claim to be. For example Arbonne energy fizz sticks are just a dose of caffeine. Each stick has about as much caffeine as half a cup of coffee.

Another issue she found is that even though the website gives the impression that they are non-GMO verified, this is not entirely true. In the small print they give the very vague statement that a growing number of products are verified. However the truth is that several Arbonne products are not non-GMO verified.

After speaking with several active consultants, Meghan formed the opinion that Arbonne Consultants don’t fully understand the products. They tend to focus on hype phrases, like cleaner and purer, but there is no basis for any of these claims. Furthermore Arbonne does all their own testing, so there is no independent scientific verification of the quality. Her consensus is that while they are priced as premium quality, Arbonne products are not premium quality.

Arbonne proudly displays a list of ingredients which they will not use in their products. Telpner points out that this is quite meaningless as most of the ingredients would not be found in any skincare products.

As for the science behind Arbonne products. Well they do all their own testing, which is a big no no in the pharmaceutical industry. As they have not been independently tested, there is no real proof that Arbonne products are as safe or pure as they claim.

Is Arbonne an Illegal Pyramid Scam

Even though MLMs closely resemble pyramid schemes, they are not illegal. The reason dates back to the 1979 case of Amway vs the FTC. After 4 years in court Amway was found to be offering a business opportunity, rather than a pyramid scam. The technicalities came down to wording in their paperwork. One example requires consultants to make retail sales.

The Amway ruling effectively opened the doors for all other MLMs to operate within the law. However we should remember that being legal doesn’t make it ethical. If you knew that less than 1% of people had a chance of generating a real income, would you feel comfortable recruiting new consultants?

Another issue, is that even though these rules may be in the paperwork, they are difficult to enforce. For example, several people in MLMs have said that they have cupboards full of product. This is because of the minimum monthly purchases they need to make to remain active in the system. Even though stockpiling is against the rules, there is no way for the company to monitor it.

Being legal does not make MLM ethical. All companies are in business with the goal of selling goods and services for a profit.  Network marketing companies are able to charge a higher price because they create a customer base of loyal members who believe that by consuming these products and recruiting others to do the same, they will become financially free. According to the 2018 FTC Guidance for MLMs, these could be considered misleading or unlawful claims by Arbonne distributors.

Even though MLMs operate within the legal framework, that has not stopped some former consultants from going to court and claiming Arbonne is a pyramid scam.

If you are reading this review in 2020, then you are probably feeling the impact of the Coronavirus. Living in lock down seems to have inspired some Arbonne consultants to take advantage and use it as a recruiting opportunity. It turns out that some of their promotional activities have been less than legal, as per this official warning from the FTC to Arbonne.

Should You Join Arbonne

The only reason to join any MLM, is if you are already buying their products, and are happy enough to recommend them to others. The only way to make Money with Arbonne, is to sell a lot of product. If you’re not looking for a sales job, then Arbonne is not for you

As always we welcome your feedback in the comments section below.  We'd love to hear what you think about Arbonne, especially if you can share your personal experiences with the company

For more posts like this, look at our list of mlm reviews. 

One of our readers asked us to write a  streetonomic review of Nikken.  This network marketing company started in Japan in 1975, and has since grown to become a multinational company.   Nikken products cover a wide range of wellness needs, including magnetic blankets, water purification and dietary supplements

Here at the Finance Guy, we believe that you can't make money with network marketing.  Having said that, we'll take a closer look at Nikken and see if their opportunity is a good business or just another MLM.

How Do You Make Money With Nikken

We found a copy of the Nikken Compensation Plan, starts off telling us that this is a way to 'dramatically improve our lives'.  It also infers that this opportunity, which uses 'leading-edge wellness technology', is unique and powerful, with the ability to transform lives.

The compensation plan tells us that Nikken is a debt free company with 25 years of succes, but that doesn't answer our question of 'are Nikken consultants making money' there are 7 ways to make money with Nikken, as explained below:

1. Retail Profit
When you join the Nikken opportunity, you'll be able to purchase their products at the consultant price.  If you are a fantastic salesperson,, you might find some people who are willing to pay the full retail price.  This would entitle you to a retail profit.  While this may be a tough sale, we believe that this is the best way to make money with Nikken.

2. Personal Commission Volume Rebate
PCV is essentially a partial refund on what you personally spend on Nikken products.  Depending on your rank, your rebate can range anywhere from 10% to 20%.  While getting a payment is fun, we think it would be better to simply charge the consultants less.  It could be that this commission is meant to encourage personal spending.

3. Personal Group Commission Volumume
Put simply, this is additional money you can earn if your keep growing your Nikken downline.  The more people you recruit, the more you can earn... as long as they are ranked below you in the Nikken MLM heirarcy.

4. Entrepreneurs Club
If you want to be a part of this club, then you have 30 days  to recruit at least 3 new Nikken consultants, and they need to purchase a lot of Nikken products!  You'd have to be a pretty smooth salesperson to make it to this level!

5.  Paragon Award
This award which can be either a check, or a prize, is based on recruitment.  If you want to win this reward, you have three months to recruit three new Nikken Consultants who in turn each reach at least the Silver level in the Nikken MLM.  To earn this award, it's not enough to recruit people, you need them to also recruit

6.  Leadership Bonus
This is a bonus you can earn on the volume generated by any of your recruits who rise to the level of Silver or higher in the Nikken MLM.  You can earn 6% on all consultants who are at least at the Silver Rank.  This is paid down to 6 levels.  We believe that to earn this bonus you need to spend a lot of time recruiting people to Nikken.

7.  Lifestyle Bonus Program
This bonus is only available to Nikken Consultants who rise to at least the Gold rank. If you become eligible for this bonus, then Rodan and Fields will allow you to choose how it is paid.  You might ask for a car or a nice vacation.  You could even give it away to your favorite charity!  This is all very nice, but you could do all this and whatever you actually wanted with cash.

If this all seems a little vague, we agree.  Nikken has not been generous with details, so if it's any help, here's a colorful table they provided, we did our best to decipher it:

How Much Can You Earn With Nikken

If you ask any active member of any MLM this question, they'll say something like 'it's up to you, the sky's the limit!'.  As we can see from their compensation plan, it certainly appears possible to earn a lot of money with NIkken.  All you have to do is introduce some friends, and have them introduce some friends, and so on and so on.  Eventually you'll have a huge downline and will be earning a massive passive income.  It's as easy as that!

The only thing you need to do, is stay qualified to earn commission. You can earn retail profit at any time, all you have to do is find customers who’ll buy the products at full price. If you want to earn any of the other 6 forms of Nikken commission, then you’ll need to meet the monthly QPPV quota of 100. In other words, you need to spend at least $100 per month on Nikken products before you can earn your own commission.

The requirement to spend $100 per month would concern Dr Jon Taylor, it’s Red Flag 3 - Pay to Play, in his 5 step MLM evaluation. The problem we see with this, is that it creates artificial demand. Some purchases are being made just to meet this qualification quota. In most MLMs most of the products are being bought by members and not by retail customers. This means that the commissions paid to your upline, are coming out of your pocket.

Are Nikken Consultants Making Money

To find out if consultants are earning an income from this opportunity, we looked at the 2016 Nikken Earnings Dislosure.  This document shows the average earnings made by Nikken Consultants in USA and Canada.  We found that in the US, 92.3% of Nikken consultants lost money in 2016

Consultants had to spend $1,200 on Nikken products to remain active for 12 months. As we see from the income disclosure, the average annual commission earned at the Gold leadership level was $1,194. Even if you recruit a large enough downline to reach the Gold level, you could still be losing money with Nikken.

You might think that this is not a problem, after all, it takes time to build any business. If you put in the work, then you should be able to get yourself to a profitable level in the MLM. We looked at the ‘average months active in Nikken’. We saw that at the Gold level, consultants have been active for an average of 205 months, that’s over 17 years! This tells us that on average, Nikken consultants can expect this business opportunity to lose money for 17 years.

Why is it Difficult to Make Money With Nikken

We believe that the problem is with the network marketing business model.  It's not designed to help people make money or gain financial freedom.  The system is designed to promote and sell products.  MLM is profitable for the companies which produce the products, but not for the members who join the business opportunity.

MLM is a way for companies to sell products without employing a sales force and without having to spend money on traditional advertising and promotions.  Instead they build a network of loyal believers who are willing to pay unusually high prices for the added hopes and dreams of financial freedom.

One reason that it’s difficult to make money with any MLM is the high price of their products. The only way to pay the generous commissions is to include them in the cost charged to consultants. If you are a new conultant then 86% of the price you pay for your Nikken products, goes to your upline to pay their commission.

The price consultants pay for MLM products, is usually higher than the full retail price of similar products sold in stores. This makes it very difficult to find retail customers. Any salesperson will tell you that a key to success is selling a good product at a competitive price. Selling expensive products is difficult for anyone.

Another reason is that to build a downline with Nikken you need to Constantly Recruit New Members. Telling a few friends might get you started, but it won’t be enough. What they don’t tell you in the recruitment sessions, is that MLM has an extremely high drop out rate. It’s not uncommon for more than half of active MLM consultants to quit in any given year. This makes building a team difficult because you have to recruit faster than people are quitting.

Even if your downline isn’t quitting, they are diluting your market. Every time a new consultant joins Nikken, they are in competition with all the other Nikken consultants. They all want to sign up as many people as possible. Unlike traditional franchises, MLMs allow anyone to join. It doesn’t matter if there’s 10 other consultants living on your street, they’ll let you join. Can you imagine what would happen if McDonald’s allowed a new franchise to open right next to an existing one? It wouldn’t take long for one or both stores to go out of business!

Nikken is pretty similar to all the other MLMs we’ve reviewed. It’s a business opportunity where it is possible to earn a lot of money. Possible, but not probable, you could build a business if you can recruit faster than people quit. Let’s not forget that it’s also a business where average consultants lose money for up to 17 years.

More than 9/10 Nikken consultants are losing money. Does this sound like a business opportunity to you? The real problem is that MLM is a system designed to make money for the company, not for the members. The goal of MLM to make you a customer, not to sell you a business

Is Nikken a Pyramid Scam

Even though MLMs resemble illegal pyramid schemes, they are legal as long as there is a product or service attached to them.  We don't think that Nikken consultants are trying to scam you.  It's more likely that they themselves believe that Nikken is the path to financial freedom

Being legal does not make MLM ethical. All companies are in business with the goal of selling goods and services for a profit.  Network marketing companies are able to charge a higher price because they create a customer base of loyal members who believe that by consuming these products and recruiting others to do so, they will become financially free

Should You Join Nikken

The only reason you should sign up for the Nikken opportunity, is if you are already a retail customer spending over $100 per month. If you are happy to buy the products without any commission incentives, then maybe you can convince others to do the same. If, like most, you are joining this MLM purely for the hopes of financial freedom, then it probably won’t work out for you.

It is absolutely possible to make money with Nikken, but if you have the skills to turn a profit in this business, then we think you’d probably do even better with a normal sales job.

As always we welcome your feedback in the comments section below.  We'd love to hear what you think about Nikken, especially if you can share your personal experiences with the company

For more posts like this, look at our list of mlm reviews. 

Young Living has been producing essential oils from their farmlands in Utah and Idaho since 1994.  They have developed their own process for distilling essential oils, which they call seed to seal.  Since inception, Young Living has expanded internationally and now has offices and farms all over the world.

Over the years, more than 2 million people have signed up to become members of the Young Living network marketing system.  At the Finance Guy, we believe that you can't make money with network marketing, but we decided to do a full review of Young Living. We want to find out if this really is an original money making opportunity, or if it's just another MLM.

There is no doubt that Young Living is making money.  In 2016, they generated $1.0 Billion in sales which earned them the No. 22 spot on the 2017 DSA Top 100 list.  However we're not interested in how much profit the company is making.  We want to know if it's possible for you to make money from joining the Young Living Income Opportunity.

What is the Young Living Opportunity

To find out how we can earn money, we looked at the Young Living Compensation Plan, which they say is 'designed to help you achieve abundance'.  We've heard similar claims from almost every MLM we've reviewed in the past, but let's have a look at the different ways to earn with Young Living

Retail Profit
The first benefit we see is that you get wholesale pricing and can save up to 24% off the retail price of Young Living Products.  While not included in the compensation plan brochure, we assume that this also means that, Young Living Members can sell products to retail customers and earn a 24% profit

At The Finance Guy, we believe that retail sales are an essential part of any business.  After all, selling to customers is how companies generate profit.  Without retail sales, there is no profit.  It's a little concerning that Young Living does not think that this essential part of the sales process is worthy for inclusion in their compensation plan.

Unilevel Commission
This can best be explained as 'referral commission'.  If you convince others to become Young Living Members, then you can earn a commission on any product they purchase.  However you can only earn this commission if you personally buy enough Young Living products to generate 100 points of Personal Volume (PV).  Unilevel commissions are paid on up to 5 levels in your downline as shown below:

The requirement to generate PV would be a concern for Dr Jon Taylor, as it is Red Flag 3 - Pay to Play.  In order to make money with Young Living, you have to spend money with them, and that's just wrong!  A PV quota is essentially a minimum spend.  This means that members aren't business partners, they're Young Living customers

As a relatively new member to Young Living, you might also qualify for the 'Rising Star Team Bonus'.  Young living will devote 1% of their commissionable sales each month to paying this bonus.  To be eligible, you must be either a 'Senior Star', or an 'Executive Star', and build at least 3 legs.  In other words, you have to recruit.. As you keep recruiting you and building legs, you can climb the Young Living ranks.  This raises Red Flag 2 - Promotion Through Recruitment.

Our concern with these commissions is that they're based on the 'wholesale prices' paid by members.  This means that if you join the Young Living business opportunity, then every time you order Young Living products, 26% of your 'wholesale price', is going to your upline as unilevel commissions.

This is common to the MLMs, and it is why their ‘wholesale’, prices are often higher than the store prices of similar competitor products.

Generation Commissions
If you are lucky enough to recruit enough members to generate 10,000 worth of Organizational Group Volume (OGV), then you might qualfiy for this bonus. While PV is generated by money you spend with Young Living, OGV comes from money spent by those you recruit.  In other words, if you share the opportunity and convince others to become Young Living Members, then you can earn a commission from their Personal Volume spending.  This also means that the people above you in your organization earn money from your spending.

It doesn't stop with the people you have recruited.  You can also earn money from the people that they recruit. The recruits of your recruits would be your second generation OGV.  Based on our understanding of the Young Living Opportunity, if you manage to recruit enough members to become Young Living 'Royal Crown Diamond', you can earn from up to 8 generations in your MLM downline.  This triggers Red Flag 5 - More than 5 levels in the payout plan

The Young Living Generation commissions paid to the top members is shown below:

While it is possible to generate OGV from just a few recruits, we believe that to achieve real success in Young Living, you need to recruit a lot of new members. 

For us this raises Red Flag 1 - Constant Recruitment of New Members.  We think a business should be focused on sales, not hiring new people...

Along with the generation commission, once you have reached the rank of Silver,  you could qualify for a Generation Leadership Bonus. Young Living sets aside 6.25% of their commissionable sales each month to pay this bonus to the upper ranks of their members.  If you keep recruiting new members and generating OGV, you might reach the rank of Diamond.  At this time you may qualify for the extra 0.5% of commissionable sales paid as the Diamond Leadership Bonus.

Once again, our concern is that these commissions are based on the 'wholesale prices' paid by members.  This means that if you join the Young Living business opportunity, then every time you order Young Living products, 28.25% of your 'wholesale price', is going to your upline as generation commissions and bonuses

This is on top of the 26% which goes toward Unilevel payments.  If you become a new member, then a total of 54.25% of what you spend on Young Living is paid to your upline.  

This raises Red Flag 4 - Most of the Rewards go to your upline. This price loading is why MLM products are generally more expensive than those sold through regular stores. The commissions for their compensation plans are included in the prices they charge to members.

How Do You Get Promoted In Young Living

We thought we'd let an enthusiastic Young Living Member explain what it takes to climb the ranks in the video below:

As we can see from the image, the focus of the Young Living opportunity it recruitment. If you just find 5 friends, then they do the same, it goes into auto pilot. By the time you get to generation 5, there are so many people in your downline, that drawing waves is better than making circles for each of them.

Are Young Living Members Making Money

To find out if members are making money, we looked at the  2016 US Young Living Income Disclosure.  The commissions paid to U.S Young Living Members in 2016 is shown below:

The first thing we notice is that 94% of all active members are at the 'Distributor' rank. This means that only 6% or 1 out of 16 members achieves any promotions at all in the Young Living business opportunity. 

In the small print beneath the table, we see that the average commission paid to active Young Living Members in 2016, was $25, and the median was $0. The mean is the statistic measure of the middle point.  So if the mean is $0, we can see that more than half of active Young Living members earned no commission at all in 2016 

Those that did earn commission probably weren't much better off than those that didn't.  Commission is not profit, it doesn't include the $100 per month spent on Young Living products to remain active. In other words it cost members at least $1,200 in expenses to generate an average of $25.  So, in 2016, the average member lost $1,175 in the Young Living Business Opportunity

As part of our ongoing updates, we also reviewed the 2017 Young Living Income Disclosure Statement. One thing we found quite interesting is that Young Living has changed how they classify members. Now anyone who hasn’t recruited anyone is no longer a ‘distributor’. They are now listed as ‘preferred customers’.

We did not find any explanation as to why this change occurred. It could be that they decided that people who don’t recruit aren’t active in the business opportunity. It could also be that they want to make the Young Living opportunity look better than it really is

 Under this new system, 89.5% of members are not ‘preferred customers’. This tells us that 9/10 members earned nothing at all from the Young Living opportunity in 2017

Young Living has now classified the 10.5% of members who did sponsor new recruits and earn commission, as ‘business builders’. The table of earnings shown below only represents this portion of YL members:

As we can see only 0.83% of ‘business builders’ made it past the ‘Silver’ rank. This means on average, the other 99.17% earned less with Young Living than they would with a regular job

Let’s not forget that this table only includes the to 10% of earners with Young Living. If all members were included, the real results would be 10 times worse

Why is it Difficult to Make Money With Young Living

We believe that the network marketing business model makes it hard for anyone to succeed in Young Living.  MLM isn't designed to help people make money or gain financial freedom.  It's a system designed to promote and sell products.  MLM is profitable for Young Living, who are making money from selling products to members, but not for the members who join the business opportunity.

MLM is a way for companies to sell products without employing a sales force and without having to spend money on traditional advertising and promotions.  Instead they build a network of loyal believers who are willing to pay unusually high prices for the added hopes and dreams of financial freedom.

We believe that the best way to make money with Young Living, or any MLM, is through retail sales.  As we've seen, most members aren't earning much from the business opportunity.  This could be because it raised all 5 flags in Dr Jon Tayolors 5 Step MLM evaluation. According to his research, if a network marketing company raises 4 or more flags, then the chances of you turning a profit with the opportunity is less than 1%

One website we found called Stealth Secrets, claims that they can teach you to make money with Young Living. Unsurprisingly, the page was very vague, and appeared to be trying to sell us something else

Can You Recruit a Team With Young Living

If you want to earn part of the 54.5% which Young Living pays as commissions, then you need to build a large team.  The only way to do this is to recruit new members and have them do the same.  In theory, it's as simple as sharing Young Living with a few friends.  In reality building your MLM downline with Young Living will take substantial time and effort.

If you decide to become a new member of Young Living, then recruiting new members will be essential to your success.  After all, if you can't build a downline, then you'll end up in the 94% who never earn more than 13% commissions.  If you want to tap into the full 54.25% offered by the Young Living compensation plan, then you need to be very good at recruiting new members.

Even if you are good at finding new recruits to sign up for the Young Living Income Opportunity, you might still struggle to build a downline.  This is because network marketing companies struggle to keep members in their MLM systems.

Young Living is no different, in their income disclosure it states that '51% of members who joined in 2015, didn't make a purchase in 2016'.  In other words, if you recruit new members to your Young Living team, you can expect that more than half of them will become inactive within a year of joining.  If your recruits aren't buying product, then you're not earning commission

We also read that '57% of all members who joined in 2014 had quit by 2016'.  This is probably because once they stop buying product, they don't renew for another year either.   If you join the opportunity, then you should expect at least half your Young Living downline to quit every year.

How Good Are Young Living Essential Oils

 It's important to remember that success in any MLM requires you to make a lot of sales.  If you join the Young Living opportunity, then you'll be selling their products.  Any salesperson will tell you that the best way to make money, is with good products.

Rather than try the oils ourselves, we decided to rely on the internet for our product reviews.  First we looked at a review by Essential Oils Haven.  They seemed very happy with Young Living.  The review explained a bit about the company then went on to tell us that essential oils had a wide range of uses including;
- Psychological benefits
- Pain Relief
- Immunity Boosting
- and many many more

 This review certainly puts Young Living in a positive light.  It could be because the products are really good, or it could be because it was written by a Young Living member trying to sell us essential oils.

In our search for a more balanced review, we found a collection of FDA warnings to Young Living.  Mostly the FDA is concerned with how Young Living products are being promoted to consumers.  Reviews, such as the one we looked at above, claim that essential oils have a wide range of benefits.  According to the FDA, these claims would qualify the oils to be drugs, however there are no FDA-approved applications for these products.

No doubt Young Living would make the standard MLM claim, that 'this is just a few rogue members'.  However there are problems with the products themselves.  The FDA notes that Young Living essential oils are not generally recognized as safe and effective for use under the conditions prescribed, recommended, or suggested in the labeling.  are not generally recognized as safe and effective for use under the conditions prescribed, recommended, or suggested in the labeling. 

We also looked at Live Science, who acknowledged that essential oils are used in some alternate forms of medicine.  They then explain that there is limited scientific evidence that they provide any real benefit.  So it would appear that the problem is not just with Young Living, it is with all essential oils.  While they may create nice smells, that is where the benefits end.

Is Young Living an Illegal Pyramid Scam

Even though MLMs closely resemble pyramid schemes, they are not illegal. The reason dates back to the 1979 case of Amway vs the FTC. After 4 years in court Amway was found to be offering a business opportunity, rather than a pyramid scam. The technicalities came down to wording in their paperwork. One example requires consultants to make retail sales.

The Amway ruling effectively opened the doors for all other MLMs to operate within the law. However we should remember that being legal doesn’t make it ethical. If you knew that less than 1% of people had a chance of generating a real income, would you feel comfortable recruiting new consultants?

We don't think that Young Living members are trying to scam you.  It's more likely that they themselves believe that the products work, and the opportunity will one day make them wealthy.

Young Living is like any other company, they are in business to make profit.  As we noted earlier, they appear to be doing quite well and are one of the most profitable MLM companies in the world.  If you took a sales role with a top 100 company, you'd expect to make money.  Yet if you become a Young Living member, then your chances of building a downline are less than 1 in 20.

The best way to make money with Young Living, is to get a job with the corporate office. According to Glass Door, they treat their corporate employees quite well. Becoming an employee means ignoring the MLM, so perhaps you could also look at other opportunities before making a decision to join Young Living

Should You Join Young Living

If your goal is to make money with Young Living, then we think you should probably examine all your options before making a decision.  Before you join you should probably try using the products yourself for awhile.  Before you try to make money convincing others to spend $100 per month on essential oils, you should do it yourself.  Try the oils before there's any financial incentive.  If you feel any real benefits which you think you can share, then you might be able to make money with Young Living.

As with most network marketing companies, it is possible to make money with Young Living, but it is very unlikely.  Imagine if you were offered a sales job at a company where more than half the sales force quits every year, and most sales people are losing money.  Would you accept the job?

There are some who’d diagree with us. For example don’t mess with mamma believe that you can make money with Young living. They’ve even written a how to make money with Young Living guide. They have an incentive to be positive they are trying to recruit you to Young Living

If you have the skills to make money with Young Living, then we believe that you'd probably make more money applying those skills to a different opportunity.    That's just our opinion, as always we welcome your feedback in the comments section below.  We'd love to hear what you think about Young Living especially if you can share your personal experiences with the company

For more posts like this, look at our list of mlm reviews. 

One of our readers recently asked us to look at a network marketing company called Team Beachbody.  Here at TFG  we believe that you can't make money with MLM, but we'll see if this proves to be an exception.  Our  full streetonomic review of Beachbody will find out if this a legitimate work from home opportunity, or just another MLM money pit

What Does Beachbody Do

Beachbody started in 1998 and is based in Santa Monica, California. They are the company behind several of those exercise programs you've probably seen on late night infomercials.  Some Beachbody programs include, Insanity, Brazil Butt Lift, Hip Hop Abs, P90X, and many more.  Beachbody also sells a collection of nutritional supplements.  The most popular one being, Shakeology

In 2007, they created an offshoot company 'Team Beachbody', which uses network marketing to sell their products and services.  Globally, there are over 400,000 Team Beachbody 'coaches' in this multi-level marketing system.  Coaches are customers who want to earn referral income by recommending Beachbody to others.

In 2016, Team Beachbody reported revenue of US $863 Million.  This earned them the 28th spot on the 2017 DSN Gobal 100 list.  With sales results like that, it's clear that Multi-level marketing has been profitable for Beachbody.  However what we want to know is, are Team Beachbody Coaches making money?

How Do You Make Money With Team Beachbody

We looked at the official page for the Team Beachbody Opportunity.  We learned that customers who use the products, can become Team Beachbody coaches.  All they have to do is pay $39.95 upfront then an ongoing $15.95 per month.  Along with the ability to earn sales commission, you will also get a discount on any Beachbody products you buy for yourself.

From this we get the impression that you can not join the business opportunity unless you have, or are willing to buy some Beachbody products.  We believe that the best sales people are the ones who are also customers and as they say are a 'product of the product'.  Having said that, we also feel that being a customer should be not be compulsory, it should be optional

What is the Team Beachbody Compensation Plan

We read through their Policies and Procedures manual, which  includes the Team Beachbody Compensation Plan (starting on page 32). The first thing we notice is that they use a binary compensation model.  This is one that we seen used by several MLMs.

In a binary system, your 'business center' will have 2 legs one being left, and the other being right...  When you recruit new members to the system, you will be able to place them either in your 'left leg', or your 'right leg'.   We made the diagram below to help explain it:

Once you have paid the $39.95, you will enter the MLM with your very own 'Coach Business Center' (CBC).  You will then have the ability to start sponsoring new recruits to the system.  As you sign them up, you can decide which 'leg' of your downline their CBC will appear on.  This is shown in the diagram above, with each circle representing a CBC in the Beachbody MLM. 

The 'tell a few friends' approach may sound good, but to us it raises Red Flag 1 - Constant Recruitment of New Members in Jon Taylors MLM evaluation model.  In reality most people who join these systems end up losing money.

Like all MLMs, there are several ways to earn with Team Beachbody.  Once you have a CBC all you really need to focus on is making sales and recruiting new members to join your downline.  We'll summarize the ways to earn with Team Beachbody below:

Retail Commission

The compensation plan explains that you can earn 'up to 25% commission', on all sales made to customers through your Beachbody website.  That commission is based on the full retail price, and you will earn it on all future purchases made by any of your customers.  You can also earn 40% commission if your customers purchase a Beachbody on Demand membership

Beachbody does not give more detail on the retail commissions.  We'd like to know why you earn 'up to 25%'.  This gives us the impression that it's also possible to earn less than this.  It is our opinion that retail sales are your best chance to make a profit with Team Beachbody.  In network marketing, retail commission is the only way to earn which does not rely on recruiting others.

Shakeology Fast Start

You can earn $20 every time one of your personally sponsored Coaches buys a 'Shakeology Home Direct Starter Pack'.  If you become a Beachbody Coach, it is quite likely that the person who recruited you will encourage you to get this pack.  While they may tell you how good the drink is, you should also remember that they will make money if buy Shakeology.

If you manage sell one Shakeology Starter Pack per week for 5 weeks in a row, then you can earn an extra $100.  This is known as the Shakeology Fast Start Plus Bonus.  Essentially it doubles the original bonus, if you can time your sales to close at least one per week for 5 weeks.

Challenge Pack Fast Start Bonus

This is a bonus which is paid the first time one of your personally sponsored Coaches purchases a BeachBody Challenge Pack.  These packs are a combination of BeachBody nutrition products and exercise programs.  The packs range in price from $140 up to $295.  The amount you can earn when your new recruits join, depends on which pack they buy.

It is important to remember that Coaches do not have to buy any BeachBody products.  Take time to study and sample the products before you pre-pay for your exercise regime and dietary supplements.  No doubt the people above you in your Team BeachBody network will tell you how great these programs are.  We'd just like to remind you that the people in your upline make a commission from any money you spend with Beachbody.

Team Cycle Bonus

To qualify for this weekly bonus, you must first qualify at the 'Emerald Level' or above.  You can become an Emerald by recruiting 2 new Beachbody Coaches and placing one on your left leg, and the other on your right.  Once you are an Emerald, you will need to remain active.  To maintain your 'active status', you will need to personally purchase enough BeachBody to generate 50 Personal Volume (PV) points every 4 weeks.  

The requirement to remain active may not seem like a big deal, but we see it as Red Flag 3 - Pay to Play in the MLM evaluation system.

The amount you can earn each week from your Beachbody Team Cycle Bonus, will depend on how much is spent by the Coaches you recruit (and their customers).  When people below you in the network spend money on BeachBody, they will generate Team Volume (TV) for you.  If you have at least 300 worth of TV in your downline, you can qualify for this weekly commission.  One of the rules of the Beachbody binary system is that you need to have at least 1/3 of your TV on your 'weak leg'.  This is shown in the diagram below:

Our hypothetic Emerald BeachBody Coach shown above would qualify for a team cycle bonus.   They have remained active by personally spending 50 PV on BeachBody.  All the Coaches on the Left leg of their downline have spent 200 points of TV.  The Coaches recruited to the right side of their team have spent 100 points worth of TV.   This means our Coach will receive a team cycle bonus this week.

As an Emerald Coach, the team cycle bonus would be $14.  This increases to $16 if you reach the rank of 'Ruby', and $18 if you are at the Diamond levels.  These amounts may not sound impressive, but is it possible to earn more than one Team Cycle Bonus per week.  In fact BeachBody allow you to qualify for up to 96 team cycles per day!

Every time you accumulate 300 worth of TV, you will qualify for a cycle bonus.  Any left over volume can be saved until you have enough to qualify for your next cycle bonus.  Remember that you must accumulate at least 1/3 of the TV for your bonus from each leg.  This rule is common with the Binary MLM model.  It is designed so that all Coaches have to actively work to earn their Team Cycle Bonuses

If you are a new BeachBody Coach, then theoretically the Coach who recruited you will continue to recruit new Coaches.  Some of the Coaches recruited by those above you in the system, will appear in your downline. If these Coaches recruited by your up line spend money on BeachBody, then this will count toward your Team Volume.

Depending on how active the people above you in the network are, you might end up having a lot of extra Coaches placed on one of your CBC legs.  This is an ideal scenario, because it means that you can concentrate all your energy on building up the other leg (which is not getting recruits from above).  This will initially be known as your 'weaker leg', because it will only grow from Coaches you personally recruit. 

The 1/3 rule means that it is possible for your strong leg to accumulate substantial amounts of TV without you earning any cycle bonuses.  It's important to remember that your cycle bonus earnings are limited by Team Volume on your weaker leg.  This may end up being a disadvantage if the person who sponsored you has a particularly active upline.  If you are placed on their 'weak leg', then you will not benefit if people above your direct sponsor place new recruits on their stronger leg.  The best advice we can give is to concentrate on finding your own recruits, because there is no guarantee that you will get any freebies from your upline.

The Team Cycle Bonus can be earned from unlimited levels in your downline.  While this sounds appealing if you have a huge downline, we wonder how BeachBody can afford to pay on so many levels.  It could only work if very few people qualify for team cycle bonuses.  This also raises Red Flag 5 - More than 5 levels in the payout plan

Matching Bonus

Once you reach the rank of 'Ruby' or above, you can qualify for a weekly matching bonus on any team cycle bonuses earned by your personally sponsored Coaches.  Ruby level BeachBody Coaches can earn a 5% matching bonus.  Coaches at the Star Diamond level and above earn a 10% bonus.

Star Diamond Leadership Bonus

Every 3 months BeachBody pays out 2%  of their entire TV to their top performing Diamond Coaches.  This amount is based on the performance of the entire MLM network, not just the Coaches in their own downlines.

These bonuses raise Red Flag 4 - Most of the Rewards go to your upline.  Essentially the people at the upper levels of the system are earning more from your work than you are, and that's just not fair.

In order to move up the ranks in BeachBody, you have to grow your downline.  For example, to become a Diamond Coach, you need to have personally sponsored 2 Emerald Coaches and another 6 Active Coaches (at any level).  This raises Red Flag 2 - Promotion Through Recruitment. In order to succeed in Team BeachBody, you need to personally recruit Active Coaches.

As we have seen, BeachBody has raised all 5 red flags in Dr Taylors MLM evaluation model.  According to research, if a MLM raises 4 or more flags  then you have less than 1% chance of making a profit.

Are Team BeachBody Coaches Making Money

We found a copy of the 2018 BeachBody Income Disclosure Statement the table below is from this document:

BeachBody has presented their Statement of  Coach Earnings in a way that is vague and a bit difficult to understand. They have included all the legally required information, but it's not well presented.  For example buried in the small print, they state '51.05% of Coaches recieved a bonus or commission'.  From this we learn that in 2018 48.95% of Beachbody Coaches earned nothing.

As expected there is some money being made by those who have reached the 'Star Diamond' level.  Their average earnings in 2018 was $109,225.  The next best earners were the 'Diamonds', who averaged $14,671, or $282 per week.  Things only get worse for those who haven't reached the Diamond ranks of the system.

From the small print at the bottom of the statement, we see that 51.05% of the active MLM  received a bonus or commission.  This means that 48.95% of BeachBody Coaches earned nothing in 2018.  To make things worse, these earnings figures are only based on Coaches who were enrolled for the entire year.  If they were to include the results from all Coaches who were enrolled at any time in 2018, we are sure the figures would have been even worse.

What we are seeing is a business opportunity, where less than 2% are earning enough to replace a full time income, and close to half are earning nothing at all.  As we can see from the Star Diamond, it is possible to make money with Team BeachBody, but 98.3% of BeachBody Coaches are making less than they could in a regular job.

 We have also done a separate write up of the 2019 Beachbody Income Disclosure Statement, and the numbers have not improved!

Why is it Difficult to Make Money With BeachBody

We believe that the problem is with the network marketing business model.  It's not designed to help people make money or gain financial freedom.  The system is designed to promote and sell products.  MLM is profitable for the companies which produce the products, but not for the members who join the business opportunity.

MLM is a way for companies to sell products and services without employing a sales force and without having to spend money on traditional advertising and promotions.  Instead they build a network of loyal believers who are willing to spend money and spread the word.  The only motivation they need, is the hopes of possibly achieving financial freedom at some point in the future.

Another problem is in the compensation plan.  In order to qualify for most of the payments, you need to be a BeachBody customer.  If you want to advance through the ranks, you need to recruit others, who will also become both Coaches and customers.  This creates a system which focuses more on recruitment than on retail sales.

It is difficult to make money with any network marketing system because there is no organic demand.  Most of the sales are being made to people who have joined the business opportunity.  This means that the people at the top of the system only make money when the people below them are spending it.  MLM is not designed to give you a business, it's designed to make you a customer.

Are Shakeology Supplements Good Quality

Any salesperson will tell you, that the best way to make money, is with quality products and services.  It's true that sales skills play a part, but it always helps when whatever it is you're working with, 'sells itself' a bit.  If you are going to make money with Team BeachBody, then Shakeology will be part of what you are selling.

We did not purchase or try any Shakeology products, instead we outsourced this.  We had a look at a review of Shakeology by the certified nutritionist at Ancestral Nutrition.  Their review found that Shakeology can help you lose weight but also noted that it:
- Is unhealthy
- Contains ingredients which may have harmful side effects

Looks like your best bet for safe results, is a healthy balanced diet made up of regular food.  

Is Beachbody An Illegal Pyramid Scam

Even though MLMs closely resemble pyramid schemes, they are not illegal. The reason dates back to the 1979 case of Amway vs the FTC. After 4 years in court Amway was found to be offering a business opportunity, rather than a pyramid scam. The technicalities came down to wording in their paperwork. One example requires consultants to make retail sales.

The Amway ruling effectively opened the doors for all other MLMs to operate within the law. However we should remember that being legal doesn’t make it ethical. If you knew that less than 1% of people had a chance of generating a real income, would you feel comfortable recruiting new consultants?

Another issue, is that even though these rules may be in the paperwork, they are difficult to enforce. This is part of the challenge described in the 2018 FTC Business Guiadance for MLMs. According to this guide, we believe some Beachbody Coaches are acting deceptively or unlawfully when promoting the opportunity.

For example, several people in MLMs have said that they have cupboards full of product. This is because of the minimum monthly purchases they need to make to remain active in the system. Even though stockpiling is against the rules, there is no way for the company to monitor it.

Remember that there is a difference between being legal and being ethical. Would you feel comfortable recruiting people to an opportunity if you knew that 99.7% of them would make more money with a regular job?

Should You Join Team BeachBody

Before you join Team BeachBody, or any MLM, you need to make sure that you like the products and services.  We would recommend being a customer first.  If you are happy paying full retail price and would recommend BeachBody to others when there there is no financial incentive, then maybe you can make money with Team BeachBody

We would also suggest that you compare the products and services offered by BeachBody with others on the market.  You might find that supplements with similar ingredients to Shakeology are already available at lower prices in your local supplement store.

The workout videos will get you into shape if you do them.  However before you spend a lot of money every month, you may want to try some of the similar ones already available for free on Youtube.  That's right, there are some fitness coaches who post their videos on Youtube and their only fee, is that you get a bit of advertising. 

Just like the BeachBody fitness videos, free ones such as this will get you into shape, if you are willing to do the work.  If you join Team BeachBody, you will be trying to convince people to pay for their exercise videos.  Just remember that the competition is giving away a similar service for free.

Our Final Thoughts

There's no such thing as a proven path to financial success.  It doesn't matter how well others have done, you can duplicate every move they made and still lose money.  In our opinion it is very unlikely that you'll turn a profit with Team BeachBody or any other MLM.  Those are our thoughts, we'd love to hear from you in the comments section below, especially if you want to share you own experiences with BeachBody

For more posts like this, look at our list of mlm reviews. 

Unicity is a Utah based company which sells a wide range of dietary supplements and cosmetics.  They have been promoting their products through network marketing since 2001.  Here at The Finance Guy, we believe that you can't make money with MLM, but we'll give Unicity a chance to prove us wrong.

What Does Unicity Do

There is a wide range of over 400 Unicity products, which are being sold in more than 50 countries by their network of MLM distributors.  They say that the products were developed using Unicity science, which helps 'improve health and quality of life'.

Like most MLMs they like to promote some products more than others.  They call these the Unicity core products.  Based on what we read in the brochure, these products might:

- Improve muscle strength, mental clarity and bone structure
- Optimize blood sugar and lose weight
- Support healthy cholesterol and triglyceride levels
- Ensure you’re getting 100% of your recommended daily intake for many essential vitamins and minerals
- Contribute to normal, energy-yielding metabolism
- Clear your body of toxins and other wastes

How Do You Make Money With Unicity

We looked at the official Unicity Opportunity page, which only had some very limited information.  We did learn that this was a system which costs US $40 to join and can 'improve your health and build your wealth'.

In true MLM tradition, there are 8 ways to earn income with Unicity.  As expected, the the amount you can earn will depend on your rank.  Unicity tell us that they have a 'simple rank advancement system'.  They go on to tell us that you will 'receive a detailed guide after you enroll as a distributor'.  

While this lack of detail might be explained as 'not wanting to confuse new recruits'.  It could also be explained as 'Unicity is trying to sign you up before you see all the details'.  We believe that this sort of lack of transparency is an early warning sign that the opportunity doesn't work.

We didn't pay the $40 joining fee, but we did find a library which included the 2017 Unicity Compensation Plan.  This is the MLM document which explains all the different ways to earn, and how you qualify to earn them.  We will go through the ways to earn with Unicity below:

1 - Retail Profit
You can earn a profit margin if you buy products at the distributor price, and sell them at either the full retail price or the preferred customer price.  The amount you can earn from each product is shown on the 2016 Unicity price list. We believe that retail margins are the best way to earn income with any MLM.  At the end of the day when you join network marketing, you become a commission based salesperson.  Unfortunately, like all MLM compensations plans, Unicity only gives a 2 sentence mention to retail profit.

As we saw in the price list, each product also carries a Personal Volume (PV) value.  In order to earn any commissions other than retail profit, you will need to order at least 100 PV worth of product per month.  We estimate that it will you will need to order +/- US $125 per month at distributor prices.  Dr Jon Taylor would say that this raises  Red Flag 3 - Pay to Play 

2 - Personal Rebate
Starting in your second month as a Unicity distributor, you can receive monthly rebates.  This is like a refund on money you paid to them during the month.  We think charging you a lower price would make more sense, but that's just our opinion.  To qualify for the rebate you must order at least 100 PV worth of product.  The more you order each month, the larger your rebate will be.  The table below shows the different rebates and the PV needed to qualify for them:

3 Fast Start Bonus
The reason you can't earn rebates in your first month, is because your PV will go toward a Fast Start Bonus.  Unlike other MLMs there is a chance that you will not actually earn this bonus.  Depending on how qualified they are, your up-line will get bonuses of between 38% and 53% on whatever you spend in your first month with Unicity.  

It is possible for new distributors to earn the 15% 'Enroller' bonus.  To qualify for this, you'd need to order 1,000 PV worth of product in your first month.  In other words you can get a a 15% refund if you spend US $1,250 on Unicity products in your first month as a distributor. They might say that this is an incentive to get you started.  We might say, it's a way to get you to spend a lot of money before you really understand the products.

4 - Unicity Lifestyle Bonus
You can qualify for lifestyle bonus payments for the first 6 months after you have achieved specific Unicity ranks.  The ranks and the lifestyle bonus payable are shown below:

5 - Infinity Share Bonus
This is the commission you can earn from the PV generated by all the distributors in your Unicity downline.  You can earn an infinity bonus of 5% on the PV of distributors in your downline.  As you achieve higher ranks in the Unicity hierarchy, you can earn this on greater 'depth'.  Once you reach the rank of 'Presidential Diamond', you can earn 5% on up to 9 levels in your Unicity downline.

The infinity share bonuses paid at each Unicity rank are shown below:

6 - President's Club Bonus
This is very similar to the lifestyle bonus.  The only differences is that it's paid at higher ranks, and the payments are a lot higher.  The potential bonuses you can earn if you achieve the presidential ranks in the Unicity hierarchy are shown below:

7 - Additional Distributor Position
If you reach the rank of Presidential Diamond, you will qualify for your first additional distributor position.  If you make it all the way to the rank of 'Global Ambassador', then you will have earned a total of 5 additional distributor positions (ADPs).  The advantage of these ADPs is that you can effectively become part of your own downline.  Unicity will also let your new position qualify at the presidential levels. 

If you sign up new distributors under your new ADPs, then you can earn multiple infinity and lifestyle bonuses on any PV generated.  Effectiely you can increase your share of commission from each distributor in your downline by up to 400%!

8 - Chairman's Club Bonus
This is another bonus similar to the lifestyle bonus.  You can earn these one off payments if you hold down a rank of double diamond or above for 3 months.  The bonuses paid at each level are shown below:

9 - Founders Club Bonus
Even though they told there were 8 ways to earn, there is also a ninth. If you achieve the rank of 'Global Ambassador', then Unicity will pay you this bonus in every month that you provide a Unicity training seminar.  

How Much Are Unicity Distributors Earning

The compensation plan has shown us that it is possible to earn money with Unicity, but that doesn't mean that it's probable.  To find out how much people are making, we looked at the 2015 Unicity Income Disclosure Statement, which is the most recent one provided. It could be that the years since have not been as good but even in 2015 we see that the Unicity opportunity is just another MLM.  

It starts with the familiar claim that the Unicity opportunity can 'Make Life Better by getting Unicity's quality products at a special distributor price'. We later see the claim that 'A large majority of people sign up as Unicity Distributors just to get the product discount'.  If that is true, then why do people become preferred customers?

We don't believe we've ever seen an income disclosure with as little detail as this one.  Despite the vague data provided, we were able to produce a table showing the commissions earned by Unicity Distributors in 2015:

We did our best to construct the above table with the limited data provided by Unicity. We included expenses of $1,500 per year to show the cost of 100 PV per month.  Remember that this is the minimum spend required to qualify for commission.  Based on our calculations, 97.3% of Unicity distributors lost money in 2015.

Even though Unicity offers many ways to earn, only 0.2% are making as much as a regular job. In other words only 1 in 500 Unicity distributors is earning a full time income.  The opportunity which claims to 'improve health and build wealth', appears to be failing for  499 / 500 distributors.

Why is it Difficult to Make Money With Unicity

We believe that the problem is with the network marketing business model.  It's not designed to help people make money or gain financial freedom.  The system is designed to promote and sell products.  MLM is profitable for the companies which produce the products, but not for the members who join the business opportunity.

MLM is a way for companies to sell products without employing a sales force and without having to spend money on traditional advertising and promotions.  Instead they build a network of loyal believers who are willing to pay unusually high prices for the added hopes and dreams of financial freedom.

Another problem is the generous compensation plan.  If you reach the Presidential Diamond rank, you can earn up to 45% in infinity bonuses.  the problem is if you aren't at this level then these bonuses are included in the distributor price you pay for your Unicity products.  As a new distributor 45% of what you pay to Unicity goes to your upline as commission.  

Dr Taylor would say that this raises Red Flag 4 - Most of the Rewards go to your upline.  The depth of the bonuses also raises Red Flag 5 - More than 5 levels in the payout plan.  According to his 5 step MLM evaluation, the chances of turning a profit are less than 1% when these flags are raised.

Is Unicity an Illegal Pyramid Scheme

Even though network marketing systems closely resemble pyramid scams they are legal as long as there is a product or service attached to them.  That being said, there is a difference between legal and ethical.  By attaching the smoke and mirrors of future financial freedom, Unicity is able to charge substantially inflated prices.  

We already identified that at least 45% of the distributor price goes to the compensation plan, and this doesn't include all the lifestyle, presidents and founders bonuses.  Even if we ignore all these other commissions, then we still see that Unicity only gets 55% of the distributor price to cover all the costs of production and to turn a profit for themselves. Based on this we can see that Unicity distributors are paying close to double the traditional wholesale price

Should You Join Unicity

If you are looking for an opportunity to replace your income, then we suggest you research all your options before making a decision.  It's quite likely that you might find one where your chances of success are better than 1 in 500.  If you are considering joining just to get the products cheaper, then we recommend researching competitors products.  With most MLMs, we find that you can get products of equal or better quality at lower prices from regular stores.  The over inflated distributor prices are often more expensive than competitors full retail prices.

This review is an expression of the opinions we formed while researching the Unicity opportunity.  We'd love to hear your opinions in the comments section below, especially if you can share your experiences with Unicity.

For more posts like this, look at our list of mlm reviews. 

One of our readers recently requested that we look at Ambit Energy.  They are a US based provided of natural gas and electricity.  The company was founded in 2006 in Texas.  Customers are referred to Ambit by a network of more than 250,000 independent consultants who are paid through a Multi-Level Marketing system.  Ambit is about to expand into Japan and will so become another multi-national network marketing company.

Here at The Finance Guy, we believe that you can't make money with network marketing, but we'll happily be proven wrong.  Our review of Ambit Energy will take a detailed look at their business opportunity.  We want to find out if this is a great way to make money, or just another MLM.

What Does Ambit Energy Do

Ambit provides Natural Gas and Electricity in deregulated markets across the US.  On the Ambit Energy Website, they tell us that they are 'focused on being the finest and most-respected retail energy provider in America, offering cost-effective choices for today’s energy consumer.'

In 2016, Ambit Energy generated an estimated revenue of US $1.20 Billion. This secured them  16th place on the 2017 Direct Selling News Global 100.  We also see that in ' 2010, Ambit was named #1 Fastest-Growing Private Company in America by Inc. magazine.' 

With results like this we have no doubt that the company is turning a good profit.  However we want to know if the consultants are making money from the business opportunity.

What is the Ambit Opportunity

The official Ambit Opportunity homepage, says it will show us how 'Ambit Energy Consultants are discovering Financial Freedom'.  There's a 6 minute video on there which explains how this 'life changing opportunity' allows you to earn money every time people use either their gas or electricity.  They also purport that Ambit is the right partner to help you take advantage of the deregulation of the energy markets.

The video then tells us how well Ambit is doing and lists some awards that it has won. Including their placement on the DSN global 100 list.  It's nice to know that the corporation is turning a healthy profit, but we want to know if this is a good opportunity for consultants to make money.

Ambit then explains that their opportunity is superior to others we might have seen because everyone uses energy.  All you need to do is give people the opportunity to save money on their power and gas bills.  You can even show them how to get their power for free, all they need to do is refer a few friends to Ambit.

Obviously what they are getting at is that every Ambit customer is also a potential Ambit Consultant.  After all, nobody would say no to free power and gas, and most people would appreciate a few extra dollars a month.  While this might sound well and good, we see it as an early warning signal.  After all,  when we looked at Dr Jon Taylors 5 step MLM evaluation, we found the first red flag is constant recruitment.

How Do You Make Money With Ambit Energy

If you want to set out on the road to financial freedom with Ambit Energy, then your first step is to pay the once off fee of US $75 to become an Ambit 'marketing consultant'.  After that your only fixed cost is the $24.95 per month to maintain your Ambit website and access to all the online tools needed to run your Ambit organization.

Like all network marketing companies, there is more than one way for consultants to earn an income with Ambit Energy.  They are enthusiastically explained in this short video:

To help us better understand the opportunity, we also read through all 4 pages of the 2016 Ambit Energy Compensation Plan.  Our research lead us to believe that the Ambit Energy Opportunity is unsustainable.  We also found several read flags which gave us the opinion that most Ambit Consultants aren't making much money.  

At 4 pages, the Ambit compensation plan does it's best to avoid going into too much detail.  Fortunately we were also able find their more extensive 17 page explanation of the 3 ways to earn with Ambit.   Our initial research suggests that the Ambit opportunity displays all 5 red flags identified in  Dr Jon Tayolors 5 Step MLM evaluation.  His research of 100's of MLMs, found that if a network marketing company raises 4 or more flags , then you have less than 1% chance of turning a profit from joining. We will go through them as we explain the ways to earn below:

Jump Start Bonuses
As a new consultant you have the opportunity to earn a 'Jump Start' bonus of of $100 in your first 4 weeks with Ambit.  All you have to do is earn 5 customer points.  Your first customer point is as easy as switching your own power to Ambit and therefore you are your own first customer!  This is an example of Red Flag 3 - Pay to Play - To their credit, Ambit does make this a mandatory requirement to 'remain active'.  Having said that we can see that part of the process of becoming a consultant, is becoming a customer

You get another 2 customer points when you set up your 'business building website'.  While not listed as a compulsory step, the $24.95 to run your website would also raise the pay 2 play flag.  To be blunt, we don't believe that it costs Ambit admin fees of $24.95 per month to give you these 'tools'.  At the end of the day all they are doing is adding you as a user to their existing system.   If you open a Gmail account, you will also get access to a collection of Google apps such as cloud storage, a calendar and many more.  If every new user costs so much per month, then why is Google giving all this away for free to several million people ever month?

If you have become a customer and set up your Ambit website, then you'll have 3 customer points.  All you need to do now is sign up 2 new Ambit customers in your first 4 weeks, and you can earn a $100 jump start bonus.  If you continue to accrue customer points at a fast rate, then you can earn up to 6 Jump Start bonuses in 12 weeks.  If you achieve all 6 then you will earn a total of  $400 in jump start bonuses Ambit Energy as shown below:

Team Builder Bonus
This bonus can best be described as a matching bonus.  If one of your customers decides to become an Ambit marketing consultant, and they qualify for their $100 Jump Start 1 bonus, then you will also earn $100.  The team builder bonus can be earned on every consultant you personally sponsor!  

On the upside, the team builder bonus should motivate your sponsor to help you get your first 5 customer points in your first 4 weeks with Ambit.  On the flip side, after 4 weeks they will most likely want to focus their energy on new consultants who have the potential to earn them a team builder bonus.  The team builder bonus also keeps everyone actively looking to recruit new consultants, which raises Red Flag 1 - Constant Recruitment of New Members

Leadership Income
When you first sign up for the Ambit Energy opportunity, your title will be 'Ambit Marketing Consultant'.   To qualify for leadership income, you will need reach the higher levels in the Ambit hierarchy. 

You can get yourself promoted.  To do this you will need at least 5 customer points (which you've done if you've earned Jump Start 1).  You will also need to build a downline team of 6 marketing consultants (and have personally recruited at least 2 of them).  Once you have ticked all these boxes you will automatically be promoted to the level of Ambit Regional Consultant.

If you continue to recruit new consultants, and meet the predetermined criteria, you can make your way all the way up to the rank of 'National Consultant'.  This well defined path to advancement would be appealing to most.  For us we see it as Red Flag 2 - Promotion Through Recruitment

Once you have qualified at one of the 'leadership ranks' with Ambit, then you will be eligible to earn 'leadership income'.  This is very similar to the team builder bonus except you can earn it whenever any consultant in your organization earns a Jump Start 1 bonus.  It is paid to unlimited levels in your downline!

To make things even better,  your can earn more as you advance through the ranks.  The leadership income paid at each level is shown below:
 

If you attend an Ambit recruitment session, they'll tell you how this leadership income will someday be the key to your financial freedom.  If you ask us, it's Red Flag 4 - Most of the Rewards go to your upline

As a new consultant if you qualify for the first Jump Start bonus, you will earn $100.  The person who recruited you will get a Team Builder bonus of $100 and there will be $240 of Leadership Income distributed to people in your direct network marketing upline.

What we see here is that Ambit is willing to pay a total of $440 in total bonuses if you can successfully obtain 5 customer points in your first 4 weeks.  Only catch is that you only get $100 for doing all the work, and the other $340 goes to the upline.  In other words you do all the work and get 22.7% of the reward.

The 'unlimited levels' of leadership income would sound good to anyone. Imagine how easy your financial life would be if all that money just flowed in every month.  It looks good from the outside but we think it is Red Flag 5 - More than 5 levels in the payout plan

Customer Residual Bonuses
This is the Ambit equivalent of 'passive income'.  You can earn income every month bills are paid by customers signed up by yourself or any marketing consultant in your Ambit organization to unlimited levels. This once again raises red flag 5, but we'll move along with the review.  The amount you can earn per month per customer at each rank is shown below:

Residual Income
This is similar to customer residual bonuses with two important differences.  The first is that it's only paid to 7 levels (still raising red flag 5).  The second difference is that it's paid on all customers in your Ambit organization, not just those signed up by new 'marketing consultants'.  The monthly residuals you can earn on customer power bills is shown below:

Here we see a combination of Red Flag 4 - Most of the Rewards go to your upline and Red Flag 5 - More than 5 levels in the payout plan.  For every customer you personally bring to Ambit, you can earn from $0.05 to $0.30 per month in monthly residual income from their bills.  While this doesn't sound like a lot, the important thing to remember is that someone 7 levels above you in Ambit, who you've probably never met, is earning from $1.50 to $6.00 per month on the same customers.  It's our understanding that when you sign a new customer to Ambit, a random stranger will earn up to 30 times more monthly income than you for the work you have done.

In case we've been too subtle, we'd just like to point out that we believe you can't make money with Ambit Energy.  Despite this the company has enough consultants to generate $1.20 Billion in annual revenue.  If their business opportunity is all about helping people get free energy, then it does make us wonder who paid the $1.20 billion worth of energy bills in 2016

How is Ambit Energy Being Promoted

If you know anyone who is an Ambit Energy Consultant, then it's quite likely that they've tried to sign you up as a customer and have invited you to see the 'opportunity'.  In true network marketing tradition, it's quite possible that the business opportunity was presented to you and a collection of other prospective new recruits. 

If you attend a presentation, you might be shown a video such as this one:

Along with this video, we also read through a copy of the 2017 Ambit Energy Business Presentation Script.  The script is a step by step set of instructions for how do use a powerpoint presentation to recruit new consultants to the Ambit MLM.  It follows a similar pattern to the video above and shares most of the same information.

The presentation introduces it as a 'life-changing opportunity'.  The video goes a s step further purporting that this is a 'unique and proven system'.  They both go on to explain that the Ambit opportunity is helping people just like you and me take advantage of a 'massive transfer of wealth'.  The opportunity they refer to is deregulation of the energy markets.  They might talk about it while you see a picture similar to this one:

The presentations then continue to tell us how successful Ambit has been and that they intend to continue to grow.  The company was started by a couple of guys we've never heard of before, but should be impressed by.  It's nice to know that the company is turning a profit, but they haven't proven that consultants in the MLM are seeing good returns for their efforts.  

The presentations will then show you how easy it is to make money with Ambit.  Everyone uses power, and everyone wants to save money on their bills.  Offering people the opportunity to earn free energy sounds like an easy sell!.  At just $75 it's a better deal than any franchise.  We then see the familiar network marketing pitch being something along the lines of: Making money is as simple as telling a couple of friends, then have them duplicate.  Here's a copy of a slide you might see while being told how simple this business is:

Next the business presentations moved on to the compensation plan.  Explaining how much you can earn and how to get yourself promoted to earn even more.  We've already discussed this so we won't go over it again.  In our assessment of the ways to earn, we saw all 5 red flags.  In the Ambit business presentation, they see it as a path to long term financial freedom. 

We saw several warning signs that suggest making money with Ambit would be difficult, but in their business presentation, they show how if you recruit 3 consultants (and collect 20 customers), and they all 'duplicate',  then by the time your organization reaches 7 levels you'll be earning almost US $10,000 per month.  This is shown in the image below:

Why We Think It's Difficult to Make Money With Ambit Energy

A Flawed Business Model

We believe that it is extremely difficult to make money with any network marketing opportunity.  Essentially we think that  MLM as a business model is designed to make you a customer, it is not designed to help you generate wealth.   

MLM has a bad reputation,  which could explain why Ambit, and almost every mls company tells you that 'their opportunity is different from anything else in the  network marekting industry'.   We've heard that claim several times, but the opportunities always end up looking like just another MLM.

Generous Compensation Plans

Some common MLM claims made by Ambit is that they have 'the best compensation plan in the industry'.  They also promote it as a simple system. Achieving financial freedom is as easy as 'gathering a handful of customers'.   

The compensation plans which they say are a 'simple pathway to financial freedom', are in fact the reason why very few will ever succeed in MLM.  We'll go through some of the problems we see in the ambit compensation plan below:

Duplication
Ambit calls it 'helping others do the same', ironically they are doing the same as all other MLMs.  We've seen the concept of 'duplication' in every network marketing opportunity we've looked at so far.  In theory all you have to do is introduce a few friends to the MLM opportunity.  Then they see how wonderful it is, sign up and proceed to tell a few of their own friends.  As we saw in the Ambit business presentation, just introducing three new consultants can lead to almost $10,000 per month.

The problem is that in practice, duplication simply doesn't work. It doesn't matter if you copy the exact steps taken by someone who was successful.  There is no guarantee that you will achieve success of your own.  It's important to remember that timing, market conditions and luck all play a part.  Taking the same steps at a different time or in a different market might turn out to be unlucky.

The Ambit Opportunity does not make you a business owner
No matter how many times Ambit or any other MLM tell you that this is an opportunity to become a business owner, this simply is not true.  Even if their presentation shows you Robert Kiyosaki's cashflow quadrant, it's still not an opportunity to be a business owner.

If you become an Ambit Consultant, or member of any other MLM, you are an independent contractor.  This is a role which is most similar to a commission only salesperson.  While it's true that you can pick your own hours and determine your own income, you do not own the company.

For one thing a business owner gets a share of company profits.  As an Ambit consultant you get paid a commission on the sales you and your team generate.  You are not entitled to any company profits.  Another important thing to remember is that you do not have any control.  Ambit decides what services consultants can sell and how much they get paid to do so.  Ambit also has the power to terminate your agreement leaving you with no income at all.

MLM is Not a Franchise
The Ambit presentations we looked at mentioned that $75 is lower risk and cheaper than any franchise.  This is another myth we see in several network marketing presentations.  They explain how successful franchises such as McDonald's have been.  Then they tell you something along the lines of it's more profitable to buy a McDonald's then try and create your own burger. 

They imply that joining the MLM (Ambit or any other), will give you similar benefits to joining an established franchise.  While the concept is similar to a franchise, there are some key differences which is why we think Ambit is not like a franchise.

The main problem we have is with the constant recruitment.  If you go into a McDonald's and order a meal, does the teenager with the 'trainee' badge try to convince you to start your own McDonald's franchise?  If not then McDonald's is not like MLM.

Franchises don't simply let new stores open at will.  If you apply to purchase a franchise, then first you will have to prove that you have the skills to successfully own and manage the business.  Then the location will have to be approved.  These are important keys to the success of the franchise.

Ambit will encourage you so recruit as many new consultants as possible, and then to 'duplicate'.  If you started recruiting your friends and they started recruiting their friends.  It wouldn't take long before you were competing with each other for new customers and new recruits.  You will also be competing with Ambit consultants from other mlm organizations who know the same people you know and are trying to recruit them before you do.

Endless Recruitment
This is similar to the effects of market saturation.  Every time a new consultant joins Ambit, they are in competition for new customers and mlm recruits with all the existing Ambit consultants.  This means that the potential profits made by each consultant will decrease as more consultants join the MLM.  This is probably why Jon Taylor found that less than 1% who join any MLM will turn a profit.  We assume that the 1% who do make it, are those at the top of the pyramid.

The problem with recruitment based models, is that there is no focus on the organic customers.  People become fixated with finding the next consultant instead of finding the next customer.  This means that a very high percentage of the 'customers' are also consultants.  This is a problem because it means a large percentage of any bonuses you might earn is paid for by other consultants.  The bonuses are included in your monthly bills so this means that only those near the top will turn a profit. 

Network marketing companies like to deny that they don't have many organic customers.  We don't know the exact figures for Ambit, but have managed to find this Ambit training manual.  Here we see that they are teaching new consultants that the key to success is in finding customers that can be turned into consultants.  In other words they are fueling the problem.

All those compensation payments are included in the price
Ambit pays monthly commissions for every active customer in your organization.  Some are paid to 7 levels and some to infinite.  The problem for the customers is that all these bonuses are included in their monthly bills.  When you join Ambit and become a customer, this means that part of your electric bill is going toward paying your upline.  Given that some bonuses are paid to infinite levels, your bills will need to keep increasing as the MLM grows and more people above you qualify for bigger monthly payments from your bills.

Deregulation Doesn't Guarantee Transfer of Wealth

The main selling point we took away from the Ambit business opportunity presentation, was about deregulation.  They showed how after deregulation industries such as telecommunications experienced a disruptive shift.   It changed the way customers could access telecommunications and we saw lots of new companies offer a whole lot of new services. 

Several years after deregulation of telecoms, there are some players who have become Multi-Billion dollar companies.  This is what Ambit want us to think of... Deregulation leads to new super successful companies.  What we're not paying attention to, is the fact that for every successful business there were a few that failed, and no longer exist because they went bankrupt.  

The real pattern which we see when deregulation disrupts an industry, is that there is a huge influx of new players.  In time most of them will disappear and only the few super successful ones will remain.

Does Ambit Lower Customers Bills

As we've expressed from the onset, we are skeptical about whether the Ambit business model can deliver cheaper power.  We looked at the Ambit rates and plans for Fresno California. The first thing we noticed in the terms of service, is that Ambit is not the direct provider of electricity or natural gas.  Ambit does not have any infrastructure and is not generating any power.  They are a sales company which buys power from infrastructure providers and then sells it to customers for a retail profit.

We then noticed that the terms of service state that 'Ambit Energy may amend the terms of this agreement at any time'.  In other words once you are out of fixed term contract, they can increase the prices.  All they have to do is notify you 30 days in advance.   Their method of notification may be an email, a letter, or a note attached to your monthly bill.  I don't know about you, but I generally pay the amount owing on the bill and don't spend much time reading through the print to see if there's a notification about rate changes...

What really concerned us about the Ambit terms of service, was that there is an arbitration agreement.  Which suggests that Ambit is currently the subject of a class action lawsuit.  The lawsuit which was filed in New Jersey alleges that Ambit uses deceptive tactics to hide the real cost of the energy they are supplying.  This has lead to some customers being surprised with charges at the end of their discount period, that for some have added up to thousands of dollars.

It would appear that New Jersey isn't the only area where Ambit customers (who may also be consultants) are opening unexpectedly high bills from Ambit Energy.  There is a dedicated online Ambit Complains Board, where several customers from all over USA are sharing similar stories.  We also found this detailed story of an Ambit consultant hit with a 'massive electric bill', a year after joining the MLM.

Is Ambit an Illegal Pyramid Scheme

Despite the similarities to pyramid schemes, network marketing is legal.  If there is a product or service attached that can be sold to consumers, then the system is not illegal.  By this definition Ambit is not an illegal pyramid scheme.  Even though they are legal, we believe that MLM is an unethical business model.

MLMs know that they strongly resemble illegal pyramids, and they do their best to play this down.  Ambit is no different, we found their response to the question: Is Ambit a Pyramid?  Here found the classic MLM response, which is that all companies are pyramids.  It's true, there is a hierarchical system with a CEO at the top, then layers of executive followed by managers and finally workers.  

Ambit even claim that 'You will only get ahead if someone above you dies or quits'.  They then flip it around to show us how with Ambit this consultant is earning more than the people in his upline.  We'd just like to point out that this is possible with any commission based sales role. Given that MLM is essential commission based sales, we believe that the author might have earned more than his upline.  Back in 2008, the Finance Guy actually achieved this.  While working as a loan writer for a bank, his bonuses for the year meant that he got paid more than both his direct boss and the one above him.  So this is definitely possible outside of the MLM world

We are willing to agree with Ambit that most companies have a  hierarchical structure, but we disagree that this makes all companies resemble pyramid schemes.  When we look at the actual definition of a pyramid scheme, we see that the key element of a pyramid scheme is the constant need to recruit new members.  That's where the difference is between network marketing and companies which don't resemble pyramid schemes.

Normal companies only hire new staff to replace those that resign or when the company is growing fast enough to justify it.  Ambit doesn't care how many consultants sign up because it costs them no hire them, and they only pay them for results.  If they follow procedures and 'become their own first customer', it could be argued that Ambit profits from new consultants joining the MLM.

Ambit, and all MLMs, claim that all companies resemble pyramid schemes.  We obviously disagree, unless a primary part of every role in every company, is recruiting new employees.  It could be that they've all made an honest misunderstanding.  It could also be that MLMs want to mislead us to make their opportunity look better than it really is.

Should You Join Ambit Energy

If you want to save money on your bills, then make sure you compare all the available options.  Also make sure to read through the terms and conditions before you sign anything.  As we've seen, some deals appear to be good, but can end up costing you more over the longer term.

If you are looking for a new business opportunity, then take your time to examine all your options.  If you think you have what it takes to turn a profit as an Ambit consultant, then you can probably make even more in a regular sales job.

One study found almost all MLMs are a waste of time.  They found that your chances of success are extremely small.  This because of the unrealistic expectations of a constantly expanding down-line.  

This review is based on the opinions we have formed while researching Ambit Energy.  We'd love to hear what you think in the comments section below.  Specially if you can share your own experiences with Ambit.

For more posts like this, look at our list of mlm reviews. 

Lifevantage is a Utah based wellness company which was started in 2003.  The range of Lifevantage  products are all made with the common goal of 'promoting healthy living.'  In 2009, they decided to give up on traditional retail sales.  Instead they chose  to promote their products using multi-level marketing.  In June 2017 they estimated that they had 64,000 active distributors in their international network marketing system.

Here at The Finance Guy, we believe that you can't make money with MLM, but we'll give Lifevantage a chance to prove us wrong.  Our review of Lifevantage will take a close look at their business opportunity.  We want to find out if this is a legitimate way to earn an income, or just another MLM.

In 2016, Lifevantage reported revenue of US $207 Million, which earned them 68th place on the   2017 DSN Global 100 list.    There is no doubt that they are turning a profit, but we want to know if Lifevantage distributors are turning a profit from the MLM opportunity.

What Does Lifevantage do

Lifevantage describe themselves as a 'science-based nutraceutical company dedicated to helping people achieve healthy living'.  Their flagship product appears to be Protandim, which they say can reduce the effects of aging.  They explain that the antioxidants in this product can help your body on a cellular level.  Along with fighting back the hands of time, healthy cells will also improve your energy levels in the day and your quality of sleep at night.

Lifevantage also produce a large range of other products which look similar to most supplement based mlms.  There's a weight loss range, a cleanser, something for energy, and some cosmetics for those that want to be as beautiful as possible.  What did make Lifevantage stand out is they make a product for dogs.  Petandim allows you to give your best friend the benefits of science-based anti aging supplements.

How do you Make Money with Lifevantage

According to the official Lifevantage opportunity webpage, this is 'The Opportunity of a Lifetime'.  They say they have the tools and training which are part of their 'proven plan', to help you 'get a quick return on your investment, and earn long term residual income'.  This all sounds great but there doesn't seem to be much detail.

To find out more we watched this video explaining the Lifevantage compensation plan:

The 16 minutes of video is an attempt to explain the 2017 Lifevantage Compensation Plan.  We decided that we'd do our part and read through the full document and share our own findings below:

Like the video, the compensation plan starts off explaining that there are 8 ways to earn with Lifevantage.  We see this as an early warning because we've seen a lot of MLMs with overly complicated ways to earn.  Usually the result is that most distributors are losing money. Having said that we'll go through the Livevanatage ways to earn:

1. Retail Sales
You can earn a retail margin from Lifevantage when customers purchase either directly from you or through your Lifevantage website.  We believe that retail sales are your best option to make money in any MLM.  Lifevantage calls retail the 'most obvious way to earn money', but doesn't really tell us much more than that about it.

If you join any network marketing company, it's important to remember that sales are a key part of your business.  If you're not selling product, then you're not making money.  In our opinion, building a retail customer base is critical to making money in MLM

2. Smart Start Bonus
The Smart Start Bonus is designed to reward you for signing on either new preferred customers or new distributors to Lifevantage.  This bonus is paid for the first calendar month after you have enrolled a new customer or distributor to Lifevantage. 

Depending on how much Personal Volume (PV) you have generated, you can earn a smart start bonus of either 30% or 40% on all Lifevantage products purchased by new preferred customers.  You can also earn a smart start bonus if your newly enrolled distributors join with either a silver, gold or platinum pack.

3. Launch Bonus
This is similar to the smart start bonus except it's paid on customers and distributors recruited by others in your downline organization.  Lifevantage call this a 'trickle up' bonus.  There are 6 levels of launch bonus that are paid to the next eligible Lifevantage rank in the upline.   

Depending on your rank, and which package the new distributor buys, you might earn a launch bonus ranging from $2.50 up to $50.00.  To qualify for the launch bonus, you and your customers must buy enough Lifevantage products to  generate at least 200 PV per month.

4. Royalty Commissions
Royalty commissions are the monthly income you can earn from all product sales within your Lifevantage organization.  In order to qualify for more royalties, you need to obtain a higher rank in Lifevantage.  Rank is achieved by recruiting a downline and generating enough product sales to meet the PV and organizational volume (OV) requirements.

The amount of commission which you can earn at each rank, and the qualification criteria is shown in the image below:

Lifevantage proudly tell us that they pay commission of up to 43% on all products purchased within your organization.  The most you can earn per sale is 9%, but it is true that a total of  43% is paid to all the different levels in the MLM.

5. Generational Matching
Once you reach the Lifevantage rank of 'Pro 3' or higher, you will qualify to earn a monthly generational matching bonus.  This amount is calculated based on the royalty commissions earned in your downline.  It is paid on up to 5 levels below you in your organization as shown in the image below:

Lifevantage can pay up to 30% in generational matching bonuses on any royalty commissions earned in your organization.   The video we watched explained that this bonus kept people at the higher levels in Lifevantage motivated to help everyone in their downlines.  By this we assume they mean that this bonus ensures that people in your upline will want you to keep buying product.

6. Elite Bonus Pool
This monthly bonus is only paid to those who have reached the level of Pro 7 or higher with Lifevantage.  Every month Lifevantage will take 4% of all sales made in all organizations in the MLM, and pay this as an Elite Bonus Pool to those who have reached the highest ranks.

The higher up the ranks you go, the more Elite Bonus you can earn.  1% is shared with Pro 7, 8, 9, 10.  Then another 1% is shared with Pro 8, 9 10.  A third 1% is shared with Pro 9, 10.  The final 1% is only shared with the Pro 10 members of Lifevantage.

What we see is that 4% of every dollar you spend on Lifevantage products is funding this bonus.  You are paying an extra 4% so that those at the top of the system can earn this bonus.

7. Achievement Bonus
This bonus is a one time payment made to those who reach the Pro 10 levels with Lifevantage.  The payment can range from $100,000 at the 'master level' to $500,000 at the Presidential level'.

8. Business Centers
If you reach the Lifevantage rank of 'Premier Pro 5', then you will be eligible for your first new business center.  By the time you achieve a rank of Pro 10, you will have been eligible for a total of 4 new business centers.

A new business center allows you to sponsor yourself and start a new Lifevantage business in your own downline.  You can then earn commission at two levels on any sales made under your new business center.  If you strategically place all four new business centers, you could earn on up to 5 different levels from the sales generated by the lowest business center.

Are Lifevantage Distributors Making Money

We had a look at the Lifevantage 2017 US Income Disclosure.  The first thing we noticed was the the following statement. 'There were approximately 63,000 total U.S. Distributors during the period, with approximately 48,500 U.S. Distributors paid in the same period.'  After some simple math, we see that 14,500 or 23.02% of US distributors earned no commission in 2017!

We then see a table showing what was earned by those who did earn any commission in the 12 months to June 2017.  This is shown below:

Once again we did some math and we could see that even at the Pro 5 level the average commissions paid in the 12 months were less than $30,000.  In other words people who put in the time and effort required to reach Premier Pro 5 might have qualified for a new business center, but on average they could make more money if they worked a regular job.

According to the table, 75% of US distributors were paid less than a full time income in the 12 months to June 30 2017.  An additional 23.02% earned nothing at all.  This means that a total of 98.02% of Lifevantage distributors are not earning a full time income.

As a publicly traded company (NASD:LFVN) Lifevantage is required to release their financials to the public. To get an idea of how much Lifevantage distributors are earning globally, we looked at the Lifevantage 2017 4th quarter fiscal results. 

We saw that for the year ending June 30 2017, Lifevantage say they paid a total in commission and incentives of $96.7 Milliion.  They also tell us that globally they ended the year with 64,000 active consultants.  We once more rely on our math skill and find that on average Lifevantage distributors earned $1,510.94 for the year.  

The figures in the financial report include all Lifevantage distributors at all ranks.  While the top 1.98% in the hierarchy might be earning more than $30,000 per year, most are not.  What we can see is that the expected income from the Lifevantage business opportunity is less than $1,511 per year.

Why is it Difficult to Make Money With Lifevantage

We believe that the problem is not unique to Lifevantage.  It is common to any opportunity which uses the MLM business model.   The problem with network marketing is that it's designed to promote and sell products.  It is not designed to help you make money.  Companies use MLM because they can generate a profit for themselves, they do not use it to share the wealth.

The generous compensation plans offered by MLMs are part of the problem.  Lifevantage pays ongoing commissions which add up to a total of 59.9%.  The problem is that these are all included in the 'wholesale price' they charge their distributors.  If you are a new Lifevantage distributor then 59.9% of what you pay will be paid as commission to people above you in the MLM

In their financial report, Lifevantage showed that commission and incentives represented 48.5% of their revenue for the 12 months to June 30 2017.  While it's not the full 59.9% which would be possible if all sales qualified for all commissions, it's still a lot. 

The remaining 51.5% is kept by Lifevantage.  This covers the costs of production and includes their own profit.  This would be the amount traditional companies earned from producing products and selling them to the wholesale market.  The price paid by distributors is close to double the traditional wholesale price.

Is Lifevantage an Illegal Pyramid Scam

Multi-level marketing may look just like a pyramid scam, but it is not illegal  as long as there is a product or service attached.  This means that opportunities such as Lifevantage are legal, but this does not mean that they are ethical.  

MLM creates an environment where there is a danger of over consumption.  People start buying products because they think it's their path to financial freedom.  They are not buying products which they otherwise would have spent money on.

The buying frenzy is intensified by the levels in the compensation plan.  The system is designed so that people all the way up to the top of the pyramid will earn more money if you spend more.  When they 'encourage' you to keep buying product is it because you are on the path to freedom, or is it because your ongoing purchases will make them money?

Can You Build an Organization with LIfevantage

If you want to build a network marketing downline organization, you will need to be constantly recruiting new members.  The videos and other promotional material make it sound as simple as sharing the opportunity with a few friends, then have them do the same.  Theoretically your organization will soon be growing on it's own with you collecting residuals.  In reality building a MLM team is very difficult

As we saw in the Lifevantage financial results, they had 64,000 active distributors at the end of June 2017.  This may sound good, but they also show us that at the end of June 2016, they had 69,000 active distributors.  In other over the 12 months to June 2017, Lifevantage had a decline of 5,000 active distributors.  Even with new recruits, the total number of Lifevantage active distributors shrank by 7.25% in 12 months.

You should expect to experience similar results when trying to build your own Lifevantage organization.  It's possible that in any given year, you won't recruit enough new distributors to replace those who have quit.  Growing your organization will mean you need to recruit enough to keep ahead of the drop out rate.

LIfevantage is not alone in this.  All MLMs that we have looked at so far, suffer from a high attrition rate.  It is quite common for more than half the active distributors to quit in any given year. 

We believe that the high drop out rate is the reason for incentives such as the smart start bonus and the launch bonus.  These are designed to get new members to spend as much as possible as quickly as possible.  They will tell you that buying packs will help you get your business up and running.  You might hear all about 'being coachable', and why you need to 'duplicate' what others have done.  We think that these incentives are designed so that they can make as much money as possible from you before you quit.

Should You Join Lifeventure

If you are looking for an opportunity to supplement or replace your current income, then we suggest you carefully examine all your options before deciding which is best for you.  If you are already a Lifevantage customer, and you love the products and believe you can sell them at full retail price then maybe you can make money with Lifeventure.

If you do decide to join Lifevantage, we would suggest that you only start with the $50 business builder starter kit.  You can then buy products at your own pace to try them out and see which ones you like.  You can even share samples with friends to start building a customer base and have them purchase from your free Lifevantage website.

As we saw in the video, your sponsor will tell you that the $1,250 platinum pack is the best way to join but there's also a $650, Gold pack and a $350 siliver pack.   While you might get some price discounts by buying the packs, we think there's a risk you will be paying for  a lot of products you don't want.

The platinum pack will be promoted as the 'best way to start your business'.  But we think it's the best way for the person who sponsored you to get a $400 smart start bonus. Then all the people in their upline who are also encouraging you to buy a large package might be influenced by their potential fast launch bonuses.  It's important to remember that when you buy product, the people above you in the MLM earn a commission.  They might be trying to help you, but earning commission from you is also a motivating factor.

Our Final Thoughts

Multi-level marketing is a great way to sell products and turn a profit if you are the manufacturer.  If you are a member of the network marketing system, then we believe it is unlikely that you will make money with any MLM.  

We assessed the Lifevantage opportunity using Dr Jon Tayolors 5 Step MLM evaluation. We found that it raised all 5 red flags.  According to Dr Tayolor, this would suggest that your chances of making money with Lifevantage are less than 1%.  

This has been our review of Lifevantage.  These are opinions we formed from reviewing the data that was available to us.  We'd love to hear your thoughts in the comments section below, especially if you can share your experiences with Lifevantage.

For more posts like this, look at our list of mlm reviews. 

WorldVentures is a Texas based travel company which started in 2005. They are a members only program so you need to join before you can book any WorldVentures travel.  Active members  acquire points, which can be used to help them pay for a range of 'DreamTrips' luxury vacations at a 'discounted rate'.  WorldVentures memberships are currently being sold in almost 30 countries by an international network of representatives who have joined their multi-level marketing system.

Here at The Finance Guy, we believe you can't make money with MLM, but in this full review of WorldVentures, we'll give them a chance to prove us wrong.  We will take a look at their business opportunity, and find out if this is a legitimate money making opportunity, or just another MLM.

In 2016, Worldventures reported an annual revenue of US $926.6 Million, which put them in 25th place on the  2017 DSN Global 100 list.  It's good to know that the company is turning a profit, but we want to know how well the members of their MLM are doing

What is Worldventures

The official about Worldventures page describes them as a 'a community of fun, freedom and fulfillment'.  It goes on to explain that if you join their DREAMTRIPS club, you will have access to their 'curated' group vacations to the 'most sought-after locations'.  WorldVentures members also experience the 'transformative power of travel'.  It then talks about the benefits of starting a business and joining a team.

We wanted to know more about the vacations so we looked at the WorldVentures DreamTrips page.  We discovered they are offering 'more than just a vacation', it's a 'dream trip'.  There's a short video on the page with a collection of members filmed in various international locations.  They tell us how they like that the trips are planned for them. 

It's nice that WorldVentures plans trips for you.  Small issue is that the video only showed people standing near recognizable features, such as the Great Wall of China, The Washington Monument, The Sydney Harbour Bridge etc etc.  They also show a collection of generic adventure activities like white water rafting and paragliding.  There's nothing special about these regular vacations. The image below is a sample from the video:

As we can see, this member is speaking to us from some exotic location, possibly the Greek Islands.  When we see video of people in front of a static background, it never looks like it was made with special effects on a home computer.

To get an idea of how easy it might be to create fake travel footage, we decided to send the same member to Egypt.  Using nothing more than our beginners ability with photoshop,  we created the image below:

We only worked with still images, but video software on a home computer could produce similar footage. Even though the video could have been filmed with cheap actors in front of a green screen, we'll give them the benefit of the doubt.  We're willing to assume that these are real members on real DreamTrips vacations.

Ignoring the production quality of the video, we are still struggling to see what's so special about WorldVentures DreamTrips.  The Finance Guy has been to some of the locations shown in the video, and has done white water rafting and other adventurous activities.  All they've done is show us that they 'package' a vacation which we could easily arrange ourselves.

What is WorldVentures DreamTrips

Feeling a little disappointed with the information on the official website, we went to youtube and found a this video:

To save you around 18 minutes, we'll share what we found in the video.  Firstly we were happy to see that the video claims it was made without actors, instead they used WorldVentures members.  After all actors are only playing a role, members want to make money from you joining!

The video talks about a blue 'You Should Be Here!' sign, which they claim has 'gone viral'.  Not sure about you, but this is our first time seeing this 'viral' sign.  They purport that only their members can get those signs for the 'couldn't build it yourself vacations' through WorldVentures. The way to build your WorldVentures business is to share photos with the sign.  Well it appears that they haven't shared enough to reach us yet.

They go on to claim that their experiences are offered 'exclusively to their members', because the 'planning is done for you'.  Not sure about you, but they are sounding a lot like a regular travel agent.  Only difference is that travel agents plan the vacation we ask for rather than something put together by someone else.  

The video refers to their trips as ' one of a kind adventures', yet strangely they are only showing footage of people at regular hotels and resorts doing regular vacation activities.  After this they transition into the types of membership and how like a gym there are monthly fees. Basically you can pay a monthly fee and acquire points toward your next trip.  Wow imagine if there was some other way to put money aside for holidays.  Hey wait a savings account could do that, and you could even custom make your own vacations.

What do you get with DreamTrips

As far as we can see, WorldVentures DreamTrips membership charges a monthly fee for trips you could plan yourself or through a travel agent.   The only benefit we could find was in their price promise shown below:

It's good to know that WorldVentures are confident that their trips are the cheapest.  If you can find the identical trip for cheaper, they'll give you a 100% refund.  That sounds good but maybe it's not.  For starters, would the refund include all the monthly membership fees we paid in order to access this 'exclusive offer'? 

What if we could arrange a trip to the same destination at the same time, with the same activities, but our trip was significantly cheaper? What if we flew on an airline which offered cheaper or more direct flights?   Is it possible we'd choose a cheaper room at the same hotel? We could create our own version of the same vacation at a cheaper cost but it wouldn't be identical so in our opinion, the DreamPrice Promise is worthless.

Another question we are left asking ourselves is how would we be able to find 'the exact same trip' if they are offering 'one of a kind vacations'. Maybe their pre-planned group get aways are less unique than they say they are.

How do you Make Money With WorldVentures

To find out how the WorldVentures business opportunity works, we looked at the 2017 WorldVentures Compensation Plan.  This document explains how independent representatives can become financially free through the power of network marketing and simply sharing the WorldVentures opportunity.

The compensation plan wastes no time telling us that they encourage their representative to share WorldVentures with others.  They refer to this as 'social commerce'.  For us this is an early warning sign.   Endless recruitment is a red flag in Dr. Jon Taylors 5 step MLM evaluation system. He found that 99% of people will lose money in MLMs which encourage constant recruitment.

WorldVentures explain that the advantage of membership is that their DreapTrips, are simpler than booking it yourself online.  Once again, we are struggling to see the value in this service.  In the last 15 years, we've booked almost all our travel online ourselves.  It's really not a difficult or time consuming process.

We then see that WorldVentures pays commission based on a binary compensation system very similar to the one used by USANA.  We have already found that you can't make money with USANA, but maybe WorldVentures is different.

Like almost all MLM's you can not earn commission with WorldVentures unless you 'remain active'.  To do this you need to pay a once off upfront fee, then ongoing monthly fees, which they say covers the cost of business tools, including your very own WorldVentures website, and the back office support.  According to Dr. Taylor, this is known as the pay to play red flag.

It always makes us wonder when see companies charging fees for 'your own website'.  This is something we don't believe actually costs them anything.  All they are really do is giving you your own login and link to their generic marketing website.  It's no different to adding a new account in Gmail.  Does every new account cost Google extra monthly admin fees, or are they just part of how the system is designed?

What Commissions are Paid by WorldVentures

In true network marketing tradition, WorldVentures offers an overly complicated compensation system with several ways to earn.  So far, in the MLMs we've looked at, most representatives don't end up earning much money, but maybe WorlVentures is different.

Direct Commission
This is the equivalent of what other MLMs would call retail commission.  In other words, you can earn a margin by selling memberships directly to new members.  As always we believe that this is your best opportunity to make money with WorldVentures.  However just like all the others we've reviewed, it only gets a cameo mention in the compensation plan.

We did find something rare in the WorldVentures compensation, but rare isn't necessarily good.  We discovered that the weekly commission has an upper limit determined by rank, as shown below:

Monthly Residuals
If you reach the rank of 'Senior Representative', or higher then you will qualify for monthly residuals.  There are all sorts of balancing rules with the binary pyramid, but if you have a big enough downline, you can earn this.  However, once again there is an upper limit on what you can earn as shown below:

To us, these maximum limits don't make sense.  Essentially what they are telling us, is that no matter how much business you generate, they aren't willing to pay more than these maximums. Punishing the top performers is not a good way to run a salesforce! To us it looks like WorldVentures would rather pay themselves than their top salespeople.

There are a few other ways to earn with WorldVentures including 'Personal Sales Bonues', 'Trainingdollars', 'Traveldollars', 'Dreamcar Bonus', and 'Dreamhome bonus'.  The only way a representative can earn any of these is to sell a very substantial amount of DreamTrips memberships.  To access these, you need to first make your way up the hierarchy or WorldVentures MLM ranks. 

How Much Are WorldVentures Representatives Earning

We found a copy of the 2015 WorldVentures Income Disclosure Statement.  If we focus on the paragraph below the table of higher earners, we'll note that: In 2015 77.76% of WorldVentures Representatives earned no commission at all.

If we do some math and add up the first three rows of their table, we see that 21.42% averaged less than $1,300 in commission for 2015.  If we include the 77.76% who earned absolutely nothing, we see that in 2015, only 0.82% of WorldVentures representatives earned more than $25 per week.  For the record, you could make more than double that amount per day if you were to create a blog...

When we look at the significant income, it's a familiar story, 0.26% of representatives are earning a full time income from WorldVentures.  In other words, your chances of earning a full time income with the WorldVentures business opportunity are less than 1 in 384!

Is WorldVentures an Illegal Pyramid Scam

Network marketing companies are legal as long as they have a product or service attached to them.  There is a lot of other legalese terminology, which their lawyers successfully navigate.  What we are trying to say is that despite our opinion that MLMs are not ethical, but they are legal.

Even though they are legal, there is a lot of negative press and warnings about WorldVentures. The Australian press isn't alone in recommending caution with this 'business venture'.  We also found evidence that some members had unhappy experiences with WorldVentures.

Should You Join WorldVentures

WorldVentures has achieved a first!  This is the first time we've reviewed a network marketing company and have been unable to find a reason why you should join.  As far as we can see, you could book all the vacations yourself online, and if make some modifications, so that they're not 'exactly the same', then you'll probably get them at a better price.

If you would prefer not to go the effort of deciding the details of your own trip, then there are still some other options.  For example rather than paying a monthly fee, you might save for your vacations.  Maybe you want a pre-packaged tour to a popular destination with a group of like minded travelers.  If this is you then perhaps WorldVentures can be of value.  Then again, you might be better off saving your money and going on a Contiki Tour.

If WorldVentures wanted to offer added value to their DreamTrips, then they could put effort into offer truely unique experiences.  Rather than offering cut 'n' paste trips, they might want to try something different.  Being different would make them unique, and while it might not appeal to all, it would add value to a niche market.  We think Worldventures could learn a lot from the epic tours offered by the Thirsty Swagman.

As always this review is just our opinion.  Having said that, it is the opinion of someone who's used the internet to book some pretty amazing journeys.  It might be fun to join a group and go to an exotic location at the time they want you to go and stay at the hotel they book.  We'd love to hear your opinions in the comments section below, especially if you can share your experiences with WorldVentures

For more posts like this, look at our list of mlm reviews. 

Legalshield is an Oklahoma based network marketing company which sells pre-paid legal services.  The company was started in 1972, under the name 'Sportman's Motor Club.  In 1976 they changed their name to 'Pre-Paid Legal Services', and in 2011 it became known as Legalshield

Legalshield offers their services through a network of legal professionals across the USA and Canada.  Membership plans are promoted and sold by associates in their multi-level marketing system.  All members can become 'associates' and earn commission by promoting Legalshield plans to new members.

We believe that you can't make money with MLM, but we'll give them a chance to prove us wrong. In this full review of Legalshield. We'll find out if this is a legitimate money making opportunity, or just another network marketing company.

What does Legalshield do

Legalshield's goal is to provide affordable legal care, for any situation, to all members.  The concept seems simple enough.  You pay a low monthly membership fee, and in return, get access to the legal assistance that could potentially cost several thousand dollars.

The Legalshield website explains that they cover issues related to;
Landlord / Tenant
Consurmer Finance
Traffic
Estate Planning
Real Estate
Employment
Collection
Family Law
Civil Litigation
Criminal

With personal plans starting at $17.95 per month, and small business plans at $39 a month, it certainly appears to be fairly extensive legal coverage!  There's also identity theft plans starting at $9.95 per month.  For just a few extra dollars per month, all plans can be upgraded to cover you and your loved ones.

Legalsheild is building a 'community of coverage' with their network of lawyers from all over the US and Canada.  This allows them to provide a local service no matter where you are.  Legalshield is keeping up with the times and also offers mobile apps for both iphone and Android, so that you can access their services at the touch of your screen.

How do you Make Money With Legalshield

We looked at the Legalshield opportunity, and found out that you can achieve success in four easy steps:
1. Become a Member - Buy a Legalshield membership for yourself
2. Sign up as an associate -  Pay at least $99 and agree to be part of the MLM network
3. Sell to others - Get other people to join as members and associates
4. Get rewarded - Relax while the network marketing system makes you financially free.

The Legalshield compensation page, explains that you can earn money from personal sales and from building a team.  If your team gets large enough, then you'll eventually have residual income and will qualify for the 'performance club' which gives you additional riches.

We also looked at the four page Legalshield compensation plan.  This compensation plan is definitely the most vague of all the MLMs we've looked at so far.  Legalshield appear to have done their best to only provide minimal information. The lack of detail could be because they are lawyers and only give the legal minimum, or it could be that they don't want us to see how bad the opportunity really is.

Based on the limited information in their compensation plan, we can see that Legalshield is very similar to most network marketing companies.  You can earn commission for direct sales or from sales made by others you have recruited to the system.  The amount you can earn per sale increases as you grow your team and advance through the MLM ranks.  

When you first sign up as as 'associate' with Legalshield, you can earn $65.16 for direct sales and $13.04 override on sales made by those in your downline.  If you reach the top rank of 'Executive Director', then you will earn $182.46 for direct sales and up to $117.30 override from sales made in your downline.

How Much are People Making With Legalshield

We found a copy of the 2015 Legalshield Income Disclosure.  The first thing we see is that only 2.5% of members are active associates.  This could be a good sign, after all that would suggest that 97.5% of the members are retail customers and not part of the MLM structure. It could also mean that a large number of associates drop out of the MLM but are still members.

Legalshield has chosen to present the data in a rather unusual format. They have shown us earnings based on how many years associates have been with Legalshield, rather than by what rank they have reached.  Once again we assume that they have provided what is legally required, but could have chosen to present the data in a way that makes them look as good as possible.

The most important point we found in this document is that in 2015 83% of all Legalshield associates earned less than $1,000.  In other words, only 1 in 6 Legalshield associates earned more than $20 a week.

Let's not forget that income is not the same as profit.  As we saw in the compensation plan,  step 1 is to become a member, and that means paying monthly fees.  If we include the cost of Legalshield membership, and other costs of running and promoting your 'own business', we'd expect to find that most Legalshield associates are losing money.

How is Legalshield being Promoted

To get an idea of how Legalshield is being promoted, we looked at an online copy of the Legalsheild business opportunity presentation.  This 45 page slide show is designed to recruit new associates to the Legalshield MLM.  This gave us some insights into how the business opportunity is being presented to new recruits.

The recruitment presentation tells us that Legalshield can teach us 'life-transforming skills', it hen goes on to tell us that Legalshield has a strong rating with Oklahoma business bureau. They also tell us that they have 5 Stars with Consumer Affairs.  It's true, the rating is 5 stars, but when we read the comments, we saw that all the negative comments had been removed by Legalshield.  It's almost as if they were using their network of lawyers to protect their image!

Next we see statistics stating that you are 'almost three times more likely to be in court than you are to be hospitalized'.   We feel that this might be a bit misleading, think about that for a moment.   When is the last time you or someone you know went to either court or was in hospital.  If you and your friends are anything like ours, you'll be able to recall a lot more hospitalizations than court visits.

While there could be more court cases than hospitalizations, a large portion of them occur at the corporate level and don't necessarily involve individuals.  We can't see specific details of the data collected for this statistic.  It's possible that Legalshield presented the statistics in a way that advertised a need for their services.

We then see a long list of services provided by Legalshield, all with the small print disclaimer, telling us that exclusions and limitations apply.  The presentation then shows that paying $20 per month for Legalshield can help you avoid paying $250 per hour for a lawyer.  For an extra $19.90 per month, you can also get ID shield to gain access to legal services related to identity theft.  When I think of all the fees I've never paid to lawyers over my life, I would rather save the $39.90 a month. 

Will Legalshield Cover All Your Legal Needs

As we saw in the presentation of the business opportunity, Legalshield does seem to offer a fairly extensive range of services.  We looked at the Legalshield plan details for California, and found that the cover might not be as extensive as we'd hope.  For example letters and phone calls made on your behalf are available 'at the discretion of the Provider Lawyer'. In other words it's an optional service for them.  They can decide not to do this for you.

We also noticed that the contract and document review service is limited to 15 pages per document.  Most contracts we've looked at over the years have been well over 15 pages.  Having only the first 15 pages reviewed might give us a partial idea, but we'd miss out on all the important information contained from pages 16 onward.

We found more details in a sample version of the Legalshield services agreement.  Under trial defense, we see that Legalshield will provide a fixed number of hours of service per year.  This would help if we have to appear in court.  However when we look at the list of exclusions, once again, the cover is less comprehensive than we might have hoped.

Criminal charges are not covered by Legalshield, neither are cases involving medications (even if prescribed).  It also appears that most family matters such as divorce and child custody etc are also not covered.  You might be more likely to go to court than to hospital, but to us it looks like some of the most likely reasons to go to court are not fully covered by Legalshield.

It does appear that you can still use Legalshield for these excluded matters, but instead of full coverage, you will get a 25% discount from their preferred provider.  Once again this is provided subject to their own judgment, and does not include an contingency matters.  The 25% discount also applies to the pages in documents which aren't included in the first 15.  

To us Legalshield looks more like discounted legal services than full pre-paid legal cover.  Having said that, a 25% discount could make the membership worthwhile.  The only concern we'd have is that there is no choice of attorney.  We have have to use the designated providers through Legalshield.  In some matters we might prefer a different lawyer who is more specialized in whatever it is that we need.  Another issue in regards to the pricing.  If we had a simple matter, we might be able to negotiate a better deal than the 25% discount to the full price of the designated providers.

Should You Join Legalshield

If you think that the services they offer are worthwhile and you are happy to only use the legal providers they offer, then maybe Legalshield is right for you.  If you are joining because you are interested in the business opportunity and want to supplement or replace your income, then we suggest you do some very thorough research of all your options before making a decision.   

As we have seen from their own income disclosure, most Legalshield associates are not making much money.  Like most MLMs we believe you could do better if you put the same time and effort into something else.  Despite the promises of financial freedom, less than 1% of people who join MLM will ever make a significant income.

This has been our opinion on Legalshield, and whether or not you can make money with them.  We'd love to hear from you in the comments section below, specially if you can share your experiences with Legalshield.

For more posts like this, look at our list of mlm reviews. 

This review of Melaleuca comes at the request of one of our readers.  Based on our research so far, we believe that you can't make money with MLM.  That being said, we'll still give you a full Melaleuca review.  We want to know if this is an opportunity for financial freedom, or just another network marketing company.

Melaleuca first launched in 1985, out of Idaho.  They now have annual sales of US $1.75 Billion from over 400 products.  Melaleuca report that they have purchases from over 1 million customers from all over the world every month.  There is no doubt that the company is very profitable.  What we want to know is:  Are people making money from network marketing with Melaleuca

What Does Melaleuca Do

The range of Melaleuca products includes nutrition, personal care, home cleaning and cosmetics.  All Melaleuca products are made from natural ingredients and do not contain harmful chemicals.  This means that they are better for both your health and for the environment.

We like that the products are natural and do not cause any harm.  An online review of Melaleuca products, gave them an average score of 4.4 / 10.  The score is based on consumer feedback, and does not include much detail.   We assume that part of the reason for the  less than impressive score, is because of the price.  Our MLM research, suggests that you could probably find similar products at regular stores for a fraction of the price.

How Do You Make Money With Melaleuca

To find out how you earn money, we looked at the Melaleuca compensation plan.  This document explains how members of the MLM can earn commission.  Here we see that Melaleuca's mission, is to 'enhance lives', by 'helping people reach their goals'.  

The compensation plan describes Melaleuca as an 'opportunity for the average person to start a business with virtually no risk and unlimited upside potential'.  They go on to tell us that it's a 'proven system where people with virtually no financial investment', can dramatically improve their finances.  All they have to do is refer customers to Melaleuca.

We were initially impressed by the fact that Melaleuca has a focus on sales to customers.  We believe that the only way to make money from any MLM, is to build a substantial retail customer base.  We later found out that everyone signs up as a customer.  Customer is the first level of enrollment in the Melaleuca business opportunity. This give us the impression that Melaleuca wants to turn every customer into a recruit

 Melaleuca call their MLM members 'customers', not distributors.  Everyone joins as a customer, then has the opportunity to refer others and build a business.  In Melaleuca there is no difference between customers and members of the MLM.

The compensation plan claims that you'll never have to sell products because 'all products are sold directly by Melaleuca'.  We think this is only partially correct.  It is true that customers will place orders directly with Melaleuca.  So you won't have to process orders or deliver products.  Having said that, you have to find customers and convince them to buy products.

You might not need to physically deliver the products to customers, but you still need to make sure that they make the purchase through your link and join your team. So they might get away with saying that you’re not doing sales, but you can’t make money with Melaleuca unless you promote your referral link.

How much Commission does Melaleuca Pay

Like most MLMs the commission you earn with Melaleuca is calculated from the 'product points', from your customers.  Remember that when they say ‘customer’, what they mean is ‘recruit’. What they should be saying is that product points come from your MLM downline

Every Melaleuca product has a point value assigned to it.  When customers you have referred buy product, you earn commission based on the point value of what they have ordered.  To qualify for commission you need to personally order at least 29 points worth of product per month. So while you might be looking for a business opportunity, you are also an obligatory customer.

The product points means that you will get the same commission regardless of what the customer pays.  For example customers who sign up for a monthly supply of Melaleuca will qualify for the 'preferred member price'.  Even though they are getting a discount, your commission will remain the same.  This can be seen in the US Melaleuca price list.

The amount of commission you are paid is calculated from a combination of the product points purchased and the number of customers you have personally enrolled.  The amount you can earn and the customers/members needed are shown in the table below:

You can also earn commission from customers enrolled by other recruits in your Melaleuca MLM marketing organization.  You can earn 7% commission on the points ordered by customers in your downline.  Depending on your 'status' you can earn this commission on between 2 and 7 generations.

In true network marketing fashion, there is also a variety of other ways to earn with Melaleuca.  These include;
Advancement Bonuses - Paid when you qualify for a new status.  This doubles with the pacesetter bonus if you achieve rank advancement fast enough
Mentoring Bonus - When people in your marketing organization advance, and get paid the advancement bonus, you get a mentoring bonus.
Leadership Growth Bonus - Only available at the ranks of 'Senior Director' and above.  Paid based on leadership points
Monthly Car Bonus - Senior directors and above can have a car leased for them by Melaleuca

How Much are People Earning With Melaleuca

We looked at the 2016 Melaleuca Annual Income Statistics.  We were not surprised to find that very few people are earning a substantial income from the Melaleuca business opportunity. The table below summarizes the commissions paid to each rank by Melaleuca in 2016:

As we can see from the above table, in 2016  99.58% of 'customers' earned less than $32,000 in commission from Melaleuca.  In other words only 0.42%, or 1 in 238 earned a full time income from Melaleuca.

Like all MLMs, Melaleuca explains these results with excuses.  First is the claim that 'the majority who join are only interested in being customers',  then there's the 'very few decide to build a business'.  These statements could be true, but they could also be an attempt to spin the truth and make the Maleleuca opportunity seem better than it really is.

For the sake of the review, we'll give Melaleuca the benefit of the doubt, and we are talking about a serious level of doubt!  We'll assume that 66% of active members in 2016 only joined to be customers.  With this adjustment, we now see that of those who joined Melaleuca to be more than just customers, only 1.23% earned a full time income.

Let's go a step further and believe that only the 12% who make it to the director levels are building a business.  Now things really improve as we can see that 3.5% of those who choose to build a business are earning a full time income.  We see that only 1 in 28 people are earning significant income from the proven system with virtually no risk and unlimited upside potential.

Why is it Difficult to Make Money With Melaleuca

One of the main reasons it is difficult to make money with any MLM is that they claim you can be successful with 'duplication'.  Which is their way of telling you to follow their instructions without asking questions.  The problem is that it simply does not work.

If you join Melaleuca they'll tell you how much money you can earn by recruiting customers to buy through your personal link.  The internet makes is so easy that anyone can do it.  That means that all the existing Melaleuca members in the world can also share their own online link with all of your customers. 

When you try to sell Melaleuca, you are competing with the 'more than 1 million', existing customers who have already joined before you and also have their own referral links.  Let's not forget that you are also competing with the corporate website.  We discovered that it is possible to sign up with Melaleuca directly.  We assume that when customers join directly, they are placed in the MLM downlines of top Melaleuca performers.  This is part of the 'incentives' which are only paid to those near the top of the pyramid.

Another challenge is that the products are overpriced.  The reason for this is because all those generous commissions from the compensation plan are included in the price you pay for the products.

If we look at the 'preferred prices' of Melaleuca products, we can see that the relationship between price and product points is not as straight forward as we'd hope it would be. This is shown in the table below:

As we can see from our very limited sample, there is some difference in the points per dollar from different Melaleuca products.  This means that the commission you earn will be influenced by which products your 'customers' order.  We adjusted the table to show the maximum commissions:

We looked at the 2017 US Melaleuca price list, and found that the adjusted personal customer commissions and organization commissions varied from product to product.  We found it interesting that the commission earned on the price paid is always less than the rate paid on the points.  Melaleuca says they'll pay up to 20% and 7% commissions, but this is based on points, not dollars.  This could be an honest mistake, or another attempt to make the Melaleuca opportunity look better than it really is

If we look at the commissions paid on Melaleuca products, we can see that there is a substantial mark up to finance the mlm compensation plan.  Keep in mind that there are 7 layers of organizational commission payable (totaling 49%), and customer commissions of up to 20%.  

These mark ups are based on product points, but they still represent a substantial portion of the 'preferred' price you pay for Melaleuca products.  This is shown below:

If you join Melaleuca and buy products at the 'preferred' price, then between 36% and 53% of the price you pay will go directly to the people in your upline.   This includes the person who directly introduced you to Melaleuca, and 7 levels of directors above them.  This does not include costs of production, Melaleuca profit, or any other incentives paid to top MLM members

MLMs use their compensation plans to lure members in with the dreams of financial freedom.  Unfortunately only a small fraction who join will ever climb the pyramid and earn all these incentives.  For everyone else, they are just an added cost.  We have found evidence that people have quit Melaleuca because of the inflated prices

 Is Melaleuca An Illegal Pyramid Scam

Even though MLMs closely resemble pyramid schemes, they are not illegal. The reason dates back to the 1979 case of Amway vs the FTC. After 4 years in court Amway was found to be offering a business opportunity, rather than a pyramid scam. The technicalities came down to wording in their paperwork. One example requires consultants to make retail sales.

The Amway ruling effectively opened the doors for all other MLMs to operate within the law. However we should remember that being legal doesn’t make it ethical. If you knew that less than 1% of people had a chance of generating a real income, would you feel comfortable recruiting new consultants?

Another issue, is that even though these rules may be in the paperwork, they are difficult to enforce. For example, several people in MLMs have said that they have cupboards full of product. This is because of the minimum monthly purchases they need to make to remain active in the system. Even though stockpiling is against the rules, there is no way for the company to monitor it.

Should You Join Melaleuca

We believe that Melaleuca products are free from harmful ingredients, and we applaud them for this.  Having said that, Melaleuca is not the only ethically responsible company in the industry.  Before you join Melaleuca, you should try some of their products and compare them to other environmentally friendly products being sold by competitors.

For years the Finance house has been using cleaning products by a company called Earth Choice.  In Australia these products are sold on supermarket shelves and are priced in line with their chemical based competitors.  Like all products, they even go on special from time to time so they can be cheaper than the harmful alternatives.  Being happy with these products, we have no incentive to change.

If you find that Melaleuca is better quality or better value than similar products, then maybe you can make money selling Melaleuca.  Remember at the end of the day you won't make money unless you make sales.  If you find that other products on the market offer the same environmental benefits but at a better price, then it's quite likely you'll have a hard time selling the products.  It's also important to remember that there are already over 1 million people trying to sell Melaleuca, you will be just another one.

Our Final Say

Network marketing is a very profitable way for companies to sell products.  If you are considering joining Melaleuca, or any MLM, just remember that their goal is to sell you products, not to make you rich.  

We believe that that MLM is business model designed to turn you into a customer.  It is not designed to offer you a business opportunity.  This opinion is based, in part, from research by Dr Jon Taylor, of MLM The Truth.  He found that less than 1% of people who join any MLM will turn a profit.

These have been our opinions of Melaleuca, we'd love to hear about yours in the comments section below.  Please share your thoughts, especially if you have personal experiences with Melaleuca

For more posts like this, look at our list of mlm reviews. 

Forever Living Products (FLP) was launched in 1978 out of Scottsdale Arizona.  Today it is an international company and is one of the world's largest manufacturers and distributors of Aloe Vera products.  There is now a wide range of FLP products which includes weight loss, nutrition, Bee products, essential oils and more.

Forever living sell their products through network marketing.  They have a network of around 9.3 Million 'business owners' (FBOs) selling their products in over 150 countries. With annual revenue of over US $2.5 Billion, there is no doubt that the company is very profitable.

But we aren't here to review how profitable the company is. We want to know if everyday people can make money from their business opportunity.  We believe you can't make money with network marketing.  However we're happy to be proven wrong in this full review of Forever Living Products.

What Is the Forever Living Business Opportunity

According to the Forever Living mareketing plan, making money as an FBO is simple.  All you have to do is share the products and share the business opportunity. If you do this, you will make enough money to achieve 'financial freedom for life'.  They even offer a simple process for guaranteed success with FLP

The information on the FLP website is a bit vague.  We managed to find more detail in their 12 page explanation of the Forever Living business opportunity, or as they call it 'the greatest opportunity in the world'. We've heard others make that claim then turn out to be just another MLM.

According to the business opportunity, multi-level marketing 'allows you to achieve tremendous financial gains'.   All you need to do is recruit one person per month, and have them 'duplicate' the process.  In a little over a year you'd have a network of over 4,000 FBOs.  The commissions from their Forever Living purchases will give you 'financial rewards that you've never before dreamed possible'.

They imply that this opportunity is suitable for people with:
Money Problems
Little or no Formal Education
Lack Opportunities
Unhappy at Work

While helping these people may seem noble, we see this as a red flag!  Forever Living is targeting people who are quite possibly in financial distress, and probably have below average financial literacy.  In our opinion, they are focusing on people who would believe their claims without doing further research

If you are are reading this post, then you are doing research, so we hope that means that you are not the type who will sign up to become an FBO

  How do you Make Money With Forever Living

Like all MLMs, Forever Living has a complex compensation plan.  There are 10 ways to earn with FLP.  As you order more product and sponsor more people, you can qualify for more income.  This is explained in the video below:

The first thing we notice is that there are 2 ways to make money with Forever Living.
1. You can sell to everyone you know, then sell to strangers
2. You can build a ‘downline’

‘Building a dowline’, is MLM speak for sponsoring others to become Forever Living FBOs. If you start doing this, then you can earn commission from your own sales as well as sales from all the FBOs in your downline.

Your downline isn’t just limited to the people you sponsor, it also includes any FBOs they sponsor. In theory you can earn commission from friends of friends of friends who you’ve never even met!

The video tells us that at this point your business will be on autopilot, but we think that in reality building a downline is much more difficult. One thing the promotional presentations never mention, is that all MLMs have an extremely high rate of attrition. This means that it is normal to expect more than half your downline to quit every year.

If you are very good at recruiting, and can grow your Forever Living downline faster than the FBOs quit, then you might climb the ranks. The video explains that the bigger your downline, (and the more profit they order), the more you can earn. The commissions available at each rank are shown in the diagram below:

Each Forever Living product you buy will have a specific Case Credit (CC) value.  The video explains that 1 CC is equal to around US $140 worth of FLP products at wholesale price. To achieve each rank with Forever Living you, and your downline, will need to generate the qualifying CC.

For example, when you first join, you will be able to buy products at 15% below the Suggested Retail Price (SRP).  If you purchase 2 CCs worth of product within 60 days, then you can qualify for wholesale pricing.  Wholesale prices are 30% below the SRP.  

To qualify for any commission, you must remain active and personally order at least 1 CC of product per month.  In other words you can't get paid unless you spend US $140 per month

Once you are 'wholesale qualified', you can earn 30% retail commission when customers order from your Forever Living FBO website.  You will also qualify for personal bonuses of 5-18%.  All you have to do is find customers!

To find out more detailed information, we looked at a copy of the Forever Living compensation plan. This document explains all the ways FBOs can earn income, as well as what they need to do to earn it.

We learned that Forever Living pays differential commission.  For example if you qualify for the full 48% to SRP discount, but someone you have sponsored only qualifies for 35%, then you get the 13% difference!

The earnings potential doesn't end at the 48% to SRP commissions.  If you continue to grow your FLP network and reach the level of 'manager', you will qualify for leadership bonuses.

Leadership bonuses are paid on any FBO's who reach the manager level in your down line.  These bonuses are paid on 3 generations of managers. You will earn 6% on 1st generation, 3% on 2nd and 2% on 3rd generation.  

If you continue to grow your Forever Living business, then you might qualify for some of the incentives which are reserved for the top performers.  These include:
Car Plan
Profit Sharing
Fully Paid Vacations
'Special Promotions'

Can You Make Money With Forever Living

Before you join Forever Living, you should make an effort to read the Candice Kiddle Forever Living experience.  Like millions of others, she signed up with the hopes of solving her financial problems, but it didn't take long for the dreams to turn into nightmares.

Candice joined as a single mum lured in by the possibility of earning some extra cash using nothing more than the internet.  Within a few months she realised that she'd made a horrible mistake. This was not her path to financial freedom. With Forever Living, she struggled to break even and was damaging friendships.

Candice's story is far from an isolated case, in fact there are some which are claiming that Forever Living is a Scam!

We applied Dr Jon Tayolors 5 Step MLM evaluation to Forever Living, and found that it raises all 5 red flags.  This would suggest that new FBOs have a less than 1% chance of turning a profit with Forever Living.   We'll look at each of the flags below:

Red Flag 1 - Constant Recruitment of New Members
As we saw from the FLP marketing plan, you will achieve tremendous gains if you build a team that 'duplicates' your regular recruitment activities.

Red Flag 2 - Promotion Through Recruitment
Your success in FLP is linked to the CC volume generated by you and those you recruit.  You can't reach the higher management ranks unless you have a large downline team

Red Flag 3 - Pay to Play
If you don't buy 100 cc (US $140) worth of product per month, then you won't get paid any commission.  The 'remain active' requirement is a common strategy used by MLMs to ensure that you keep buying product even if you don't want to

Red Flag 4 - Most of the Rewards go to your upline
As we saw from the compensation plan video, there is a total of 59% of commissions included in the retail price of Forever Living products. This does not include any of the additional benefits paid to high performers such as cars, luxury holidays, and more.

Red Flag 5 - More than 5 levels in the payout plan
Forever Living has done their best to be as vague as possible with the information we can see. However based on the depth of leadership bonuses paid, we are confident that they pay commission to more than 5 levels

How Good are Forever Living Products

The Forever Living business opportunity explains that the products 'bring the remarkable properties of Aloe to the whole body'.  It goes on to tell us that the 'health properties of aloe have been known for centuries', however the medical and nutritional industries ignored aloe.  FLP credit themselves with reintroducing Aloe to the world.  

On the Forever Living website, they tell us that aloe is the 'lifeblood of the company'.  It goes on to describe the 'magically soothing abilities' it provides, along with other 'proven health benefits'.

Forever Living does make good quality aloe products, and there are many claims about the  benefits of aloe vera.  FLP is making good quality products, but could be over priced. One review  of FLP products found that they were no different to cheaper products offered by their competitors.

A FLP review by one more cup of coffee, had similar findings.  They explain that the products are good, but are too expensive.  They go on to note that the business opportunity will turn you into an 'annoying aloe' person.  

Is Aloe Vera Really Good For You

A study by the University of Maryland found that Aloe Vera is useful for treating skin conditions.  They do not recommend oral use because if ingested, Aloe Vera can cause severe side effects.  They go on to note that there is insufficient proof that Aloe Vera can help conditions such as diabetes

Another study by the National Centre for Integrative and Complimentary Health, had similar findings.  They were able to isolate chemicals in the plant which were responsible for causing intestinal tumors.  Fortunately these chemicals are already removed as part of the extraction process.  The NCICH study echoed the findings from Maryland.  They found that Aloe Vera is a laxative and can be helpful in treating skin conditions, but there is no scientific evidence that Aloe Vera is helpful for any of the other purposes it is used for.

Is Forever Living an Illegal Pyramid Scam

Even though they closely resemble a pyramid system, MLMs are legal as long as there are products or services attached to them.  This does not mean that network marketing is an ethical way to sell products.  An investigative reporter in Sweden recorded her experiences from a Forever Living recruitment seminar.  She learned about using social media to share the 'Forever Living lifestyle'.

The presentation taught them about 'relationship capital' and how to see all your friends and family as 'opportunities for sales'.  There was even advice on how to promote the products without personally breaking the pharmaceutical laws.  Forever Living has been warned by the Swedish Medicines Agency that FBOs have made false claims about the health benefits of FLP products.

This would explain why Forever Living speaks vaguely of the 'magical' and 'proven benefits' of aloe, but doesn't really give us much detail.  It seems that most of the positive benefits of aloe are being shared by enthusiastic FBOs who are eager to make sales.  In their quest for commissions, they may overlook that fact that there is no scientific evidence to support their claims.

Should You Join Forever Living

Before you sign up for Forever Living, or any MLM, we recommend that you do thorough research.  Make sure that you try the products yourself and compare them to competitors.  Try and find independent information about the products.  Remember active members will earn commission if you join.  Their incentive is make money, not to help you.

As we have seen there are lots of promises made about Forever Living products.  There is also no shortage of promises about the financial success you can achieve as an FBO.  The problem is that we have not found any evidence that either the products or the business opportunity actually work as promised.

Final Thoughts

There's no such thing as a 'secret to success'.  We don't believe that you can make money by simply 'duplicating' what others have done.  No matter how successful someone has been, there is no guarantee that you will achieve any results even if you follow every step they took.

In our opinion, it is unlikely that you will make money from network marketing.  The main reason is because of saturation.  As more members join the system, they will be competing with existing members to make sales.  The internet makes it easy for you to reach people all over the world.  Unfortunately this also means that all the other Forever Living FBOs can also reach your target market.  Unless you are doing something unique, it's unlikely that you will make significant sales or generate any profit.

MLM is a structure designed to sell you products.  It's not designed as a franchise business opportunity.  The company doesn't care how many members join, to them it just means more products are being bought.  These are just our opinions, we'd love to hear what you think.  Let us know what you think in the comments section below, especially if you can share your experience with Forever Living

For more posts like this, have a look at our list of mlm reviews.  If there’s a MLM we haven’t reviewed yet, then let us know in the comments section and we’ll add it to our list.

One of our readers recently asked us to look at a MLM which has just arrived in Australia.  Rodan + Fields is the collaboration of dermatologists Katie Rodan and Kathy Fields.   In 1995, the pair formed a San Francisco based company which found early success with their proactive solutions acne treatment.  In 2002 they launched the Rodan + Fields brand of high end cosmetics.  

Despite being purchased and promoted by the cosmetics power house Estee Lauder, the Rodan + Fields brand failed to find commercial success.  In 2007, the doctors purchased their company back from Estee Lauder and converted it to a multi-level marketing company.  

By 2016 Rodan + Fields had just under 287,000 consultants in their growing international network marketing system.  Here at The Finance Guy, we believe that you can't make money with MLM, but we'll give Rodan + Fields the chance to prove us wrong! In our full streetonomic review of Rodan +Fields, we'll find out if this is a good business opportunity, or just another MLM money trap.

What Does Rodan + Fields Do

Rodan + Fields produce a wide range of skin care products, which according to the internet, are of very high quality.  We are not surprised that Rodan + Fields produces top quality products.  After all they were developed by a pair of Stanford University qualified dermatologists.

In 2014 cosmetics was a US $460 Billion global industry.  By 2020, it is expected that there will be a global demand for cosmetics of US $675 Billion.  There is no doubt that this is a growth industry and that money is being spent.

How Do You Make Money With Rodan + Fields

According to the  Rodan + Fields website,  this is a 'life-changing' business opportunity.  You will have the ability to achieve financial freedom while working your own hours.  But why let us explain it..we watched a video made by the co-founders

As expected, their video reminds us that they are dermatologists, and that Proactiv was a very successful product.  Based on this we are given the impression that this new venture is bound to succeed.  Keep in mind Rodan + Fields is not Proactiv Solutions, and Stanford Med does not teach business skills.

To get a better idea of how you can achieve life-changing financial freedom, we looked at the Rodan + Fields Compensation Plan.  This document explains precisely what you need to do in order to make money from the business opportunity.  We discovered that, like most MLMs, making money is more complicated than you might expect it to be.  There are 5 ways to earn with Rodan + Fields:

1. Retail Profit
You can earn a retail margin from selling Rodan + Fields products to customers.  Sales can be made in person or over the internet (as long as they purchase using your personal R+F web link).  You can earn up to 33% from one off sales and up to 16% from 'preferred customers' who sign up to receive a monthly supply of Rodan + Fields products.

2. Consultant Commissions
In order to qualify for this payment, you will need to meet the monthly quota of 100 points of 'qualifying volume' (QV) on your Rodan + Fields consultant account.  Rodan+ Fields sometimes calls it Sales Volume (SV), Commissionable Volume (CV), or Personally Sponsored Qualifying Volume (PSQV).  

Regardless of what they call it, the volume is essentially the same thing.  It's the amount of product which you and your team need to buy before you qualify for compensation.  Network marketing companies use these point systems as a way to standardize their qualifying quotas in a global market.  

No matter where you live, or what the price is in your local currency, the same products will have the same point value everywhere in the world.  Here is an example of the 2017 U.S Rodan + Fields Product Price & Volume List

In order to qualify for consultant commissions, you need to remain active.  To do this you need to sell 100 points worth of product through your Consultant Account every month.  Active consultants can earn commission of 10% from any products bought by consultants or customers who are on their 'L1'.  

In Rodan + Fields, L1 is the first line of referrals. It includes any members who you recruit to Rodan + Fields as either consultants, or as customers.

3. Personal Team Commissions
To earn team commissions, you need to first qualify as an Executive Consultant with Rodan + Fields.  To do this you will need to remain active and have your team generate 600 points of Personally Sponsored Qualifying Volume (PSQV).  This can come from either preferred customers or consultants you have personally sponsored.  The points earned by consultants you sponsor will include any volume from their retail sales 

As an executive consultant you will earn a team commission of 5% on all the points generated by your team.  Your team includes all the consultants and preferred customers you have enrolled, and all the retail sales made by consultants you have recruited.  Rodan + Fields refers to this as your L2 points.

4. Generation Commissions
Once you have reached the level of Executive Consultant and one of the people you sponsored also reaches this level, then you will become a 'Level 1 Executive Consultant'.  This will entitle you to earn a 5% commission on 'Generation 1' in your downline.

You can continue to increase in levels as more consultants you have sponsored reach the Executive Consultant rank.  Once you have 8 Executive Consultants in your personal team, you will become a Level 5 Executive consultant.  At Level 5, you can earn 5% commissions from 5 generations in your downline.

The earnings potential doesn't end there.  If you continue to grow your team you can qualify as an RFX Executive Consultant and earn a 2.5% commission from the 6th generation in your downline   To qualify for this, you will need 15 Executive consultants in your team and 5 of them need to achieve the title of 'Level 5 Executive Consultant'

5.  Performance Bonuses
At different times during your Rodan + Fields journey, you may qualify for additional incentives.  These may range from car incentives to small cash bonuses, and many other non cash 'lifestyle rewards'.

Are Rodan + Fields Consultants Making Money

To find out how much consultants are earning, we looked at the 2016 Rodan + Fields Income Disclosure Statement.  Like most mlm income disclosures it starts with a bit of marketing and explains that their goal is 'help people create life-changing opportunities'. They also purport that their products and business are suitable for all people no matter what their age, sex, or background.

One thing we liked about Rodan + Fields, is that their income disclosure includes retail profit margins earned by consultants.  This is because the customers place orders online and Rodan+ Fields credits the appropriate consultant with the retail commission.

In 2016 Rodan + Fields had 286,709 consultants enrolled in their business opportunity.  Of these 161,361 or 56.28% received at least one commission payment in 2016.  The remaining 125,348 or 43.72%, earned no commission at all from Rodan + Fields.  

The income earned by Rodan + Fields Consultants in 2016 is summarized in the table below:

As we can see, only 2.17% of all Rodan + Fields Consultants earned more than $10,000 in 2016. That means that only 1 in 50 Consultants made more than $200 per week from this 'life-changing opportunity'.

If we look at those who are making money from Rodan + Fields, we see that only 0.29% are earning over $50,000.  In 2016 99.71% of Rodan + Fields Consultants earned less than a full time income from their business opportunity.  Your chances of replacing the income from your normal job are 1 in 345

Let's not forget the commissions paid do not include expenses.  Consultants will need to spend time and money building and promoting their Rodan + Fields network.  Many of them will also need to spend their own money in order to keep up with the 100 points per month in required product volume.  If we included expenses, we'd find that most Rodan + Fields consultants are losing money

The income disclosure conveniently only shows data for those who remained part of Rodan and Fields for the year. If they were to include all the consultants who quit during 2016, then we believe the results would be much worse.

After writing this review, we checked back in and did a separate write up on the 2019 Rodan and Fields Income Disclosure. It came as no surprise that the results have not improved. 99.45% of Rodan and Fields consultants are earning less than a full time income.

It’s possible that this was just a bad year, so in an update, we decided to have a look at the 2018 Rodan and Fields Income Disclosure. The summary of earnings is shown below:

As we can see from the table above, only 0.6% of R+F consultants earned more than $50,000. In other words 99.4% earned less than a full time income from Rodan and Fields.

To make things worse, this table only counts the consultants who were paid a commission in 2018. It turns out that 46% of Rodan and Fields Consultants earned no commission at all in 2018. If we were to include these consultants in the table above, we’d find that more than half of Rodan and Fields Consultants lost money from the business opportunity in 2018.

It’s important to remember that consultants are people who joined the Rodan and Fields business opportunity. Even though they can access the products at ‘wholesale’ prices, they were not customers looking for discounts. We believe all consultants were recruited with the hopes of earning extra money. Unfortunately, we calculate that, only 1 in 333 R+F Consultants will ever replace the income from their regular jobs.

Why is it Difficult to Make Money with Rodan + Fields

We believe that the problem is with the network marketing business model.  It's not designed to help people make money or gain financial freedom.  The system is designed to promote and sell products.  MLM is profitable for the companies which produce the products, but not for the members who join the business opportunity.

In his book, Multi-level Marketing Unmasked, Jon Taylor found that 99.7% of people who join any MLM, end up losing money.  Despite what you hear in the sales pitches, it is highly unlikely that you will make money from any network marketing company.

MLM is a way for companies to sell products without employing a sales force and without having to spend money on traditional advertising and promotions.  Instead they build a network of loyal believers who are willing to pay unusually high prices for the added hopes and dreams of financial freedom.

The high price set by MLM companies makes it very difficult for consultants to make retail sales.  We found a consumer review of Rodan + Fields products, by a site called 'Skinny and Sassy'.  They confirmed that the products are of high quality.  They went on to note that the ingredients used are 'nothing new'.  

We were not surprised to see that most consumers found Rodan + Fields was too expensive.  Given that there are other products of equal quality made from the same or similar ingredients, consumers are not willing to pay the premium for having the R + F label on the jar.

Even at the preferred customer and consultant prices, Rodan + Fields products were found to be more expensive than most of their competitors. Any salesperson will tell you that it's very hard to make money selling overpriced product

Part of the reason it's difficult to make sales with any MLM is the high price.  Another reason is market saturation.  Anyone can sign up to be a Rodan + Fields Consultant.  Every time a new consultant joins, they are competing with all the existing consultants to find customers and to find new recruits.

One of the advantages we heard in a sales pitch was that you can sell it over Facebook.  Well so can everyone else.  The internet makes it easy to set up a point of sale.  So easy that anyone can do it. The hard part comes in attracting customers.  Why will they come to your Rodan + Fields link instead of one of the other 287,000 owned by other consultants.

Consultants aren't your only competition.  Customers can also buy products directly from the Rodan + Fields online store.  .  The only way to attract traffic and make money online is to have original content or offer something very unique. Simply having a link to become a carbon copy of what 287,000 others are already doing will not generate results.  Especially if the first thing people find when searching for the products, is the corporate webpage which can make the sale and cut the MLM members out of the deal entirely

The high attrition rate with MLMs makes it difficult to build a downline team. Before you can grow your network, you’ll need to replace all the consultants who quit every year. It is common for more than 50% of members to quit any MLM in their first 12 months.

Another review of Rodan and Fields by Nav.com found that they are just a more expensive version of Mary Kay or Avon. In other words, it’s just another cosmetics MLM where very few consultants will ever turn a profit.

Why are Rodan + Fields Products so Expensive

Even at the 'wholesale' prices paid by consultants, MLM have to charge a substantial mark up in order to fund their compensation plans.  A snapshot of the Rodan+ Fields Compensation plan is shown below:

The table above shows all the commissions that can be earned on the CV or Commissional Value points in Rodan + Fields.  When you buy product at the 'Consultant Price', the 8 levels of commission are included in this price.  As a new consultant 42.5% of what you pay to Rodan + Fields is paid as commission to your upline.   

The remaining 63.5% of the consultant price, goes to Rodan + Fields to cover all the costs of production and to generate some profit for themselves.  A common myth within MLM is that it's a system which 'removes the middle distribution layers'.  It would be more realistic to describe it as an opportunity to become part of the 42.5% middle layer mark up.  

This is the real reason why the people who sponsored you and everyone above them in their team will encourage you keep buying product every month.  They may tell you that the key to success is never giving up, or something similar.  We think their real motivation is the fact that your upline only makes money if you are spending money.

 Is Rodan and Fields An Illegal Pyramid Scheme

Even though MLMs closely resemble pyramid schemes, they are not illegal. The reason dates back to the 1979 case of Amway vs the FTC. After 4 years in court Amway was found to be offering a business opportunity, rather than a pyramid scam. The technicalities came down to wording in their paperwork. One example requires consultants to make retail sales.

The Amway ruling effectively opened the doors for all other MLMs to operate within the law. However we should remember that being legal doesn’t make it ethical. If you knew that less than 1% of people had a chance of generating a real income, would you feel comfortable recruiting new consultants?

We had a look at the 2018 FTC Business Guidance for MLMs, which outlines when MLMs are being misleading or unlawful. It turns out that many of the technique used to promote the business opportunity may be considered a breach of the FTC guidance.

Another issue, is that even though these rules may be in the paperwork, they are difficult to enforce. For example, several people in MLMs have said that they have cupboards full of product. This is because of the minimum monthly purchases they need to make to remain active in the system. Even though stockpiling is against the FTC rules, there is no way for the company to monitor it.

All companies are in business with the goal of selling goods and services for a profit.  Network marketing companies are able to charge a higher price because they create a customer base of loyal members who believe that by consuming these products and recruiting others to do the same, they will become financially free. Based on the actual results, we believe such promises are a breach of the FTC MLM guidance

Should You Join Rodan + Fields

Before you sign up for the business opportunity, try being a retail customer.  If compared to competitors, you find that Rodan + Fields offers quality products at a fair price, then maybe you should join.

A Rodan and Fields ‘success story’ we found. A lady claimed that she liked the products so much, but didn’t want to pay the full retail price (or should we say overprice). Becoming a consultant gave her access to the ‘wholesale’ prices, and after sharing the opportunity on Facebook, she ‘covered her costs’.

This consultant refuses to disclose her actual income, (possibly because it’s unimpressive), but assures us that it’s enough to get her some free makeup each month. While getting some free product might not sound like a ‘success story’, in MLM it actually is. Keep in mind that around half of R + F consultants earn absolutely nothing.

If you have stumbled across this opportunity, and think it might be a way to earn some extra money, then keep in mind that after expenses most are losing money. If you have the ability to earn some free makeup with Rodan and Fields, you could probably use the same skills to earn a real income in a real sales job.

Final Thoughts

There's no such thing as a proven path to financial success.  It doesn't matter how well others have done, you can duplicate every move they made and still lose money.  In our opinion it is very unlikely that you'll turn a profit with Rodan + Fields or any other MLM.  Those are our thoughts, we'd love to hear from you in the comments section below, especially if you want to share you own experiences with Rodan + Fields

For more posts like this, look at our list of mlm reviews. 

Scentsy is an Idaho based producer of fragrances which was founded in 2004.  The company sells their products through multi-level marketing.  Scentsy  products are sold by over 100,000 consultants in their international network marketing system.   In 2016 Scentsy generated revenue of $456 Million, which ranked them at 42 on the 2017 DSN Global 100 list.  

Scentsy say that they 'give aspiring entrepreneurs the opportunity to launch a business without making a huge financial investment'. Here at the Finance Guy, we  believe that you can't make money with network marketing, but we are happy to be proven wrong in our streetonomic review of Scentsy 

What is the Scentsy Opportunity

The Scentsy website explains that this is an opportunity to do business your way.  You can start your Scentsy business with either a 'basic starter kit' for $99, or an 'enhanced starter kit' for $149.  Both kits come with 'everything you need' to get your Scentsy business up an running.

When you sign up with either kit, you'll get a range of product samples, (you get more products with the enhanced kit), a collection of business tools, and your first 3 months access to your very own Scentsy website.  If you want to continue selling Scentsy through your website after 3 months, it will cost you $10 per month.

Unlike other MLMs we have looked at,  Scentsy does not offer wholesale prices to their consultants.  When you order products from them, you will pay the full retail price.   Scentsy then pays you a commission each month on your Personal Retail Volume (PRV).  

Commission paid on your PRV starts at 20%, but will increase to 25% once you've made 1,000 PRV points worth of sales.  If you manage to make more than 2,000 PRV points worth of sales in any month, then you will get a bonus 5%.  This means that you can earn up to 30% commission selling Scentsy products.

Retail sales aren't the only way to make money with Scentsy.  The most successful consultants recruit others to join Scentsy as part of their downline.  The benefit to you, is that when people you have sponsored buy products, their orders will will help you qualify additional income as explained in the Scentsy Compensation Plan

Scentsy has only provided a one page compensation plan, but we've done our best to interpret the information.   This minimal information has meant that we have had to make a lot of assumptions, so we apologize if our explanation has any inaccuracies.

If you are personally ordering at least 500 PRV worth of Scentsy per month, and you have sponsored consultants who are also ordering product, then you might qualify for a rank with Scentsy which pays you a commission based on the wholesale value of all products ordered by you and your downline.  The wholesale commission paid at each rank is shown below:

If you someone in your 'frontline' is also qualified to earn wholesale commission, then you will earn a differential commission on their wholesale volume.  For example, if you are a star consultant, you are entitled to a maximum of 4% wholesale commission from each 'leg' in your downline.  

If someone you have directly sponsored in your 'frontline' reaches the the rank of 'Lead Consultant',  then they will qualify for 2% wholesale commission.  On this leg you will only earn the 2% difference between their rank and yours.

Once you have reached the rank of Director (or above), you will qualify for the maximum 9% wholesale commission.  If others you have sponsored reach these ranks, then they will also qualify for 9%.   This means you will not get any wholesale commission from legs in your downline with a frontline consultant who is ranked director or above.

If you are at the rank of Director or above, you will now qualify for a directors bonus.  This is a commission paid on the wholesale volume of other directors in your downline.  This is not limited to directors in your frontline.  You can also earn directors bonuses on up to three generations of directors in your downline.

The bonuses paid at each rank and for each level in your downline are shown in the table below:

Based on our understanding of the 1 page Scentsy compensation plan, is is possible to make money with Scentsy.   If you can sell product, and recruit others who also make sales, then you can earn:
- Up to 30% commission on retail sales
- Up to 9% Wholesale commission from consultants you sponsor in your downline
- Up to 5% Directors Bonus if you obtain the highest rank of 'Superstar Director'

Are Scentsy Consultants Making Money

We looked at the U.S version of the 2015 Scentsy Income Disclosure Statement, which suggests that most Scentsy consultants in the U.S did not earn much money.  The information is shown in the table below:

As we can see from this table, only 0.55% of Scentsy consultants in the U.S earned an average income of more than $42,000 in 2015.  Unlike most mlms, Scentsy includes retail commission in their income disclosure.  This means that in 2015 99.45% of Scentsy consultants were not able to earn a full time income

These figures do not include expenses.  Running your Scentsy business will cost you time and money.  If  we were to include these costs, we'd find that the majority of Scentsy consultants lost money in 2015.

It is possible that 2015 was just a bad year, so we also did a write up of the 2018 Scentsy Income Disclosure Statement. While the managed to give us a lot less information, we still found that Scentsy consultants earned less than $1 per day in commission from the business opporutnity.

Why is it Difficult to Make Money with Scentsy

If you attend a presentation promoting Scentsy, or any MLM, you'll hear all about what is possible.  All you have to do is use the products and convince others to do the same.  It's a simple enough theory which rarely works in practice.

To qualify as a 'lead consultant' with Scentsy, you need to personally order $500 worth of product per month, and have one 'active frontline consultant', who also orders $500 product per month.   We believe this will qualify you as a 'lead consultant' with 500 PRV and 1,000 Group Wholesale Volume (GWV).

To be a lead consultant you need to remain active and recruit one friend who also remains active.  This sounds pretty easy, until we look at the results.  The 2015 income disclosure shows that in 2015, less than 24% of Scentsy consultants achieved the rank of 'lead consultant' or higher'.  

It is possible to earn up to 9% in wholesale commission if you reach the rank of Director.  In 2015, only 1.81% of Scentsy consultants were ranked at the level of 'director' or higher. This means that less than 1 in 55 Scentsy consultants qualified for 9% wholesale commission

We evaluated the Scentsy opportunity using Dr Jon Tayolors 5 Step MLM evaluation.  This test is designed to find out if new recruits are likely to make any money from joining a network marketing opportunity.  We found that Scentsy raised all five  red flags in this assessment.   We will look at each of the red flags and why we believe they are a concern in more detail below

Red Flag 1 - Constant Recruitment of New Members
We read through a copy of the Scentsy consultant guide, this document is like an instruction manual for new consultants.  There is advice about everything you need to do to achieve financial freedom with Scentsy.  In the business building section, they state 'There's no better way to grow your income than through building a team'.  

The compensation plan is designed for constant recruitment.  The only way for you to reach higher commissions is to grow a larger team.  The only way for your recruits to earn more, is to also recruit and build their own teams.

Red Flag 2 - Promotion Through Recruitment
You will never need to personally purchase more than $500 per month worth of product to remain active with Scentsy.  To qualify for promotions, you will need to grow your wholesale volume and your active downline.  Recruiting is how you qualify for promotions with Scentsy

Red Flag 3 - Pay to Play
To remain active, and maintain your rank with Scentsy, you need to buy $500 worth of product per month.  We believe that some consultants are ordering more product than they are selling, just so they can remain active. 

Dr Taylor warns that pay to play can lead to hyper-consumption resulting in members buying more product than they can consume or sell.  Eventually products start to get stockpiled as members fill their storage areas with unopened boxes of hopes and dreams.

Red Flag 4 - Most of the Rewards go to your upline
We found wholesale bonuses of 9% and directors bonuses of 15%. These incentives are included in the price charged by Scentsy As a new consultant your upline will get 24% of every dollar you spend with Scentsy

The price you have to charge your customers will include these generous MLM mark up.  This means that the retail price will be expensive, making it more difficult for you to compete with all the alternate aromatherapy products in the market.

Red Flag 5 - More than 5 levels in the payout plan
According to Dr. Taylor, once there are more than 5 levels in a compensation plan, then it becomes very difficult for new recruits to turn a profit.  He believes that at this point the system becomes 'an exploitative money transfer scheme, or product-based pyramid scheme'.

How Good are Scentsy Products

Any salesperson will tell you that the best way to make money, is with quality products.  It doesn't matter how skilled the salesperson is, making money is easier with good products that are well priced.  As we have not purchased or used any Scentsy products, we have relied on the internet to see what others are saying about Scentsy products.

Scented Wax Reviews, sampled several Scentsy bars.  We trust this review because they are a customer, not a consultant.  Unlike most reviews, they are not trying to sell us Scentsy or any other aromatherapy products.

This review found that when compared to other scented waxes, Scentsy is of very high quality.  They ranked well for scent and 'throw'.  Even though the products were of excellent quality, the review notes that she would not buy Scentsy again because they are too expensive.

P'd consumer currently gives Scentsy 2.4/5 stars, nobody appears to have a problem with the products, but the customer service and business opportunity have several complaints.  Most Former consultants say they were mislead about the income potential, while customers complain about products which have not been delivered (even though they paid months ago).

Based on your online findings, we believe that they are making good products, but Scentsy is overpriced and their customer service needs improvement.  

Is Scentsy an Illegal Pyramid Scheme

Even though they closely resemble pyramid schemes, network marketing companies are legal as long as they are attached to  a product or service.  Having said that, there is a difference between legal and ethical.  

Network marketing companies  don't just promote their produts, they also sell hopes and dreams of financial freedom.   This dangling carrot is why MLM companies sell to their members at above normal retail prices

 The promise of financial freedom could be considered misleading and unlawful. We looked at the 2018 FTC Business Guidance For MLMs. This clearly states that MLMs are not allowed to make unsubstantiated income claims. Even if some people at the top of the pyramid are making a lot of money, this is the exception, not the norm.

Should You Join Scentsy

If you join the Scentsy opportunity to make money then we suggest that you include this with other income making options.  In 2015, only 0.55% of Scentsy consultants in the U.S earned a full time income from their business.  Your chances of replacing full time income are less than 1 in 180

You should only join Scentsy if you have already tried their products, and know enough about aromatherapy to make money selling these products at their inflated retail prices.  In our opinion you'd have a hard time making money with Scentsy.  That's just our opinion, we'd love to hear from you.  What do you think about Scentsy?  let us know in the comments section below, especially if you can share your Scentsy experiences

For more posts like this, look at our list of mlm reviews. 

Advocare is a Texas based company which was founded in 1993, they produce a variety of dietary supplements, which they sell through network marketing.  In 2016 Advocare had almost 600,000 distributors in their MLM system.  The company made a profit of US $586 Million, which placed them at no. 37 on the 2017 Direct Selling News Global 100 list

We decided it was time for a streetonomic review of Advocare.  We believe that you can't make money with network marketing, but will still give Advocare a chance to prove us wrong.  

We are not associated with Advocare, and have not purchased or tried any of their products.  Our review is based entirely on information which is publicly available on the internet.  We appologize if any of the information we relied on is out of date or inaccurate

What is the Advocare Business Opportunity

If you've met an Advocare distributor, or a member of any MLM, then you have most likely heard how this could be a potentially life changing opportunity which could be your key to financial freedom.  While statements like this may be true, the same could be said about buying lottery tickets.  

On their website, they explain that there are 5 ways to earn with Advocare.  Like all MLMs, they explain that making sales isn't the only way to profit from Advocare. You can also generate income if you recruit others and build a downline.  The 5 ways to earn with Advocare are:
1. Retail Profits
2. Wholesale Commission
3. Overrides
4. Leadership Bonuses
5. Incentives

To find out more about how you can make money with Advocare, we read through the 2017 Advocare compensation plan. We will look at each of the 5 ways to earn in more detail below:

1. Retail Profit
According to the compensation plan, 'retail sales are the simplest way to earn income with Advocare'.  Distributors can purchase products directly from Advocare at a price which is between 20% and 40% below the suggested retail price.  

All you have to do make a profit, is buy the products then find customers who are willing to buy them from you at the retail price.  Remember their retail price is just a suggestion so you can set your own prices and adjust this profit margin.

The strategy of adding a profit margin is a simple one.  It's been used for centuries by every salesperson who ever attempted with a career in sales.  We are willing to assume that salespeople have never had a 'stable income'.  It's the kind of job where some  earn a fortune, while the others (who might even be sitting at the desk right next to them), struggle to make ends meet.

2. Wholesale Commission
This is the 'passive income' which Advocare will pay you when people in your downline buy Advocare products.  The amount you earn is based on the difference between your discount levels.  For example, if you qualify for a 30% discount, and your new recruit qualifies for a 20% discount, then Advocare will pay you this 10% difference on any products purchased by the recruit.  You will not earn any wholesale commission from members in your downline who are at at the same discount level as you.

Wholesale commission is also paid on any products ordered by your preferred customers.  A preferred customer has paid a small joining fee so they can buy products directly from Advocare at prices 20%-30% below the suggested retail price.

All new distributors and preferred customers automatically qualify for a 20% discount.  You can 'qualify' for larger discounts when you have generated enough Personal Volume (PV) on products you purchase or Group Volume (GV) on products purchased by your downline.  

Your combined PV/GV is the total recommended retail value of all Advocare products ordered by you and your downline.  As your PV/GV grows, you will qualify for larger discounts.  As the saying goes, you can save money when you buy in bulk.  

Your discount level is based on your cumulative PV/GVover up to 6 pay periods.  There are 24 pay periods per calendar year with Advocare.  Pay periods end on the fist and the third Tuesday of every month.  This means that your discount is based on the total PV/GV you have generated over three months.

The table below shows the current PV/GV qualification levels needed for each discount level:

Once you have reached the 40% discount, you are at the 'advisor level'.  Preferred customers are not eligible for this level of discount.  Distributors can also qualify for the advisor level if they generate a total of $3,000 in PV/GV over 24 pay periods, or 1 full year.

3. Override Earnings
Once you have reached the advisor level, you can start earning override commissions.  This payment can be earned on the Business Volume (BV), generated by your downline.  You can earn overrides on up to 3 levels of advisors in your depth.  

Each product has an assigned value of Business Volume points (with the exception of sales aids and distributor kits).  Advocare states that the Business Volume is 'approximately 50% of the suggested retail price'.

Like the wholesale discount, you can qualify for a higher override if you generate enough PV/GV.  The main difference here is that it can't be accumulated.  You have to generate the qualifying PV/GV every pay period.  The potential overrides you can earn and the PV/GV required for each, are shown below:

4. Leadership Bonuses
This is like a combination of wholesale and override commission.  Once you become a leader, you can earn a commission on the BV generated by your entire downline.  Your leadership bonuses grow as you advance through the 11 potential leadership levels.

Like the wholesale commission, you are paid the difference between your leadership bonus and any leadership bonuses earned in your downline.  The leadership bonus starts at the 'Silver' level which pays a 3% commission on all BV.  Once you reach the 'Triple Diamond' level in Advocare, you can earn 19.75% commission on all BV in your downline.

The leadership bonuses and their qualification criteria are shown below:

5. Incentives
Advocare rewards their top performers with what we'd call 'soft dollar benefits'.  This means you get paid with something which is not cash.  Like all MLMs fully paid 5 star vacations are a popular incentive used by Advocare.   

Advocare incentives can be created by either the company or by distributors who are at the leadership levels.  Each incentive is designed to motivate members at specific levels in the downline to perform extra well during the 'qualification period'.

Incentives can be anything that motivates people to push a little harder.  While the top leaders might be pushing for 5 Star vacations, new distributors might earn something like a new iPad if they sponsor enough new people and generate PV/GV in their first 90 days.

We did not find any specific details about current incentive offers, but we are assuming that incentives are still being used.

How Much do Advocare Distributors Earn

We looked at the 2016 Advocare Income Disclosure Statement, it's no surprise Advocare made the Top 100  list.  With 570,289 individual distributors purchasing products in 2016, it must've been a very profitable year.  That figure does not include all the preferred customers who placed orders in 2016!

The year might not have been so great for distributors.  The same report shows that 72.31% of distributors did not earn any commission from Advocare in 2016.  They might have earned retail profit, but we can't be certain because Advocare doesn't track the retail profit made by their distributors

We believe that in 2016 over 410,000 people participated in the Advocare business opportunity and made no commission at all.  Advocare would argue with this point. In their disclosure statement, they claim that some people become Advocare distributors so that they can 'purchase products at a discounted price'

We see similar excuses in every MLM income disclaimer we look at, and we never believe it.  There are people who join Advocare just to get discounted products.  They sign up as 'preferred customers'.  If they had no intention of trying to make money, then they wouldn't join as distributors.  As we noted earlier, the income disclosure statement only looks at distributors, and does not include preferred customers.

Preferred customers and distributors would get the same discounts on personal purchases.  Preferred customers pay $19.95 to join Advocare.  Distributors join with a $59 'distributor kit', which includes some product samples along with a book of retail sales receipts and a magazine with stories about people who made money in Advocare.  We do not believe that anyone paid an extra $40 for sales tools they never planned to use.

The commissions earned by all Advocare distributors in 2016 is summarized in the table below:

From this table we calculate that in 2016, 99.24% of Advocare distributors earned less than $100 commission per week.  We further see that only 0.11% earned what we consider a full time annual income ($50,000 and above).  We infer that only 1 in every 909 Advocare distributors was able to replace the money they could earn in a normal job.

Advocare defines active distributors as anyone who earned a commission in 2016.  This is supposed to make us think that only 27.69% were trying to make money.  The other 72.31% bought the sales tools so they could be preferred customers.

We decided to play along with the marketing spin and only look at the 'active distributors'.  We now see that 97.26% of active Advocare distributors earned less than $100 per week.  The real improvement is that 0.38% of active distributors were able to earn a full time income from Advocare.  The odds of replacing a full time job with Advocare have improved to 1 in 263

Why is it Difficult to Make Money With Advocare

We applied Dr Jon Tayolors 5 Step MLM evaluation to the Advocare business opportunity.  We found that it raised all 5 red flags.  According to Dr Taylor, this would suggest that very few Advocare distributors ever tun a profit.

MLM is a way for companies to sell products without directly employing a sales force or using traditional marketing.  It's a system which is profitable for several companies, including Advocare.  MLMs exist because they generate corporate profits.

The problem for distributors, is that MLM is a marketing system, not a profit sharing system.  Their compensation plans can be very attractive when you look at what is possible.  They become less attractive when we look at what is probable.

The main reason why it's difficult to make money with all network marketing companies, is that most of the rewards go to your upline.  Of the 5 ways to earn with Advocare, 4 of them are earned from purchases made in your downline.  Your upline earns all this commission from your purchases.  These payments are included in the 'wholesale' price Advocare charges you.

The wholesale commissions are great if you qualify for the full 40% discount and have a large network of friends and family buying Advocare products in your downline.  As a new distributor you will start of with a 20% discount.  The remaining 20% is paid to your upline.  This means that when you spend $80 with Advocare, $20 will go to your upline as wholesale commission.  Your initial 'wholesale' price includes a 25% margin paid to your upline. 

Distributors who are at the 'advisor' level can earn an override of up to 7% on Business Volume. This is paid to up three layers of advisors, for grand total of 21%.  This payment is also included in your 'wholesale price'.  When we include the 19.75% BV paid in leadership bonuses, we see that BV payments of 40.75% . Are included in the 'wholesale' price paid by all Advocare distributors.

Advocare told us that BV is equal to around 50% of the suggested retail price.  We calculate that with a 20% discount, then 25.46% of your 'wholesale' price goes toward these BV payments to those near the top of the system.  This is on top of the wholesale commission you've already paid.  At this level 50.46% of the price you pay to Advocare goes to your upline.

Things get a little better if you qualify for the 40% advisor level discount.  At this point you won't pay any wholesale commission.  However your upline is still earning BV based payments from you.  We calculate that at this stage, 33.95% of the price you pay to Advocare is paid to your upline.

Retail profit might be the 'simplest way' to generate income, but that doesn't mean it will be easy. The 'suggested retail price' is just that, a suggestion.  There is no guarantee that you will be able to sell products at this price.  

A quick search on Amazon, will show you some distributors are offering products at a substantial discount to the retail price. Some of them might even offer them at prices below what you are paying Advocare for the same products.  If you want to earn retail profit, you will have to compete with the prices offered by other distributors.

The compensation plan is included in the price you pay.  This means that Advocare can only a maximum of 62.05% of what they charge you to produce the products, package them, ship them to you, and generate a $586 Million profit for themselves.  The only way to sustain this system is if the wholesale price of Advocare products is more expensive than most competitors retail prices.

How Good Are Advocare Products 

Any salesperson will tell you that the best way to make money is with good quality products.  The quality of the products will directly influence the price retail customers are willing to pay.  We did not purchase or use any Advocare products, so our product research is based entirely on third party internet reviews.

A writer for Spit That Out, put herself on a range of Advocare products.  She found that there were some possitive results (slight weight loss).  Some products gave her what she thought was an allergic reaction.  She also experience 'severe abdominal pain' from the detox products, but her upline told her that this was a normal reaction.

Diets in Review looked at the Advocare 24 Day Challenge.   This review found that 74% of consumers were unhappy with the product.  They further found that it contained several ingredients which could be harmful to your health.  We are not sure how much we trust their 'review' because they are trying to sell an alternate dietary system.

For a more trustworthy perspective, we looked at review of Advocare by a certified nutrition consultant at Ancestral Nutrition.  Some of the highlights from this review are that Advocare contains:
Genetically Modified Ingredients
Rancid Vegetable Oils
Arificial Sweetners
May cause a wide range of health problems

Is Advocare an Illegal Pyramid Scam

Even though MLMs resemble illegal pyramid schemes, they are legal as long as there is a product or service attached to them.  We don't think that Advocare distributors are trying to scam their new recruits.  It's more likely that they themselves believe that the system will one day make them wealthy.

Some former distributors believe that Advocare is an illegal pyramid scheme.  In March 2017, they filed a federal class-action against Advocare which alleges that they are a pyramid scheme.  

It could be a coincidence, but found it interesting that the compensation plan we looked at was issued in the same month, and contained some interesting legal speak.  For example one of the requirements for earning overrides is that you submit a sales compliance form which 'must show that you have made at least five sales to at least five different customers / preferred customers during each pay period in which any overide, leadership commission or other bonus or incentive is earned.'

If you don't satisfy this requirement Advocare may find that you are in violation of their 'excessive purchase of inventory' policy.  The consequences could include loss of future payments, or even expulsion from Advocare.  We have found similar wording in several MLM documents.  

The paperwork is designed to protect the corporation from any illegal activity done by the distributors.  MLMs let their distributors promote their system, they set 'rules' in the paperwork, but enforcing the rules is very difficult.  When disgruntled former members cause legal problems, then the paperwork allows the corporation to blame the 'rogue distributors' who broke the rules.

Another common complaint is that MLM members make illegal and false claims about the quality of their products and the benefits they can achieve.  Advocare is not immune from this.  Truth in Advertising has a database of unsubstantiated health claims made by Advocare distributors.

Should You Join Advocare

As with all business opportunities, you should take some time to get to know the products and their market before you sign any paperwork.  We suggest that you have a look at some products from competitors, read the ingredients and see what stores are charging.

If you find that the products are good value at full retail price, then you might be able to make money selling them.  Keep in mind that more than 99% of Advocare distributors aren't earning much money.  Perhaps this is a sign that you should consider other business opportunities before you decide whether or not Advocare is right for you.

Update May 2019

On May 17, Advocare announced that after a ‘confidential agreement’ with the FTC, they will be changing their business model. As of 17 July 2019, Advocare will only pay commission on what they call a ‘single level compensation’. In other words retail sales commission will be the only way to make money with Advocare. This means that Advocare will no longer be a Multi-Level Marketing company

Distributors will no longer be able to earn commission from their downline, they will only make money from sales made to retail customers. Advocare describe these changes as ‘the only viable option’.

While nothing can be confirmed at this time, it appears that the FTC found serious problems with the Advocare MLM compensation model. If this is true, then it could have widespread implications for the entire industry. Time will tell, but we expect these changes will cause a huge exodus of distributors from Advocare

As always we welcome your feedback in the comments section below, especially if you can share your own Advocare experiences.

For more posts like this, look at our list of mlm reviews. 

This post was originally written in July 2017, upon more recent reviews (April 2019), we found that several links were removed. We have done our best to replace the bad links, and keep the post in tact. If you find any problems, please tell us in the comments section. A good reader experience is our primary goal :)

Since writing our review on World Financial Group, readers have been asking us about a similar MLM called Primerica. We have finally decided it's time for a streetonomic review of Primerica.  Our goal is to provide an outside opinion of whether or not you can make money with their business opportunity.

Finding information was surprisingly difficult, which we see as a red flag. Their own website only gives a very limited description of the Primerica Business Opportunity.   Despite this hurdle we will share what we have learned from the information we were able to find.

Some of the data used for this review was not supplied directly by Primerica, so we apologize if it is incorrect or out of date.  If you are interested in joining Primerica or just want to know more about them, then we hope that you find this review useful.

What Does Primerica Do?

Primerica is a financial services company which sells a range of insurance, investment and debt products to consumers.  They recruit and pay their agents through a multi-level marketing system.  If you've met a Primerica agent, then you've probably been invited to see a presentation so they can recruit you to their team

Before you look at the Primerica opportunity, you should ask yourself one important question.  Do you want to be a financial advisor?  If the answer to this question is no, then Primerica is not for you.  You can not make money with Primerica unless you are a good financial planner

If you do want to become a financial planner, then you will need to study and pass some exams.  First you will need to become a licensed insurance agent, otherwise it would be illegal for you to speak to customers about life insurance.  If you plan to get promoted through the Primerica ranks, then you will eventually need to get a securities license too.   If study and exams is something you don't want to do, then joining Primerica probably isn't for you.

What is the Primerica Business Opportunity?

The company website describes it as 'a great opportunity for people from all walks of life to achieve their dreams'.  If you are looking for financial freedom then they say 'Primerica is the company that can help you discover that freedom'.   While this all sounds very positive, they haven't told us anything about how you can make money with Primerica.  

Their website wasn't quite as detailed as we hoped, but Primerica has also published a video on Youtube about their business opportunity, so we watched that for more information

The first thing we learn from their video, is that in this opportunity, Primerica is targeting people who are unhappy with their work lives. There’s even the standard sales pitch version of the definition of insanity, which they get completely wrong! They then have a bunch of people who tell us about the jobs they used to hate, but then they found the ability to dream again.

It goes on to look like a pretty standard MLM promotion. They claim to offer you the chance to own your own business. Without the normal risks etc etc. Ironically if you join MLMs such as Primerica, you are not a business owner, you are an independent contractor. You are a commission based salesperson for the MLM business. You are not a shareholder or decision maker in the business.

After a bit more hype, they finally tell us that Primerica is going to teach us how money works. This did sound interesting because financial literacy is something which we think is important. Then we hear ‘step 2’ in their process, ‘we get you protected’. This is code for ‘we sell you an insurance policy’. Speaking as industry insiders, we’d recommend not buying anything until after you have your own license and have made a few sales. Make sure you fully understand the products before you buy them yourself. It’s too easy to get excited about the opportunity and jump into an inappropriate financial product.

Next we get a glimpse of their strategy which they call ‘buy term and invest the difference’. They claim it’s unique and make it out to be some sort of game changer, but it isn’t. It’s something that any licensed financial planner can help you set up, if it’s right for you. Having said that a real financial planner would know that one strategy isn’t right for everyone.

The video goes on to tell us how great Primerica is, because it was voted on a list 4 years ago, and it’s a public company. They also get to represent some companies as shown in the image below:

No matter what they try and tell you, all this means is that Primerica can sell these products for commission. This is how financial planning works, you get licensed, and you sell financial products. Any financial planner with similar licensing can give you the same service.

The video goes on to tell us about how great the opportunity is, but we saw nothing new with Primerica. We did find it interesting that they referred to themselves as the fastest growing ‘financial services marketing company’. It’s interesting wording because they are creating a category which probably doesn’t exist outside of themselves, WFG and a couple of other MLMs who promote financial services. If I moved to New York and got a brokers license, I could call myself ‘the most successful West Australian broker in New York’. The title might be true, but it also doesn’t mean anything.

The video goes on to tell us a bit about the MLM ranks and has a collection of people, who tell us how great their lives are because of Primerica. Their stories might be true, but that doesn’t mean that the results will be the same for you. We want to know more about how Primerica is going to help us from day one.

The best document we could find for new Primericans is the 2015 Primerica New Recruit Manual, which outlines how the business works.  This has not been supplied directly by Primerica, it is from people in their MLM, so we can not confirm if it is still valid or if it's an original unedited Primerica document. we do like the line on the bottom of each page which says ‘for internal use only, not to be used with, or distributed to the public’. We downloaded it from the internet, so it appears that these Primericans perhaps didn’t follow that rule too well.

The manual starts of will some very basic stuff, such as how to dress for meetings, and when to attend training. It then shows you all the licenses you will need to obtain before moving on to the important part… recruiting. Their is a whole page for you to fill in with names and details of potential Primierica recruits. After that we get to the interesting part.

Page 6 of the New Recruit Manual is a script to be used when calling potential leads. The opening part of the script reads ‘I am currently getting my state license, and part of my requirement is to take my trainer to 10 presentations in the next week’. We found this particularly interesting because even though we don’t know which state they are in, we believe this statement is not true.

The real goal here, is to get your upline in front of your warm leads before you are licensed. What this means to you, is that your leads become clients for your sponsor. If you aren’t licensed, you can’t sell products, so there is no point calling your leads until you are ready to make sales yourself.

It looks like they are trying to leverage your relationships with friends and family to get clients for themselves. They may say things to you like ‘why wouldn’t you want to share this’. Or something similar, but we strongly suggest you resist calling your warm market until after you fully understand the products are are licensed to sell them yourself.

We read through the rest of the manual and there is a lot about overcoming objections, and asking your leads for more referrals. There is no mention of studying for your license, or setting aside time for proper product training.

Spending time learning and watching your ‘trainer’, work with their clients would be much more effective to your own future. Feeding leads to your trainer is better for their financial future. You can call us cynical, but this opinion is based on close to 20 years experience in financial services.

It was nice to see that on page 13, they offer some stand responses to standard objections. Our favourite was the one where they purport that your regular job is a pyramid scheme. It’s very interesting that Primerica does not deny being a Pyramid themselves.

You can make money with Primerica by selling a combination of term life insurance, mutual funds, and debt management products.  How much you can earn will depend on how well you generate sales.  Don't worry if you're not a sales person because Primerica has 'a time-tested method of building a business and earning a potentially unlimited income'.  They confirm that you will need insurance and securities licensing to reach maximum income levels.

For more information about the opportunity, we looked at a document called 2017 Introduction to Primerica. This document also contains information which is ‘not available to the public’, which didn’t stop an agent from posting a copy online. Primerica has subsequently complained about the sharing of their copywritten documents, but here’s what we learned from it.

We can now confirm that Primerica’s target market, is ‘middle income earners’. It’s a sector they believe is currently being ‘under-served’. They don’t provide any actual market data, so we can’t confirm how they came to this conclusion. We can however confirm that we have seen several clients from this sector while working with major companies in the traditional financial services market.

As we plod along we find that they also talk about the Millennial generation. There are 93 million of them in the US alone, according to the Primerica, it’s the largest generation (by population size), the US has ever seen. This strategy may sound clever, but we’ve heard it before, except 20 years ago, people were talking that way about Baby-boomers.

We believe that the Millennials represent more people than the Baby Boomers, but we’re not convinced that they have the same statistical significance. For example, do they control a similar portion of wealth? Do they make up a similar % of total population? Many more questions which we could spend days researching. If you’d like to find the answers and share them in the comments section, that would be great.

The unsubstantiated claims continue with references to how more than 50% of financial decisions are made by women. The gig economy is expected to explode over the coming years. Primerica represents a high proportion of Non-Caucasian clients.

Then it gets real interesting. One of the strengths Primerica lists is their ‘independent contractor sales force’. This confirms our previous assertion that they are not making you a business owner. They are making you part of the ‘Gig Economy’. Like an Uber driver, you are welcome to work for them and earn a commission from any sales you make. They’ll take a cut, but there is no benefits, and no hourly rate.

If you keep reading, you’ll find that the bulk or Primerica’s income comes from sales of term life products. Then on page 11, we see that ‘sales force growth drives Term Life Sales’. There is no mention of customer acquisition, just recruitment. Then again, ‘we get you protected’, was step 2 in the Primerica opportunity video.

This recurring recruitment theme is a serious concern. It appears that most of Primerica’s profits come from existing agents. This suggests that if you join Primerica, then you are the primary source of income for people in your upline! If you want to make money then according to the system, you need to recruit!

We scroll on and find that Primerica are proud to be ‘Not a Traditional Life Insurance Company’. They then show us a table breaking down their income from insurance premiums, investments and other income sources. This is all well and good until we pay attention to the fact that Primerica is not an Insurance Company. They have chosen to compare themselves to insurance companies rather than financial services providers. This could be an oversight, or it could be an attempt by Primerica to make themselves look better than they really are.

Primerica goes on to provide a break down of their licensed sales force. We used their data to create the table below:

If we look at the above table, we see that of all the agents who become licensed insurance agents, less than 3% (1 in 33), make it all the way to being Investment Advisers. This suggests that a large portion of agents either quit Primerica, or fail to advance beyond the first license. This becomes more of a worry when we consider that this does not include all the agents who quit without getting their insurance license

The introduction continues for several pages more full of charts and other fun stuff which could fill up an allotted presentation slot. Feel free to keep reading it, we found enough.

. Another document which they have made an effort to keep offline, is the Primerica New Recruit Orientation Guide. Our study of this document found:

To succeed you need to 'coachable' and commit to field training.  In MLM language, being 'coachable', usually means being able to copy what those above you are doing, it's part of the 'duplication' process.  Field training means shadowing your upline, attending client meetings the intention being to learn through observation.

Allegedly the first 90 days are 'the most important of your entire Primerica Career'.  The way to get off to a 'fast start', is to build a list of contacts right away, and start recruiting new members to Primerica.  They note that recruiting will be your main activity while you are waiting for your insurance licensing. 

You can't discuss any products until you are licensed, so in the early stages all you have to do is introduce Primerica in a positive light and book appointments so your field trainer can take it from there (with you observing).

The prospecting skills supplied explain that there are different types of prospects which are hot, warm and cold.  The manual suggests you start your business by contacting your 'warm market':
Hot Prospects - Are people in your very close circle of friends and family.  You see them often know their spouse and family, and probably know a lot of their other friends
Warm Prospects - Are people you are familiar with, but aren't in your close circle.  They might be work colleagues or members of a common club. 
Cold Prospects - Are people you've never met

Once you are familiar with prospecting, you'll learn the most important skill, recruiting.  The manual describes recruiting as 'the life blood of Primerica', stating that is a 'better way to sell', and a 'better way to prospect'. So we guess that means your prospecting in the first 90 days is actually recruiting.

Some recruiting techniques suggested by this 'time tested method', include 'looking at everyone as a potential recruit'. It doesn't matter if people say 'no' because it's all part of the process of finding the next yes.  Remember to play the numbers game because recruiting is 'an all the time activity' and 'the engine of your business'.

Like all network marketing companies, the motivation for the constant recruitment, is money.  If you have a downline, you will earn an 'override commission' on any sales generated by them and whoever they recruit (for several layers).  Advancement through the ranks, and access to the higher pay scales in Primerica requires recruitment.

The commission you make from your own insurance sales, and the override you are entitled to, are both dependent on your rank in the Primerica hierarchy.  We constructed the below table to illustrate how your Primerica commission is calculated at each level. This data was found on a page created by a Primerica agent, which has since been removed..

Primerica pays override commission based on a 'differential' basis.  This means that if a new member is sponsored by someone in your team, you earn the difference between their maximum override, and your own.

If you pass your insurance licensing and become a representative, you can start selling insurance.  You will earn 25% commission on every life insurance policy you sell.  You will also generate 70% of commission for your upline from the same sale.  When you are starting out in Primerica, your upline will earn 2.8 times more commission than you on any sales you complete

Your upline will try and use this big difference in pay to motivate you.  They might say something like 'keep recruiting and one day you'll get here too.'  The Finance Guy thinks that this is unfair.  Nobody should earn more than you for the work you do, but that's just the opinion of someone with several years financial planning experience. We'd question the true motives of a 'mentor figure' who will get most of the reward from your work

What is the Primerica Fast Start

We already know that this is part of the 90 day plan, but for more information, we found a copy of the 2015 Primerica fast start manual. This is a 90 day plan to help get you up and running as fast as possible.

Once again this document was provided by active Primericans and not directly by Primerica. We can’t confirm that this is an official document, but these people went through the system and are the result of official Primerica processes.

The first point in their game plan, is ‘everyone is focused on recruiting.’ Once again there is no mention on looking after clients, or ensuring that your own financial literacy is up to date.

Again a key to success is buying an insurance policy from Primerica. While it’s true that it’s important to believe in your products, can you really believe in them if you’re not even licensed to sell them yet? This manual also has versions of warm market lists, prospecting sheets, and of course scripts, which include objection handling.

In a previous version of the 90 day plan, which has now been removed from the internet, we learned a few things too. We aren’t sure why the previous document was removed. Maybe the Primerica agents who posted it quit, maybe they changed their website. It could also be that they weren’t supposed to be sharing Primerica’s inside secrets. Before the link was removed, we did read the document and the research below is from it. We found:

If you follow the Fast Start guide then 'every goal or dream you have, can and will be accomplished'.  You'll be in a great position to make money because 'you’ll have an unlimited number of appointments to go on because of all of the new recruits joining your team'

There is a 4 point game plan, which basically involves focusing on recruiting, and making sure that you buy Primerica products yourself. It’s disappointing that the focus isn’t on improving your financial education and finding retail clients. Perhaps that’s because there are very few retail clients in Primerica. With all the focus on recruiting, we can assume that most of the money comes from inside the MLM network. This is problem because it means that only the people at the top of the system can turn a profit.

Following the Fast Track program could have you on the path toward earning  '$30k - $50k in income your first year, and $150k - $250k plus your second year'.  The first step is to book 15 'kitchen table' appointments for your field leader in your first 30 days.  This is something the Finance Guy disagrees with. This former financial planner would suggest only approaching people you know after you've got some experience and built up enough confidence in the products and how they work. 

The manual then provides a telemarketing script for booking appointments.  The script involves calling people you know and telling them that you are 'very excited' about working for a new company and asking them to 'help you out' by letting your 'trainer' come and show it to them, as part of your learning.  The script then goes over a few possible scenarios, all of which end with you asking what time you can come over and show them Primerica.

We found it odd that script instructs you not to confirm appointments.  They suggest you tell your friend that the appointment is in your diary so unless you hear from them, you'll see them at that time.  People sometimes forget, or circumstances come up.  Professionals confirm every appointment (even if it's just via a text message).  If you don't confirm appointments then you will waste a lot of time showing up to cancelled appointments

It is our opinion that they don't want you to confirm the appointments because this would give the prospects a chance to cancel.  If a client can't keep an appointment then your confirmation call is a chance for you to reschedule.  If they are simply disinterested, then they were never going to buy so cancelling the appointment saves you time.

The manual explains that the best results come from the 'right market'.  They suggest focusing on married couples who are employed with financially dependent children.  Clients also get points for having a mortgage and being aged 22-55.  Now find 15 people from your warm market who best tick the boxes.

You can also improve your results by ticking boxes on the company side of the appointment.  These include being motivated, wanting more money, being competitive, have people skills and you must be credible

Some more tips for success from the fast start manual include:
 - Show up to all training and meetings
 - Bring guests to the 'opportunity meetings'
 - Listen to Primerica recommended CDs
 - Read Primerica recommended training and books
 - Plug In

Theses tips for success including the phrase 'Plug in' remind us very much of Amway.  This is not good thing because we believe that you can't make money with Amway.  

The fast start guide gives an overview of the different ranks in Primerica and how to achieve them.  It then explains that if within the first 30 days of joining, you can achieve 50,000 in 'builders track points', you can earn the $300 fast start (which might be paid in scholarships and vouchers).  Your points must include at least 4 insurance sales.  You can also get points for attending meetings and coaching sessions, and generally plugging in.

Are Primerica Agents Making Money

We know that it is possible to make money with Primerica.  We've been told that this is  'a time-tested method of building a business and earning a potentially unlimited income'.  If you follow the fast start program, we are told that we can earn '$30k - $50k in income your first year, and $150k - $250k plus your second year'.

While these statements sound good, we thought we'd find out how much Primerica agents are earning now.  After all that should give us an indication of how likely it is that we can make money with them.

We were unable to find a full version of their income disclosure statement, but there was a reference to personal incomes on the general page.  Here we learned that the average annual income for Primerica representatives in 2016 was $6,088.  That's less than $120 per week!

We have no doubt that some representatives earned a lot more than this, but that also means that a large amount of representatives also earned absolutely nothing.  Maybe the vast majority who join, never follow the fast start program.  It's also possible that the Fast Start Program is all hype and no delivery.

Why Is It Difficult to Make Money With Primerica

 The main reason people aren't making money is because they aren't making sales.  We learned this from the 2016 Primerica Annual Report. In 2016, Primerica agents sold an average of 0.22 life insurance policies per month.  That's only 2.6 sales for the year!  The same report shows that this was a good year.  The figures in 2014 and 2015 were even lower!

Even though the company made over $1.5 Billion in revenue in 2016, the average representative only made a sale once every 4.5 months.  We know that some representatives made a lot more sales, but this also means that several made no sales at all.  

We believe that the constant focus on recruiting is part of the problem.  Like all network marketing companies, Primerica teaches representatives to 'recruit everyone'.  The problem is that while everyone is focused on recruiting, nobody is focused on finding retail customers.  This makes it very difficult for representatives to turn a profit because not enough money is coming in from outside of the MLM network.

Can You Build a Team With Primerica

If you want to become above average, and earn more than $120 per week, then you will need to build a good downline.  Remember, you can't earn 95% commission on your own sales until you've recruited enough people to become a Regional Vice President (RVP).

To find out how well the Primerica representatives grew their teams in 2016, we again looked at the annual report.  We constructed the table below using information found in it:

We see that at the end of 2015, Primerica had a total of 106,710 licensed representatives across USA and Canada.  During 2016, they managed to sign on a total of 262,732 recruits, or around 2.6 recruits  from each consultant.  It turns out that only 44,724 (17.02%) of these recruits became licensed.  That means that less than 1 in every 5 recruits completed their insurance license.

If you're not licensed with Primerica, you can't move from associate to representative, and can't make sales or earn significant commission.  We can't confirm, but we will assume that recruits who don't become licensed all quit Primerica.  This would infer that in 2016 82.98% of new recruits quit Primerica without completing the initial training.

The total number of Primerica representatives grew by 10,117 or 9.5% during 2016, yet in the same time, 44,724 representatives were newly licensed.  From this we have calculated that 34,607 or 32% of existing representatives quit Primerica during 2016. Even if recruits do get their license, you can expect 1/3 to quit every year.

This should give you an idea of what it would be like to build a downline team with Primerica.  In order to earn overrides, you will need to sign up 5 new recruits so that 1 of them can become a representative.  Building a team in these conditions will require constant recruitment because  every year 1/3 of your existing team will quit. Every time a representative quits your team, you will need to sign up five more recruits just to replace them.  

If you can't recruit enough new representatives to replace the 32% who quit, then your team is will be shrinking. This would become difficult as your team grows.  Imagine if you had 50 representatives in your downline.  That means that you should expect 16 to quit.  To replace these 16 represenatives, you'd need to sign up 80 new recruits.  To grow a team with Primerica, you need to find new recruits at rate of more than 160% per year. 

Imagine if all businesses were like this.  What would it be like at your work, if every year they hired 5 new staff for every 3 existing staff members, just to keep up with everyone who was quitting?  Would you accept a new job with a company where 4/5 of staff quit before they earned a paycheck?  

We had a look at Primerica reviews on Glassdoor, and found an interesting blend. Some reviews written by current representatives seem quite positive. However there’s also quite a few former Primerica representatives who share some of our concerns. A common theme is that it’s difficult to make money with Primierica.

Is Primerica an Illegal Pyramid Scheme

Network marketing companies are legal as long as they are backed by a product or service.  They only become illegal pyramids if you are being paid for recruiting new members to the system.  Having said that, the line between making sales and recruiting new members if often quite a blurry one.

We looked the 2018 FTC Business Guiadance for MLMs. Based on our understanding of this document, it’s possible that some of the promotions made by Primerica Agents are deceptive or unlawful.

As noted above, the annual report showed us that in 2016 each Primerica representative signed up an average of 2.6 new recruits.  During that same time, the same representatives made an average of 2.6 life insurance sales.  Is this a coincidence, or is that most of the insurance policies are being sold to new recruits?

In the 'Doing it Right' section of the new recruits manual, Primerica states:
'You do not get paid for recruiting. That would violate anti-pyramid laws and is a practice Primerica does not permit. Please remember that recruits are never required to purchase any Primerica products or provide referrals in order to become a Primerica Representative.' 

It's nice to know that new recruits aren't required to buy any products, but that doesn't mean that they aren't encouraged to buy them.  In the same manual it tells us that recruiting is a 'better way to sell'.  This can only be true if the new recruits become customers.

The 'Building Credibility' section of the manual states:
'Credibility is essential to your future success', it goes on to  say 'One of the best ways to establish your credibility is to complete your own FNA and start working on your own financial program. You will become familiar with the FNA process and understand what is required to begin your own journey down the road of reaching financial independence.'

So you aren't required to buy products, but if you want to be successful, then it's essential.  Completing your Financial Needs Analysis is one of steps in the 30 day fast start program.  Doing so will earn you 1,000 points toward your $300 bonus.  Buying your own life insurance policy will get you another 2,500 points.  Once again, we can't be certain, but we believe if you join Primerica your field trainer will try and sell you an insurance policy while you are still a recruit.

We would suggest waiting until after you have your license done so you can be your own first client.  Then again we are not getting paid a commission and are not worried that you only have a 1 in 5 shot of actually getting that license.

We looked up Primerica on consumer affairs, and found that some people do feel that it’s a pyramid scheme. There are also quite a few customer complaints about Primerica insurance policies.

If MLM Doesn't Work, Why Does Primerica Use It

We regularly say that you can't make money with network marketing.  We have never said that network marketing companies can't make money.  In 2016, Primerica reported a total profit of almost US $338 Million.  A big part of their profit came from the fact that they use multi-level marketing.

In the annual report they proudly say 'RVPs’ efforts to expand their businesses are a primary driver of our success.'  They go on to mention that because of the constant recruitment, 'our sales force is able to continually access an expanding base of prospective clients without engaging costly media channels ' In other words paying the MLM incentives is much cheaper than using advertising and other branding techniques

The company mission statement says they want to help their clients achieve financial freedom.  We believe that all representatives are part of the Primerica client base.  Perhaps they should work harder on their mission because we haven't met a lot of people who could be free on an income of $6,088 per year.  Then again this shows that commission only contractors are a lot cheaper than regular staff, so it helps with the profit line.  Perhaps the best way to make money with Primerica is to become a shareholder.

Should You Join Primerica

At the beginning of this post, we said you should only join if you want to be a financial planner, but you can also join if you want to work in recruitment.  If you are interested in becoming a financial planner, we recommend you consider this as well as several other opportunities.

The last time the Finance Guy joined an independent financial planning group, he got 95% of the commission he generated from day 1.  Furthermore he owned his client base and was able to sell it when he decided to leave the industry.  At Primerica you will not earn this level of commission until you reach the top of the pyramid.

 If in any given year, you decide to join the 32% of representatives who quit Primerica, there is no guarantee that you can sell your clients.  In the Annual report, they mention:
'Primerica Ownership Program. This program provides qualifying RVPs a contractual right, upon meeting certain criteria, to transfer their Primerica businesses to another RVP or a qualifying family member at such time as they desire.'

If you attend a presentation of the opportunity for any MLM you will probably hear claims that you can earn passive income and work on your own business.  No matter how many times they make this claim, it simply isn't true.  Maintaining a downline requires constant work, and if you quit you can't sell your 'business', unless the company allows you to.

In our opinion you are unlikely to make money if you join Primerica, but that's just our opinion.  What's your opinion?  We'd love to hear from you in the comments section below, specially if you can share your experiences with Primerica.

For more posts like this, look at our list of mlm reviews. 

Oriflame is a Swedish based cosmetics company which started in 1967.  Over the past 5 decades, the company has grown and now as a global network marketing structure of 3 million consultants ordering their products from over 60 countries.  In 2016, Oriflame made sales totaling US $1.4 Billion, which placed them at 15th on the Direct Selling News Global 100.  

We decided it was time for a streetonomic review of Oriflame.  Here at The Finance Guy, we believe that you can't make money with network marketing, but will still give Oriflame a chance to prove us wrong.   

We are in no way associated with Oriflame and have made no direct contact with them or their consultants.  Our research is based entirely upon publicly available information from the internet.  We will look at what others have said about Oriflame then compare it to our own interpretation of the Oriflame business opportunity

What Is The Internet Saying About Oriflame

The Dermatology Review
This website, praises Oriflame for the quality of their products, then goes on to recommend other products (which we suspect they are selling for commission).  They tell us that Oriflame products were developed in line with the 'most advanced cosmetic science'. 

We are not qualified to comment on anything relating to 'cosmetic science', but it's good to know that Oriflame makes quality products.  Omoge Mura also praised the quality of Oriflame products.  What their review lacks in words, is made up for with pictures.  I looks like the products are good, but can you make money with Oriflame?

Online MLM Community
Provides a list of 7 tips for 'how to succeed in Oriflame'.  As far as we can see, this list of tips could be a cut 'n' paste job for any sales job.   Set goals, be persistent, use the product yourself, blah blah blah.  This website appears to be trying to promote something similar to Matt Loyd's MTTB, but we already know you can't make money with MTTB

Natural Swedish Beuaty
An active consultant has provided some tips for 'how to make money with Oriflame'.  Based on this review, this is a good business opportunity.  She explains that you can drop a few Oriflame catalogues around at work then 'watch the orders come flooding in'.  It also explains that if you arrange demonstration parties, 'you will see a large amount of sales'.  Oriflame sounds too good to be true!

Orinet
Another active Oriflame consultant has made similar claims that this is a great money making opportunity.  This site explains that making money with Oriflame is easy because the catalogue and web service 'sells for them'.  This U.K based review explains that with Oriflame, you can earn GBP 2,000 (U.S $2,635 at time of writing) every three weeks from 'just a few hours' of work.  This member makes Oriflame sound like an amazing opportunity!

Oriflame Corporate
The official company website also purports that this is a great money making opportunity.  If you are looking for a 'lifestyle of freedom and luxury', then Oriflame is for you.  It's doesn't end at making sales though because you can 'earn even more money by inviting others to join'.

Oriflame recommends that you  join right away because 'the Oriflame opportunity puts your dreams within your reach – with minimal investment, no risk and exceptional rewards'.  Exeptional rewards with no risk! What could go wrong?

Can You Make Money With Oriflame

The 2015 Oriflame Success Plan explains all the different ways you might make money with Oriflame.  One thing we did like, is that like Avon, they encourage consultants to find customers for retails sales even though we believe you can't make money with Avon.  

Depending on how far you progress up the Oriflame hierarchy,  you can make between 20% and 35% retail commission just from selling products at the recommended retail price.  If you can sell enough cosmetics, then you can make good money.  

To find out how much retail profit current Oriflame consultants are making, we looked at the 2016 Oriflame Annual Report.  As a NASDAQ publicly traded company, Oriflame is legally required to provide audited financial reports, so we believe this is the most trustworthy Oriflame document on the internet.

For us, the highlight of the annual report, was in the Key figures on page 40.  One of the key figures was 'sales per active consultant'.  It turns out that in 2016, the average Oriflame consultant made EUR 411.90 worth of sales for the entire year.

That's an average of 34 Euros worth of sales per month, which is U.S $39 at the current exchange rate.  A retail profit of just over $1 per day is an optimistic view of Oriflame.  It is our opinion that they are reporting their own sales figures, which represent the wholesale price.  

We want to know what the retail profit was.  If every Oriflame consultant earned the maximum 35% retail margin, then average retail profits for 2016 was 221 Euros per consultant.  According to our understanding of their 2016 financial reports,  Oriflame consultants earned less than $1 per day in retail commission.  Our calculation assumes all products were sold for retail profit, if consultants ordered for personal use, then their earnings would have been less.

Fortunately for Oriflame consultants, retails sales are not the only way to earn money.  Like all MLMs they can also earn incentives  from  the compensation plan when  they recruit others.  We looked at the UK version of the  Oriflame Success Plan, which explains how to qualify for different 'titles' which pay progressively more incentives.

Once you have started recruiting others to join Oriflame, you can qualify to earn monthly commissions on any product they order, as well as any product orders by others they might recruit.  If you reach the top rank of 'Executive Director', then you can earn commission ranging from 9% to -0.12% from 12 levels of depth in your downline.

You can earn all this money once your team is ordering over GBP 100,000 worth of Oriflame products every three weeks.  Recruiters will tell you that this is great because look at what is possible.  We see this as a red flag because all these incentives are included in the wholesale price charged to consultants.  If all these ranks exist in the team that you join, then we calculate that 40.88% of the wholesale price paid by consultants is paid to their upline.

A study by Multi-Level Marketing Unmasked found that 99.7% of people lose money from network marketing.  The reason is because of the overly complex compensation structures used in the MLM business model.  In every network there are  few people at the top making a lot of money, but every dollar they earn comes out of the pockets of those recruited beneath them in the structure.

We were unable to find a copy of any version of the Oriflame income disclosure statement on the internet.  This means that we don't know exactly how much incentive payments Oriflame consults are earning at different levels.  We had similar problems when reviewing Avon, but still managed to show that you can't make money with Avon

We were able to calculate the average incentive paid to all consultants using the  128 page the Annual Report.  In the consolidated income statement (page 64), we found 'cost of sales', which is reported to have been EUR 366,467,000.  We have kindly assumed that the only cost of sales was MLM incentives. This is the total incentives paid to all Oriflame consultants in 2016

 We have estimated the total incentives paid in 2016 and Oriflame has told us that they have around 3,000,000 consultants around the world.  Using high school division, we calculated that on average Oriflame consultants earned EUR 122.16 in total incentives for the year.

According to our calculations, the average total income earned by Oriflame consultants in 2016 was EUR 343.16. This is shown in the table below

Why is it Difficult to Make Money With Oriflame

We looked at Oriflame using the MLM Evaluation tool provided by 'MLM the Truth'.  We believe that it raises all 5 red flags.  According to their calculations, this means that Oriflame consultants have a less than 1% chance of making a profit.

The compensation plan, which is similar to that used by most MLMs makes it extremely difficult for new members to make money.   This is because they focus too much on recruitment and not enough on building a retail customer base.  This means that very little money is coming from outside the network.  

The only way to make money in such a system, is if someone else is losing it.  People at the top of the pyramid will encourage everyone beneath them to keep recruiting and keep using the products, after all every time you buy more products, someone in your upline makes more money

Is Oriflame an Illegal Pyramid Scam

Even though the Oriflame success plan resembles an illegal pyramid scheme, it is legal because it is backed by products.  Pyramid schemes are only illegal if there is no product or service attached to them.

Being legal does not make the system ethical. All companies are in business with the goal of selling goods and services for a profit.  Network marketing companies are able to charge a higher price because they create a customer base of loyal members who believe that by consuming these products and recruiting others to do so, they will become financially free.

Should You Join Oriflame

The only reason to join this or any other network marketing system is if you you are already using the products and are confident you can sell them to others.  If you are joining because you think it's a good opportunity to make a little extra money, then we suggest you look at some other opportunities too.

If you are planning to build a team with Oriflame, then we should point point out that their annual report shows that in 2016 the total number of Oriflame consultants decreased by 7%.  This means that globally, people are quitting Oriflame faster than new consultants are joining.  The high attrition rate is a problem which is common to all MLMs we have looked at.  If you build a downline with Oriflame, you should expect a high portion of them to quit every year.  To grow your team you will need to first replace all the members who have dropped out

As always we welcome your feedback in the comments section below.  We'd love to hear what you think about Oriflame, especially if you can share your own experiences with the company

For more posts like this, look at our list of mlm reviews. 

Jeunesse recently won the 2017 Direct Selling News Growth Award.   We decided this was a good reason to write a streetonomic review of Jeunesse, to find out if you can make money with them. 

Since launching in 2009 from Florida, the company has expanded at an impressive rate.  In 2016, Jeunesse made over $1.4 Billion worth of sales in more than 120 markets around the world.  The products are sold through an international network marketing system.  

Jeunesse produces a range of anti-aging and skin care cosmetics, as well as nutritional and weight loss supplements.    People join Jeunesse to share the products and take advantage of their unique business opportunity, which allegedly can give you a life of 'time, freedom and financial security'.  

We believe that you can't make money with MLM, but let's find out if Jeunesse is any different.

How do You Make Money With Jeunesse

We found a video explaining how you earn with Jeunesse.  They describe the process of 'social selling', which allows you to become wealthy if you 'share your personal review, and let your friends come to you'.  The emphasis is on recruiting because when you start building a team 'your earning potential opens up'.  We've heard similar claims from other MLMs, and we believe making money in network marketing is more difficult than just talking to your friends.

The video went on to explain that there are 6 ways to earn with Jeunesse.  To find out more about how you can earn money, we looked at the full compensation plan, or as they call it, The Juenesse business opportunity.

This document explains that the 'key to your success' is in sharing these products which are 'incredibly powerful and in demand'.  It goes on to explain that through sharing Juenesse products, you can choose to earn a little extra each month, or generate a full-time income..

The purpose of this review is to find out if you can make money with what Jeunesse calls ' one of the most competitive compensation plans in the industry'. We will look at each of the 6 ways to earn and find out if they are really unique, or just another MLM:

1. Retail Profit
Like all network marketing companies, members can sell Jeunesse products in the retail market.  The website claims that members can make between 20% and 45% retail profit.  Why is there such a large variance? This comes down to the type of customer you are selling to.

If you sell products at full retail price, you can make the full 45% commission. If the customer is a 'preferred customer' and is buying their product on 'autoship', then they'll pay 20% less.  If they are just a preferred customer (not on autoship) they'll pay 10% less.  These discounts come out of your profit, Jeunesse still makes their full wholesale profit.

Preferred customers require less work because they can order product online and you still get paid commission.  Autoship customers get their products sent out each month without having to manually place orders.  You will earn less money per order from these customers, but it is a lot less work!

2. First Order Bonus
This is exactly what it sounds like!  If you sign up a new customer, you can earn a bonus commission on their first order.  The more they order, the more you earn.  This is shown in the table below:

If you become a Jeunesse customer, then the member who signed you up will want you to spend as much as possible on your first order.  

3.  Team Commission
Jeunesse claims to offer a 'unique' compensation plan, which is the 'most competitive in the industry', but to us it appears that the Jeunesse team bonus is very similar to the Isagenix You Share, They Share model.

The information provided by Jeunesse is inconclusive, but we believe that their MLM is a binary system, which means that you will have a left team and a right team.  To qualify for team commission, you and your team need to accumulate 'Commissionable Volume' (CV).  

Each Jeunesse product is assigned a CV value.  If you personally purchase 100 CV in a month, and have one person from your left team and one from your right team do the same, then you will 'activate' your eligibility for team commission. Based on a U.S Jeunesse price list we estimate that 100 CV of product would cost around US $140

Every time you accumulate a total of 900 CV points (with up to 600 from one team and 300 from the other), you will earn U.S $35 in commission.  This bonus can be earned up to 750 times per week, which would result in a team commission of $26,260.  Our understanding of this is shown in the diagram below:

Jeunesse will pay team commission on the CV generated up to 7 levels deep.  Once your friends start telling their friends, your team commission has the potential to become quite substantial.  That is assuming that you can build a team full of people who keep buying Jeunesse product

4. Leadership Matching Bonus
Once you reach the rank of 'Jade Executive' you will get a monthly bonus which is equal to 20% of any commission earned by everyone you have personally enrolled in Jeunesse.  As you climb up the ranks, this bonus grows because you can earn it on more levels.  

Once you reach the rank of 'double diamond director', you can earn the maximum bonus paid up to 7 levels.  This means that your matching bonus will be calculated on people you sponsor, as well as those they sponsor.  

We found a copy of the Jeunesse ranks chart, which appears to have been uploaded by an existing member.  This explains what is required to qualify for each rank in the Jeunesse heirarchy. The full leadership matching bonus, paid to 7 levels, is shown below:

5. Customer Acquisition Incentive
Some people will join Jeunesse just to buy the product at a discount.  If you can sponsor 5 customers and they all make a purchase in the same month, you will earn a 5% bonus on whatever they buy.  If you have 10 customers then you can earn the maximum 10% customer acquisition incentive.

We like this incentive because it encourages members to find customers.  Not everyone will want to join the business, and many of them will not purchase much product (specially if they're not earning a lot from it).  Any salesperson will tell you that you can't make money without customers

6. Diamond Bonus Pool
To qualify for this, you must reach the rank of 'Diamond Director' or higher, and have 10 sponsored customers making purchases each month.  You will then qualify to earn shares in the diamond bonus pool.  Every quarter Jeunesse will pay out 3% of CV to the diamond pool, which will be divided equally by the number of shares.  

Earning shares is an area where Jeunesse could have provided more detail.  We believe that you can earn more diamond pool shares if people you sponsor reach high enough ranks, and if your entire team buys enough product.  You will also get extra shares for hitting these targets in more than one consecutive month during each quarter.  

Are People Making Money With Jeunesse

We managed to find a copy of the U.S 2014 Juenuesse Income Disclosure Statement.  We were not able to find a more recent copy, which we see as a red flag.  If people were doing well with Jeunesse, then they'd proudly display the results.  

We found that in 2014 in the U.S, most Jeunesse distributors did not earn much commission. We created the table below using the data from their disclosure:

Our calculations found that in the U.S in 2014, 98.88% of Jeunesse distributors earned less than $5,000 in commission.  The 'competitive' Jeunesse rewards plan paid them less than $100 per week!

Like all all MLMs, there are some people making good money from Jeunesse.  We found that 0.23% of all U.S distributors earned over $50,000 in commissions in 2014.  That's means that only 1 in every 435 Jeunesse distributors earned a full time income

Why is it Difficult to Make Money With Jeunesse

Here at The Finance Guy, we believe that mulit-level marketing is a business model which simply does not make money for members.  There's no question that it works for the companies, after all Jeunesse reached over $1.4 Billion in sales in 2016. 

People who sign up for the 'business opportunity', are really signing up to become customers.  The 'wholesale price' they pay is heavily inflated in order to fund the incentive program, which as we saw, is only lucrative to 0.23% of all members.  

We are not alone in our point of view.  In his free e-book 'Multi-Level Marketing Unmasked', Jon Taylor found that 99.7% of people will lose money if they join network marketing.  He describes mlm as an 'unfair and deceptive practice'.  The main problems Dr Taylor found with the MLM business model are that it relies on endless recruitment, and most of the rewards for sales are paid to the upline.

Is Jeunesse an Illegal Pyramid Scam

Even though they closely resemble pyramid schemes, network marketing companies are legal as long as they are promoting a product or service.  Legal does not mean that they are ethical. Offering people the hope of financial freedom in exchange for buying your products is not a tactic all of us would employ

Legal problems often arise with how members promote MLMs.  There have been many instances of complaints against distributors who have exaggerated the benefits of the products or have made false promises about the potential income.

Jeunesse has not been immune to these problems.  In January 2017, Jeunesse was hit with their second class action law suit in less than 12 months.  Both complaints filed with the FTC allege that top distributors engaged in racketeering of pyramid scheme.  They raise questions over the health and income claims made in the marketing material.

An investigation by Truth In Advertising, identified several areas of concern with Jeunesse. Some of the issues they raised related to 'inappropriate health claims', 'confusing compensation plan', and 'incredible income claims'.  They urge consumers to take be careful when dealing with Jeunesse distributors.

Should You Join Jeunesse

The only reason you should join Jeunesse, is if you are already using the product and believe you are getting benefit from it without the business opportunity.  Signing up could give you access to cheaper product, but as Truth in Advertising points out, Jeunesse products are often available on sites like Amazon, at prices which are significantly below the wholesale price.

If you think you have the skills to build a profitable network marketing business, then we suggest you consider other options too.  It is more likely than not, that you can apply the same skills to build an even more profitable business for yourself which doesn't require you to constantly recruit people, most of which will never see a profit.

As always, we'd love to hear your feedback in the comments section below, especially if you can share your own experiences with Jeunesse

For more posts like this, look at our list of mlm reviews. 

doTERRA was founded in Utah in 2008, they are a producer of essential oils.  The name doTERRA is a Latin term which means 'gift of the earth'.  The doTERRA story explains that the company wanted to promote their products using a 'unique sales model', which would give people the 'opportunity to achieve financial freedom'.  They now have over 2 million 'wellness advocates' in almost 100 countries signed up to their multi-level marketing system.

At the Finance Guy, we believe that you can't make money with network marketing, but we decided to do a full review of doTERRA. We want to find out if this really is an original money making opportunity, or if it's just another MLM.

What is the doTERRA Opportunity

There are three reasons why people become wellness advocates:

DoTerra Users - sign up because they like the products, and want to learn more about essential oils. They might refer people

DoTerra Sharers - love the products and want to sell enough to pay for their monthly 'Loyalty Rewards' order

DoTerra Builders - want to replace their full time income with a work from home opportunity.  

Here’s how the doTerra opportunity looks:

The money flows from the users to the ‘builders’. this could look like something the cops on The Wire might want to look into, or it could look like almost any business in the world. At the end of the day every profitable venture needs customers or ‘users’. The key difference is that most companies don’t try to recruit all their customers to become salespeople

We looked at the 'building doTERRA naturally' brochure, which is designed to introduce the opportunity to those who want to replace their full time income.  The brochure explains that becoming a wellness advocate with doTERRA 'will open you to greater financial opportunity and help you achieve your own personal goals for success.'

The brochure shares some hints and tips about goal setting and using the internet to connect with your doTERRA upline.  There's even a sample activity chart included to help you monitor the progress of your team.  It will also help keep yourself on track with recommended daily, weekly and monthly tasks to keep you on the path to success.  We found it amusing that they included use the product every day, as one of the keys to success.

One of the pages in the brochure is titled 'Income Earning Statement', and it shows that doTERRA wellness advocates who have reached the 'leadership ranks' within the system are earning quite well.  Silver members of doTERRA are earning an average of $26,600 per year while those who reach the 'Presidential Diamond' rank, are earning an average of $1,353,000 per year.  The brochure gives the impression that people are making money with doTERRA

Are People Making Money with doTERRA

We looked at a review by the Talented ladies club, which suggested that Doterra Advocates aren’t making money, in fact they tell us that less than 0.5% of advocates make more than $9,000 and that’s before expenses.

They also point out that in order to ‘remain active’, doTerra advocates need to spend at least $100 per month on oils. They also imply that the products are expensive. So far it’s not looking very good, but we decided to keep going with our own research.

If we went by the earnings table in the brochure, we'd think that 38% of doTERRA advocates are earning over $59,000 per year.  However we noticed that this table only applies to the leadership ranks, who in 2015, made up only 1% of all doTERRA members. Their brochure does not represent the earnings all doTERRA advocates

To get the full picture, we looked at the 2018 doTERRA Earnings Disclosure Summary (EDS), which has been combined with a summary of the opportunity. The first thing we noticed was a big friendly pie chart claiming that only 20% of doTERRA members join to pursue the business opportunity.  It purports that the other 80% join doTERRA with primary goal of buying their product at a discount.

It then says that while 80% of members do not join for business purposes, they are still eligible for commissions, which many of them have earned.  It then proudly states that in the US, 20% of doTERRA members who made a purchase in 2018, earned some commission.

We also looked at the 2015 Doterra Earnings Disclosure Statment, (which they have now taken off the internet.). We made the table below from the information provided:

As you can see from the table, the information is more confusing than it needs to be.  doTERRA has chosen to group three ranks together to show that 9% earn an average of $1,600, then they've grouped another two ranks to show that 4% are earning an average of between $3,950, and $9,950.

doTERRA has presented their earnings information in a way that makes it difficult to interpret. We consider this to be a red flag, it could be some form of oversight. It could also be that doTERRA is deliberately trying to make things look better than they really are.  

Even in this format, we can see that on average, 99% of all doTERRA advocates earned less than $10,000.  Only 1% are earning more than $200 a week in commission from doTERRA.  Of the 15% of advocates who join to 'start a for profit business', 14/15, or 93.33% of them made less than $10,000 in 2015

Most people with full time office jobs would be earning $40,000 per year or more, yet 99.62% of doTERRA members earned less than this in 2015.  Can it really be such a great business opportunity if less than 1/200 doTERRA advocates are earning a full time income. That means that 97% of those who signed up for business, are not generating a full time income.

It could be that 2015 was a bad year for doTERRA advocates, so we also looked at the 2017 doTERRA earnings disclosure.  It tells a similar story, starting with the claims that most people only join for cheaper products.  One noticeable difference is that in 2016, leaders only represented 0.5% of all members.  By our calculation, in 2017 99.81% of doTERRA members earned less than a full time income.

We checked in again and did a separate review of the 2019 doTerra Income Disclosure. While they did their best to provide as little information as possible. We can still see that less than 10% of active advocates earned more than minimum wage. Furthermore if we were to include expenses, we’d find that most active doTERRA Advocates are losing money.

Why is it Difficult to Make Money With doTERRA

We applied Dr Jon Tayolors 5 Step MLM evaluation to the doTERRA compensation plan.  We found that the doTERRA business opportunity raises all 5 red flags indicating that it would be very difficult to make money with doTERRA.  We will go through each of the red flags and explain how it applies to doTERRA

Red Flag 1 - Constant Recruitment of New Members
The doTERRA Fast Start bonus, is designed to keep members constantly recruiting.  This bonus is only paid for the first 60 days after a new recruit opens an account.  If you join doTERRA, then the person who recruited you will earn a 20% commission on any orders you place in the first 60 days of your membership.  After this time, they will earn a 2% commission on your orders.

doTERRA advocates can earn up 10 times more commission from new recruits, therefore they have a constant incentive to keep recruiting.  The Fast Track bonus doesn't end with the person who recruited you.  It is paid to three enrollment levels in your upline.   The second level Fast Track bonus is 10%, which reverts to 3% after 60 days.  The third level Fast Track is 5%, which remains at 5% after 60 days, but is only paid at the rank of director and above.  

Once you have joined doTERRA, the person who sponsored you will also earn Fast Track bonuses on anyone you recruit.  It is in their best interest to tell you that you need to recruit as many new members as possible.  It doesn't end at recruiting though, they will do their best to make you buy as much doTERRA as possible in the first 60 days.

Red Flag 2 - Promotion Through Recruitment
We can see this red flag in the doTERRA Uni-Level Bonus.  This is the monthly commission you will earn from the activity of your downline.  To qualify for the maximum Uni-Level bonus, which pays gradually increasing commissions down to 7 levels, you need to achieve the doTERRA rank of 'silver', or above.

To achieve higher ranks in doTERRA, you need to have a combination of personal and organizational volume and what they call 'qualified legs'.  To achieve any rank above consultant, you will need to personally order 100 points worth of doTERRA per month.   Members need to spend U.S $100 per month on personal orders.

The points spent by everyone in your downline go toward your organizational volume.  Every time you personally sponsor a new recruit, you can choose to either place them in an existing leg, or you can make them the 'front line' of a new leg.  

To qualify for the rank of 'Premier' or above in doTERRA, you will need to have qualified legs. For example at the Premier level, you need to have two legs at the 'Executive' level.  To reach the top rank of 'Presidential Diamond', you will need six legs at the 'Platinum' level.

You can not get promoted in doTERRA unless you recruit enough people to build qualifying legs.  A leg will only qualify if the team members in that leg are purchasing the required volume of doTERRA products each month.

Red Flag 3 - Pay to Play
To qualify for any commissions from the doTERRA compensation plan, you will need monthly PV.  You will need to spend U.S $50 per month on product as a 'consultant', and U.S $100 per month at all other levels.  

Recruiters will refer to this expense as 'your personal consumption', but we do not agree.  Unless you are already buying and using $100 worth of essential oils per month, then whatever you buy will be an additional expense.  Before you agree to spend your money, ask yourself a simple question. Are you buying the products because you want to use them, or because you want to qualify for the incentive program?

Dr Taylor warns that pay to play can lead to hyper-consumption.  To qualify for the 'business opportunity', members buy more product than they can consume or sell.  Eventually products start to get stockpiled as members fill their storage areas with unopened boxes of hopes and dreams

Red Flag 4 - Most of the Rewards go to your upline
Dr Taylor warns that the compensation plans of most MLMs results in extreme inequality of payouts, he estimates that while a few people at the top make a lot of money, 99.6% of people who join MLM will lose money.

All the incentive payments from the compensation plan need to be included in the 'wholesale' price charged by doTERRA to their members.  We calculate that when you buy doTERRA products, 64% of the price you pay goes to your upline.  This is shown in the table below:

Red Flag 5 - More than 5 levels in the payout plan
Dr Taylor says 'Excessive levels in a downline is another sign participants are expected to sell primarily to their downline, rather than to the general public.  This makes it an exploitative money transfer scheme, or product-based pyramid scheme'.

The doTERRA Uni-level bonus is paid to 7 levels (for those who qualify).  The Infinity Bonus and Diamond Pool are paid... to infinity.  This system is not sustainable! The only way for the people at the top to make money, is if people below them in the system are spending it.

How Good are doTERRA Products

We have not purchased or consumed an doTERRA products, so we looked at some online doTERRA product reviews.  One  by the supplement police found that doTERRA oils were pure and high quality.  It's good to know that the products are high quality.

Another review we found by essential oil haven, confirmed that doTERRA is producing quality oils.  They did go on to mention that doTERRA products are no different from the high quality pure essential oils made by their competitors.  The main difference is that doTERRA is more expensive than most competitors.

This raises an interesting question about the people who 'join to get doTERRA at a discount'.  If all they wanted was pure essential oils at a better price, then they would not buy from doTERRA.  Even at the wholesale price, you can get the same quality essential oils at a lower price from competitors.  

We see this as a common problem with network marketing. As we saw with doTERRA, at least 64% of the wholesale price is needed to fund the compensation plan.  This means that only 36% is for doTERRA corporate profit and to pay all production costs.  The prices need to be high because the MLM business model is more expensive than traditional marketing

What Are the Benefits of Essential Oils

Essential oils get their name because they are an extract of essence.  They are so concentrated that even a few drops is enough to create a noticeable fragrance.  According to thrive primal, essential oils can be used for a multitude of benefits including:
ADD
Depression and Anxiety
Pain relief
Parkinson's Disease
Brain Regeneration
Spirituality

On further reading we noticed that this website was run by a doTERRA advocate who was trying to sell doTERRA products.  We decided to do some more research.  We also looked at Live Science, who acknowledged that essential oils are used in some alternate forms of medicine.  They then explain that there is limited scientific evidence that they provide any real benefit.

We also looked at science based medicine, who wrote an exclusive review on doTERRA products.  They also note that the evidence that essential oils work is 'sparse to nonexistent'. They also note that most of the beneficial claims are made by members of the MLM seeking to recruit new members and sell product.

While we couldn’t find any evidence that there are any medical benefits to essential oils, several doTerra Advocates have made false claims about the benefits of their oils. Because of the way advocates are promoting the oils, there is an FDA issued warning to doTerra

Below is an extract from the FDA warning:
’Your consultants promote your above mentioned dōTERRA Essential Oil products for conditions including, but not limited to, viral infections (including ebola), bacterial infections, cancer, brain injury, autism, endometriosis, Grave’s Disease, Alzheimer’s Disease, tumor reduction, ADD/ADHD, and other conditions that are not amenable to self-diagnosis and treatment by individuals who are not medical practitioners’

 We also looked at this warning about doTerra and Young Living from a qualified aromatherapist. She explains that ingesting essential oils, or applying them undiluted to the skin, can be very harmful. She is very worried about the ‘advice’ she is seeing given. She urges everyone to never ingest essential oils, and if you are applying them to the skin, they should be diluted all the way down to no more than 3%.

What are Others Saying about doTerra

We looked at a review by qualified naturopath Katherine Maslin. She confirmed that ‘therapeutic grade’ is just something invented by doTerra. She also explains why essential oils should never be ingested. They are simply unsafe

Over on Influenster, the reviews are mostly positive. Apart from a few complaints about the price, people seem happy with their oils. Then again most of these reviews seem to be written by existing doTerra Advocates. They have a vested interest in promoting the doTerra name.

The people at Lazy man have the opinion that doTerra is a scam. They agree that the products are overpriced. They also note that the ‘health benefits’, are unproven. In short they think doTerra is a pyramid scheme.

MLM best company gave doTerra a very good rating. It’s not surprising given that most people who vote on their site are from inside the MLM industry. Even with the rating of 8.1/10, they still raised some interesting points. One is that the doTerra therapeutic grade claims are meaningless. This review confirms that this ‘certification’, is something which doTerra themselves invented and has no value outside their own company.

Another issue we noticed is that in 2014 doTerra had problems with the FDA. It turns out that the claims about the health benefits of doTerra oils, aren’t proven. Therefore advocates who make such claims are in breach of FDA rules. They were forced to take corrective action including this doTerra FDA compliance video.

Is doTERRA a Pyramid Scam

Even though MLMs closely resemble pyramid schemes, they are not illegal. The reason dates back to the 1979 case of Amway vs the FTC. After 4 years in court Amway was found to be offering a business opportunity, rather than a pyramid scam. The technicalities came down to wording in their paperwork. One example requires consultants to make retail sales.

The Amway ruling effectively opened the doors for all other MLMs to operate within the law. However we should remember that being legal doesn’t make it ethical. If you knew that less than 1% of people had a chance of generating a real income, would you feel comfortable recruiting new consultants?

We also looked at the 2018 FTC Business Guidance for MLMS. The FTC explains that several activities used by MLMs to promote their business opportunities, may be misleading and unlawful.

Another issue, is that even though these rules may be in the paperwork, they are difficult to enforce. For example, several people in MLMs have said that they have cupboards full of product. This is because of the minimum monthly purchases they need to make to remain active in the system. Even though stockpiling is against the rules, there is no way for the company to monitor it.

Being legal does not make MLM ethical. All companies are in business with the goal of selling goods and services for a profit.  Network marketing companies are able to charge a higher price because they create a customer base of loyal members who believe that by consuming these products and recruiting others to do so, they will become financially free. Keep in mind that making such promises is in breach of the FTC guidance.

Should You Join doTERRA

The only reason you should join doTERRA, is if you are already spending over $100 per month on their products and want to recommend them to others.  Even if this is the case, you might want to look at what other brands are charging for the same essential oils.  You might find that you can save money by switching brands.

If your only motivation for joining doTERRA is to make extra money, then we think you should consider other options before proceeding.  Our calculations found that less than 0.5% of all doTERRA advocates are generating enough commission to replace a full time income

As with most MLM companies, it is possible to make money with doTERRA, but it is very unlikely.  If you have the skills to make money with doTERRA, then we believe you'd make more money applying those skills to start your own business.  

As always we welcome your feedback in the comments section below.  We'd love to hear what you think about doTERRA, especially if you can share your personal experiences with the company

For more posts like this, look at our list of mlm reviews. 

One of our readers recently asked us about a network marketing company called Shaklee.  Here at The Finance Guy, we believe that you can't make money with MLM, but we still wanted to have a closer look. We decided to conduct a detailed review of Shaklee to find out how it works and if members are making money.

Shaklee has been selling their products through multi-level marketing since 1956.  Now over 60 years old, the company has over 1.2 million members in 8 countries.  They have grown to become a global company.

Shaklee makes a wide range of more than 200 products which include health, nutrition, weight loss, cosmetics and home cleaning.   One thing we liked right away, is that the cleaning products are all environmentally friendly and biodegradable.  Being eco-friendly is something we believe in.

What is the Shaklee Business Opportunity

We looked at the Living Well With Shaklee brochure, which is designed to explain to prospective recruits, how the can make money with Shaklee.   The document starts by explaining how lots of small improvements will have a cumulative effect.  In other words, life will get a lot better from all the small changes.  They call this 'The Shaklee Effect'.  

We've always said that reaching goals is about taking steps in the right direction.  We are not sure how the Shaklee effect is in any way new or different.  The brochure goes on to describe how you can apply this concept to improve your health, create more spare time, or become financially free.  

There are three ways to experience the 'Shaklee Effect', which are 'use', 'share' and build'.  When you use the products, you will experience the health benefits.  When you share the products (by selling them to others), you can earn retail commission.  When you build your Shaklee team (by recruiting others), then you will qualify for commission from their sales, as well as for other incentives.

How Do You Earn Money With Shaklee

To find out how members can make money, we looked at the Shaklee Dream Plan.  This is there version of what most MLMs call a compensation plan, but it was redesigned and renamed in 2010.  After reading through the 20 pages we think  Shaklee looks just like any network marketing company. 

There are 9 ways to make income with Shaklee, including retail profits.  If you manage to sponsor enough new recruits within your first three months, you might earn one or more 'Power Bonus'.  If you sell enough of specific products, you might qualify for a 'Gold Bonus'.  If you achieve higher ranks within a short time, you might get a 'FastTRACK Bonus'.  Like all MLMs, Shaklee wants you to start buying lots of product and sponsoring new recruits as quickly as possible.

Once you've started building a team, you will become eligible to earn Personal Group Bonuses. Each product sold by Shaklee has a point value assigned to it.  In order to qualify for commission, you need to personally order at least 100 points worth of product per month. This can be either for personal use or for retail sales.  We estimate that you'd need to spend around US $150 per month to stay active

To earn a commission in any month, you need a total group volume of at least 250 points (with at least 100 being purchased by you).  At this level you will earn a 4% commission.  As your team grows, you will be entitled to higher levels of commission. Your rank with Shaklee will also rise as your PGV (Personal Group Volume) grows.  The commissions payable and ranks achieved are shown in the table below:

If you reach the rank of Director, you can earn the maximum 20% Personal Group Bonus.  It is important to note that if someone in your team reaches the rank of director or above, their points will no longer contribute to your PGV.  Not to worry though because there are still ways to keep earning from them.

Once you reach director, you have obtained the status as a 'leader with Shaklee'.  There are 10 additional leadership ranks after director, which you can achieve with Shaklee, starting with 'Senior Director' and ranging all the way up to 'Presidential Master Coordinator'.  In 2016, US Shaklee Leaders earned between $4,155 and $955,006 in annual commission payments.

The Shaklee leadership ranks are:
 

Director
Senior Director
Coordinator
Senior Coordinator
Executive Coordinator
Senior Executive Coordinator
Key Coordinator
Senior Key Coordinator
Master Coordinator
Senior Master Coordinator
Presidential Master Coordinator

If you become a leader, (with one of  the 11 leadership ranks), you will start qualifying for 'Leadership Bonuses'.  This means that while you don't earn your 20% PGV from fellow leaders in your team, you will earn up to 6% of their entire group volume per month in leadership bonuses.  It doesn't end there, you will also earn leadership bonuses from any leaders they sponsor. The Shaklee dream plan pays leadership bonuses up to 6 generations deep.

We found a presentation of the Shaklee business opportunity, posted by an existing Shaklee member.  We used the explanation of the leadership bonuses shown in this presentation to create the table below:

  Your earnings with Shaklee don't have to end at 6 levels of passive income!  Once you have reached the rank of Senior Coordinator, you will qualify for the Infinity Bonus.  With this monthly incentive, you can earn as much as 8% commission from the business of every sales leader in your down line.  There is no limit on this bonus, it is paid on infinite levels

If 20% PGV bonuses, 6% Leadership bonuses and 8% Infinity bonuses don't sound good enough, then there's still more.  As well as all the cash payments, you can also qualify for luxury holidays and cars all paid for by Shaklee.

Will You Make Money With Shaklee

It is possible to make money, but we believe that it's very unlikely that you'll turn a profit with Shaklee.  While it is possible to make good money once you reach the higher leadership ranks, but Shaklee has not disclosed how many members reach this level.  We suspect that like most MLMs, only a very small percentage of members will ever achieve significant levels of income.

For starters we look at all the money being paid by the dream plan.  When you buy products from Shaklee, 20% of what you pay will go to the first director in your upline (and there may be others layers who get their respective PGV too).  Then 34% will go toward paying the top level leader and infinity bonuses.  54 cents from every dollar you spend with Shaklee will go to leaders in your upline.

From the remaining 46 cents per dollar, Shaklee has to pay for producing and shipping their products, price in their own profits, sending leaders on holidays, paying for leaders cars, and in the event you qualify, pay you some PGV bonuses too.  All these payments are included in the price they charge you for products.  This leads us to believe that Shaklee products are expensive when compared to similar products offered by competitors

We decided to evaluate the Shaklee business opportunity using Dr Jon Tayolors 5 Step MLM evaluation.  This test is designed to find out if new recruits are likely to make any money.  We found that Shaklee raised all five  red flags in this assessment.   We will look at each of the red flags and why we believe they are a concern in more detail below

Red Flag 1 - Constant Recruitment of New Members
When you join Shaklee, you will be encouraged to recruit friends and family right away.  The FASTTrack bonuses are designed to help get you recruiting immediately.  To make money in Shaklee, or any MLM, you will need to convince people you know to buy the products.  Not all of them will agree, and some will be offended.  Inevitably, some of your relationships with these people will be damaged.

Another problem we have with the concept of endless member growth, is that in reality it simply doesn't work.  It's like a perpetual motion machine, it sounds good in stories but in reality it is far from being a possibility.  No matter how good a system is, it will eventually reach the point of saturation.  As the number of participants grows, it will become increasingly unlikely that new members will ever turn a profit.

Dr Taylor found that 99% of participants in any endless recruitment chain, will lose money

Red Flag 2 - Promotion Through Recruitment
In order to reach the levels of Shaklee where it is possible to earn a good income, you will need to convince others to join below you, at lower ranks.  This means that you can only succeed if there are enough people below you spending money on product.  Many of these people will never turn a profit, some may even experience financial distress.  In order to succeed in MLM, you will put others in financial difficulty.

Another problem pointed out by Dr Taylor, is that this creates what we call 'synthetic demand' for the products.  You've probably never seen the products promoted without the business opportunity.  Members are not trying to sell products to the retail market, they are focused on growing their downlines.  If you've been introduced to Shaklee, or any MLM, was it to show you the products, or to show you the business opportunity?  

Without retail consumers, the only source of profit becomes your downline.   The Shaklee Dream Plan appears to be quite generous, but the money to pay for all these incentives, comes from other members.  We calculated that more than 54% of funds paid by new Shaklee members is paid to their upline.  

To us, the dream plan looks like a zero sum game,  you can only make money if someone below you is losing it!  The Shaklee Dream plan states that 'top Business Leaders make the lion’s share  of their income from Leadership and Infinity Bonuses'  In other words, most of their money comes directly from Shaklee members in their downline.

Red Flag 3 - Pay to Play
In order to qualify for any incentive payments from the Shaklee Dream plan, you will need to personally purchase at least 100 points worth of product per month.  We had a brief look at the Shaklee Shop, and believe that this would cost around $150 per month.  If you skip a month, you run the risk of forfeiting any accumulated points which may have converted into commission in the future.

They will refer to this as your personal consumption, but we do not agree.  Unless you are already buying and using these products on a monthly basis, then whatever you buy will be an additional expense.  You should also ask yourself, are you buying the products because you want to use them, or because you want to qualify for the incentive program?

Dr Taylor warns that pay to play can lead to hyper-consumption resulting in members buying more product than they can consume or sell.  Eventually products start to get stockpiled as members fill their storage areas with unopened boxes of hopes and dreams.

Red Flag 4 - Most of the Rewards go to your upline
As a new member to Shaklee, your best option for making money is from retail sales.  The dream plan states that you can make up to 36% in retail price differential, but this is less than the  54% minimum which is going to your upline in the form of incentive payments, car payments and prepaid holidays. 

In order to make a retail profit, you would have to charge your customers a price which includes all your upline incentives and your own profit.  This would make them very expensive compared to other products on the market.  A common theme with most MLMs is that members see recruitment as the best option for making a money.  Unfortunately this results very little money coming from outside your network.

Dr Taylor notes that the compensation plans of most MLMs results in extreme inequality of payouts, with a small number of members making money at the top, while the majority (he found to be 99.6%) lose money.

Red Flag 5 - More than 5 levels in the payout plan
Dr Taylor says 'Excessive levels in a downline is another sign participants are expected to sell primarily to their downline, rather than to the general public.This makes it an exploitative money transfer scheme, or product-based pyramid scheme'.

As we noted previously, Shaklee pays leadership bonuses up to 6 levels deep, and pays infinity bonuses... to infinite levels.  These incentives have to be included in the price they charge members for their products.  New members are paying higher prices so that their upline can go on holidays, drive new cars, and earn bonuses

Based on our evaluation of Shaklee, new members will struggle to make any money. If any MLM raises 4 flags, then Dr Taylor says the chances of turning a profit are less than 1%

Is Shaklee an Illegal Pyramid Scam

Even though MLMs closely resemble pyramid schemes, they are not illegal. The reason dates back to the 1979 case of Amway vs the FTC. After 4 years in court Amway was found to be offering a business opportunity, rather than a pyramid scam. The technicalities came down to wording in their paperwork. One example requires consultants to make retail sales.

The Amway ruling effectively opened the doors for all other MLMs to operate within the law. However we should remember that being legal doesn’t make it ethical. If you knew that less than 1% of people had a chance of generating a real income, would you feel comfortable recruiting new consultants?

Another issue, is that even though these rules may be in the paperwork, they are difficult to enforce. For example, several people in MLMs have said that they have cupboards full of product. This is because of the minimum monthly purchases they need to make to remain active in the system. Even though stockpiling is against the rules, there is no way for the company to monitor it.

The MLM business model is not illegal, but that does not mean that it's ethical.  Like all businesses, network marketing companies turn a profit by selling goods and services.  Unlike other businesses, MLMs charge a higher price for the added hopes and dreams of passive income and endless wealth.  

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Should You Join Shaklee

It’s important to remember that sales is a core part of making money with Shaklee. Any salesperson will tell you that the best way to make money with quality products, so we thought we’d take a closer look at what you’ll be selling.

If your only reason for joining is to make extra money or start your own business, then we recommend that you thoroughly research all your options before taking any action.  It is possible (yet unlikely), that you will make money from Shaklee, but it is also quite likely that you could have put the same time and effort into something else and made even more money.

So the question remains,

What Does Shaklee Sell

According to the Shaklee Website, the top products are shown below:

We found this brochure of the Shaklee health plan, which suggest that all you need to do is take 3 simple steps. Strangely, all 3 steps involve taking Shaklee supplements. The three steps are shown below:

1. Shaklee Essential Nutrition
They sell a range of Shaklee multivitamins. If you have a household, with men, women and children, then there’s a bottle of Shaklee multivitamins for each of them. Step 1 doesn’t end there, you can also sell Shaklee nutrition, or if that’s not for you, because you want to be a mom, there’s also Shaklee prenatal.

If you like going to the gym, or just generally getting fit, then don’t despair, you also have the opportunity to sell Shaklee protein shakes.

2. Targeted Solutions
As the name suggests, there are many options here. We didn’t look at them all but some which we think would sell easily (if they work), are:
Aging Well
Energy
Sleep

3. Vitamin and Mineral Boosts
Whatever you are looking for, there’s a good chance you’ll find a Shaklee vitamin / mineral boost.

Now that we think about it, the Shaklee health plan feels like stepping into to GNC store. The only question we have is, are Shaklee products really better than regular shelf products. Despite our best efforts, we could find no credible evidence that Shaklee is any better than supermarket supplements.

There were plenty of online reviews claiming that Shaklee, which may seem great. However, most positive reviews are from Shaklee members trying to recruit you.

As always we welcome your feedback in the comments section below.  We'd love to hear your thoughts and opinions especially if you can share some experiences you've had with Shaklee

If you liked this post, look at our list of mlm reviews. Let us know if there’s a MLM that’s not on the list, which you think we should review!

Isagenix is an Arizona based supplement company which was founded in 2002.  Using the network marketing model, Isagenix has grown into an international company.  Isagenix has over 200,000 associates in 13 countries in their multi-level marketing system.  

If you've heard of Isagenix, then it's very likely that you've been invited to look at 'the opportunity' of becoming a member of the Isagenix network marketing team.  Here at Finance Guy, we believe that you can't make money with network marketing.  In this full review of Isagenix, we’ll give them the chance to prove us wrong. We want to find out if this is a real money making opportunity, or just another MLM

What Does Isagenix Do

Isagenix manufactures a range of dietary supplements.  They have divided their product range into four broad categories, which are, weight loss, energy, performance and healthy aging.  They've even taken the extra step and created a collection of programs.  We looked at one called the '30 day energy system', which is a prepacked combination of Isagenix products which are designed to work together to help improve energy.

Rather than sell their products on supermarket shelves or through advertising campaigns, Isagenix has employed a version of direct selling known as 'network marketing'  This involves rewarding people for bringing in new customers.  If you are successful in network marketing, you can get the products for free, or maybe even earn a very good full time income. Here at The Finance Guy, we think that you can’t make money with MLM, but we’ll give Isagenix a chance to prove us wrong.

How Do You Make Money With Isagenix

While all network marketing companies are similar, there are slight differences in how members qualify for commission payments.  We found this short video explaining how 'anyone can make money with Isagenix'.

This video was obviously made as a prospecting tool by an existing Isagenix member.  This is fairly typical of what you might see at any network marketing presentation attempting to sign up new recruits.  The recurring theme of the video is that you need to recruit two new members in your first week, and have them do the same.

This is what is known in network marketing as 'duplication'.  The idea being that you will become successful if you simply follow the steps taken by successful people.  Isagenix calls this 'You + Two, Them + 2'.  According to the video, if you 'instil the sense of urgency' for your recruits to also recruit 2 friends in their first week, then after 12 weeks, you'll have an Isagenix team with over 8,000 members

Even if things don't go according to plan, and after 12 weeks, you only have a team of 4,000, then don't despair, because you'll be earning around $4,500 per week.  The video claims that with this 'life changing company'. You can build an annual income of over $250,000 in 12 weeks with Isagenix.  All you have to do is share the opportunity with two people, and tell them to do the same.  This overly simplified extremely positive approach sounds a little too good to be true!

How Much Are Isagenix Members Earning 

To find out how much existing members are earning, we looked at the 2015 Isagenix Earnings Disclosure Statement.  Our calculations found that only 0.04% of all Isagenix members earned more than $50,000 in 2015.  This means that only 1 in 2,500  people made a full time income with Isagenix.

In 2015, 99.6% of global Isagenix members earned less than $10,000, does this look like a system which will build a residual income of $250,000 after you've 'shared the opportunity' with two friends?  The numbers show that you can make money with Isagenix, but it's highly unlikely.

One very interesting point we found in the earnings disclaimer, was the statement that 'a large majority of those who join Isagenix don't join to make money at all' (that would be 83.3% who earned nothing).  They then explain that the 11.5% of people who earned less than $500 are in a known as 'product sharers'.  They are not considered active business builders because they only earned commission for 'referring a few friends'  

It sounds like the people who earned less than $500 in 2015 did follow the urgent instructions in the video to 'find their two'. We're not saying the Isagenix promotional video was a lie, but their forecast income calculations appear to have over stated the income by a factor of 500:1. 

Maybe 2015 was a bad year, so we also managed to find a copy of the 2016 Isagenix US Earnings.  Unfortunately things did not improve for Isagenix members in 2016.  Our calculations found that 99.79% of members earned less than a full time income.

It is important to remember that there is a difference between earnings and profit.  The earnings shown in these disclosures do not include any expenses.  Active Isagenix members have to buy purchase at least 100 Personal Volume points every 30 days to remain active.  This means it's impossible to earn commission from Isagenix unless you are also spending money with them.

How much money you spend remaining active with Isagenix, depends on what products you decide to buy.  Each product has a point value assigned, but it's directly related to the price.  According to one Isagenix price list we looked at,  remaining active  with Isagenix can cost anywhere from $105 to $399 per month.

Members who remained active for a full year spent at least $1,250 on Isagenix products.  This means that all Isagenix members who earned less than $1,250 in commission lost money.

Why is it Difficult to Make Money With Isagenix

To find out why so few members are earning a substantial income, we looked at the Isagenix Compensation Plan.  This 13 page document explains the Isagenix opportunity in detail, including how commissions are earned.  Isagenix uses what is known in MLM as a 'binary compensation plan'.  It is quite similar to the Usana compensation plan, which we have previously looked at.

On the first page, Isagenix describes it as 'a competitive Compensation Plan - one of the best in the industry', and goes on to say that members who 'dedicate significant time and money, may not achieve any meaningful results'  Strange as it seems, we believe both these statements could be true.  Despite the fact that only 1 in 2,500 Isagenix members earned a substantive income in 2015, this result could be considered 'one of the best' MLM opportunities.

Unless you are able to sell a huge amount of product for a retail profit, then you will probably start at the ‘associate’ rank with Isagenix. At this rank, you will not qualify to earn any commission. To qualify for commission, you have to achieve the Isagenix status of 'Consultant' or higher.  This can be done by employing what they call the 'You Share, They Share, Repeat system'.   In other words you start making money when your two friends each tell two friends.  Your binary MLM business will look like this:

Theoretically, with duplication, the above diagram would grow exponentially and your Isagenix team would go into autopilot. You'd advance through the Isagenix rankings and will be earning commission from all the product purchased by your entire network.  In reality earning commission with Isagenix is a not so simple.

With the binary compensation system, you will have two teams, one on the left, and one on the right.  When anyone in either team buys product, they will generate points which are assigned to their respective team.  You only get paid commission if at least 33% of your points come from each team.  This means that your commission is determined by how well your weaker team performs.  It is possible to have a very strong Isagenix team, and still earn no commission. 

How Good Are Isagenix Products

Regardless of what you might hear at recruitment sessions, to make money with Isagenix, you have to make sales.  Any salesperson will tell you that the easiest way to make sales, is to work with high quality, in demand products.  We have not tried any Isagenix products, so to find out how good they are we looked at what others had to say.

Diet spotlight clearly wasn't impressed with Isagenix Products. Given they were trying to sell their own products, it's no surprise that they focused on the negative side of Isagenix, describing them as:
- Overpriced, costing up to three times as much as similar competitor products
- Not liked by consumers, with several complaining about the bad taste
- Unproven quality, as no proven research has been made public

For a less one sided perspective we  went to Ancestral Nutrion, to find out more about Isagenix from a certified nutrition consultant. Once again the findings were less than positive. They researched the ingredients used in Isagenix, their findings included:
- Unhealthy sweetners
- Known to carry toxic nitrates
- May contribute to cholesterol problems
- Bad for your liver

Ancestral Nutrition also found that some ingredients used by Isagenix may cause side effects including:
- Reduction of blood pressure
- Extreme stomach pain
- Trouble breathing
- Painful skin reactions

We understand that the findings of one nutrition consultant, shared on a blog, should not be considered conclusive.  To make sure we weren't being unfair, we researched a little more.  We looked at a review of Isagenix by Choice, who are a leading Australian consumer advocacy group. 

Choice conducted research  on Isagenix products using both a professor in Nutrition, and a scientist from the Gylcemic foundation.  We think that their study has some credibility, after all their goal is to inform consumers, not to discredit or promote specific products.  The most interesting point we learned was that Isagenix products are no different from cheaper alternatives, and they'll give you the same results

Anyone trying to 'share the opportunity' would argue that the high price of Isagenix is irrelevant because of the financial freedom which comes 12 weeks later.  Choice advise consumers not to believe the hype driven by 'self proclaimed wellness experts', who are trying to profit from pushing Isagenix.  They also mention that most Isagenix members will never make much money, and this is a common theme with all MLMs.

What's Wrong With Network Marketing

Here at The Finance Guy, we believe that network marketing simply does not work.  There's no such thing as a secret to financial success.  In his free e-book 'Multi-Level Marketing Unmasked', Jon Taylor offers 466 pages worth of research showing why he believes the MLM business model is deceptive and unfair.  This extensive study found that 99.7% of people lose money with network marketing

Looking at what we know about Isagenix, more than 0.3% of members earned over $10,000 in commission during 2015.  If they only had to buy $1,250 worth of product, to qualify for this then it is quite likely that that they turned a profit, which means Isagenix is an above average MLM! 

We can't say for sure how many Isagenix members are turning a profit because we can't see all their expenses.  For example we don't know how many people took unpaid leave from their jobs (costing themselves days of pay), to attend work on building their team.  Building a team with any MLM takes more than just telling a couple of friends.  It takes time and effort, and you will need to spend money building your team.  

Is Isagenix an Illegal Pyramid Scam

Even though MLMs closely resemble pyramid schemes, they are not illegal. The reason dates back to the 1979 case of Amway vs the FTC. After 4 years in court Amway was found to be offering a business opportunity, rather than a pyramid scam. The technicalities came down to wording in their paperwork. One example requires consultants to make retail sales.

Another issue, is that even though these rules may be in the paperwork, they are difficult to enforce. For example, several people in MLMs have said that they have cupboards full of product. This is because of the minimum monthly purchases they need to make to remain active in the system. Even though stockpiling is against the rules, there is no way for the company to monitor it.

The Amway ruling opened the door for all MLMs to operate. The Isagenix business model is not illegal, but that does not mean that it's ethical.  Like all businesses, network marketing companies turn a profit by selling goods and services.  Unlike other businesses, MLMs charge a higher price for the added hopes and dreams of passive income and endless wealth.  

Should You Join Isagenix

If you are considering joining Isagenix, then our advice is to use the product first, and compare it to other products (including those available at normal stores).  If you are convinced that the products are well priced and of high quality, then you might have a chance of making money with Isagenix.  

If you don't like the products when you're paying full price with no financial incentive, then how will you convince others to buy them?  If you want to make money from Isagenix, you have to sell the products.  It doesn't matter how anyone else describes it, MLM is a sales job.

If you have any thoughts about Isagenix, we'd love to hear about it in the comments section below, especially if you can share any experiences you've had with them.  

For more posts like this, look at our list of mlm reviews. 

Mary Kay Inc is a cosmetics company, which was started in 1963 by Mary Kay Ash.  Since inception, the company has grown to be one of the largest direct selling companies in the world.  According to Mary Kay statements, the company has a global network of more 3.5 million Independent Beauty Consultants, and generated annual wholesale sales of $4 billion.

The company claims that as a Mary Kay Independent Beauty Consultant, you can run your own business, set your own hours and can 'earn amazing rewards'.  We decided it was time for the Finance Guy to conduct a streetonomic review of the Mary Kay business opportunity to find out if people are really making money with Mary Kay

What Is The Mary Kay Opportunity

To learn more about the Mary Kay business opportunity, we watched this video about it:

The video is a discussion between one of the Mary Kay corporate people and one of their top consultants. After a lengthy introduction and background info, we learn that Mary Kay taught the consultant how to dream. She then goes into her Mary Kay success story. We hear how she built her downline in her own time, while she was a single mom. It grew from there etc etc.

We learn her path to success. She shared the Mary Kay opportunity with absolutely everyone she knew because ‘you never know who is going to join’. We then here a bit more about why she’s so happy to have found Mary Kay. Eventually we hear the familiar MLM mantra, ‘you’re in business for yourself, not by yourself’. This is there way of telling us that even though are building your own downline, you have access to their infrastructure and can seek help from your upline.

If you join Mary Kay, the people that recruited you can help you recruit others. Furthermore you’ll have access to their online tools and other pre-made marketing material.

We were a little surprised that after 16 minutes, we didn’t learn all that much about the opportunity. All we really know is that this one consultant has done very well, and she seems very excited about recruiting others to join her downline. They somehow managed to not explain anything about how the business will make us money. We thought we better keep researching.

How Do You Make Money With Mary Kay

We managed to find a copy of a Mary Kay Recruiting Notebook, which is designed to promote the Mary Kay business to prospective new recruits.  The document starts off with the company mission, which is 'to enrich women's lives', with 'an unparalleled business opportunity'.

The notebook goes on to claim that Mary Kay 'is not a multi-level or pyramid company'.  Yet on the same page there is a label reading 'direct sales', which is just another name for MLM. It then goes on to simplify the Mary Kay business model into two steps.  1. The sale Mary Kay makes to consultants. 2. The sale the consultants make to their customers.  This is precisely how any MLM company would describe their sales process.

To make money with Mary Kay, you need to sell product.  As a consultant you can purchase Mary Kay products at half the recommended retail price.  This means that you can earn up to 50% commission on any sales you make.  Even with this generous incentive, to make a decent living, you'd have to sell a lot of makeup to a lot of customers.  If you want to earn an income of $50,000, then you have to find enough customers to buy $100,000 worth of Mary Kay product.

Even if you can find enough customers to buy a large volume of Mary Kay product, you will encounter logistical challenges.  As part of your role as a Mary Kay consultant, you are responsible for delivering the products to every individual customer.  Along with the time this would take, you will also incur expenses.  As a Mary Kay Consultant, you will have to pay all of your business expenses.  

You will spend a lot of time and money building and maintaining your Mary Kay Business.  Your real profit from selling Mary Kay, is what is left after costs, and it will be less than 50% of your total sales.  Retail sales are however not, the only way to earn money with Mary Kay.  You can also make money when you  'share the opportunity'. 

According to the recruiting brochure, sharing the opportunity can give Mary Kay Consultants 'unlimited earning potential'.  If you recruit others to become Mary Kay consultants, then you can earn commission on any sales they make.  Depending on how many people you can recruit, Mary Kay will pay you between 4% and 13% commission on any sales they generate.

If you are an exceptional recruiter, you might achieve the status of 'Director', which will entitle you to earn up to 13% in additional commission as well as other cash bonuses.  There's even a VIP Car Program.  For a company which claims not to be multi-level, they are doing a good job of impersonating an MLM

How Much are Mary Kay Consultants Earning

If you were to look at the recruitment notebook, you'd find a list of the top 100 Mary Kay commission earners.  This is a list of people who have achieved the status of 'Sales Director' with Mary Kay, and have made monthly commissions ranging from $5,800 to $16,900.   The top 100 consultants at Mary Kay are earning a good income.

While it's clear that money is being made at the top, we want to know how much the average Mary Kay consultant is earning.  Mary Kay has not made this information easy to find, but we were able to find a copy of the Canadian Mary Kay 2015 Earnings Representation, which we used to create the following table:

According to our math, 94.39% of Mary Kay Consultants earned less than $100 commission in 2015 in Canada. The recruitment notebook claims that Mary Kay is 'an unparalleled business opportunity', yet in Canada, 19 out 20 Mary Kay consultants earned less than 28 cents per day in 2015.  In 2015, less than 6% of Mary Kay consultants earned more than $9 a month in commission.

It would appear that most Mary Kay consultants are not earning significant commission.  Having said that, the same document does state that the 'vast majority of the Independent Sales Force Members primary source of profit is selling product'.  

Like most MLMs we have reviewed, including Tupperware, and Avon, Mary Kay admits that the best way to make money is through the retail sales.  On the quick facts section of the website, we found a summary of the annual Mary Kay Global sales figures.  We assumed that all consultants sold all product for the maximum retail profit of 50%.  Based on this, we used the Mary Kay sales results to create the table below:

According to their own figures, on average, worldwide Mary Kay consultants earn less than $100 per month in retail profit.  They claim to provide consultants with 'unlimited earning potential', but in reality less than 1% of all Mary Kay consultants are earning a full time income 

Can You Make Money With Mary Kay

Like all network marketing companies we have looked at, it is possible to make money , but it is highly improbable that you will turn a profit with Mary Kay. Here at The Finance Guy, we believe that you can't make money with MLM.  It's a model which makes good money for the product providers (including Mary Kay), but most people who are recruited will end up losing money.

As we have seen from the financials provided by Mary Kay, the average retail profit made by consultants is less than $22 per week, and less than 1% of consultants in Canada made more than $1,600 per month in commission from Mary Kay.  The recruiters may focus on the select few who are making a good income, but the numbers show that the vast majority of consultants are not making money with Mary Kay

Why Is It Difficult to Make Money With Mary Kay

One of the main problems with the direct selling model, is that they endorse constant recruitment.  Any salesperson will tell you that the demand for any product is finite.  Adding more salespeople will not increase total sales.  Constant recruitment means less sales per consultant

Mary Kay doesn't care how much the individual consultants earn, because they make their money from total sales of their products.  Using the MLM model means that it costs them nothing when extra consultants join the sales force.  In fact they make money because the consultants have to buy product when they sign up.

Mary Kay is just like all the other network marketing companies. In his book, Multi-level Marketing Unmasked, Jon Taylor found that 99.7% of people who join direct selling companies end up losing money.  Despite what you hear in the sales pitches, it is highly unlikely that you will make money from any network marketing company.

If you attend a Mary Kay promotional event, they will tell you that it's a system for everyone and that they believe that the 'more you help others, the more you help yourself'. In reality, there is no such thing as a system that continuously works for everyone.  If you keep adding new people to any income generating system, you will eventually reach the point of saturation.  No matter how big a company is, there is a limit to how many sales they can make.

The Mary Kay recruitment notebook claims that one of the benefits is that there are no territories, so you can sell Mary Kay anywhere you like.  We see this as a disadvantage because allowing too many consultants to sell in the same area creates market cannibalisation.   This means that there are too many sales people, and not enough customers.  It would be like McDonald's opening 4 outlets right next to each other, and expecting all of them to turn a profit.  Despite what some members claim, network marketing is not the same as franchising

How Good are Mary Kay Products

There is no shortage of salespeople, who will claim that they 'can sell anything', including 'ice to Eskimos'.  Despite their vaunted skills, the truth is that to make good sales, you need a good product.  The best products (such as the original iPhone), will literally sell themselves.  Customers will be lining up to buy them.   To make good sales, you need an in demand product with a good reputation.

Before you sign up with any MLM, or accept any sales role, you should ask yourself if you believe in the products.  It is much easier to sell something if you are a customer yourself. You can try the product yourself before you join, or you can do some research and see what others had to say.  We did some online research and found that Mary Kay products only scored 2/5 with consumers.  

No matter what you are trying to sell, there's nothing better than a happy customer to help you find your next deal.  We did not directly engage with a Mary Kay Consultant, but our web surfing has lead us to believe that Mary Kay sells products by running 'skincare classes', or offering facials.

The classes involve finding a host, and asking her to invite some friends to her house. They will then see a demonstration of Mary Kay products before they are given the opportunity to buy them.  From our distant perspective, Mary Kay classes are like Tupperware parties.  Based on our research, we believe that you can't make money with Tupperware.  Our opinion did not improve when we read this Mary Kay customer experience.

How Is Mary Kay Promoted

To get an idea of how Mary Kay is sold to new prospects, we once again looked at the Mary Kay Recruiting Notebook.  We looked toward the back, just after the page that claims '$100 could change your life!!!'  

We found what appears to be a guide for prospecting potential Mary Kay recruits.  This includes a list of opening questions, closing questions and two full pages about overcoming a list of 20 objections!  Team Finance Guy has cumulatively had an extensive  experience in sales, just like most people in the finance industry.  In our opinion, we believe that Mary Kay uses cheap sales tactics to promote their opportunity.

The opening questions could be a cut 'n' paste from any MLM, including the emphasis to 'Dream past the ordinary!'.  The concept of dream building, is central to network marketing.  Dreams are idealistic, dreams are Utopian.  Thinking about our dreams makes us feel warm and fuzzy, but thinking about dreams does not make them achievable!

The closing questions purported in the Mary Kay notebook, are unsurprisingly positive.  They are about why you should join today, and what impressed you most.  Last time I saw such an aggressive sales push, I was looking at a second hand car!  Having said that, I did buy the car, but I bought because I liked the product, not because of the cheap sales push.

When we looked at the 'Mary Kay Consultant's Guide to Overcoming Objections', at the back of the notebook, we found the advice to be somewhat questionable.  For starters, item 2. indirectly suggests promoting Mary Kay to your work colleagues.  Depending on your workplace, recruiting office friends to Mary Kay could get you fired!

Mary Kay targets people who are financially desperate.  Item 14 in the 'Overcoming Objections' section, is aimed at those who can't afford to lose money.  The suggested response includes the statement that with Mary Kay you 'could make $750 per month'.  This is somewhat incongruent with the Mary Kay financials which show that on average, consultants earned less than $100 per month.

The remainder of the Mary Kay 'Guide to Overcoming Objections', is exactly what you'd see from any multi-level marketing presentation.  Including the claims that 'you don't need to be a salesperson, you don't have to sell to your friends and family, you don't need to know lots of people, etc etc'.  The common MLM theme is that the sponsor can teach you to copy what they have done.  Unfortunately copying your sponsor may not be the path to untold riches.  Our research has found that you can't make money with direct sales.   It is more likely than not that your MLM sponsor is losing money, if you copy them, you will also lose money!

Can Mary Kay Teach you to Make Money

Over the last 20 years (or thereabout), The Finance Guy has been (unsuccessfully), recruited to more than 13 direct sales teams.  If you come across a lot of people in your daily life, then this probably sounds normal, or even below average!  Let's face it, everyone has at some point been shown the 'MLM opportunity'. 

One of the common themes with network marketing companies, is that they can teach you to make money.  They all claim to offer the 'secret to financial freedom'.  All you have to do is copy your 'mentors'.   The promotional presentations will focus on the most successful members in the system.  Despite what they tell you, no matter what you do, there is no guarantee you will earn as much as the people at the top..

We recognized more MLM smoke and mirror, techniques when we looked at the Mary Kay marketing plan.  This document claims that you don't need to know anything about selling because Mary Kay will supply you with 'motivational material'.  We're not saying that Mary Kay motivational materials are ineffective, but our research did find that Amway motivational content is controversial.  Even though Mary Kay claims to be different, they look just like MLM!

Is Mary Kay Different From Other Direct Sales Companies

It doesn't matter which network marketing company you look at, they all claim to be 'different from the rest'.  It's almost comical when you look at how similar they are when they claim to be different.  Mary Kay is just like all the other MLMs in that they claim to be different!

The Mary Kay marketing plan, claims that they pay the 'highest commissions structure of any direct sales company'.  This claim might be true, but it doesn't change the fact that on average, Mary Kay consultants earn less than $1,200 per year.  This is based on our interpretation of  Mary Kay financials

The marketing plan claims that Mary Kay has 'the highest paid women, with hundreds earning over $100,000'. If earning big money with Mary Kay is easy, then something strange must be going on in Canada, because according to the official 2015 Canadian Mary Kay Earnings Representation, only 0.03% of all representative earned over $100,000.  In other words, your chances of earning more than $100,000 with Mary Kay, are around 1/3,333.  Your chances of getting rich from the lottery are better than with Mary Kay

Another common MLM misconception we noticed in the marketing plan the claim that with Mary Kay, there is no middle man.  The irony is that to make money with Mary Kay, you become the middle man.  The commission system, which they claim is not MLM, pays you commission when your recruits make sales.  You are earning a mark up on the sales of your down line

Mary Kay claims that these commissions, of up to 26%, are 'paid out of company profits'.  The joke is on the consultants, because Mary Kay makes those profits from selling them product!  The 26% mark up is included in the price Mary Kay charges on all products to all consultants!

Is Mary Kay An Illegal Pyramid Scheme

Even though MLMs closely resemble pyramid schemes, they are not illegal. The reason dates back to the 1979 case of Amway vs the FTC. After 4 years in court Amway was found to be offering a business opportunity, rather than a pyramid scam. The technicalities came down to wording in their paperwork. One example requires consultants to make retail sales.

The Amway ruling effectively opened the doors for all other MLMs to operate within the law. However we should remember that being legal doesn’t make it ethical. If you knew that less than 1% of people had a chance of generating a real income, would you feel comfortable recruiting new consultants?

Another issue, is that even though these rules may be in the paperwork, they are difficult to enforce. For example, several people in MLMs have said that they have cupboards full of product. This is because of the minimum monthly purchases they need to make to remain active in the system. Even though stockpiling is against the rules, there is no way for the company to monitor it.

While MLMs may be legal, that doesn’t make them ethical. If you knew that on average consultants earned less than $5 per week, would you feel comfortable recruiting all your friends and family to the ‘opportunity’.

Should I Join Mary Kay

If you are looking for a way to make more money, then it is unlikely that Mary Kay will work for you.  If you become a Mary Kay consultant then you are a commission based salesperson.  The only way to make money, is to sell product. Unless you can sell huge amount of Mary Kay product, you won't won't turn a profit.

The only reason you should join Mary Kay, is if you are already using the product.  If you want to make money selling any product or service, then it should be something you that you are already using. There's no point trying to convince people to do something you are not doing yourself

As always, we'd love to hear your feedback in the comments section below.  Let us know what you think, especially if you can share your real world Mary Kay experiences

For more posts like this, look at our list of mlm reviews. 

In 1886 a door to door book salesman named David McConnell had an idea. He thought thought he could make more money door to door selling perfume than books, and he was right!  More than a century later, his vision lives on as the company we know as Avon Products (NYSE: AVP).

Today, Avon is one of the best known self employment opportunities in the world.  Mums, (and some dads) all over the planet have considered Avon as a way to earn some extra cash.  Here at The Finance Guy, we decided it was time for a streetonomic review of Avon.  We will find out if this is an opportunity for financial freedome, and will see how much the average Avon Representative earns.

Avon have a global network of close to 6 million Representatives who are contracted and paid through a network marketing system.  Here at TFG, we believe that you can't make money with mlm, but we will review the Avon numbers and find out if Avon representatives are turning a profit.

How Much Do Avon Representatives Earn

Like all MLMs, Avon offers representatives the chance to work for themselves and control their own income.  Avon is presented as an opportunity to take control of your financial future.  Members will stand in line to sign you up, but our Avon review suggests that most Avon representatives are not making money!

 After multiple Google searches, we were unable to find a valid link to any version of the Avon income disclosure statement.  This made us ask if Avon is intentionally hiding the income details from the public.  Therefore all the information in this review is based on the 140 page long, very publicly available 2015 Avon Annual Report

Our financial math review of Avon found that in 2015 most representatives did not earn much income.  A summary of the maximum earnings per Avon representative, is shown below:

As we were unable to find an Avon income disclosure statement, we gave them the benefit of the doubt, and assumed that all Avon representatives were earning the maximum 50% commission on all campaigns.  At maximum commission, the Average Avon representative earned less than $1,100 in retail commission in 2015.

Our calculations were based on the assumption that Avon had approximately 6 million representatives world wide (as stated in their annual report), and that all reps earned 50% on every sale from every campaign (so total commission earned by reps would be equal to the total revenue reported by Avon ). Even with maximum commission, the numbers suggest that Avon Representatives are not making a profit

Our calculations found that on average, Avon representatives made less than US $25 per week in retail commission.  Does this sound like an opportunity for financial freedom?  Let's not forget that we have not included any expenses.  Avon reps need to pay for all the time, effort, brochures and materials used for promoting and delivering Avon products to their customers.  

Retail profit is not the only way for Avon representatives to make money.  Those who recruit and build a team of Avon Represents below them will qualify for incentives or 'Leadership Bonuses'.   The amount of these payments depends on how much Avon products your recruits sell.  

We once again used information found in the 2015 Avon annual report to estimate how much Avon representatives are earning from these incentives.  Our findings are shown below:

Avon did not include the leadership program incentives as an item in their annual report.  We have therefore assumed that these payments are included in total 'selling and admin costs'. Once again we decided to be as generous as possible and we assumed that this entire amount was paid out to Avon representatives.  We estimated that Avon representatives earned average incentives of $590.53 during 2015.

Our review of the2015 Avon Annual Report found that after sales commission and leadership incentives, average Avon Representatives earn less than $135 per month from Avon.  That is total income, not profit.  To find the profit, we'd have to deduct all the time and money they spend in order to stay active and promote Avon.  Our review suggests that after costs, most Avon Representatives are losing money!

Are Any Avon Representatives Making Money?

We have read posts which claim that some high level Avon representatives are earning upward of $2 Million per year.  While we were unable to verify any of these earnings, we believe that they are true.   Just like all MLMs, there is a small percentage of Avon representatives, who are earning a lot of money! 

If you attend an Avon recruitment presentation from Avon, you will hear stories of high income earners.  The presentation will claim that they are an example of what is possible for anyone.  The truth is, that those who make money are the rare exception.  Jon Taylor has proved that 99.7% of people who join network marketing companies, will lose money.  This is shown in his free book 'Multi-Level Marketing Unmasked'.

Network marketing companies want you to believe that they offer the path to financial freedom.  When they are prospecting for new recruits, they will focus on the 0.03% of people who are making a profit.  These success stories are presented as an example of 'what is possible' if you join.  These claims are true, it is possible to make a fortune through MLM, but it is highly improbable.  Only 1 in 333 MLM members will ever turn a profit.  Why would you invest yourself into a business with a 99.97% failure rate?

Is It Easy for Avon Representatives to Build a Team?

In any direct marketing system, the best way to make money, is to build down line.  This is done by recruiting new members to the system.  Once the people you recruit start making sales, you start earning commission from their sales as well as from your own.  When your down line start recruiting new members, you will earn from all their sales, as well as from the sales of any new members they have sponsored.

If you join Avon, and you successfully recruit a team of new representatives, then you will qualify for Avon's Sales Leadership incentives.  They will tell you that building a team is as easy as sharing the opportunity with a few friends and having them tell all their friends.  In reality building a network marketing team is very difficult.

Avon claims that 2015 was a good year for team building.  The annual report states that they made 'significant progress' by achieving ' Active Representative growth of 1%'. This was considered a success because they were able to 'reverse declines in Active Representatives'.  This is not good news for Avon Representatives who are trying to become sales leaders.  The annual report shows that during 2015, there was one new Avon Representative for every 100 existing Avon Reps. 

Would you want to join a system if  your chances of growing your team by just one new member per year is 1/100?  Even if you manage to recruit lots of new members, there is no guarantee that your team will grow.  Another major problem with Avon and most MLMs, is the extremely high turn over rate.  In previous years Avon experienced 'declines in Active Representatives', which means that even though new recruits might be joining, there were more people quitting.  If you want to be a sales leader with Avon, you will need to constantly recruit new members.  Your first goal will be to replace all the members who quit or become inactive, your second goal will be to try and grow your team.

Why Is It So Difficult To Make Money With Avon?

Avon was once considered a great way for stay at home moms to make some extra money in their own time. Selling home delivered  cosmetics from catalogues, was a great business model.  It offered people the convenience of shopping from home, and allowed representatives to earn a living without venturing too far from their local neighborhood.  Unfortunately Avon has not kept up with the times

Shopping from home is no longer a unique value added service.  Thanks to the internet and companies like Amazon, there is very little we can't buy from home and have delivered within a few days.  Avon's catalogue model is not competitive in the modern market.  

It is possible to buy Avon online.  Their website offers customers the option to purchase either 'directly from Avon', or 'with a local online representative'.  Avon members can become 'online representatives' buy paying Avon extra fees.  This will provide them with their own referral link so their customers can buy from them online.  

The problem with being an online representative, is that Avon still requires you to deliver the goods to your customers.  This means that unlike other online businesses, you will only be able to sell to customers who live within delivery distance of your home.  You can't use the internet to promote your Avon business to new customers from all over the world.  This is perhaps why most webpages run by Avon Representatives are designed to recruit new members, not to sell product.

If customers buy directly from Avon, they will pay the same price for the products.   Avon will keep the commission instead of allowing a sales representative to earn it.  This means that unless online representatives ensure that their customers use their specific links, it is possible that they will lose commission because of direct purchases.  This means that instead of supporting members, Avon is competing with their own representatives for online sales.

Does Avon Help You Promote Your Business?

Avon does not do any marketing to the public.  This task is delegated to the army of Avon Representatives.  There is a wide range of promotional brochures and other marketing tools, but like the website, they all come at an additional cost to the Representatives.  If you decide to become an Avon Representative, then you will be able to purchase products at wholesale prices, but will need to depend on your sponsor for any additional support.

Before you join Avon, you should ensure that you have a sponsor who is already successful, and can show that they are supporting their team. The 'upline' will be your main source of knowledge and support.  For example if you join Avon through a website, it is quite likely that you will never meet your sponsor in person, and will probably not get a lot of support.  Essentially you will be working on your own from from day one. 

Why Do Avon Representatives Want to Recruit You?

If you speak to a current Avon Representative, they will do their very best to convince you to sign up and become an Avon Representative.  They will parrot all the standard MLM claims about why Avon 'is the key to your future financial freedom'.   It's unlikely that they will mention the fact that they are currently earning less than $25 per week from this 'key to financial freedom'.  This does not mean that they are intentionally lying.  Most active MLM members believe the that they are on the path to financial freedom, despite the fact that they are losing money!

According to the indoctrination, the key to success with Avon is in becoming a sales leader and recruiting new Avon Representatives.  You earn income when your recruits make sales, so in theory, the more you recruit, the more you can earn.  Avon Representatives want you to join their team so that they can make money from your sales.  To be more precise, they are recruiting you to try and reverse their losses.

Avon Representatives are taught that recruiting new members is the key to success, ironically, the more they recruit, the less likely they are to succeed.  The MLM model used by Avon, encourages constant recruiting of new Representatives with no regard to the existing market.  When companies hire new salespeople, it's usually in response to a marketing strategy.  They are either trying to grow into new areas, or they are reacting to strong demand from customers.  

MLMs could learn something from the corporate world.  As a corporate sales representative you'd be allocated an area or a specific product, or even given a portfolio of customers to look after.  As an Avon Representative, you are selling the exact same products as all the other Avon Reps, and it's possible that they will competing with you for the same customers.

If you become an Avon Representative, you will essentially have your own duplicate version of an Avon sales business, offering identical products for sale.  It's like going into a McDonald's, no matter where it's located, you know what you're going to get from the fixed menu. In this sense Avon is similar to a franchise.  New entrants have a carbon copy of an existing business.

MLMs often claim to be similar to franchises, but they are not.  Franchises are careful about opening new branches.  They make sure that applicants are qualified to run the business and they will only allow new branches to open in approved locations.  If McDonald's used the MLM system of expansion, they'd  allow 7 new franchises to open in within 100m of an existing outlet.  Then they'd tell the owner of the original one to be happy because they now have a 'down line'.  In this example, we'd expect that the original outlet would see their sales fall by 87.5%, or 7/8, and all 8 shops would lose money.  

By encouraging constant recruitment of new members, Avon is creating an unsustainable system.  There are simply too many Sales Representatives, and not enough customers.  If you are an Avon Representative, you should not consider recruiting any new members unless you have so many customers that you can no longer service them alone anymore.

Our Final Say

As an Avon Representative, you will have the opportunity to sell their products for commission.  How much you earn is entirely based on your ability to make sales.  If you are exceptionally good at selling, then it is possible that you can turn a profit with Avon, but you are more likely to make money from regular sales job.  Very few people turn a profit from any MLM system.  Unless you are near the top of the system or extremely lucky, then it is highly improbable that you  will ever make a profit.  

Avon has one advantage over most other MLMs in that they actively sell to retail customers.  This means that Avon Representatives know right away that making money involves selling product to customers.  Our review found that in 2015 the average Avon Representative earned less than $25 a week in commission.  This should be a major red flag to anyone who plans on earning a living selling Avon

People join Avon with dreams of financial freedom and the hope of earning a little extra money.  Unfortunately the vast majority of them will not make any money, and after time and expenses, most Avon Representatives will lose money. 

If you are looking at joining Avon, or are already a Representative, we'd love to hear from you in the comments section below.  Especially if you can share any success stories or advice for new Reps.

For more posts like this, look at our list of mlm reviews. 

In 1946, Earl Tupper released his first patented airtight container, which he called 'Tupperware'.  He felt that the best way to make sales was to demonstrate how the new concept worked, and how it could be used.

By 1949, his idea for demonstrating products had evolved into the direct selling model we now know as the 'Tupperware Party'.  It did not take long for Tupperware to become known as the ideal opportunity for stay at home moms looking to make a little extra income.

When it comes to network marketing, we think you can't make money with multi-level marketing.  Tupperware has a distinct advantage over most MLMs in that there is a noticable retail market for Tupperware.  Like most married men, I can say that I've seen more than a few dollars worth of Tupperware in my own kitchen.  This lead me to wonder if Tupperware was different, maybe the ladies hosting the parties were making a good living.  We decided it was time to take a streetonomic review of Tupperware to see if the sales force is making money.

Is Tupperware Better than other MLMs

The key difference between Tupperware and most other direct marketing companies is that their business model focuses on making retail sales.  The goal of the Tupperware party is to sell Tupperware products to retail customers.  This gives them a significant advantage over other MLMs who rely mostly on their members to consumer their products.

Tupperware products are good quality and last a long time, I know this from personal experience.  A selection of Tupperware containers appeared in my kitchen a little over 2 years ago.  Despite the frequent use all of our Tupperware containers are still in perfect condition, with all lids still locking on as tightly as ever, we have not had to replace any of our Tupperware.

Unlike most MLMs that we have looked at, Tupperware doesn't try to pretend that the business is not about making sales.  When new members join the Tupperware sales force, they are given a copy of the Tupperware Business Binder, which contains some basic sales training.  Tupperware consultants know that to be successful in MLM, you need to sell lots of product.

Unlike most MLMs, Tupperware does not sell products which need to be replaced on a regular basis.  Most MLMs focus on products such as cosmetics or diet products, which if used, will need to be replaced regularly.  The company can make repeat sales to the same customer every month until they stop being a customer.  Tupperware products do not require frequent replacement so it will be unlikely that you will have customers who make regular purchases.  In order to make regular sales, Tupperware consultants need to constantly prospect for new customers

Are Consultants Making Money with Tupperware

To answer this question we started on the Tupperware Investor Relations page, which shows some of the financial highlights achieved by Tupperware in 2015.  One of the slides shows that Tupperware made $2.3 Billion worth of sales, and had a sales force of 3.1 Million consultants.  We then went back to the Tupperware business binder and found that consultants can earn up to a maximum of 35% commission on their personal sales.

After doing some calculations, we believe that most Tupperware consultants are not making enough sales to earn a substantial income.  Even if they all earned 35% on every sale, then the average commission paid to Tupperware consultants in 2015 would have been $260 for the entire year.  That's less than $22 a month.  The Tupperware financial data and our calculations are shown in the table below:

Tupperware offers a well recognized high quality product, and keeps the focus on making sales.  Despite this, most consultants are not making money.  We believe that this is because multi-level marketing does not work unless you are at the top of the pyramid.  It is however very profitable for the company selling the products with high margins.

The 35% commission on personal volume is only part of what you can earn with Tupperware.  There is also the opportunity to earn royalty bonuses from the sales made by any new members you recruit.  We wanted to know if anyone in the Tupperware network is making a profit. We looked at the Canadian edition of the 2016 Tupperware Income Disclosure Summary.  We found that 96.88% of Canadian Tupperware consultants were paid less than $500 in 2016.

There are some Tupperware consultants who are earning a good living in Canada.  The same income disclosure summary showed that a total of 22 consultants earned more than $50,000 over the same time when 96.88% earned less than $10 a week.  The consultants who earned this level of income represent 0.06% of the Canadian Tupperware Sales Force.  Statistically, your chances of earning a good income with Tupperware are 1 in 1,667

Why is it Difficult to Make Money with Tupperware

Despite having quality products and a culture which focuses on retail sales, most Tupperware consultants will not make a significant income.  We believe that this is because network marketing does not make money for members.  The system is great for the product providers.  They get a loyal customer base who is willing to buy directly from them and pay significantly more than what a traditional wholesaler would pay for the same products.

Like all MLMs, recruitment of new members plays a large part in the Tupperware compensation system.  Once you start building a team, your potential to earn income is no longer based on just your own sales.  You can also make commission from the sales made by those who you have introduced to the system.  The more members you recruit, the greater your opportunity to earn from their sales activities.

Network marketing companies are willing to let anyone sign up and 'become part of the opportunity'.  Existing members have a vested interest in recruiting as many new members as possible.  This inevitably results in the MLM sales force grows at an unsustainable rate.  There are too many salespeople, and not enough customers.  For most consultants there won't be enough sales to earn a decent living.

In their training, Tupperware will teach new consultants to prospect their parties for both sales and for opportunities to sign up new recruits.  Ironically, signing up new members is not what's best for their own business.  Every time a new consultant joins Tupperware, they are competing with all the existing Tupperware consultants to find customers, host parties, and sell Tupperware.  Every new recruit reduces your chances of making future sales.

For example, if you have successfully run a party, and recruit a new Tupperware consultant from the attendants, then your chances of making direct sales or getting referrals from this group has halved because the new recruit will be trying to make sales within the same circle of influence.  You could make some commission if the new recruit makes sales, but you'd earn more if you make the sales yourself.

Is Tupperware Like a Franchise

Network marketing companies often compare themselves to successful franchises such as McDonald's.  They'll explain that when you join, you can duplicate the successful business model and leverage off the success of the existing brand name.  While this is partially true, the network marketing model is different from franchising in key areas.

First of all, getting a franchise is not as easy as joining a Multi-Level Marketing company.  Before you can open a new franchise, your application will need to be approved.   The company will make sure that you are a suitable applicant with the necessary business skills, and they will need to approve the location of any new franchises.

If franchises operated the same way as direct marketing companies, then they'd let anyone open a new franchise anywhere they chose, even right next to existing stores.  If Subway allowed three stores to open side by side, do you think any of them would turn a profit?

Network marketing companies make money when members buy their products.  They don't care if the members themselves are making any profit.  They will claim that their system can offer financial freedom to everyone, but they do nothing to ensure that everyone gets a fair share of the market or a designated territory.  MLMs enable their members to cannibalize the market with too many sellers and limited buyers.

Are Tupperware Products Better Than Others

There is no doubt that Tupperware sell very high quality products.  The only problem is that they are also very expensive.  I could buy a small lunch container from Tupperware for $17, or I could buy a similar one from K-Mart for $3.  Both products have lock on lids, are BPA free, and are microwave and freezer safe.   The K-Mart option is slightly larger and is more than 80% cheaper.

Tupperware products might be stronger, last longer and have a lifetime guarantee, but they get lost just as easily.  For Tupperware products to make financial sense, they'd have to last more than 5 times longer than the K-Mart alternative.  I'd rather take my chances with the K-Mart brand.  At least with them I can take them out of the house without getting a lecture about the importance of bringing them back home.

Our Final Say

Tupperware is a great option if you want high quality plastic storage.  If you are looking for an opportunity to earn a good income, then it is unlikely that you will find this from Tupperware.  Like all direct marketing companies, there are a few people near the top of the system who are making a good living, but the majority of people who join will never earn enough to support themselves.

For more posts like this, look at our list of mlm reviews. 

Herbalife was first launched in Los Angeles in 1980.  Today, it has expanded into a global company, available in over 90 countries. Herbalife is one of the largest multi-level marketing companies in the world.   If you've seen the word 'Herbalife' at a promotional stand, or on a t-shirt, or anywhere else, then it's quite likely that you live in one of the many countries where Herbalife is active.  We decided it's time to offer our streetonomic review of Herbalife!

If you've met someone who has joined Herbalife, then it's quite likely they invited you to 'see the opportunity' and become a Herbalife distributor.  I have personally been invited  more than once.  I even went to one of their promotional seminars but I decided not to join Herbalife.  

Herbalife uses network marketing to promote their line of nutritional products.  Like all multi-level marketing companies, Herbalife offers a business opportunity to anyone who is willing to give it a try.  The idea is you use the products and tell other people to use them too, once your friends start telling their friends, you'll be earning enough income to be financially free.  Sounds pretty simple, but at The Finance Guy, we believe that you should not join Herbalife because making money with mlm is very difficult.

Why Do Herbalife Members Want to Recruit You?

Like all direct marketing companies, the key to financial success in  Herbalife,  is in building what they call a 'down line'.  The strategy is to invite anyone and everyone you know to join under you as a Herbalife distributor.  The more you recruit, the bigger your team gets, which theoretically results in you earning more money.   In theory, all you have to do is tell a few friends, and have them tell their friends.  In reality, making money with Herbalife, is extremely difficult

Making a profit from Herbalife is far more complicated than simply inviting a few friends to become distributors.  Herbalife, distributors need to remain active by generating their minimum quota of annual Volume Points (VP).  Each Herbalife product has a VP value, so the more Herbalife products you and your down line purchase the higher up the chain you will rise. Buying more product also qualifies you for larger discounts on the prices.  (the top discount is 50% off the recommended retail price).  To remain active, you have to buy a minimum quota of Herbalife product. If you fail to generate VP, then you become 'inactive', and forfeit any future commission your team might have generated for you.  

The presentation I attended claimed that this is a business for everyone because 'you don't have to be a salesperson to be successful in Herbalife'.  If the distributors aren't salespeople, then what are they doing with all that Herbalife product they have to buy just to qualify for commission?  To make money with Herbalife, you will have to buy a lot of Herbalife products, and convince everyone in your down line to do the same.

How is Herbalife Promoted to New Members

If you attend a presentation, as I did, Herbalife distributors will tell you that they are offering you an opportunity for financial freedom.   They will focus on dream building, telling you to imagine a future of luxury and financial affluence.  They'll claim that in a few years you can have enough 'residual income' to finance your wildest fantasies.   What they forgot to mention is that all the money for this dream lifestyle, comes directly from the people recruited in their down line.   

The person who recruits you, and quite a few people above them in their 'up line' will enthusiastically tell you the importance joining right away, and buying your Herbalife Member Pack (HMP).   They will tell you that to become financially free, you need to understand 'duplicating' and 'being a product of the product'.  This is their way of telling you that you need to spend money on Herbalife products, and you need to do it right away. They conveniently don't mention that: If you don't spend money, they don't make money.  

Not all Herbalife distributors will invite you to attend a promotional presentation, some will offer to visit you at home to 'show you the opportunity'.  Some Herbalife distributors, won't even meet you in person, they prefer using the internet to recruit new members to their teams.  We looked at website created by Herbalife members Willem and Sune Kilian, of Team EZHealthBiz, (Team EZHealth), which purports that 'you can make money with Herbalife'.  To get an idea of how Heralife is promoted by existing members, we decided to compare the claims on their site with our own streetonomic look at Herbalife:

Is Direct Marketing Better Than Traditional Marketing

Team EZHealth claims that it is 'well known', that people using Herbalife products are getting 'amazing results'.  They then show you a few photos of famous athletes, before telling you that you can't buy Herbalife in shops.  If you want 'amazing results', and want to be more like the athletes in the photos, then the only way is to join Herbalife, and buy lots of product!

This is a strategy common to most multi-level marketing companies.  They show you a product you've never seen before, then claim that the products are better than anything sold in shops  because someone famous agreed to receive money so the company could use their photo.  Then they'll explain that the company chose direct marketing as the most effective way to deliver products to their consumers because it 'cuts out the middle man'.  

We could not find any research to substantiate the quality of Herbalife products.  We did however find a post by ancestral nutrition, which is run by a certified nutrition consultant, who completed an unbiased review of Herbalife products.  Based on the ingredients in Herbalife products, Ancestral Nutrition described Herbalife products as 'not healthy', 'contain MSG' and 'support genetic modification of food'.  Would you buy a product if it sponsors some athletes but a professional in the nutrition industry found it to be: not healthy, containing MSG and genetically modified

Why is Herbalife Not Available in Shops?

This question is not addressed by team EZHealth, but in the handful of MLM presentations we have seen in the past, they generally claim that it is 'cheaper to sell directly to customers'. We believe that selling directly to customers is not cheaper than using traditional shops. While there may be savings on advertising costs, nobody will buy what they don't know about.  Companies pay for advertising and promotions because they work!  The only way you hear about MLM products, is from MLM members, we do not believe this is an effective promotional strategy.

Promotions aren't the only area where direct marketing falls short, there is also the problem of logistics.  Recruitment events for multi-level marketing companies usually claim that it is 'cheaper to sell directly to customers'.  This is another unproven claim made by several MLM companies.  The presentations claim that sending out over a million small packages to houses all over the world is cheaper than sending less than 10,000 crates to large supermarkets who could distribute products internationally.  The claims made by MLMs does not make logistical sense

Do All Herbalife Distributors get a Discount?

Another misconception common to the MLM industry, is that signing up entitles you to a discount.  EZHealth claims that 'only registered Herbalife members, may purchase Herbalife products from Herbalife'. They go on to claim that 'the minimum discount is 25%'. We believe that this is an aritificial discount.  If the only way to buy Herbalife, is to be a member, then nobody pays more than the 25% discount. However time and freedom found that even after the alleged discount, Herbalife products are more expensive than their compeitors. If nobody pays more, are you getting a discount?

Does Herbalife Pay Most of Their Turnover to Distributors?

According to EZHealthBiz,  Herbalife pays 73% of their turnover back to distributors.  As a publicly listed company, Herbalife (HLF: NYSE), is required to release their financial data to the public.  We looked at the Herbalife finacial statments and found that in 2014, Herbalife paid 29.67% of turnover to distributors and in 2015, they paid 28% of turnover to distributors.  Maybe EZHealthBiz ends up with a return of 73% on their own purchases, but on average, Herbalife is paying far less than that  

We are not saying that EZHealthBiz is lying, but in their own post about the Herbalife compensation plan, they only mention a maximum payout of 50% (if you are a supervisor and have new recruits paying Herbalife full price). But that can only really be 33% because the first 25% discount is artificial  as nobody pays Herbalife full price. 

In our research, we found no proof that Herbalife is paying 73% of their turnover to distributors.  We did however find 73% in the Australian 2015 Herbalife Statement of Average Gross Compensation, which claimed that a survey found that  '73% of former US Herbalife members', joined Herbalife so that they could buy the products cheaply.  If they did want to gain access to cheap Herbalife products, then we have to ask 'why are they former members'?  Maybe buying from Herbalife wasn't so cheap after all.

Can You Make Money With Herbalife?

According to the Kilians, making money with Herbalife is simple.  All you have to do is join Team EZHealthBiz, buy Herbalife products, and then tell all your friends and family to do the same.  In our own research we found that it is very difficult to make money with MLM.   We decided to take a closer look, to find out if Herbalife distributors are following this alleged pathway to passive profit.

According to the Herbalife sales and marketing plan,  there are 7 possible ways for distributors to earn income from Herbalife.  These include finding your own customers and selling product at a retail profit, as well as qualifying for all sorts of incentives once you've purchased enough Herbalife products.  We believe that the retail margin is the only way new distributors can make money from Herbalife.

We looked at the Herbalife 2016 Statement of Average Gross Compensation for USA, which showed that in America, more than 6 out of 7 Herbalife members, did not sponsor any new recruits, and did not receive any incentive payments at all from Herbalife in 2015.  That means 86% of Herbalife distributors made no revenue other than the retail margin.  Herbalife does not monitor or record retail profits made by members, so it is unknown whether or not these members made any money at all.

How Much are Active Herbalife Members Earning?

According to their income disclosure statement, 98.6% of all Herbalife  distributors in USA, were paid less than $5,000 during the year 2015.  Does this mean that something is wrong with Herbalife, or is it just hard to make money with Herbalife in America?  To find out we also looked at the Australian Herbalife Statement of Compensation, which shows a similar picture.  In Australia 2015 was also not a good year, 98.5% of Herbalife Distributors earned less than $2,500 for the year

Can You Build a Down Line with Herbalife?

If you want to be part of the 1.5% of Herbalife distributors who earn more than $100 a week in commissions, then you need to recruit aggressively and build a large down line.  But your job doesn't end at building the down line.  You also have to maintain it.  Like most MLMs, Herbalife has a very high churn rate.  So you will have to recruit new members to replace the ones who quit every year

We looked at the the 2015 Herbalife Annual Report, which states that 48.5% of Herbalife members quit the business in 2015.  Herbalife was happy with this figure because the total number of distributors grew by just over 5%, which was a 'record result'.  This means that only 1 in 20 distributors grew their down line in 2015, and this was a record result!  If you try to build a business with Herbalife, then you should expect half your down line will quit every year, and your team will grow at less than 5% per year.

Should you Join Herbalife?

If you are looking for an opportunity to make some extra money, then Herbalife is probably not going to work out so well for you. While their presentations may claim that they offer the secrets to a future of financial freedom, their own data shows that less than 2% of Herbalife Distributors are paid more than $100 per week, and this does not include the time, effort and expenses they incurred buying Herbalife products attending Herbalife meetings, and promoting the opportunity

While there may be 7 ways to earn income from Herbalife, we found that retail profits are not reported.  To be eligible for the other 6  streams of revenue, distributors have to buy a minimum amount of Herbalife products every year.  We calculated that, for most of them the cost of these products outweighs any commission they were paid.  The numbers show us that unless there are retail profits, then over 98% of Herbalife distributors are losing money.    

If like 73% of Herbalife members, you want to join just to get access to cheaper products, then we suggest you shop around first, and seek advice from a nutritional expert.  Don't sign up just to try the products at a discount. You should not join Herbalife unless you are already using their products.

Our final say

It is possible to make money from Herbalife, but it's very unlikely.  As we have seen from their own numbers, only a very small number of members will make a significant income.   After expenses, the majority of members are losing money every year.  We are not saying that the people who promote Herbalife as a path to financial freedom are intentionally trying to mislead you, but the data shows that people are not making money in Herbalife.  This could explain why almost half the members quit Herbalife every year

As always we welcome your feedback, and would love to hear from you in the comments section.  Specially if you can share your own Herbalife stories with us

For more posts like this, look at our list of mlm reviews. 

My Top Tier Business (MTTB) is the entry level product for the My Online Business Education (MOBE).  We have already posted our review of MTTB and MOBE, breifly covered the MTTB 21 Step Program.  We decided it was time to release our expanded uncut edition of the MTTB 21 step review.  

We believe that it would be extremely difficult to make any money with MOBE or MTTB, and this point of view will be reflected in our conjecture throughout this post.  We have not joined MTTB and are in no way associated with it or any other program.  

What is the MTTB 21 Step Program

When you pay your $49 to enroll in MTTB, you are buying the 21 Step Program.  This is a training course to get you up and running with MOBE.  You can not activate your MOBE referal link until your personal coach is satisfied that you have completed the 21 Step Program.  This is the education that will unlock the secret formula to making money online

If you have already enrolled in the MTTB 21 step Program, and have paid your $49, then please do not send another cent to MTTB or MOBE.  In this review, you will see why it is more than likely that you'll find MOBE is a waste of your hard earned money.

My Top Tier Business has chosen to keep the steps mysterious and  not to tell us anything other than there are 21 steps.  To find out more, we need to pay them $49. This should a huge warning sign!   Would you buy a book if the bookstore told you that you were not allowed to read the table of contents or the back page unless you purchase it?

We did manage to find a what we believe is a list of the MTTB 21 Step Program.  We can not confirm that this information is accurate or current because the source was from independent webpages not directly published by either MTTB or MOBE.  We'd share a link, but it's from a MOBE member, so we don't want to get him in trouble for sharing the secret handshake.

This is our version of what you might learn, from My Top Tier Business, maybe we should call it the TFG 21 Steps Program. Our program is absolutely free to you, and can be done in the time it takes you to read this post.  Unfortunately we can't send you a magical web link which generates billions of dollars of passive income.

Below is our full version of the TFG 21 Step Program:

• Step 1: How To Make 6 Figures in Your First Year With Top Tier
• Step 2: Discover the Missing Ingredient 99% Miss in Business Success
• Step 3: How to Unlock Your Millionaire Mindset
• Step 4: Why 85% of Franchises Succeed While Most Other Businesses Fail
• Step 5: What is Even More Lucrative Than a Franchise Model
• Step 6: How to License a Proven & Profitable Online Business
• Step 7: How to Get the Expert Support You Need to Succeed
• Step 8: How to Get Paid Quickly and Easily with MOBE
• Step 9: How to Get $3,000 Commissions With No Extra Work
• Step 10: How to Get $5,000 Commissions With No Extra Work
• Step 11: How to Get a New Mercedes Benz Paid for Every Month
• Step 12: How the Phone Sales Team Makes You Money
• Step 13: How the MOBE Team Builds Your Business Everyday
• Step 14: How to Make 5x More Money Without Any Additional Work
• Step 15: How Goals are the GPS to Your Success
• Step 16: How to Create Success Faster with Helping Hands
• Step 17:How to Finance Your New Business Venture
• Step 18: How to Get Steady Streams of Traffic Visitors 24/7
• Step 19: How to Get Access to Even More Opportunities
• Step 20:Discover Your Why and Manifest Your Success For Life
• Step 21: Discover a Special One-Time Offer, You Don't Want to Miss

Step 1: How To Make 6 Figures in Your First Year With Top Tier

Like most educational courses, the first day or step one is an introduction and overview of the subject matter.  You'll preview the foundations of My Online Business Education, and learn some new concepts and terminology.  Don't panic if it's all a bit confusing, there's still 20 more steps of education ahead.  This is presented in a 60 minute video which will include:

What is a Top Tier Product
M.T.T.B describes a 'top tier' product, as one which costs lots of money, and generates lots of commission. Customers will pay a higher price, but there is no mention of whether or not they offer more value.

Think of it like cars.  A car salesman could make a $10,000 commission from selling a top of the line Bentley or he could make a $500 commission from selling an entry level Ford compact. 

Why You Need to Sell Top Tier Products
The Ford only generates 5% as much commission as the Bentley, so one Bentley commission is worth 20 Ford commissions.  If your goal as a car salesman was to earn $100,000 for the year, then you could either sell 10 Bentleys or 200 Fords!

Why spend all that time trying to make 200 sales, when you can make the same money from only 10 sales? Naturally selling cheap Fords will be a lot easier as there'd be more customers..

What are the Pros and Cons of Different Systems Available
MTTB purports that there is a difference between 'top tier' and 'regular' affiliate businesses.  They are suggesting that in the world of affiliate marketing, they are Bentley, while the rest of the internet is Ford. 

Why join a work from home system that makes $10 per sale when M.O.B.E can generate up to $9,000 per sale.  One of the MOBE members stated that 'it takes the same amount of effort to sell low ticket items, as it does to sell high ticket items'. He goes on to say, 'with MTTB, you can sell high ticket items with the same effort, and hit your monthly income targets a lot faster!'.  - We elected not to share a link to this video because it promotes membership. Future quotes regarding videos of the MTTB program, are sourced from his youtube series.

We can not confirm if the above quotes were also made directly by Matt Lloyd or MTTB, but they do come from someone trying to sell his system.  We see a few flaws in their logic, selling high priced items does not take 'the same effort' as selling cheaper ones.   

Think again of the cars. The paperwork to complete the sale for a Ford and a Bentley might be identical... transfer of ownership etc etc... sign here here and here.   The difference comes in the effort taken to get that signature on the contract.  

How many people can afford to spend over $150,000 on a car?  The Bentley salesman needs to go to much greater effort to find his potential buyers.  Your average parent doesn't just walk into a Bentley dealership to find a nice safe first car for their 17 year old!  The salesman selling cheaper cars has literally put the 'Ford' in 'affordable!'

What about the effort required per customer to complete the transaction.  Some car buyers will show up at the yard, take a car out for a 20 minute test drive, and make a decision to purchase it on the day.  It might take around 2 hours for this transaction to go from prospect to closed deal.  The salesman has made his commission putting in 2 hours effort!

Other customers will be less impulsive.  They will want to take multiple test drives.  They'll want to discuss it with friends and family.  They'll want to test drive other cars to make sure they are making the right decision.  They might request features which are not standard and take time to order.  

These more complex deals may take months to complete.  The salesman will need to stay in touch with the customer.  They will spend time answering questions, taking them for additional test drives, and explaining why the prospect should buy their car instead of one from a competitor.  To earn these commissions, the salesman will need to work for several hours to get a result.  Sometimes, that result will be no commission at all because the customer decides not to proceed.

For simplicity, we've only looked at two very extreme cases.  One very easy transaction, and one very difficult.  In reality car buyers will cover a much larger spectrum between easy and difficult.

Ford and Bentley both have their share of easy and difficult customers.  On average, which make of car do you think has the easier transactions, and which the more difficult.  Do you think customers spend more time when they are about to spend $150,000 or when they are about to spend $20,000?

This is the issue have with the MTTB member video.  Our interpretation of what he was suggesting is that 'selling a Bentley takes the same amount of time and effort, as selling a Ford'.  We disagree as we believe that on average it takes more time and effort to sell a top tier product, such as a Bentley.  We can't say if it's due to an unintentional misunderstanding of the sales process or a deliberate attempt to mislead potential customers

According to the video, the 'second key take away' is traffic.  Once you have a web link, you need to send traffic through it.  Traffic can be 'organic' from sources such as Google searches.  Traffic can be promoted on a grassroots level, through sharing links in chat rooms and social media.  These are ways to generate your own traffic.  

You can also pay for traffic by buying advertising for your link.  You can pay Google to place an advert on the internet which promotes MTTB and MOBE through your personal affiliate link. Maybe your advert will even be displayed on this web page!

 Step 1 claims that 'paid traffic is the way to go'.  They base this endorsement on the assumption that paid advertising will generate a positive return on investment.  For example they say 'if you knew that if you invested $1,000 in traffic, you'd make $5,000 back, would you do it?'.   He describes this as part of leverage, goes on to say that with paid traffic you can 'spend a lot more, and increase your monthly income as much as you want'.

In our view this description of paid advertising is another misrepresentation.  You will never know how much revenue you will make from paid advertising.  But we will go into this in more detail later when paid advertising resurfaces in future steps! 

Step 2: Discover the Missing Ingredient 99% Miss in Business Success

This is a brief, 10 minute video to introduce you to 'the tactical triangle'. They will explain that most online businesses focus on three things:
1 Traffic - Promoting their webpage and enticing web surfers to visit
2 Conversions - Inviting visitors to ask for more information, turning web surfers into prospects
3 Sales - Following up with prospects to complete a sales transaction.

Step 2 will explain that most online marketers first find a popular niche. Then they find a product they can sell to the niche.  Lastly, they work on generating traffic which will flow on to become sales.

MTTB describes this system as 'a recipe for disaster', because they are missing the secret 4th ingredient in the process. They'll even go as far as saying the standard approach is 'backwards'.  If you apply the tactical triangle, you will focus on profits. You'll learn to apply the 80/20 Rule, and will replace the word sale with the word 'economics'.

We find it interesting that the 'tactical triangle' uses terms like economics and the 80/20 rule to show the 'missing ingredient' for success.   When they say economics, they mean to say 'profit after all expenses'.  Focusing on generating profit is not a secret ingredient.  Every business in the world is in operation with the goal of making profits.  They are not using a correct definition of economics

As for the 80/20 rule, this is also known as the Pareto principle. It was established in the early 1990's and examines the phenomena that 80% of total results is generated from 20% of total effort.  In sales, it means that your top 20% of customers will purchase so much that it will represent 80% of your revenue. 

It then gets interesting as MTTB explains that they look at the process backwards ie. They start with economics and end with traffic.  They then introduce the concept of reinvesting in your business.  They will tell you that once you've made a profit, you should reinvest it in your business to make more profits.

If we combine the concept of reinvesting and starting at profits, MTTB arrives at the conclusion that: Your first step in business is to invest money on promotions so that this will go on to generate leads, sales, future profits and future reinvestment.  You will need to decide 'how successful you want your business to be in the future' and invest accordingly today.

So the 'missing ingredient' is a combination of using the wrong word to say profit, and applying a widely known principle made popular 24 years ago.  They then claim that the first step in business should be to spend money on investing in future profits before you've made any revenue.  

To us, step 2 looks like the use of psychology to convince us that we need to spend money promoting our link right way.  Waiting for organic sales and profits is what the 99% who are unsuccessful do.   They then drop the name Perry Marshall, as a source of their economic research.  We discovered that he is not an economist or marketing guru, he is someone who ... sells 'how to use Google Adwords' courses. 

To us the tactical triangle is a red flag.  We think it uses confusion and misinformation to convince people to invest in advertising upfront rather than waiting for organic results. This could be an unintentional mistake made by people who have themselves been mislead.  It could also be a deliberate fraudulent attempt to transfer wealth from you to them

We made a picture of the  the tactical triangle, maybe it will help explain things better: 



What is Our Problem With Paid Advertising

When it comes to Google Adwords, PPC means Pay Per Click.  You are buying clicks of your web link, not completed transactions.  Just like the example with the cars, some people will click on your link (visit your car yard) and buy right away.  Others will click on your link and decide to leave without ever making a purchase. In the middle will be clicks from prospects who ask for more information, again some will ask questions and make a transaction, others will ask questions and decide not to proceed.

With paid traffic, you are paying for every click on your link, not just those who will spend money. 

The second issue we have with describing paid advertising in this way, is that, like all investments, past performance does not guarantee future returns.  The results of advertising are not predetermined.  There are many variables which are beyond our control.

 Imagine you are working at the car yard.  One day you get 10 prospects walk in off the street and 8 of them buy a car on the spot.  Have you had a very good day with a bit of luck on your side? Or does this prove that you will sell cars to 80% of the customers you see in the future, and every day you will get 10 new prospects?

Even if your car yard was consistently giving you 10 customers per day, and you were consistently selling 8 cars a day, what do you think would happen, if a new car yard opened across the road, and it sold identical cars (Fords and Benteleys).  This is why when you join a franchise, part of what they help you work on, is... the best location for a new outlet.

Unfortunately the internet does not differentiate when it comes to locations.  Any web surfer can access any MTTB web link from anyone in the entire system.  All the existing members are competing with each other for those web clicks.  

Now Let's Look at the Streetonomics of Using Paid Traffic with MOBE
To get above average results from MTTB and MOBE, members need to either promote their link in new and creative ways (not being done by others), or they need to pay more for their Google Ads PPC.  Google Ads works on a bidding system, whereby the people who offer to pay the highest price per click take preference to the rest.  Once their budget is satiated on the best web results, the process flows down to the next highest bid.   If your bid isn't high enough, your advert will not appear in the best locations.

Offering to pay more per click will get you more traffic!  This will also cost you more per customer and reduce your profit margin.  According to our understanding of economics, MOBE members will continue to increase how much they pay per click until the profit margin on acquiring new customers diminishes to an almost break even point.  This is what we'd call the equilibrium price.

Ironically, things only get worse when new members join MTTB.  They join the existing pool of members all trying to sell their MOBE link.  We view market effect of adding new members as  an increase in supply.  Going back to the equilibrium effect, adding more members leads to additional bidders for the same Google clicks, and an increase in the Price Per Click bids.  In other words, adding new members further diminishes the profit margin of existing members.

Our version of economics is very different from the economics described in the 'tactical triangle'... It is not impossible that we have made a huge error and have gotten it all wrong. We are not claiming to be professional economists.  We did however study economics at a university level for three years...

Step 3: How to Unlock Your Millionaire Mindset

The third lesson in the program, is a 15 minute video,which will teach you how to 'think and make make the decisions millionaires make'.  This suggests that there is a commonality in the decision making process of all millionaires... we disagree with this point of view, but will continue with our summary of what you will learn.

Step 3 Starts off by explaining that in order to be successful online, a 'shift' must take place in our minds.  The shift involves moving your mindset from 'employee' mode to 'business owner' mode.   They go on to show an example in which two people join an online system, one makes money, the other makes nothing.  The only difference.... mindset ... One member was able to 'condition' his mind, and erase 'limiting beliefs' from the past.

Robert Kiyosaki once explained the importance of educating your emotions, and overcoming fears.  Thomas Edison took more than 1,000 attempts to create the fist light bulb.  They use these examples to assert that it's good to try something nobody else has done, and it's okay if you fail multiple times because each failure is a step on the road to success.

We think this is assumption is an unproven generalization.  Not every road leads to success, and not every new concept becomes a huge success.  If we pointed this out to an MTTB business coach, no doubt they'd point out that we have 'the wrong mindset', and our 'limiting beliefs' are stopping us from becoming millionaire business owners.

Step 3 mentions Robert Kiyosaki for a second time, this time mentioning his book 'the cashflow quadrant'.  This book divides income generating into 4 categories.  Below is our own version of the cashflow quadrant:



MTTB then alleges that employees and business owners think differently, so if you want to become successful you need to think the way business owners think.  They refer to this as 'a key mind shift'.  

They claim that someone with 'an employee mindset' is 'afraid to take a single step forward, until they see a path laid out'. A business owner has a more impulsive mind set and will 'jump off a cliff and build a plane on the way down'.  

So to be successful, you need to act without planning.  Don't spend time researching information because this is a form of 'paralysis by analysis'.  It's better to take action without asking any questions, and deal with challenges and failures as they transpire.  Remember failure is good because every failure always takes you one step closer to being the next Thomas Edison.

If we were being cynical, we might say that Step 3 is all about convincing you to buy all the MOBE products without asking any questions and with no proof that any of them work.  After all the the goal of MTTB is to 'transfer wealth from customers to yourself' and let's not forget that until we finish the steps and get our affiliate link, we are a customer.  

Step 4: Why 85% of Franchises Succeed While Most Other Businesses Fail

In step 4 of the MTTB Program, we find ourselves watching a 12 minute video. In this step we will learn why franchise models are so successful, and what they can teach us about running an online business.

One of the first things we learn in Step 4 is a bit confusing.  They tell us that when people go into business for themselves, they want to 'be the guru' or the 'system owner'. They go on to explain that this is 'extremely risky', and 'less than 20% of new businesses make it'  

I know that we aren't supposed to ask questions, but didn't Step 3 tell us that this system would make us business owners.  And didn't they say an essential key to success was taking risks?  Now just one step later we are seeing contradictory allegations.

It goes on to explain how Matt Lloyd works long hours every day.  He proudly states that he 'works a lot more than most'. This added to the confusion because in Step 3 we were told this was a system which lead to the Business Owner area of the cashflow quadrant, which is supposed to be a purely passive income.

This look more like it leads to being self employed.  If Matt is not earning passive income, from his system, they how will copying what he's done earn us passive income?

The video will go on to explain that joining MOBE and MTTB is like buying a franchise of McDonalds.  If you have not already read our original MOBE/MTTB review, you will see why we believe MOBE and MTTB are not a franchise opportunity.

They tell us to 'look for a business with a successful track record'. To us, this sounds a lot like the employee mindset of 'afraid to take a single step forward, until they see a path laid out'.  They were telling us that the 'mind shift' required us to take action without consideration of any risks or other important details.  

Are steps 3 and 4 intentionally giving us mixed messages?  Perhaps the mixed message is something along the lines of:
MOBE is a franchise with a proven track record. If you ask to see evidence of this track record, then you have 'limiting beliefs' and are thinking like an employee.  If you want to conduct due diligence before paying large sums of money, then you have 'paralysis by analysis'.  

If you join MOBE and your paid advertising campaigns fail to generate a profit, then this is good, because your are closer to being Thomas Edison.  Let's not forget that to become an internet millionaire, we need to be willing to implement new ideas, while copying what others have done.  We'd like to know how copying others is a new idea....

Step 4 was legitimately confusing.  Hopefully it will be cleared up later on, but we're not overly confident.  Let's move along on and find out!

Step 5: What is Even More Lucrative Than a Franchise Model

Make sure you set aside some time for Step 5, as you will need 50 minutes to watch this video! It promises to show 'what makes MOBE the perfect business model'.  Maybe it's good that MOBE is not a franchise.  Even though 85% of franchises succeed, this business model is perfect so will eliminate the 15% chance of failure, experienced by franchises.

MOBE is a perfect online business model because 'all you have to do is generate traffic'. Hey that's what they told us in the introductory video, which described this as a 'ready to go', 'made for you' system.  It's ready to go and it requires 3 weeks of training!

It then goes on to explain the importance of top tier products.  Remember they are the ones which are high priced, pay top commissions and transfer the most wealth from the customer to the sales person.  A high price is all that matters, it doesn't have to offer better value.

They even have a 24/7 telemarketing team to close your sales for you, now listen to your 'business coach', and buy the products.  Luckily for you, the term 'business coach', does not sound like commission based telemarketer trying to transfer your wealth away from you

Step 6: How to License a Proven & Profitable Online Business

The program, which is really collection of webinars, continues with a 26 minute video.  Step 6 will explain why we should 'tap into' MOBE because it's a 'Proven and Profitable Online Business'  They don't offer any evidence of MOBE having a successful track record, but tell us it's proven and profitable.  We ran some calculations ourselves and found that 95% of MOBE and MTTB members lost money in 2015

It has come to our attention, that before proceeding to step 6 with MTTB, you will need to sign a non disclosure agreement.  They can now start sharing the inner secrets of how MOBE works and why it is so wonderful at making people rich.  The reason for the non disclosure agreement is to prevent Matt Lloyd's competitors from  'stealing the MTTB formula and using it themselves'.   I wonder how many competitors simply paid the $49 to gain access to the secret formula.

In other words, the NDA is a way of saying 'Welcome to the inner sanctum!  You are now worthy to share all our secrets and become a millionaire'.  We have not signed a non disclosure agreement! We are confident of our information from this point forward because.... We have gained legal access through Youtube to the transcripts of each webinar in the MTTB 21 Step Process. 

We have chosen not to share the source of these videos but will do so if requested.  We will go on to say that the information was obtained with ease, and was posted as free public Youtube videos by multiple MOBE members.   If MTTB or MOBE is interested in pursuing the source of this information especially regarding which members are sharing the secret handshake, we suggest they search the internet.  Our source is: www.youtube.com

Now that we got that out of the system,  let's move on to the actual material.  Step 6 will teach you the essential elements of running a successful online business.  It will go on to purport that MOBE has all these elements and that MOBE is successful.  

MOBE will explain the benefits of leverage, and claim that you can access a ready made proven formula for success (MOBE) without having to do any of the development implementation or maintenance.  Remember your only role is to generate traffic.

According to step 6 of the MTTB 21 step program, the 5 essential elements to a successful online business are:

1. Traffic
This is what a shopping mall would call 'footfall'.  If people aren't visiting your market, then no sales can be made.  This is also the only part of the process you really need to worry about.  Remember all you do is send traffic through your personal link, the rest is 'done for you'.

2. Funnel + 3. Filter + 4. Follow Up
We've lumped these three steps together because they describe different  aspects of what is known as a 'sales funnel'. This is a commonly used strategy in affiliate marketing.  We've already discussed the MTTB Million Dollar Sales Funnel in our original review, so will be very brief here... If you join MOBE, the only role you will play in the sales funnel is right at the top. This is called a 'squeeze page' by MTTB.  It's the part where you promote your personal web link so that web surfers will agree to become prospects, watch the promotional video and share their email address.

We have completed the Problogger 31 Day Challenge, and can confirm that this sounds very much like what they call a 'sneeze page'.  In their version of a sales funnel. Their online marketing course is 100% free, it's not a 'top tier' product, but seems to provide the same secret information.   So far the MTTB secret formula looks like a modification of widely known freely available information

5. Product Mix
A simple definition of affiliate marketing would be: 'selling things over the internet for a commission'.  Along with all the products on Amazon, there are several thousand products which will pay you a cut if you generate a sale for them.  

If you were to complete a free online course, you might be taught that product selection involves:
Finding an affiliate product you can promote - Something which you are interested in and are happy to endorse to others. Preferably, but not essentially, something you yourself either own or have used.  

Creating Your Promotional Material - This could be a well written review of the product.  It could be a 'how to' page.  It might be a 'product hack' page explaining imaginative ways to use the product.   People who are already interested in the product and are researching it further, will arrive at your pages (assuming that your content is well written for SEO and that people are actively seeking this information).

Generate Affiliate Sales - You tell people how great the product is, and you make sure you provide them with your affiliate link so they can follow your endorsement and buy it. This makes you a commission for the promotional work you have done.

Finding your product mix, involves choosing the products you'd like to sell.  You will choose based on products you like, and can endorse.  The commission paid per product will be a contributing factor in your selection process, but should not be the only thing you consider.

MTTB and MOBE do not believe the above process is worth the time and effort.  They endorse using paid advertising to promote you affiliate link, or personal MOBE link.  Paid advertising does work, but it is not the only avenue available.

We already know that MOBE will only recommend 'Top Tier Products' and part of their 'done for you system' involves providing all these products so all you do is pay for advertisements and send them traffic.

The MTTB Version of Product Mix - Is included in the 'done for you' part of the business.  MOBE calls it 'Your Product Mix - Having the Right Products'.   MTTB confirms that having the right products is an essential element for success. They then tell us that 'MOBE's  Exclusive License Rights Program (MLR), will help you to get a very easy head start'

Naturally MTTB don't mention any of the products, they simply tell us that they have them. We've been trusted with access to the Fort Knox of internet wealth creation, and our trustworthiness has been confirmed. Yet they won't share any details! 

This would be a concern, but we must  remind ourselves that asking questions such as 'what exactly are these products?' is a 'limiting belief' caused by our 'employee mindset'.  Fortunately the alarm bells stopped ringing because MTTB goes one to list a bunch of 'top tier' products, which we've never heard of.

Rather than list the products (and unintentionally draw attention to them) we are comfortable creating a hypothetical product for illustrative purposes.  Bare in mind you are completing the TFG 21 Step Program, not the official MTTB 21 Step Program.  The products listed as 'top tier' MOBE products will look very similar to the one below:

How to generate 12,000 internet leads in 3 months - Price $2,500; your commission $1,300.

This certainly looks like a 'top tier' product.  One sale will generate a commission of $1,300.  Only problem is the product only exists in the imagination of The Finance Guy.  If you'd like to promote it and convince people to send us $2,,500, then we will happily pay you a fee of $1,300.  

If the customer who pays $2,500 asks us to deliver the product, we will have to either invent a smoke and mirrors course on the fly, or take the money and run.  We are not suggesting MOBE is using smoke and mirrors to create 'top tier' content.  It's just that we'd prefer to work with products we already believe in.  

If the Problogger course cost $2,500 we'd still recommend it. We've done the course and know it's full of useful information.  We might not personally be willing to pay that amount for an online education course, but accept that there are those who'd happily pay.  We are not endorsing this because we've read the name 'Problogger'.  We are endorsing it because we know enough about it to believe in it.

MTTB will counter our above gripe because when you sign up for MLR, 'get access to the products you are selling'.  This is another case of us not liking the way MTTB uses words.  We'd rephrase this and say 'When you pay $2,497, you are buying access to MOBE (MLR) and included in price is all these products'.  At this point all we've seen is list course names with prices and commission splits.  We are being asked to pay for the products before we know anything real information about them

The MOBE member (the voice behind the transcript we are reading) counters our above point telling us that one of the products is 'worth $5,000, but you get it for free when you join MOBE'.   If he could hear us, or is reading this post, we'd like to ask him 'if this is an exclusive MOBE product, and your primary goal is to find new MOBE members, when does anyone actually pay $5,000 for this product?'.

We're not saying we don't believe the extra product is worth $5,000, but in our opinion it is not being given away for free. It is one of the products you pay for when you join MOBE

Saying it's worth $5,000 and giving it away for free suggests that it's not worth $5,000, it might have some value, but whatever the real value, it's built into the $2,497 MOBE MLR fee. Let's go back to the car yard... Let's pretend there is an upgraded 'sports' version of the entry level Ford compact.  It has a turbo charged engine, shiny mag wheels, and a sportier body which includes... a hydraulic powered hard top convertible roof.  

If a customer wants to buy the standard version of the car, would you offer to upgrade them to the sports version at no extra cost?  You might offer a promotion where the the sportier version is offered at a price which is below the usual 'label' price but still more expensive than the standard.  

Our MTTB member is telling us that when you pay for MOBE (the standard verion), you get $5,000 of added value (the sports version) for free.  Does this sound like a good business idea?  More to the point, does this sound like a company you'd like to enter a partnership with?

Step 7: How to Get the Expert Support You Need to Succeed

A very short 9 minute webinar showing you how to use the MOBE members area to access coaching, training and other fun stuff.  It starts off congratulating us for buying MLR. You've overcome your 'limiting beliefs' and have spent $2,497 without asking 'employee mindset' questions... well done you have made hit the switch and will be an internet millionaire!

There is an unexpected perk of membership in that you can now 'join the MOBE private facebook group'.  Although setting up facebook groups is very easy and costs absolutely nothing, we are not going to set up a TFG private group.  If you'd like to converse with us and each other on facebook, feel free to like our public facebook page. If you invite all your friends to follow us, we'll charge them nothing and give you a 50% commission on the transaction!

The Step 7 transcript of the MTTB 21 Step Program boldly states 'today your training officially begins'.   Let's just recap a little here... we are at step 7/21, and have paid $2,497, but our training is only just beginning?  So what does that tell us about the first 33% of the 21 step training program? Was that not training?  Were steps 1-6  just a campaign so sell us MLR?

The first thing you learn now that you are officially in training, is that MOBE 'flat out works'.  It works because they offer ongoing training and there is support when you need it.  Problogger offers all this for free through a regular podcast, a chat area,a facebook page, a linkedin group, and much more.  Once again, we don't doubt that some people might pay $2,497 for all this, but that doesn't change the fact that it's available for free.

Incidentally, we did find both a daily and a weekly MOBE series of training updates available for free through our podcast software... We can't confirm if these are the official versions of the secret training, but they certainly look very similar to what MTTB is describing. If you'd like to try the secret training material for free then this could be possible...

Step 7 goes on to list a whole bunch of other 'additional training' you now have access to as a MLR License holder.  Our narrator proceeds to drop some names of the experts who will run these training sessions.  They are alleged 'experts of internet marketing'.  If you run a google search on one of their names, you will not find any reference to any internet marketing activity other than MTTB....  

Imagine  we told you that the TFG 21 Step Program included professional coaching, by our guru, Harvey Metzbergkrantz. Harvey will teach all his strategies for online success, so you can emulate and leverage off his knowledge.  Harvey's training is worth $5,000 but you'll get it as part of your membership when you attend a seminar in the future.

Have we convinced you that Harvey can teach you to generate huge profits online?  Would you pay for a seminar if you knew he was going to be a speaker? For the record Harvey Metzbergkrantz is a name we made up, if someone with this name exists in reality, we are not referring to them.

Step 8: How to Get Paid Quickly and Easily with MOBE

Step 8, which is the second step of 'real training' only takes 8 minutes.  It shows you how to get paid by MOBE.  Once you are up and running, you'll get paid twice a month.  The MTTB transcript starts off explaining in bold print that 'Today You'll be setting up your E-Wallet account, so we can pay you your Top Tier Commissions!'

Setting up an MTTB 'E-Wallet' will circumvent the effort and expense required to establish an online merchant service (such as those offered by Visa or Mastercard).  It even claims to save you from using Paypal, because with 'you're dealing with Top Tier commissions, those Paypal fees add up'.  

This concludes step 8, what did we learn... MOBE offers a payment service called an 'E-Wallet'.  It is superior to other systems such as Paypal.  We are going to set it up right now.  Is anyone else wondering why MOBE has not told us how the E-Wallet is superior or shown an actual fee comparison table to illustrate how much we'd save?  Sorry we've gone and asked a question again... I guess we are doomed with the eternal mindset of an employee..  

Step 9: How to Get $3,000 Commissions With No Extra Work

In just 12 minutes, you'll learn how to make more money without doing more work! Can't wait to see what we learn in step 9!

Step 9 starts off repeating the importance of 'leverage' (the word they use to convince you to blindly follow their formula for success). We have written  our own definition of financial leverage, which is very different. We'd have to agree with ourselves on this one because well, what we wrote explains what leverage means to us.

It then goes on to introduce the concept of 'positioning yourself early in the business'.  When you buy a product yourself, you become entitled to earn commission from that product.  If your business is not 'in position' to earn from that product, then you will not get  paid even if your leads buy a top tier product!

If you upgrade, you'll have access to seminars where you'll learn from all those random names that were dropped back in Step 7.  If MTTB would like to invite Harvey Metzbergkrantz to speak at the next seminar, one of us will gladly accept a cash payment to show up wearing that name badge and talk for a couple of hours.

They are describing the 'Titanium Mastermind'.  You can position yourself to earn $3,000 commissions if you pay $9,997 to join this 'elite group'.  The benefits include visiting an exotic location such as Fiji, and then attending a conference with other MOBE members.  This is where the big names will give their seminars. (Harvey Metzbergkrantz yet to be confirmed).

We are not travel agents, but for around $10,000 we could arrange a pretty sweet holiday to most of the exotic locations we are interested in visiting.  The Finance Guy recently went on a trip with the Finance Wife and Kids to an exotic Island.  We stayed at a beautiful resort, visited a forest where we interacted with wild monkeys, and generally had a great vacation.  

We spent 10 days and less than $10,000 on our trip, but all we did was relax around the pool and do tourist stuff.  Maybe I'd have been willing to pay more if the trip included a work conference and I got to spend a few hours a day listening to industry experts share stories.  Then again, maybe I'd prefer to vacation while on vacation, and attend work conferences within a reasonable distance of my work place....

Step 9 ends with more repetition of what we've already heard... random people will teach you how to get to the next level. (no details or proof of their success provided).  We almost forgot, that the key to success is having high ticket 'top tier' items.  

The narrator encourages us to join through his link and even says that if we do we'll get a 'free 30 minute traffic coaching session from him'.  The youtube clip we are viewing was uploaded in July 2014, as of today (January 2016), has 97 views.  That's more than 5 visits per month!  No wonder he is offering traffic coaching sessions.  We might join MOBE just to learn how he does it!

Step 10: How To Get $5,000 Commissions With No Extra Work

This 11 minute video is almost identical to what we saw in step 9.  The main difference here, is that they are promoting the Platinum Mastermind Conference.  If you spend just $16,667 today, your business will be 'positioned' for an extra level of success!  

When you buy the MOBE Platinum Mastermind Conference, you access to 'some of the smartest minds on the planet'. The cost includes  5 days, 6 nights at a 5 star resort... there is no mention of flights being included, so we assume you pay for these yourself.  Our friend from the Youtube video claimed he went to Costa Rica for his conference so hopefully his flights weren't too expensive.

Once you arrive at this 5 star resort in an exotic location, you might spend some time enjoying the location and taking in the tourist activities, but you will also spend many hours in a hotel seminar room.  Have you ever heard the saying 'as picturesque as a seminar room'? Neither have we.

Seminar rooms are large dark rooms with rows of desks and chairs facing a projector screen and a small stage where the presenter can put on his show.  These rooms are surprisingly plentiful.  In fact I'm sure you could find several within a 30 minute commute from your home.

In this $16,667 seminar, you will hear talks about vague topics including:
'The Greatest and Most Hidden Wealth Secrets.. how the rich get richer'   - Wait didn't we already hear this... it's business ownership

'How to Magnetize Yourself to Passive Wealth Opportunities' - But if MOBE generates passive income, then why do we need to attend expensive seminars, and put time, money and effort into paying for Google advertising?

'The Way to Complete and Personal Freedom in Every Area of Your Life' -  Interesting!  I've personally always wanted the complete freedom of instant teleportation. Maybe I should join after all!

The 'Gurus' are another list of people you never realized you wanted to pay to hear.  They advertise that Fredric Lehrman will be speaking.  A Google search confirms that the only thing he is known for is a product called 'prosperity consciousness'.  The same Google search will also lead you to several of his videos... You might even hear his MOBE presentation for free on Youtube!

Essentially steps 9 and 10 are both trying to convince you to pay large sums of money to travel to nice places and spend several hours listening to talks from people you never knew existed before you joined MOBE.  We think that in both cases you'd be better off spending far less money to go to the same location and spending the same time just enjoying time with your family.

Your MOBE personal coach, who happens to be a commission based  telemarketer, will emphasize the importance of positioning yourself.  They'll explain how much more money you'll earn if you buy these products.  It is our strong opinion that they only want you to buy so they can earn a commission.

In our original review of MOBE and MTTB, we found that you don't have to buy more MOBE products to earn all those commissions!.  In fact we recommend you don't buy any MOBE upgrades.

Step 11: How to Get a New Mercedes Benz Paid for Every Month

This 10 minute video, will show you how many sales you need to generate in MOBE to get yourself a luxury car.  A small detail they left out, is that the car is not bought for you, it's leased, and if you stop making sales, they'll cancel the lease.  So if you sell 5 MOBE License Rights per month, you can drive a nice car, but if you fail to meet this target, the car is taken away.

It's all very well that they want to reward their top performers with something like this, but why not just pay them the extra cash? Personally, I don't care much for cars.  I own a lovely Korean station wagon, which is cheap to run and moves my family around town comfortably. It satisfies everything I want from a car 

If my employer offered to lease me a luxury car, I'd ask for the cash instead.  This way I have the choice of how I spend my money rather than having it used on a car.  Step 11 doesn't even try to pretend they are teaching us anything about online marketing.  All MOBE is doing here, is dangling carrots on  a stick!

Step 12: How the Phone Sales Team Makes You Money

In this 9 minute video, you'll learn how the phone team will help you earn money around the clock.  Even while you sleep!  You'll learn how the team has been trained by yet another guru you've never heard of.  This one is passing on the lessons of Deepak Chopra... 

It's all about how the sales team will maximize your goal of transferring wealth from the customer to the MOBE member.  It's a good time to remember that your sales coach is one of these telemarketers and you are currently a customer.  So right now, their goal is to transfer wealth away from you to themselves, and other existing members of MOBE

When you buy your $16,667 Platinum Mastermind upgrade, you'll get access to this sales training, so that one day you too, can become a MOBE telemarketer / personal coach.  You can make even more money if you call your own leads and make your own sales.  

Just to clarify, at the platinum mastermind seminar, you will learn how to 'magnetize yourself toward passive income' and how to be your own telemarketer.  Does this seem contradictory to anyone else?

Step 11 ends with a basketball analogy.  'Your only job is to pass the ball.  After that, the Dream Team rushes down the court, and scores for you'.  I've always wanted to get on the hardwood and notch up an assist with Michael Jordan or Magic Johnson completing the play.  Only problem is, I'm got good enough to be on that team, and neither are the MOBE telemarketers!

Step 13: How the MOBE Team Builds Your Business Everyday

In part 13 of the MTTB 21 Step Program, you will watch a  20 minute video.  Most of the video is spent introducing you to members of the MOBE staff (and existing members).  The main goal of this video is to let you know that MTTB and MOBE hold live introductory events, and if you use your link to promote them, then you will earn commission on any sales from referrals you send along.

Why settle for watching a Matt Lloyd video on Youtube, when you can go see one of his underlings give the same information live?    There is even a live event where you can hear other MOBE members share their success stories, this sounds very much like Amway!  This is a red flag as, we believe you can't make money with Amway

Step 14: How to Make 5x More Money Without Any Additional Work

You'll spend 12 minutes of this video learning once again why you need to 'be fully positioned' and why you should buy all the products right away.   They really drum in the message that if you don't buy the product yourself, you won't make money when others buy it... small problem is that that is only true for the first 5 sales, after that you are automatically positioned to the next level.

This step claims to look at the MTTB compensation plan. We read this document and confirmed that, you don't have to buy additional MOBE products to make the full commissions.  

We believe that most people who pay the $49 to join MTTB, do not purchase any additional products.  Therefore you will not miss out on any additional commission because these upgrade sales are not being made with significant frequency.

Our analysis of the MTTB earnings disclaimer lead us to the conclusion that you will not make money with MOBE

Step 15: How Goals are the GPS to Your Success

This 16 minute video is all about goal setting.  It outlines the same formula which you can find in any book or website about the topic.  You start with the end goal in mind, then break it down into smaller more achievable steps in the right direction.

The MOBE goal sheet will ask you how many hours per week you want to work on your MOBE business.  Sets a target for your monthly income, and asks you to set a time frame for achieving this goal.  There is nothing new or 'top tier' about any of this.

Our commentator notes that 'goals can lead you to financial freedom, but the first step is to join MTTB'.  He mentions his link is below the video, which has been viewed 20 times since being posted in July 2014.  Maybe he forgot to set a goal for it to have gone viral by now...

Our only concern is that the sales coach could use your own goals as a way to extract more money from you.  Once again this is something we've seen in MLM, where a the person trying to sponsor us says 'if you want to earn $XXX per month, within 3 years, then you must invest in this business today'.  It all comes back to the expectation that every failure is a good thing.  Every month you fail to produce any income, will be disguised as a step closer to success.

This entire step should be a huge red flag.  If this is supposed to be a 'done for you', 'passive income source', then there should be no need to for us to commit ongoing hours of our own time to MOBE.

Step 16: How to Create Success Faster with Helping Hands

Step 16 of the MTTB 21 Step Program only takes 6 minutes.  It is a continuation of goal setting.  Once again the information provided is not new information.  In this step MTTB talks about 'Your Personal Accountability Program'. 

This basically means telling people about your goals and the time frames you have set to achieve them.  In theory this makes you more likely to stick at them because you've made yourself accountable.  Letting others know of your plans also enables them to guide you down the path and offer assistance whenever they can.

It's also a way for your business coach to use your own time frames and goals as a way to encourage you to spend more on promoting your MOBE affiliate link.  Or to upgrade and buy that next course.  We are running out of steps and so far we haven't found even a hint of valuable information...

Step 17:How to Finance Your New Business Venture

At 17 minutes, this makes this step one of the longer videos in the MTTB 21 step program.  The narrator of our youtube video mentions that the information contained here will 'change your life'.  He alleges that this step will 'teach you to think like an entrepreneur'

It's an important step for your coach too.  This video will tell you to stop saying 'I can't afford this', and start asking 'how can I afford this?'.  This video is all about ways you can borrow money to fund your purchase of the My Online Business Education products.

As The Finance Guy, we completely disagree with this step.  MOBE is yet to have proven any results.  We suggest you do not buy any further products until you have personally tested the system.   Remember you don't have to buy more products to earn more income with MOBE

 In our original review, we looked at the  MTTB earnings disclaimer, for the 12 months ending in September 2015. We calculated that in the that year, 95% of MOBE and MTTB members earned less than $60 per month.   

In their video, MTTB will show you pictures of Robert Kiyosaki, and explain that this is how a 'rich dad' would do things.  They will also tell you stories about big successful companies like Amazon and Fedex, who were built from a dream using borrowed funds.  Pay no attention to these examples

Matt Lloyd and MTTB forget to mention that for every success story like Amazon or Fedex, there are thousands of failures.  People who have left themselves in financial ruin because they put all their assets into chasing a dream that never eventuated.

MTTB and your personal telemarketer will tell you that you can access funds from many places including:
Your retirement savings - Hey great idea take the savings you've set aside for your future, and risk losing them all on an online system.

Credit Cards - Drawing down a cash advance on your credit card is one of the most expensive ways you can borrow.  Why not max out your credit card at the highest interest rate and use the cash for something which may never send you a single cent in return.

Borrow From Friends and Family - We all know that nothing builds friendships like borrowing money from each other then having to explain that due to 'system failures' we can not repay the debt.

Loans of all forms - Banks crowd funding and all sorts of places might lend you money, just remember they expect repayment and will charge interest.  If you MOBE system fails to deliver (as it did for 95% of members in 2015), then you will have to repay these loans from your current income.

Sell Your Valuables - You don't really want that share portfolio or that nice ring your grandmother left you do you?  Sell them and put the money in MOBE, don't worry if the system fails and you can't buy any of it back.

Once again, our negative attitude is probably because of our 'employee mindset'.  We have not yet accepted that our goal in life should be to transfer wealth from customers to ourselves.  Your MOBE salesperson might also correct us if we noted, 'you are the customer and the MTTB 21 steps are designed to transfer your wealth to a MOBE member'.

Step 18: How to Get Steady Streams of Traffic Visitors 24/7

We hope you've made it this far without having cashed in all your belongings.  Step 18 of the MTTB 21 Step Program, is a 10 minute video.  In this short video, MTTB will show you ways to generate traffic to your MOBE affiliate link.

In this video you will see a list of place where you can pay to promote your MOBE link, including Facebook, Banner Ads, Solo Ads, and many more.  They even offer something called 'done for you ads', so all you have to do is pay money and the MOBE team will do the rest for you!

Remember, your only part in this 'partnership' is to bring in traffic.  This includes paying for that traffic.  Let's think about that for a moment.  You are paying to promote Matt Lloyd and My Online Business Education.  In return you get a cut of any sales you help generate.  This may sound fair, but we see a major red flag in this system.

We don't think this partnership is designed to share wealth with you.  It's designed to transfer the expenses to you, while sending income to Matt Lloyd and MOBE.  Paying for online advertising is not a proven science. Your campaigns will not always be profitable.  Sometimes they will generate disappointing results, and sales generated will fail to meet the cost of advertising.  This means you will lose money on some advertising campaigns.

Your sales coach / MOBE product pusher will tell you that some advertising campaigns will fail, therefore you should invest more in advertising.  Remember failure is good, it means you are almost Thomas Edison!  This is a ridiculous analogy!  Thomas Edison was not repeatedly copying other people, and trying the same thing over and over again.  He was doing what had never been done before, and learning from his failures to improve his ideas until they worked.

MOBE doesn't care if you lose money from your advertising.  They will still get a share of any sales you manage to generate.  Essentially, you are taking all the financial risk, and they are only  sharing in the financial reward.  In fact we'd take a step further and say Matt Lloyd and MOBE expect your advertising campaigns to fail.

If paid advertising was a proven way to profit from MOBE, Matt would pay for the advertising himself.  It's just another way for Matt and MOBE to transfer wealth from you for their own benefit.

Step 19: How to Get Access to Even More Opportunities

Another short video, this one is only 6 minutes!  It starts off telling you that these opportunities are available only to platinum members.  This step may be a waste of time if you haven't paid around $25,666 for both the Titanium and Platinum memberships.

Once again we are reminded that we access to 'world renowned' sales coach, who we've never heard of.  A Google search showed that the only thing he is known for is teaching people how to promote Multi Level Marketing.  It's no secret that we think Multi Level Marketing is a bad idea.

The 'opportunity' they are referring to, is calling your own leads.  As a platinum member of MOBE, you have the opportunity to be your own telemarketer, and get paid the telemarketers share of the commission on your sales. If you ask Matt nicely, he might let you join the official MOBE coaching team, and try and make commission from telemarketing to other peoples leads too!.

Our youtube narrator makes an interesting statement.  He says 'it's pointless trying force people to buy something they don't want, however if you have something that can change people's lives, it is your obligation to give them that solution'.  He claims that this sales training will teach you to do this.

This is where they explain the process we have already hinted at.  The sales person spends time asking you about your personal goals and financial dreams, then claims that this MOBE product is the answer to everything you ever wanted in life.  

They leave out an important detail.  MOBE and MTTB do not offer any real products. There is no consumer market.  All money paid into the system is by existing members who are paying either joining or ongoing fees.    This is the problem with most direct marketing and MLM systems.  It is also why Jon Taylor found that 99.7% of people lose money with this business model

Step 20:Discover Your Why and Manifest Your Success For Life

This 9 minute video goes back to mindset.  It focuses on finding what keeps you going when times are tough, and the business is losing money.  Our narrator even tells us to expect the business to struggle in the early days.  So early failure is becoming an expectation?

Finding your why is the key to finding a motivational hot spot.  For MTTB, your why is also a key to finding a manipulative hot spot.  Imagine your goal is to go on a vacation.  Your why, is because you want to take your young kids to Disneyland.  Your daughter is a huge fan of the Disney Princesses, and your son tells you Woody and Buzz are his best friends.

When work gets hard, you can imagine their little joyous faces when you finally arrive at Disneyland.  This can help motivate you.  The goal is time sensitive, you want to go before they outgrow the idea, or become 'too cool' to want to vacation with you.  It can really help you put in those extra hours when it's already been a long week.

Your MTTB telemarketer coach, will use the same goal to push MOBE on you.  They will say things like 'I thought you wanted to take your kids to Disneyland' or 'If you buy this upgrade you will get to Disneyland 3 times faster'.

Finding your why is a useful motivational tool.  However it's not a reason to push more effort into a failing system. Use your motivation to work harder at a job, or put effort into something that is turning a profit for you.  

Remember, our analysis found that in 2015, 95% of MOBE members earned less than $2 a day, and that's before any expenses!.  If we included money spent on MOBE memberships and paid advertising, then most MOBE members would show a net loss.

Step 21: Discover a Special One-Time Offer, You Don't Want to Miss

The final step in the MTTB 21 step program is a 9 minute video.  It once again tells you how much money you can make, and stresses the importance of being 'fully positioned' right away.  All you have to do is pay for MOBE, then drive traffic...

This special offer is aimed purely at people who have not yet paid for any additional MOBE memberships.  If you call your coach, they will offer you a discount.  If you do contact your personal telemarketer, we suggest you negotiate hard.  Offer them a total of $0 for all the upgrades.  After all, you will get them for free after five sales so why pay for them?

Well we've made it through all 21 steps, and have not learned a thing of value.  If you've already paid $49 to join MTTB, then our recommendation is that you cut your losses now.  Sinking your money into an imaginary online money making system is not going to make you rich.

If you want to know more about MTTB and MOBE, check out our MTTB/MOBE review:



As always we love hearing from our readers, so please leave us a comment below.

You can see all the MLMs we have reviewed so far from the Streetonomics home page

]]>MTTB 21 Step ProgramFinance GuyThu, 31 Dec 2015 04:04:41 +0000https://www.finance-guy.net/streetonomic/mttb-mobe-review5388101ae4b04631a5e04b76:547fcdcce4b0d77d6ee4509e:5677a9889cadb68edf522676

My Top Tier Business (MTTB), and My Online Business Education (MOBE), are companies owned and created by Matt Lloyd.  They are being promoted as a system which teaches  you how to make money online.  You might've seen adverts describing it as a 'made for you system', which can 'have you earning commissions of over $5,000'.  All you have to do is follow the 21 Step Program, and wait for cash to start rolling in. Can it really be that easy to make money online?

We decided it was time to write a streetonomic review of MTTB and MOBE.   Before we go any further we will disclose that we are in no way affiliated with this or any other program.  During our research we formed a negative opinion on this system and would not recommend it to anyone.

These are just our opinions,  we are happy to be proven wrong.  Some people are making money from MTTB and MOBE, but we think the vast majority are not making any profits from it. Our opinion is based on information we were able to find online.  We can not guarantee that the sources were accurate or up to date.  All calculations were done by The Finance Guy and all currency is in US Dollars

In this review, we will look at:

• What is My Top Tier Business
• What is My Online Business Education
• What is the 21 Step Program
• What is a Million Dollar Sales Funnel
• Can I Make Money With MOBE
• Is MOBE an Illegal Scheme
• Can I Make Money Without Buying More Products
• Do I Have to Pay for the MOBE Lisence Rights
• Is MOBE Really Like a Franchise

What Is My Top Tier Business

Finding information about how MTTB and the 21 step program work is a little tricky.  Most of the websites we looked at were essentially sales pitches, which wanted us to pay USD $49, but didn't really explain what we'd be getting in return for this money. We see this as an early warning sign.  We assume that end result of the program is that you build your own version of the sales pitch and try and generate income from attracting new members to the system.

We visited what we believe is the official homepage of the MTTB System, and this too is a sales pitch.   The page tells us that we can get commissions of up to USD $5,500 'Deposited Into Your Bank Account on Auto Pilot'  All we have to do is watch a free video. - You have to enter an email address to view the video, but we can confirm that you do not have to use  a valid email address.

We watched the video and it reminded us of the promotional tactics used in multi-level marketing.  - There is unsubstantiated claims that they can show you 'the secret the wealthy use to amass their fortunes, and how you can do the same'.  All you have to do is pay $49 and financial freedom is yours.

This is still sounding a lot like network marketing, they even had the obligatory mention of Robert Kiyosaki and his cash flow quadrant.  The standard claim that this will make you a business owner was included.  For the record, becoming a representative does not make you a business owner.  You might be a self employed contractor, but not a business owner

Spoiler Alert!!! The 'secret' is business ownership.  People who own a successful business become rich.  Matt claims to have a very successful business, and for just $49, he'll let you 'leverage' off his success and become rich.   Just like MLM, they make unproven claims of a money making system that 'works for anyone'.  All you have to do is pay them money and follow their instructions.   

 Matt describes MTTB as a 'partnership opportunity' between you and him.   You provide a lead, Matt and the team do the rest.  According to the video  the commission from sales is split in the following way:
You Get 50% - For providing the lead
Matt Gets 17% - For creating the system and letting you 'leverage' off it
The Top Tier Consultant Gets 33% - For doing all the phone work and closing sales for you.

Once you have joined MTTB, you will have access to the 21 step program, which will teach you how to make money online.  People, such as Matt Lloyd, who have made money online, will share their money making formulas with you.   If you simply do what they did, and follow the steps in the system, then you too can make lots of money online. They try to make it sound like buying a franchise in a  proven successful.

The video claims the key to the MTTB system, is making 'big ticket' high commission sales. To do this you need an expensive 'top tier' product.  Hey wait is this 'top tier' product supposed to be a big ticket sale?  If so, why are they are only charging $49?

Matt and his team will  go to work with your leads to generate high value sales and pay you generous commissions.  It's a done for you  business.  All you have to worry about is generating traffic, but they will teach you how to promote your link, so even that part is easy.  Below is our version of a graphic you might find describing the MTTB system:



So far the system is being promoted as a $49 ready to go business that will make you huge commissions with almost no effort. This offer is sounding incredibly similar to email processing 4 cash.  The key difference is that you get a personal coach, and the commissions are on steroids. Best of all, they aren't even asking us to send any emails!  We believe you can't make money with email processing 4 cash, so the system looking similar is not a good thing.

What is My Online Business Education

MOBE  was previously called My Online Business Empire.  They recently changed the last word from Empire to Education.  This is  the system which gives you access to all the tools you'll need to earn your online fortune.

If you want to use the 'made for you' templates it will cost $2,497,  for the MOBE licensing rights, and an ongoing monthly fee of $99 to be part of the MOBE 'inner circle'.  These fees may be reduced with special offers.  If you pay your ongoing fee annually it is $800, saving you almost $400!  

My Online Business Education has a copyright on their promotional material.  You are paying them for permission to promote your affiliate link using their graphics and videos.   They do not offer any previews of the material, but if you look at an existing MTTB sales pitch, you'll get an idea of what to expect.  It would seem that the $49 made for you system has suddenly become very expensive.

The $99 a month inner circle deal gives you access to:
Done for you emails - All you have to do is forward their template emails to your contact list  and wait for sales and huge commissions to start flowing.

MOBE Elite Earners - Access a weekly webinar where top earners show you what they are doing to make money.  Sounds like the Amway model of selling tape of the week 'success stories' to motivate members to keep following the system.  If someone claims that this system made them rich, then we should all believe it will make us rich

The Vault - Don't stress if you miss a webinar because you can find it and lots of other previous ones in the vault.

MOBE is is extremely similar to email processing 4 cash, a system which claims to only charge a once off fee of $25.  The difference is that it literally costs 100 times more to join MOBE and their is an additional $800 per year in ongoing fees.  Can MOBE really be that much better.   Does having a 'coach' really add that much more value, or maybe this is part of Matt Lloyds key to success: Making Top Tier Big Ticket High Commission Sales.

What Is The 21 Step Program

When you join MTTB, you will be enlisted in the 21 step program.  Before you can start you will need to have a consultation with your personal coach (either on Skype or by phone).  Once the coach is satisfied that you are ready, they will unlock the first steps.

It is very important to follow the system and complete each step within the allocated time frame.  Your coach will work with you and continue to unlock more steps as you complete the earlier ones..  Your coach will encourage you to complete 1 step per day.

You will not get your personal affiliate link until you have completed the 21 step program.  This means that you can not earn any commission in the first 3 weeks.  This may not seem like a big deal, but it does make us wonder why the sales pages claimed it was a 'ready to go system', which could 'start earning immediately'.

What are the MTTB 21 Steps?  
My Top Tier Business has chosen to keep the steps mysterious and  not to tell us anything other than there are 21 steps, until after we have paid them $49. This should a huge warning sign! You'd think a summary or even a list of the 21 steps would help increase sales.  Would you buy a book if the salesperson told you that you weren't allowed to see the back cover or look at the table of contents?

It took some effort, but we think we unlocked the mystery.  We can not confirm that this information is accurate or current because the source was not directly from either MTTB or MOBE.  We'd share a link, but it's from a MTTB member and we don't want to get him in trouble for sharing the secret handshake.

The MTTB 21 Step Program!

The 21 Step program is a collection of 21 videos.  We will only briefly go over each of the steps in this review. For those that want more, we have written a full review of the MTTB 21 Step Program:



Step 1. How to Make 6 Figures in Your First Year With Top Tier – discover the importance of selling top tier products 60 minutes

Step 2. Discover the Missing Ingredient 99% Miss in Business Success – The ‘tactical triangle in online success’. 10 minutes

Step 3. How To Unlock Your Millionaire Mind – Learn to think and make decisions like a millionaire 15 minutes

Step 4. Why 85% of Franchises Succeed While Most Other Businesses Fail – Using proven business systems is better than starting new ones 12 minutes

Step 5. What is Even More Lucrative Than A Franchise Model – An explanation of why MOBE is the perfect online business 50 minutes

Step 6. How to License A Proven & Profitable Online Business - Learn more about MOBE 26 minutes

Step 7. How to Get the Expert Support you Need to Succeed – coaching  vidoes phone teams etc 9 minutes

Step 8. How to Get Paid Quickly and Easily With MOBE - Sign up for their internal payment system 4 minutes

Step 9. How to Get $3,000 Commissions With No Extra Work - Buy the Titanium upgrade and earn instantly on sales of this package 12 minutes

Step 10. How To Get $5,000 Commissions With No Extra Work- Buy the Platinum upgrade to earn instant commission on Platinum sales 11 minutes

Step 11. How To Get A New Mercedes Benz Paid For Every Month - If you hit sales quotas you get a car leased... We'd prefer the cash but a car is nice too 10 minutes

Step 12. How the Phone Sales Team Makes You Money - You send leads through your link, they do the rest, plus they work 24/7 so you'll earn when you sleep... 9 minutes

Step 13. How the MOBE Team Builds Your Business Everyday - MOBE lets you leverage of the success of others... come to seminars and hear successful members share their stories 20 minutes

Step 14. How to Make 5x More Money Without Any Additional Work – the MOBE compensation plan, and why you should buy all the products right away to be in 'full position' 12 minutes

Step 15. How Goals are the GPS To Your Success – set goals and break them into smaller steps 16 minutes

Step 16. How to Create Success Faster With Helping Hands – delegate… 6 minutes

Step 17. How to Finance Your New Business Venture – Borrow money and sell your belongings, do whatever it takes to buy all the MOBE upgrades 17 minutes

Step 18. How to Get Steady Streams of Traffic Visitors 24/7 -  Different ways of promoting your link using paid online advertising. 10 minutes

Step 19. How To Get Access To Even More Opportunities - As a Titanium member, you can close your own deals, and earn the extra 33% normally paid to the telemarketers.  You can even become a telemarketer and close sales for other members (for 33%). 6 minutes

Step 20. Discover Your Why and Manifest Your Success For Life - This focuses on dream building.  What will you do with your financial freedom?  These products can give you your dreams...9 minutes

Step 21. Discover a Special One-Time Offer, You Don’t Want to Miss - If you've made it through 20 days without buying an upgrade, then you will have them offered at a discount on day 21... not sure what this step becomes if you have already paid full price 9 minutes

We divided the MTTB 21 Step Program into 5 categories:
1. Remind you of the importance of selling 'top tier' high priced products
2. Introduce you to all the 'Top Tier' products sold through MOBE. 
3. Emphasize the importance of following MOBE instructions
4. Teach you the Importance of spending money to promote your affiliate link
5. Encourage you to buy all the products yourself as soon as possible

The goal of this 'training' is to get you to spend as much money as possible, as quickly as possible.  Your coach will explain to you why you need to invest in your business. If you want to build a million dollar sales funnel, then you need to follow all the steps.  They will explain why spending money in today will make you so much more in the future, and if you don't join, you could cost yourself millions of dollars of lost revenue down the track.  Of course, they offer no actual proof that the system works

Using information found in the MOBE Compensation Plan, we created this table showing the programs and their costs:



If you follow the training, listen to your coach, and 'use the proven system', then you'll pay close to $60,000 up front, and at least $2,400 per annum in annual fees.  That's before your business has generated a single dollar of revenue.   This is not looking like a $49 'done for you' opportunity.  

Why is it so Important to Invest in Your Business

During the 21 step program, the topic of 'investing in your business' will come up very frequently.  Your coach will regurgitate mantras like 'it takes money to make money', as a way to entice you to buy all the upgrades.

Investment in  your MTTB / MOBE business requires more than just buying system upgrades.  You also need to invest in promoting your link to generate traffic.  Remember your sole duty in the partnership is generating traffic.  The training will teach you that you can promote your link through places like social media, search engines or many other sources.  Most of these will cost money.

Your part of the partnership involves paying upfront and ongoing fees to remain in the system, and paying for ongoing advertising costs to promote your link.  If this sounds like more work than you wanted to put in, then don't worry because MOBE also offers a 'done for you traffic' service.  They will place all the ads for you, including setting up campaigns and deciding on key words etc.  All you have to do is set a budget and send them money. Naturally they will add a fee so this will be more expensive than placing the ads yourself.

This truly is a win / win situation for MOBE and Matt Lloyd.  If your advertising efforts fail and bring in less revenue then they cost, then MOBE still makes some money from any sales and they haven't had to share any of the costs.  We'd go a step further and say, Matt expects you to lose money on advertising.

If paid advertising was profitable, then Matt wouldn't offer to do it for you.  He'd pay for the advertising himself and keep all that commission he is offering you. 

MOBE done for you advertising allows Matt to place adverts at your expense, and still benefit partially from any sales.  It has been alleged that MOBE also charges a margin on advertising making their service more expensive than just placing the ads yourself.

What is a Million Dollar Sales Funnel

We thought we'd let Matt Lloyd explain this one himself, here is a short video explaining how it works:

If we listen to our coach, and follow the 21 steps to building a million dollar sales funnel, we will have our own sales funnel which:

1. Offers a front end product for $49
Hey, that sounds like MTTB.  Except Matt is calling it 'information marketing' instead of 'make money online'.

2. Makes a Back End Offer
Once someone has spent money, they are more likely to spend more, so offer them a more expensive 'higher commission' sale which is 'more in line with what they are looking for'. Could this be MOBE Licensing Rights (MLR Program)?  And is this just a ploy to make us spend more money?

Why does the back end offer have to be 'more in line with what they are looking for'.  The front end product offers a service, now you are telling us that the customer has to pay more money to get the original offer?  This does not sound like a formula for building customer trust.

3.  Makes More Back End Offers
Keep offering more expensive products which 'offer more value' and pay higher commissions. Notice how Matt wants to 'offer' more value, we find it interesting that he doesn't mention actually providing any value.

The goal is to exhaust their ability to buy.  This must be where the titanium, platinum and diamond packages come into play.  If the customer's got money, Matt wants it! Step 17 makes sense.  They want you to 'finance your imaginary business venture'.  If you have funds available on a credit card, then your ability to buy has not been exhausted

 



This video made one thing very clear.  If you join MTTB, you are in the sales funnel.  You are one of the customers Matt describes in the video.  Your 'business coach' is one of the 24/7 telemarketing staff  working on commission only for 33%.  

When your coach tells you the importance of joining MLR what he's really saying is ' if you spend $2,497, then I'll make $824, if you don't then I get nothing'. 

We have read, but couldn't confirm, that the 'sales staff' are actually people who have paid for the platinum package.  Matt prefers to hire people who have the system themselves because 'who better to explain it than a true believer'.  

Perhaps this keeps them working harder because they are trying to recoup the $60,000 they spent on packages for the education and training for the prestigious honor of becoming a telemarketer.

Can I Make Money With MOBE

All the commissions mentioned in the promotions are possible.  If you generate traffic, and the phone sales team / platinum members / business coaches make sales to them, then you will make all those top tier commissions.  We believe it is extremely unlikely that you will generate a profit with MOBE / MTTB.  

All direct marketing and multi-level marketing companies are required to produce annual income disclosure documents, and make them available to their members.  These are legal documents so we hope they will be a reliable source of information regarding associate earnings. 

The version we found of the MTTB Earnings Disclaimer, covers the 12 months from September 2014 to September 2015. The disclaimer confirms that most people who join MTTB and MOBE do not generate a significant income. It's all there in the numbers below:



The first thing we notice is that the table looks like it was made by someone using excel for the first time.  The data is laid out in a way which makes it difficult to read, we'd expect more from a company who claims to provide 'top tier' high quality digital content.  

Looking in the text below the table we see mention of a 'standard affiliate membership'.  It turns out, that $49 is just the enrollment fee for MTTB, and the 21 step program.  To become an 'affiliate', you will also have to pay $19.95 per month to remain active.  The fee is to 'cover administrative costs'.  You can opt out of paying this fee, but then you will become an 'inactive affiliate', and won't get any commission.  So the $49 ready made business costs $240 per annum to maintain.  That little detail didn't make it into any of the promotional material.

Then there is the description of the enrollee 'they may have paid a start up or activation fee', but we are 100% certain that the enrollee did pay the $49 enrollment fee.  The 'enrollee' did enter their name and contact details on the website, and on the very same form, they also entered their credit card details and paid $49 to become an enrollee in the MTTB 21 Step Program.  

We  took the liberty of reproducing their table we made it a little easier to read and added in some extra calculations.  Our calculations are shown in green. Our version of the table is shown below:



Our very first calculation found an error in the original MTTB table.  The green totals underneath should all add up to 100%, yet only 98% of active affiliates are represented and 103% of 'all affiliates' are represented.  They state  'all percentages are rounded to the nearest full %' , but this would not create an extra 3% in one column or lose 2% in another.  We'd say 'the numbers don't lie', but it certainly looks like they are trying to in this case...

This error may seem trivial, but for us it is a red flag.  It proves that the math used to create this table was inaccurate.  It could be that the numbers were intentionally altered, or maybe it was someones first day doing math..  

We don't have access to the raw financial data so we can't confirm where the error is or what the correct figures should be.  Therefore the data provided by MTTB can not be fully trusted. I hope the same guy didn't do the math which forecast how much money we will all make if we join MOBE...

The Finance Guy is willing to help MTTB fix this issue so that all future tables are accurate.  Please send us $49 immediately and then another $59,158 over the next 3 weeks.  In 21 days,  you will have Top Tier financial mathematics (for as long as you pay our monthly maintenance fees).

Next we found something we believe we could correct.  We changed the word enrollee to MTTB, this was not a calculation, but we feel it makes the information less confusing.  The use of confusing language may have been an intentional strategy to improve the appearance of the data, or it could have been someones first day speaking English and using a computer.   

How can we be certain that every enrollee paid $49?  Well they told us in the text above their table they stated that their chart 'includes data for everyone who joined any affiliate program'. If someone didn't join MTTB, then they would not be included in this data.

We will focus on the column which includes all affiliates and MTTB members, after all if you are thinking of paying $49, to enroll in MTTB, then this is the most relevant column for you.  In the 12 months to September 2015, 95%  of MTTB and MOBE members earned an average annual income of $654, or $54 per month.  That's an income of less than $1.80 per day.

Could you live off less than 2 US Dollars per day? If the answer is yes, than consider this... In order to receive your $654 annual income, you will have to pay $240 to remain active.  If you want to use the 'made for you system' then you will also have to join MOBE and pay another $800 in annual fees.  That's $1,040 per year in fees! If we include these costs in the calculations then we see that 95% of all members incurred an average annual loss of $386 (shown in our green column on the far right)

If we look at the bottom five rows of the table, we see that 99% of all MTTB and MOBE members, earned less than $2,500 per month over the same 12 months.  This means that only 1% of all members earned an income of more than $30,000.  After fees, that adjusts down to $28,960 or $79.34 per day before tax.  This income does not include the money spent on advertising and promotions.  

Only 1% of all MTTB and MOBE members make an income before expenses of more than $80 per day.  Does this sound like a system which teaches 'the secret the wealthy use to amass their fortunes, and how you can do the same'?  

Is MOBE an Illegal Scheme

My Top Tier Business or My Online Business Education, are structured cleverly so that they are not doing anything illegal.  They are charging fees for the services they provide.  The prices they charge for these services seem high and unethical to us, but this does not make them illegal.  If people are willing to pay these prices, then their money has not been stolen.  

A thief is someone who steals your money.  A con man convinces you to give it to him.

MOBE has a copyright on their promotional content.  Your membership gives you the legal right to use their content.  They could choose to make if available to all members for a one off fee of $49, or they could choose to charge much higher prices. 

We can take our own photos and write our own descriptions, so we don't see value in the MOBE License Rights. In fact we created all the tables and graphics in this article with only limited experience with Inkscape and Gimp (which are both open source free software packages).  Our work may not be 'top tier', but it does show what can be done with absolutely no money spent.  

Can I make Money Without Buying More Products

The promotional material, and your coach, will lead you to believe that you need to invest in upgrading to the programs in order to earn commission from selling them.  It is true that when you upgrade and purchase a program, you can earn commission from it, but there is another way.

 In the MOBE compensation plan, it explains ' To upgrade, or get positioned at a certain level, you can either purchase a membership package and qualify immediately or make 5 sales at that level. On the 6th sale, you will become positioned and all future sales will qualify for commissions at that level.'

This lends credibility to the original claim that you can earn huge commissions with only a small upfront payment (and $19.95 per month).  If you choose not to buy the upgrades, then you will miss out on the first five commissions (and any additional upgrades those customers pay for, regardless of whether you have been positioned at that level at the time they upgrade).

If you are planning on joining MTTB / MOBE, then we advise not buying the upgrades.  Rather let the system buy them for you (with 5 sales at each level).  You could say that each sale is paying you 20%, because each sale pays for 20% of your being positioned at the next level.  If the system really works, then you will make 1,000's of sales in the future, so letting the first 5 go for 20% instead of 50%, won't make a huge impact on your total income generated in MOBE.

Your coach / salesperson will do everything they can to advise you to purchase the upgrades.  After all, this is how they make commission.  Not upgrading might not have a huge impact on your future earnings, but your upgrade has a severe impact on the immediate income of your coach.

If you employ our strategy, then your coach stress that you will only be eligible to earn commission on the $49 MTTB sales until your traffic has generated 5 MOBE license sales.  After this you'll need to wait for 5 titanium sales before you can earn commission on this program.  By the time you are earning commission on Platinum and Gold packages, you might have foregone more than 5 sales at each level above the MOBE License Rights

We believe that most people who join MTTB do not upgrade to a higher program.  In fact our calculations shows that less than 48% of MTTB customers will choose to pay for a standard affiliate membership.  The bottom line of the earnings disclaimer table shows 95% of MTTB and all affiliates combined equals 45% of all affiliates who have paid at least one fee of $19.95.  From this we derived that less than half of MTTB customers will pay more than the initial $49

Matt's sales funnel might be effective at making $49 'front end' sales, but it looks like their ability to up sell on the back end is less than stellar.  Less than half of the MTTB customers are willing to spend an additional $19.95 with him.  Matt and his coaches might want to work on their 'exhaust their ability to buy' skills.  

As we stated earlier, the figures in the MTTB earnings disclaimer appear to have some errors, so we should note that our calculations are only as accurate as the data which they have provided.  Again if MTTB and MOBE are willing to share the original data, we are happy to run accurate calculations (at a top tier price of course).

If most of your customers will never pay for more than the initial MTTB enrollment, then perhaps it's a bad idea to pay to upgrade yourself.  After all, you'll be paying for the ability to earn commission on something which very few people are buying.  That does not sound like a good investment. 

Do I Have to Pay for the MOBE License Rights

If you want to use the pre-made graphics and videos, then you will have to pay for the MOBE license rights.  This material is protected by copyright, so using it without rights would be illegal.  This does not mean that you have to use their content.  You can create your own content!

If you just want to promote MTTB, and are willing to pay $19.95 per month, then you can do this using your own promotional content.  You can create your own campaigns and websites to generate traffic through your link.   You will still qualify to earn commission from MOBE, and will still be positioned for higher commission after your 5 sales at a higher level.

If you had the ability to create your own content, then maybe you should consider putting a copyright on it, and selling license rights.  Hey you could create your own system without even joining MTTB or MOBE.  You'd even get 100% of commission on all sales you make, with no ongoing membership charges.

Is MOBE Really Like a Franchise

If you buy the MOBE License Rights, then you have the ability to create your own copy of their existing business.  You'll even have a coach to walk you through every step to ensure you are following the system.  This is similar to how a franchise works, but there are key differences which you should consider before paying for MOBE License Rights.

Imagine you are about tobuy yourself a Burger King franchise. Before you put down any money, you are probably very familiar with the business.  You know what their restaurants look like, you know their menu quite well and have probably eaten their food.  You can see their track record in their financial statements, and have seen all their television and other advertising.

MOBE does not share these features.  Until you stumbled across a 'make money online' or 'work from home' advertisement, you probably had never heard of MOBE or MTTB.  They are not selling an established product with existing demand.  They are selling membership in a club and alleging to know the 'secret the wealthy use to amass fortunes'.    

Unlike a physical restaurant, an online business has no fixed location.  You can promote your MOBE / MTTB link to anyone in the world who has internet access.  The problem is that the same thing can be done by all members of the system.

You will be in direct competition with all  MOBE members.  If all members use the same content and follow the same promotional steps, then you are competing with each other for new customers.  The only way to stand out from the crowd is to either pay more for your campaigns (on a pay per click bidding system) or create new and different ways to promote the system (which makes the MOBE License worthless).

 If you buy a Burger King, your competition will be other restaurants in the area  including any near by Burger Kings.  When you buy a MOBE business, this would be like trying to open a new Burger King right next door to an existing one.  Then when your customers ask you for a Whopper, you try and convince them to open a third franchise next to the existing two.

Market dilution or cannibalism, is something which any franchise would suffer from.  If you open a new Burger King 10 Miles from the nearest existing outlet, then you have now become the closest Burger King for the people within that radius.  Some of the customers who were willing to drive 10 miles for Burger King will now come to the new one.  In this regard opening new outlets makes the existing ones less profitable.

This problem grows exponentially with MOBE because the internet means that every single MOBE link being promoted is available through the internet. There is no advantage in opening a new MOBE link.  As a new member, you will be competing for the same traffic that all the existing members are trying to attract.  To make things worse, any new members you sign up will also be competing for future traffic.

This is why we believe it is highly unlikely that you will make a profit by simply following the 21 steps.  Copying what others have done might work in the real world, but not on the internet.  Creating duplicate or 'spun' pages is something which search engines don't like.  

Making yet another MTTB promotional page will not get you organic traffic from search engines.  To get traffic you'll either have to work hard to create completely original content, or you'll have to pay top dollar for your paid advertisement to come up before those placed by your fellow MOBE promoters.

This is a common problem with MLMs,  there is no organic demand for what they are selling, and they focus entirely on recruiting new members rather than trying to create productswhich can be sold in the market for a profit.   We believe that MOBE is not a franchise opportunity.

The success of franchising in the real world is not a good example of why MOBE and the 21 steps will work online.  To allege that you can expect similar success rates ( 85% ) is simply wrong.  This could be a honest misunderstanding by someone who was using marketing terminology for the first time.  Or it could be a deliberate misrepresentation to make MOBE look more attractive.

Our Final Thoughts

Making money online is no different to making money anywhere else.  You need to put in hard work and provide  something of value to the market.  There are no secret formulas or guaranteed short cuts.   If someone tells you that they can show you how to make money but first you have to pay them, then chances are, they just want your money.

If you join MTTB and follow the steps you will be in a partnership.  Your sole duty will be to provide traffic.  Unfortunately following the steps makes generating traffic expensive.  We believe that the sales you make will not cover the cost of advertising your MTTB link.  If the advertising was profitable, then MOBE and MTTB would do this themselves.

What are your thoughts?  We'd love to hear from you in the comments section below. 

For more posts like this, look at our list of mlm reviews. 

]]>Can I Make Money With MTTB/MOBE?Finance GuyFri, 11 Dec 2015 09:24:53 +0000https://www.finance-guy.net/streetonomic/world-financial-group-review5388101ae4b04631a5e04b76:547fcdcce4b0d77d6ee4509e:56603269e4b066b69a920bbb

One of our readers recently asked us a question about a multi-level marketing company called World Financial Group. It is a network marketing company which sells financial products such as life insurance and mutual funds.  After doing a little research, we decided to write a review of World Financial Group (WFG).  

Finding information about World Financial Group is rather difficult, which we see as an early red flag.  The WFG website is full of miniature sales pitches aimed at potential new recruits but there isn't much detail.  We are assuming that their goal is to be as vague as possible so that the only way to get information is to see an agent, and receive a full sales pitch.

It took a little more web surfing, but we were able to find a copy of the a brochure called WFG The New Standard,  and copies of the WFG System Manual, and the WFG Leadership Manual. We also managed to find a slide show version of the WFG Business Presentation, and a video of the WFG Napkin Presentation.  

The WFG system manual,  teaches us that answering too many questions as the 'scenario of disaster'.   They tell their associates to 'focus on selling the dream'.  Giving detailed information or answering difficult questions will lead to failure.  This explains why the website was so vague..... they didn't want it to be a disaster zone!

This is actually quite common in all MLMs. They tend to hate it if their prospective recruits ask for too much information. They want people who will blindly jump at the chance for easy money, they’re not interested in those of us who prefer to know more about it before we join. Maybe it’s because they know that people who make informed decisions wouldn’t join an MLM…

What Is The World Financial Group Opportunity?

World Financial Group is a network marketing company, which focuses on financial dreams and offers to ' teach basic financial concepts to everyday people'.  They tell us associates make commission from selling financial products.  These are summarised into three areas:
1. Savings
2. Protection
3. Retirement

Like all financial planners, WFG associates need to obtain the proper licensing before they can legally sell these products to customers.   This will involve some study and exams.  Before you join WFG ask yourself ' Do I want to become a financial planner?'. If you are expecting long term success with World Financial Group, then a career change to financial planning is part of the process.

If you'd rather not be licensed or find the exams a hurdle, then we believe WFG will still allow you to join as an unlicensed associate, and sell on a referral basis.  This means that you will prospect for new customers, but someone in your team with a license will have to handle the final sale of any financial products (we assume they would also take a share of the sales commission). It is important to understand that not taking the exams will seriously limit your earnings ability with WFG

If you are genuinely interested in becoming a financial planner, then we suggest that you look at other options along with WFG.  If possible speak to financial planners from other companies to see if they describe the industry the same way WFG does.

How Does the WFG Business Work

Rather than use a standard business model, WFG has chosen to promote themselves using a Multi-level marketing structure.  We believe it is very difficult to make money with MLM. Based on our research so far, World Financial Group has not changed our opinion about MLM.  Like most network marketing companies, WFG places a huge focus on recruiting new members. Very little attention is given to selling their services or attracting and retaining retail customers. 

If you join WFG, then you will be encouraged to get yourself off to a 'fast start'.  To do this you will need to introduce 3 new recruits, and sit in on 3 training sales within the first 30 days of becoming a WFG associate.  We notice that there is no focus on finding customers, it’s all about recruiting new members to the MLM. To us, this is a red flag!

If you achieve your fast start challenge, then you will be a part of the '3 - 3 - 30 club'.  The fast start process is very important in World Financial Group.  In the WFG systems manual, fast starting new recruits is one of the 7 keys to success and is referred to as 'the big push'.   It's part of the MLM mentality of 'the more the merrier'.  The bigger your team is, the more residuals you'll earn, so keep recruiting

The sales presentation will make you believe that all you need to do to be successful, is find three new recruits, then help them to 'duplicate' the process and find their own recruits.  This duplication will lead to your team going into auto pilot. Recruiting and fast starting is essential to your World Financial Group success.  The systems manual says 'FOCUS ON 3-3-30, YOUR DREAMS CAN COME TRUE'.  Once again there is no focus on actual financial planning

If you find three recruits, and they each find three recruits, then you'll have 12 associates in your WFG team, and will earn residual income from any sales from your entire team.  But it doesn't end there you can go more than two layers deep.  By the time your team is 4 layers deep, you will have 120 associates in your network, all earning residual income for you...Your team might look like the one in the diagram below:



 

Why Does WFG Really Focus So Much on Recruiting?

Bringing in new recruits is how they make money
Part of the process of becoming a new recruit, is completing an online financial needs analysis. Once this is complete, you are offered a complimentary financial plan - this means they won't charge you an upfront fee for preparing the recommendations.  Your sponsor, or a licensed agent in their team, will show you all the insurance and investment products you personally need to secure your financial future.  They will earn commission on any products new recruits sign up for.

The WFG systems manual states 'WFG associates are not required to purchase any products, goods, services, inventory, marketing plan or property of any kind, or pay any consideration in exchange for becoming or remaining an independent contractor of WFG'.

This is where WFG stands apart from other MLM systems in that they do not force their associates to buy product to 'remain active'.  Buying product might not be compulsory.  The WFG presentation however, explains that to be successful, new recruits need to be 'coachable + willing to follow a proven platfrom'.  In other words, they need to do what they're told by their upline

New associates are told that in order to succeed, they need to duplicate the system, and follow exactly what their up line did.  This includes buying their own WFG products.  Unlike other financial products in the market, these come with the added bonus of unlocking all your financial dreams...

The manual says 'Aim at Recruits; Hit Sales'. Buying products is not compulsory for new associates. Selling products to new recruits is part of the WFG process. 

If they don't keep recruiting, they risk their business dying
The WFG systems manual also tells associates that they need to focus on recruiting and ensure their recruits get off to a 'fast start’. This they say will help grow their business. What they don’t mention is that WFG Agents need to keep recruiting to replace people who drop out.

MLMs have very high rates of attrition. It is common for over 50% of members to quit every year. This means that your downline of 120, is likely to drop to less than 60 after 12 months, unless you can recruit fast enough to replace those who quit.

Once you reach leadership levels and become what they call a sales marketing director or 'SMD', the business starts to look a little different. If we look at the WFG leadership Manual, we see the real motivation for the fast track recruiting.  

The leadership manual says associates 'must consistently and continuously bring new people into the business'. They also tell their leaders that 'a leg isn't a leg until it's four deep', and 'an associate isn't an associate until they've recruited someone'.  This is quite a contrast to the 'get three friends and let the business grow' story the new recruits are told.

The leaders refer to this aggressive recruitment as 'tap-rooting'.  Essentially they believe that once you've recruited others, you are less likely to quit the business.  Furthermore they want you to recruit within 3 days of joining the company, because after that there is a risk that you'll lose enthusiasm, or perhaps learn that the system isn't what you thought it would be.

It seems to us that, WFG expects a large number of associates to quit every year.  In their leadership manual they refer to this as the 'Law of Averages' claiming that 'there are a lot more starters than finishers'.  They go on to tell SMDs to expect high drop out ratios and that very few people will become SMDs.

This is most likely whey they teach their leaders that a leg is not leg until it is 4 deep. What they’re really telling us is that until someone has 3 layers of recruits beneath them, they are at risk of quitting. This would suggest that even with 2 layers of downline it’s very hard to make money in WFG

The dictionary defines the Law of Averages as - a statistical principle formulated by Jakob Bernoulli to show a more or less predictable ratio between the number of random trials of an event and its occurrences.

So this 'Law of Averages' is based entirely on people who have previously joined WFG. So by their own observation, most people who start in WFG don’t finish…  World Financial Group is admitting that their system has a track record of high drop out rates...

WFG is a system where people will quit at a high rate.  So to build your team you need to work extra hard to find people who won't quit.  Finding good recruits is a highly unscientific process, WFG will prospect anyone and everyone. It doesn’t matter what your criteria is, they want you in their downline.

Their hope is that if they recruit heavily enough, they might get a few people who stay in the system, and even start recruiting for them too. The image below is a table from the leadership manual, which illustrates their expectations for recruitment and retention:



They tell us that to get the business going we only need 3 SMDs beneath us.  But if only 25% of prospects (who attend a presentation and follow up meeting) become associates, then we have to have follow up meetings with 12 prospects to get three associates..  But then only 25% of associates will become licensed or registered so we'd really need 12 associates  to get 3 licensed / registered associates in our team.  This means we'd need to have follow up meetings with 48 prospects 

It gets worse after that because only 1 in 50 associates is expected to become a SMD.  So to get one SMD in our team, we need 50 licensed  associates which means 200 associates and 800 prospects.  That's right the leaders are told to expect to  have follow up meetings with 800 people to find one SMD.  So finding 3 SMDs means having follow up meetings with 2,400 people.  All of a sudden finding 3 people for your team just got a lot harder!

Even if you know 2,400 people, then this still won't be enough because they are basing their expectations on prospects who have made it all the way through a presentation and a follow up meeting.  They are not counting all the people you prospect which are simply not interested or the ones who agree to see the presentation but decide not to proceed to a follow up meeting. 

Remember these figures were formulated from previous results of WFG associates who know how to sell the dream and avoid the scenario of disaster that comes with answering too many questions.  Even if you duplicate the system and parrot the scripts perfectly, you can still expect 3 out of 4 people who make it to a follow-up meeting, to decline to join WFG

World Financial Group claims that you'll need to focus on high numbers to 'overcome the negatives inherent in the law of averages'.  Could it be at all possible that the negatives are inherent in their own system?  After all, this is how they created their version of the ‘law of averages’.

On the WFG website, they proudly state that they now have 50,000 licensed associates.  This sounds like a good number but if we look at the WFG opportunity page, we see that in 2014, WFG signed up 120,000 new associates.  The total number of licensed associates in the entire company is less than half the number of people who joined in a single year. This supports our expectation that most of the people who join WFG don't become licensed. Furthermore, a large portion quit withing a short time of joining.  Does this sound like a system which is making financial dreams come true?

What's Wrong with using the Multi-Level Marketing model?

Multi-Level Marketing is a motivational system designed to sell dreams.  If you join, (and buy their products), then a world of financial freedom will be opened to you.  The problem is that there is so much focus on the dreams, that nobody bothered to promote the products and services.

Like all MLM opportunities, you will only make money in WFG if you sell products.  Running mass recruitment seminars and dangling carrots of wealth, is not going to earn them any money.  Therefore they make buying their products part of the process.  You need to follow their example and buy the products yourself.

MLM is designed to make you a customer. They are not interested in making you a business owner or creating your pathway to financial freedom. They want to sell their products and earn profits.

The biggest problem with MLM is a lack of organic demand.  Customers aren't coming because they want the product.  They are buying the product because they want to be part of the MLM opportunity.  

When agents buy their own WFG products, part of what they spend is paid as a commission to the people who sponsored them.  Your upline might tell you that they are trying to educate and train you but in reality they want you to join so they can get a percentage of the money you spend in the system.

WFG proudly state that they are 'committed to identifying innovative ways to push more compensation to the field'.  These 'creative ways' involve charging higher fees on the products so that when you pay for your insurance or savings plan, your sponsor and upline can get a bigger portion of your money.  This makes the products more expensive to you, and higher fees will reduce the financial performance of any investment.

We are ethically opposed to MLM, which is part of why we are indignantly negative toward it.  If you watch the WFG Napkin presentation, you'll see that it starts with a reference to the Robert Kiyosaki book Rich Dad Poor Dad.  This book is a favourite within the network marketing world

 The presenter goes on to show the 4 cash flow quadrants.  He alleges that by joining WFG you become a 'business owner'.  This is not true, at best it's an honest misinterpretation, at worst an intentional misrepresentation.

As a WFG associate, your agreement refers to you as a contractor or representative of the company.  This is very similar to having a real job known as a sales representative.  Even if you did own your business, you would be in the 'self employed' quadrant, not the business owner because the income is not passive.

The standard MLM formula continues with an explanation of why 'you don't have to be a sales person', this system will 'teach you how to be financially free' and you 'should tell everyone you know to also join'.  There are no sales quotas, but if you don't sell, you don't earn.

One of the interesting points in the presentation is where he claimed that WFG 'created jobs in the community'.... wait I thought it was creating business owners who didn't need jobs.. I'm not sure business owner means what he thinks it means.

Is WFG an Illegal Pyramid Scam

Even though MLMs such as WFG closely resemble pyramid schemes, they are not illegal. To the best of our understanding, the reason dates back to a case of Amway vs FTC 1979. It was settled that Amway was not a pyramid scheme because of the wording in their agreements. This does not mean that MLMs don’t operate like pyramid schemes, it just means that they have rules against it. Whether or not they enforce these rules is questionable.

Now other MLMs just follow the same formula to remain legal. They make rules telling consultants to make retail sales etc. Unfortunately none of these rules are monitored or enforced. That has lead many to believe that WFG is a scam

What Will WFG Teach You About Money

One of the benefits of joining WFG, is that they say they will teach you basic financial concepts. We managed to find a copy of the WFG money makeover, which explains their ‘6 steps to financial independence’. We’ll go through each of the steps below:

Step 1 - Debt Management
Personal debts such as credit cards can lead to financial hardship. As the debt mounts up, so does the monthly interest, and it’s very easy to fall into a debt trap. The post we looked at suggested a couple of ideas for managing this. One was to make extra repayments, another was to ‘snowball’ your debts. While these are both valid ideas, it’s nothing new. In fact both were included in a post we wrote about tips for repaying credit cards.

Step 2 - Emergency Fund
This is exactly what the name suggests. WFG will ‘teach’ you that it’s a good idea to have some funds put aside for unexpected expenses. The best way to build an emergency fund, is slowly. Put aside small amounts on a regular basis, and it will hopefully build up over time.

Step 3 - Cash Flow
Here they suggest a way to improve your cash flows, is to increase your earnings. They advise to start a business or get a ‘gig’ job on the side. While earning more cash is great, if it were that simple, everyone would do it. Starting a side business or taking on a gig, will take time and money, and there’s no guarantee that they will be successful. We think a better way to improve cash flows is to try and reduce your spending. Look for opportunities to save money.

Step 4 - Proper Protection
By this they mean life insurance. This includes income protection and other types of related cover. Put simply they are telling us that it’s important to have insurances that will help you financially in the event that you unable to earn an income due to illness or injury.

Step 5 - Build Wealth
This is similar to savings in that you need to put aside as much as you can as often as possible. However unlike savings, these funds are invested for the long term. You might choose a simple index fund, or try and invest directly in shares of your choice or even property. The important thing is to choose an amount you can afford to set aside and then keep it invested for as long as possible. No matter what style of investing you prefer, you will do better if you keep at it for longer.

Step 6 - Estate Preservation
This is just another way of saying ‘get a will’. If you have assets that you want passed on to your family after your time is up, then you should get yourself a will. It makes sense for you to do this so that you can decide who gets what. It might solve some problems which we often see when relatives end up arguing over how an estate should be handled.

While there is nothing wrong with this information, there’s also nothing new about it. You could easily learn all this and more for free on the internet. WFG is not offering any unique education.

What Are Others Saying About WFG

While this review is now 5 years old, we do our best to keep it current. So here is an update from online 2020 WFG research. We’re going to play the trust game here and assume that the information in these other online sources is credible.

Duford Insurance
Upfront disclaimer, you can become an insurance agent through these guys, so maybe look at them before you join WFG, they can’t be worse!…

Duford was kind enough to tell us that in 2018, WFG paid $792,000,00 in commission to 42,000 agents. While the numbers look big, when we do the math, it’s disappointing. Based on these numbers we find that on average WFG agents earn less than $19,000 in annual commission.

When we consider that the average annual income for financial planners / insurance agents is close to $60,000 per year, it shows that it’s expected that you will earn 3 times more if you join someone other than WFG. These dismal results represent a 7% increase from the previous year.. so things have been worse at WFG.

Duford then tells us a bit about the products sold by WFG. Like us, they found that WFG seems to push Indexed Universal Life (IUL) as there main product. Now speaking as someone with a degree in Finance and over 15 years experience in the industry, these products are overly complicated. They appear to be a life insurance policy which also have an investment component, but the investment is capital protected…

Here’s some general advice (because I don’t know you enough for it to be personal advice). These things should be kept separate. Nobody is saying that you shouldn’t get insurance… but I would feel better getting a stand alone insurance policy.

Yes IUL’s come with an investment component, but you pay for it… so I’d rather get the same cover with an insurance only policy (which would be much cheaper), then invest whatever extra I choose in an investment fund.. My choice would be low fee index funds… but your choice is your own.

Then there’s the capital protected aspect… in the current Covid times, it may seem appealing to have downside risk, but this is actually quite expensive.. Even though markets are down substantially, I’m still up because I’ve just been throwing in spare cash every month for several years… Capital protection only works if you need to sell… If I had paid for capital protection every year, I’d be much worse off now, than I am now without it.

The Duford review goes on a bit more, and we scanned through… the main point we got is that they agree that the key to making money with WFG is recruitment. This is a problem because the focus should be on learning about financial products and helping clients, not building a pyramid downline.

Finance Geek
These guys don’t waste time… in their introduction they suggest WFG is a scam

Something new we learned from the Finance Geek, is that WFG focuses their recruitment on relatively young students… Those just out of high school or college.. In other words impressionable, and trusting. Our research found they target ‘First Generation Americans’… well their info is based on WFG Yelp reviews, so we’ll accept it.

WFG might have adjusted their recruitment behavior, or they could target both markets… either way it doesn’t change the opinion that WFG is not a good business opportunity.

The Geek also points out that WFG has had a history of legal issues.. This is no surprise as most MLMs tend to spend their fair share of time in the court room

Wealth Awesome
These guys open with their list of pros and cons… Based on their findings, joining WFG has many cons and few pros. Like The Finance Guy, the person who wrote this review actually works in the industry.

As expected, they point out that WFG pays less than half the commission available from similar sales opportunities.

Another important point they raise is that WFG expects you to prospect to all you friends and family. In other words you do your own promotions, WFG provides no marketing.

This would be fair game if they paid an above average commission, but they don’t. Given that WFG pays less commission so they should provide leads. After all, that’s the trade off. If you work in a branch of a company, then they will give you a base plus a small commission for any sales you make. The upside is that they will do marketing which will provide you with customers.

If you work for yourself, you’ll earn a lot more per customer, but you won’t have a ‘branch’, and you won’t benefit from the marketing budget. So there are benefits to both models… If you want company benefits like a regular salary and insurance, then join a big company.

If you are a great sales person, you might do better on your own so get your own clients, make lots more per sale, and pay your own benefits.

If you join WFG you earn less and you get no benefits.

If you keep reading the Wealth Awesome review, you’ll see that we agree with their opinion that you should not join WFG

Should I Join World Financial Group?

Unless you already want to become a financial planner, there is absolutely no reason to consider joining World Financial Group.  If you do want to get into financial planning then this is a way to do so, but should not be the only opportunity you look at.  

WFG focuses on people who are 'new to the industry' and tell you that there is 'no experience in financial services necessary'.  They are proud that many recruits are 'first generation Americans'.  They use these as selling points, but we see them as red flags.

They don't want people who have financial services experience because they are more likely to know how the industry works.  This makes them less likely to believe that this is a miracle key to financial freedom.  They will also have a better understanding of products so maybe they won't like the ones which WFG asks them to buy as part of the sign up process.

First generation Americans, or immigrants, are less likely to have previously owned investments or insurance in America.  This means they too are more likely to accept the expensive high commission products without questioning whether they are the right choice or not.

World Financial Group will tell you that because of their 'team' MLM structure there is no competition.  This is completely untrue.  There are 1,000s of other companies selling financial planning products.  Every one of them is your competition.   To make things worse, every WFG associate who is not directly below you in the system is also your competition.  Every time they find a new prospect, that's one more person who you will never be in your team.

If you want to be a financial planner, then get the education and start applying for a normal job.  If there are no jobs available, then maybe give WFG a shot because the one thing they do have going is that they will give you a chance.  Make sure that you have a system for finding your own customers and selling financial products.  At the end of the day sales is the only way you will make money in WFG (or with most commission based financial planning roles)

It is also important to remember that this is a sales job. We found a review by an existing WFG member, where she admits that after almost 4 years in WFG she’s not suited for it. She explains that to be successful in WFG, you need to be a ‘hustler’.

Being a hustler means seeing everyone you meet as a potential recruit. You need to find a way to turn every relationship you have, into a potential lead for your downline. Not everyone is comfortable trying to sell and recruit their friends and family members.

Even if you are willing to sell to your warm market, you should be careful because trying to recruit your friends can damage your friendship.



 

What are your thoughts?  Have you joined WFG or thinking of joining?  We'd love you hear from you in the comments section below.  You can join disqus or comment as a guest

For more posts like this, look at our list of mlm reviews. 

]]>World Financial Group ReviewFinance GuyFri, 27 Nov 2015 07:04:33 +0000https://www.finance-guy.net/streetonomic/email-processing-4-cash-review5388101ae4b04631a5e04b76:547fcdcce4b0d77d6ee4509e:5657ec6be4b0c377c4572261

Have you ever seen an advertisement claiming you can make huge sums of money online by ‘processing emails’?  These adverts have been circulating for years, the companies seem to change name, but the general offer is still the same.  We decided it was time to write a streetonomic review of email processing.  We want to know how it works, and if it is a legitimate money making opportunity.

The most prominent of these systems at the moment is called ‘Email Processing 4 Cash’, this is who our review is focused upon.  We did find references to other companies such as. ‘Email Processing Jobs’, Email Processing System, who seem to offer a nearly identical system, so we hope this information will be applicable to all email processing systems.

Email Processing 4 Cash has been around since 2010. It is being promoted as an online work from home opportunity.  We found it on an Australian job search website under the title ‘work from home data entry staff needed’.  It went on to claim that average reps were earning from $500 to $2,500 per month, working from home in their spare time.  All you had to do was go to a website and register… It all sounded a little too easy! 

We followed the link from the employment advert, and found the online version of the hard sell. It was a website full of videos and graphics showing us how much money we can make with Email Processing 4 Cash.  The website purported that we could earn $25 per email, and inferred that it was a guaranteed income.  The image below is an example of the type of claim you'd find on their website:



 

How Does Email Processing 4 Cash Work?

The website we visited had very little information about how the system actually works.  It claimed we could earn $25 per email, but did not explain what we needed to do in order to earn the $25.   It said we’d get all the information we needed from the members area, after we signed up. 

To become a member, there was a once off joining fee, which was $25.  At this point it became apparent, that Email Processing 4 Cash, does not involve the processing of emails, and it is not a data entry opportunity.  It involves selling memberships in a structure similar to Multi – Level Marketing.  It’s no secret that our opinion is that you can’t make money with MLM.

The website we visited, belonged to someone who had joined the system, and the $25 membership fee would have been their commission.  The members area would have given us the tools to build an identical website for ourselves, and place identical advertisements to attract ‘data entry’ jobseekers.

 

Is Email Processing 4 Cash an Illegal Pyramid Scheme?

To the best of our understanding, this is not an illegal pyramid scheme because the service being sold through membership it the right to use the Email Processing 4 Cash templates.  When you join, you are buying the rights to use their content which is under copyright.  Members  make their commission from selling the same rights to new members.  

Email Processing 4 Cash might not be illegal, but that does not make it ethical.   It is promoted in an extremely vague and misleading way.  First is the name, it hides the fact that this is a commission based sales deal.  We believe that promoting this system to jobseekers, looking for an hourly rate, is irresponsible

If you were offered a job as a typist, would you be happy if your boss told you that your role involved sales not typing and your pay was completely commission based?  Promoting Email Processing 4 Cash in this way, may not be illegal, but we definitely feel it is immoral.

When someone pays their $25 through your link, you will get the $25, and an email with their details.  You are then supposed to email them back a cut ‘n’ paste welcome email, which gives them access to the members area.  This may seem like a strange and unusual step.  Why not just have the system generate an auto-response once they’ve paid?  We suspect there is a strategic reason for this seemingly archaic step.

By delegating this manual step to you, Email Processing 4 Cash, can claim that ‘you are getting paid $25 for every email you process’.  This technically means that the claims made in their promotional materials are true.  You can make $1,250 in a day if you process 50 emails.  The only problem is that you'll need to make 50 sales in a day before you have any emails to process.  The promotional material  is misleading, even if it isn't completely untrue.

 

Can You Make Money with Email Processing 4 Cash?

Email Processing 4 Cash only asks for $25, and if you avoid the upsells, then you won’t have to part with any more of your own funds.  This does not mean that the system does have financial risks.  You might not make any sales, which means that the hours, and any additional dollars, you spend promoting your site will be for little or no reward. 

We believe that making money in this system would be extremely difficult.  It is unlikely that new members would be able to generate significant income simply by using templates and following the cut ‘n’ paste system.  The problem with using templates, is that there is too much competition.  

If you follow the templates then you will make just another carbon copy of the Email Processing 4 Cash website.  This is something search engines do not like. If you are not creating original content, then you will not rank well in searches, and will not get organic traffic.  The algorithm recognizes duplicate or ‘spun’ content, and pushes these pages down in the search results. 

Most of the pages that come up in a Google search for Email Processing 4 Cash, are more than 2 years old.  The sites being built by new or even recent members, are not showing up.  This emphasises our point that generating traffic to your new link will definitely not be a passive process.  You will have to work for every click. 

When it’s time to promote your site, you’ll be competing for new customers with the person who signed you up, as well as all the other existing members.   To make things worse, every time you sign up a new member, they too will be competing with you for future customers.   The continual expansion of the sales force makes it increasingly less likely that new members will find their way to your link.  You will only make sales, if you put in several hours of promotional activity.

We all know that obtaining new customers is the hardest part of sales.  Once you have a good customer base, generating regular income from repeat customers becomes a little easier.  This system does not facilitate this type of customer growth.  There will not be any repeat business or ‘residual sales’, because there are no additional sales to be made.

 

What if You Create Your Own Promotions?

If following the templates gets you buried in competition, then why not get creative and develop your own ways to promote Email Processing 4 Cash?  This is certainly an option.  Once you have your link, you can use your own strategies to promote it. The real question is why would you want to? Surely you could find a more profitable and more honest way to use these skills.

Even if you wanted to be part of something like this, then there is no point joining Email Processing 4 Cash.   You could save yourself $25, create your very own system, and sell people the right to use it.  Let’s face it, the content isn’t exactly difficult to create.  We created all the images in this post with only a simple knowledge of how to use Gimp and Paint.

You could even make some tweaks and improvements.  Think about the $25 sign up fee, (and commission per sale).   If you were setting up your own competing system, then consider increasing the price to $30.  Most people willing to risk $25 on something like this, would also be willing to risk $30.  It’s only an extra $5!

Increasing the price would also increase the potential income by 20%, so your adverts could offer potential fortune seekers even greater returns. This could make the more expensive version more attractive to new members.   We knocked up the table below in around 4 minutes on excel, so creating the adverts shouldn’t take too long.



 

Should I Join Email Processing 4 Cash?

If you are looking for a legitimate way to earn honest money for honest work, then this probably isn’t the best system for you.  If you don’t mind skirting the edges of legality and using misleading tactics to get people to part with a few dollars, then maybe it’s worth considering.

If you do decide to join Email Processing 4 Cash, then don’t expect to make significant income.  We do not believe this system can be used in place of a real job.  If you are in need of extra money to pay bills, then don’t bother with this system.  You are more likely than not to lose your $25 and get nothing in return.

Email Processing 4 Cash promotes their system in a way which leads new members to believe that all they need to do to make money is process emails.  In reality, this is only a small step at the end of a sales process.  The number of emails you can process in a day depends on how many sales you can make per day.   Does this sound like something you'd like to be a part of?

What do you think? We’d love to hear from you in the comment section below.  Have you joined this or a similar system? If so did you generate any income from it?

]]>Email Processing 4 Cash ReviewFinance GuyTue, 22 Sep 2015 04:16:00 +0000https://www.finance-guy.net/streetonomic/usana-compensation-plan5388101ae4b04631a5e04b76:547fcdcce4b0d77d6ee4509e:55ee69ade4b0d2180aab93c9

A friend recently asked me to look at USANA.  He told me that he has just joined and asked if I'd be interested in joining too.  After reading the USANA Compensation Plan, I told him that I didn't think the opportunity was for me.   He asked me to explain, so I thought I'd share my explanation as a streetonomic review of USANA.  These are my opinions based solely on the information I could find about USANA online.

Firstly I want to say that I do not think that USANA is a scam.  It is a legitimate business opportunity, and I'm sure that some people have made serious money in it.  I believe that being successful in USANA is extremely difficult.  To turn a profit, you'd need to either work very hard at it, or get very lucky.

I will go through the USANA Compensation plan and other information on USANA I could find online, to explain why I think most new associates will never turn a profit.  

Like most multi-level marketing opportunities, it is a system in which anyone can join, but very few will be successful.  In his comprehensive free e-book 'multi-level marketing unmasked', John Taylor found that 99.7% of people will lose money in network marketing.

The Six Ways to Earn Income

The first page of the compensation plan gets straight into the six ways you can earn income from USANA.  While my friend and the person who recruited him were trying to convince me that making money was easy, I  was not convinced, let's go over the potential sources of income and I'll share my opinion on each

• Retail Sales
• Weekly Commissions
• Lifetime Matching Bonus
• Incentives
• Leadership Bonus
• Elite Bonus

Retail Sales

You can earn a profit if you buy USANA products at the associate preferred price, and sell them at retail price.  Based on the prices in Australia, we estimate that this is a profit margin of approximately 12%.  (we only looked at the essentials health pack.  Margins on other products may vary). This is described as 'the surest method of earning immediate income' , yet only this small paragraph is dedicated to retail sales.

This raised some red flags in my mind.  If retail sales is the 'surest' way to earn, then why have I never seen USANA products offered for retail sale?  Why did my friend and his sponsor, try to recruit me rather than sell me some products? Why is it called a 'preferred price' instead of a wholesale price?

The sponsor explained that I have never seen the products for sale before because this is not how the multi-level marketing model works.  Rather than spend money on traditional marketing , and distributions, they sell directly through their network of associates.  allegedly this reduces the costs and enables USANA to produce superior quality supplements.

The story sounded illogical.  Sending  product out in small quantities to millions of individuals can't be cheaper than sending bulk orders to retail outlets.  Furthermore if USANA is going to pay royalties to my friend for everyone he recruits, then there must be some middle level mark up built into their 'preferred prices'.  To find answers, I decided to read through the 2014 USANA annual report.  My calculations found a middle layer mark up of over 40%, as shown below:



My calculations may not be 100% accurate, but there certainly appears to be a significant middle layer mark up built into the 'preferred price'.  Furthermore it appears that on average active associates are making a financial loss in USANA, but more on that later.

I asked both my friend and his sponsor to tell me more about their retail sales strategies.  I was less than surprised to learn that neither of them made significant retail sales.  The sponsor explained that ' adding an new preferred customer or associate is the best way to run your business, don't worry about the retail margin, building your team is more important.  In other words, the surest method of earning income is unimportant? 

Weekly Commissions

This is why I was invited to join the team!  USANA uses a 'Binary Compensation Plan', which enables associates to earn commission from the activity of others they have recruited into the system.  To put it simply, you can recruit new members to either the left side or the right side of your business.  All the product they purchase contribute to your 'group sales volume', which can potentially earn you a weekly commission check.

The system becomes more attractive when your friends start recruiting their friends, because anyone they recruit falls under your team and also earns you group sales volume.  Theoretically you could build a successful USANA business if you only recruit two new members.  Hey that reminds me of a scene from Wayne's World 2!

 Finding two new recruits sounds easy enough, it seems strange that my calculations found that the average associate is losing money! The USANA Binary Compensaion plan, is all about finding balance.  You need to make sure that the sales on one side of your business match the sales on the other side of your business.  Does this make sense to you? We will look at the binary compensation plan in more detail later on.

Lifetime Matching Bonus

This income is generated if you sponsor new recruits who go on to qualify for one of the USANA pacesetter programs.  My friend has been in USANA for less than 6 weeks, so if he sponsors me and one other friend, and we both order enough product to remain active for 8 weeks, then he will be a pacesetter.  If he is super keen and manages to recruit 4 new members in the first 6 weeks and all of them buy enough product to remain active for 8 weeks, then he will be a 'platinum pacesetter'.

As far as I can understand, if my friend becomes a pacesetter, then it means that his sponsor will get a matching bonus on any commission my friend earns.  The bonus may range from 2.5% to 15% depending on whether or not his sponsor is also a pacesetter.  Basically you should try and become a platinum pacesetter, so that you can maximize your 'lifetime matching bonus' from other pacesetters you sponsor.

This all seemed a bit vague so I looked for more information about the USANA pacesetter programs.   This document provided more confusion than clarity.  Firstly it appears that when you become a pacesetter, you are only a member for 14 months, after which you must qualify again.  Each year, you are given a 6 week qualifying period in which to sponsor either 2 or 4 new recruits and keep them active for the pursuant 8 weeks.

So when they say 'lifetime matching bonus', they are referring to the lifetime of the pacesetter membership, which is 14 months.  There is also confusion about how the matching works.  One document suggests your sponsor will get up to 15% matching on commission volume.  The other suggests that there may be up to 100% matching. This system is too convoluted for me to even attempt to estimate what matching bonuses are paid.   The only thing I can see is that this bonus, is inflating the price of all USANA products

The sales pitch is designed to encourage people to recruit as hard as possible as early as possible.  They want you to recruit people while you are new an enthusiastic.  It is a good idea to get people to take action while they are new, before they've had time to become tainted. 

Personally I used the pacesetter aspect as a way to tone down the heavy sales pitch the sponsor was putting pressure on me to sign up right away.  I said, I'd rather wait until I had 6 prospects, that way I could improve my chances of signing at least 2 of them in my first 6 weeks. 

Incentives

If you perform well, you might qualify for added extras such as travel, and prizes.  This kind of sounds like a nice extra but I don't understand why it's included as a  way to 'earn income'.  I'd rather have the cash and then decide myself if I want to buy the prize, or take the trip.

Apart from mentioning that these things might happen, there is no other mention of the incentives.  How you qualify, and what exactly they are is a mystery to me.

Leadership Bonus

Every week, 3% of all commissionable sales volume is redistributed to  associates.  There are some rules to qualify for the leadership bonus.  The ones we found interesting are:

1. You must be ranked Gold Director or higher - Based on our calculations this represents less than 1% of all USANA associates

2. Maximize at least one Business Centre During the Week - This occurs when your business centre has more than 5,000 Sales Volume Points on both sides. According to the USANA Binary Compensation Plan disclaimer, during the year, less than 1% of all associates maxed out a business centre

3. Every four weeks, one associate you sponsored must earn their first commission - This seems like a noble idea, helping new members earn a commission. However once there is no incentive to provide ongoing support. I see it as an negative incentive to do just enough to help a new comer get one payment before moving on to the next recruit. After all you need to achieve this every four weeks, so you can't spend too much time nurturing those who have already earned their first comission.

I didn't find the precise numbers, but it's safe to assume that only a very small percentage of USANA associates qualify for this leadership bonus.  The fact that it is only available to the top 1% of all associates is not encouraging, as it does not seem realistically obtainable to new comers.My opinion is that the leadership bonus is a 3% price loading, which only benefits those at the top.

Elite-Bonus

Every three months, 1% of all commissionable sales is paid to the top 40 income earners as an 'elite bonus'.  Like the leadership bonus, this is something which I don't see as relevant to new associates.  All it tells me is that the another 1% of all proceeds are going to the people at the top of the network.  

The sponsor, is trying to tell me that direct marketing helps reduce costs.  I'm finding this hard to reconcile when I can see a 4%  price mark up to help make the rich richer, by giving them special bonuses.  Then there is additional price mark ups to fund the prizes, matching bonuses and other incentives.  

As a new associate I think it is unlikely that my friend will qualify for anything other than a retail margin (if he sells product) and maybe a few weekly commission payments (if he builds a downline).  To me the other ways to earn income, look like a system which takes money from new members to pay the established memebers.  

USANA's Binary Compensation Plan

Now that we've looked over the ways to earn income, let's look at the USANA Binary Compensation Plan  in more detail.   This system determines how much USANA associates will get paid, and what they need to do in order to earn their income.  If you want to be successful in USANA, then you need to know how the compensation plan works.

For a new USANA associate, to earn commission, they'll need to activate their business and then remain active.  This is achieved through 'Personal Sales Volume'. This is something I personally have an issue with.  They are essentially telling you that in order to get paid, you need to buy a minimum quota of new product every month.  In my opinion this creates synthetic demand, as associates buy product to remain active. 

My friend's sponsor told me that remaining active is easy because you can sign up for 'auto order'.   You can make sure that every month you buy enough to remain active, and you'll even get a 10% discount on the price.  A 10% discount sounds good, but I thought the prices were already at rock bottom! I guess there is a mark up of 10% charged to all associates who choose not to use auto order.  

The biggest objection I had with auto ordrer, is that it makes associates commit to future purchases.  They are buying product with the goal of remaining active, not because they've run out of product or think they can sell more of it.  There is a note that if you don't use or sell 70% of the products you buy, then you must cancel your auto order, but I don't see how they can monitor or enforce this.  It's just for USANA's own protection so they can avoid accusations that their system encourages associates to stockpile USANA product.

Naturally your USANA sponsor will tell you not to worry about this and keep ordering product.  It might be because any product you buy earns them Group Sales Volume, which goes towards their own commission.  This creates what economists would call a negative incentive. Like all mulit-level marketing systems, your sponsor is directly benefiting from the product you buy.  It is in their best interest to encourage you to buy as much as possible in order to maximize their own earnings.

How Much Does it Cost to Be a USANA Associate?

The cost of being an active USANA associate depends on whether you are running your business around one business center or several.  It is possible to open your USANA business with either one or three business centers.  We will look at the costs involved of joining and remaining active in USANA.  For simplicity, we will run our calculations in US Dollars using the prices and point values found on the  USANA Associate price list

Running One Business Center
To activate a single business center, you will need to order 200 points worth of products.  There is a business starter pack which will give you 250 sales value points for a price of US $305.  It comes full of USANA products for you try!  If you are looking for a cheaper way to activate your business center, then consider buying two Essential health packs.  This will give you precisely 200 personal sales value points, at a cost of US $235. Alternatively you could take your time and order products at your own choosing until you reach 200 personal sales volume points.  Until you have reached 200 personal sales volume points, your business center will not be active, so you won't be able to build your business.

Once your business center is activated, you can start recruiting friends, and building your team. To be eligible for commission, you will need to remain active.  For a single business center this involves accumulating 100 personal sales volume points ever four weeks.  We estimate this would cost US $117.50 every four weeks, which equates to $1,527.50 per year.

There are 13 four week cycles in a year, which made me think that USANA chose this system rather than a monthly cycle because they get one extra order every year from every active USANA associate. 

Your USANA network with one business center is shown below:



Running Three Business Centers
When you join USANA as a new associate, you will have the opportunity to double your potential future earnings!  Who wouldn't want to double their income?  All you have to do, is double your commitment to USANA.  If you want to activate three USANA business centers, then you will need to accumulate 400 personal sales volume points within the first six Fridays of joining USANA.  Purchasing an entrepreneur pack will give you 500 personal sales volume points, and will cost you US $624.95.  Or you can buy four essential health packs for exactly 400 points, which would cost US $470.00

Keeping your three business centers active requires you to accumulate 200 personal sales volume points every four Fridays.  This can be done simply by ordering two Essentials health packs every four weeks.  This would cost you US $235 per cycle, or $3,055 per year.

Opening three business centers in the binary compensation plan, enables you essentially sponsor yourself.  You become your own first recruit on each leg of your USANA business.  This also means that you now have to manage four legs rather than two, but more about that later.  What I found particularly interesting about the 3BC model, is that  when you activate with 400 points, your first 200 points are used to activate your first business center.  The next 200 are placed as 100 points activity each in business center 2 (BC2) and business center 3 (BC3).  This means that just by activating, you get 100 points 'group sales volume' on each leg of business center one (BC1).   Confused?  Maybe this diagram will help:



When you open three business centers, you double your exposure to the USANA business.  You can now work with four legs rather than two, and you can can potentially double your commission, because your BC1 gets group sales volume from BC2 and BC3.  That's right, simply by doubling how much you spend on USANA product, you can double your potential commission. Naturally you'll also have to sponsor more people because you now have to manage four legs instead of two.  Is anyone else seeing a system designed to entice you buy product and recruit new mambers? 

How Much Can You Earn With USANA?

As we noted above, there are 6 ways to earn with USANA.  In this section we are focusing on the binary compensation system.  This is the system USANA uses to calculate the weekly commissions earned by active associates.  The key to earning commission with USANA, is finding balance.   When you sponsor a new associate, you can elect where in your USANA team, team the new associate is placed. For example you may choose to add a new recruit to be place on the left leg of BC2. 

Where you place new recruits is important because any product they and their own team go on to purchase, will add group sales volume to this leg of your network.   To earn commission from USANA, you must have at least 125 points of group sales volume on each leg of your business center.  You will earn Commission Volume Points equal to 20% of your balanced sales volume.  This is explained in the diagram below:



As you can see from the diagram above, Unbal Associate has a team which generated 625 points in Group Sales Volume, but he has only earned 25 Commission Volume Points.  Bal Assosciate has a team which generated 400 points in Group Sales Volume, but he has earned 40 Commission Volume Points.    When we compare the figures, we see that the associate with a balanced team, has generated 60% more commission points with only 64% as much group sales volume.

This example shows the importance of keeping your USANA legs balanced.  USANA will let you roll over your unused group sales volume points as long as you remain active.  To get paid a commission on them, you will need to match the points on each leg.  This prevents associates from earning commission from doing nothing more than being placed on a strong leg.   If the person who sponsored you, places a lot of new people beneath you, who go on to recruit more member, this effectively builds half your team.  You will accumulate group sales volume, but you will not earn any commission until you start building what the associates call you 'inside leg'.  This information is described in more detail by USANA

When calculating commission, USANA does not limit the levels in your team.  You can keep earning group sales volume from all the people below you in the network, until you 'max out a business center'.  When you earn commission on 5,000 group sales points on each leg, you will max out your business center and will not accumulate further volume points.  This would require at 10,000 points in total group sales volume (to give each leg 5,000 points).  At this level, your business center will earn a weekly commission of 1,000 commission value points, which are converted from US Dollars into your local currency.

If you manage to maximize a business center, then you will be rewarded with a certificate to open a new business center.  This means you can start an additional two legs anywhere you choose within your team.   This rewards successful associates by enabling them to increase their exposure and earnings from the USANA Binary Compensation Plan.

 Maximizing a business center would require a lot of sales.  Your USANA network would need to order at least US $11,750.00 worth of product in a single week, for you to earn the maximum commission.  This can also be achieved through a combination of rolled over volume points from previous weeks, but only unmatched volume would roll.  

I am assuming that very few USANA associates ever manage to maximize a business center, and USANA has confirmed this.  In their description of the binary compensation plan, USANA warns that 'less than 1% of full time associates maximized a business center during the year' This has been worded cleverly, we looked at the USANA income disclosure statement, and calculated that only 0.9% of all USANA associates are classified as 'full time'.  If less than 1% of these associates maximized a business center, then this means that less than 0.009%  or 1 in 11,000, of all USANA associates maximized a business center.

My Final Thoughts

I personally would not join USANA, because I believe that very few associates make a profit.  My own calculations found that the average USANA associate is losing money.  They cost of remaining active in USANA exceeds the average commission paid to associates.  When I look at the binary compensation I do not see a business opportunity.  I see a system designed to generate synthetic demand for USANA products. 

I believe that most USANA associates order products for the sake of remaining active, not because they actually use or sell it at a retail margin.  The presentation I attended glossed over the products and why they were great, but the emphasis was on building a team and recruiting new associates.  I was being asked to join a 'business' which involves me buying a bunch of products I don't currently use, then asking others to do the same thing.  It didn't make sense to me, and I don't think it will make any dollars for my friend.

I'd love to hear your thoughts, on USANA.  Let me know what you think in the comments section below.

For more posts like this, look at our list of mlm reviews. 

]]>How Does the USANA Compensation Plan Work?Finance GuyFri, 14 Aug 2015 05:17:52 +0000https://www.finance-guy.net/streetonomic/d-coins5388101ae4b04631a5e04b76:547fcdcce4b0d77d6ee4509e:55cd6d45e4b0ad0fe7810023

Have you ever noticed the letter D on your coin above the year?  Have you ever wondered why some U.S coins have a D, and others don't?  We decided to have a streetonomic look at US coins, to find out what the D is for, and what it means.

It turns out that 'D' which is found on around half the US coins in circulation, is a mint mark.  Philadelphia and Denver are the only two mints in the United States which produce coins for general circulation.   Coins minted in Philadelphia do not have a mint mark.  Coins minted in Denver are marked with a 'D' for Denver.

It is possible, that you may find some coins with an 'S' mark, while these are more rare, than other coins, they are no more valuable.  The 'S' means the coin was minted in San Francisco.  Production of coins from the San Francisco mint was put on hold for 10 years from 1955 After 1965, San Francisco continued to mint a limited amount of coins which were marked with the 'S', until the early 1980s, when it was decided that San Francisco would not use any mint mark at all.    The San Francisco Mint no longer produces coins for general circulation in the U.S

]]>Do You Know Where Your Coins Were Made?Finance GuyTue, 14 Jul 2015 05:52:12 +0000https://www.finance-guy.net/streetonomic/money-with-amway5388101ae4b04631a5e04b76:547fcdcce4b0d77d6ee4509e:55a39e23e4b022eb0289bc1d

Amway was founded in 1959, and is one of the biggest network marketing companies in the world.  They have been actively promoting their business opportunity for over 60 years.  If you've heard of Amway, then it's highly likely that at some point, someone has invited you to join their team. 

Personally I can remember being recruited on 5 separate occasions.  I usually went along and listened because I am interested enough to spend a couple of hours hearing why people think Amway is a good idea.  I even joined once for a short time.  Fortunately I did not stay long enough to lose a substantial sum of money, and I managed to avoid letting my upline recruit members of my friends and family.

Conversely, partially because of the information I found, my sponsor ended up quitting Amway a few months after I did. That initial research was years ago, but it is the event that planted the seeds for this review.

According to a report we found from network marketing central, Amway is the largest MLM company in the World with annual global revenue of over $8.8 Billion. It is listed on the stock market, and is clearly a profitable business. However, we don’t want to know if the company is turning a profit, we want to know if the people who join the business opportunity are making money.

Here at The Finance Guy, we think that You Can’t Make Money With MLM, but we’ll give Amway a chance to prove us wrong in this review of the Amway business opportunity  

How Do You Make Money With Amway

According to Amway Answers, Amway Business Owners (ABO’s), also called IBOs in other regions, can make money in multiple ways.
- They can sell product for retail profit
- They can recruit others join their downline
- They can earn incentives through growing their Amway organisation, this would be when your friends recruit their friends and so on

What Do Others Have to Say About Amway?

Our primary research tool is the internet.  There is no shortage of webpages related to Amway. Most of the 'reviews' are actually attempts to recruit you into a home business.  After some sifting, we  thought we'd share some of the more useful ones we found and add our own take on the information

Amway Scam Review - 10 Things To Know 

This post is from Should I join that which focuses on providing 'Honest Reviews On Internet Marketing Stuff'.  It either confirmed our suspicions or agreed with our opinions.  This post is a good starting point if you have just been recruited and want a quick overview of how Amway works. The information we liked included:

Being in Amway Costs Money
If you want to be an 'active IBO' with Amway, then you need to meet your monthly minimum spend.  As expected some distributors buy product they don't actually want for the sole purpose of remaining active.  Some of them are now using things they never knew they wanted, others are building a stockpile of unused Amway product.

Very Few Amway Distributors Turn a Profit
Despite what anyone in Amway tries to tell you, running your own Amway business is a sales job.  You can not succeed if you don't have the sales skill to promote the products to consumers and the system to new distributors.  

Motivational Materials are a large part of Amway
Amway has a huge collection of 'success stories'.  These are recordings by people who have made it big in Amway. They explain how Amway changed their lives and set them on the path to financial freedom.  

I was briefly a member of Amway and my sponsor's upline became very upset when I refused to pay for a monthly subscription to their motivational CDs.  Later when I read the book ‘Merchants of Deception’, it was confirmed. Selling motivational material is another way the uplines make money from the people they have recruited into Amway

While I was being recruited, my sponsor loaned me some of his CDs so I got to listen to some of them. I got my friend in a lot of trouble when he told his upline that I had converted the CDs to MP3 so I could listen to them on my IPod (these were the years between IPods and smartphones).

 At the time I didn’t understand what the big deal was. I thought if it’s promotional material, then they should be happy that I’m going to the effort. However they were very upset that we might try and give away the recordings for free. This again confirms what I read in the book that Amway motivational material is a money maker for the upline, not a training tool.

 I'm sure that the success stories I heard were all true. The problem is that they build an unrealistic expectation of what is possible.  People hear these rags to riches tales and think 'hey that could be me'.  Unfortunately very few of them will ever make any money at all.  Even fewer will achieve financial freedom from Amway   Joining Amway is extremely easy, making a profit in Amway is extremely difficult.

Amway = Wrong Way

This is from a blog called Mikes Ramblings, this post takes a detailed look at Amway.  Reading this confirmed for us that:

Amway Does Not Remove the Middle Man
A common myth with all network marketing companies, is that members are buying products at wholesale prices.  It is true that Amway does not use supermarkets or traditional marketing and advertising methods.  IBOs are buying directly from Amway, but they are not paying wholesale prices

If you buy product from Amway, then part of the price you pay, goes toward paying commission to people above you in the network.  This post estimates that distributor mark up makes up at least 28% of the ‘wholesale price’ paid by Amway IBOs.

Amway gives you the opportunity to become a middle man, but it does not remove them.  Network marketing redirects the cost of marketing and distribution through it's members.  Rather than pay a supermarket and advertising company, they will pay you, if you can promote their products.

Amway is Not a Source of Passive Income
Another big myth being spread by Amway promoters, is that it's a source of passive income.  It's a business for Rich Dads, once you've got it up and running, you can relax and reap the ongoing rewards.  This is at best a misconception, and at worst an outright lie.  Amway requires ongoing work, and can not be done in just a few hours a week.

In one of my more recent encounters with Amway, I was asked by a friend to meet his sponsor after work at a coffee shop.  Eventually the presentation got to the part where he told me that Amway would 'let me earn passive income, and give me both financial wealth and the freedom to do whatever it is I want with my time' . At this point I decided to point out a few flaws in his logic

I asked him when he thought he'd reach the stage of ‘passive income’, himself. After all he was spending a Wednesday evening trying to sell the system to me, plus he was still working a normal job. Surely being home with his wife and kids would be a better use of his Wednesday evening.

 I explained that according to Robert Kiyosaki, his income was not passive. He had not yet moved Amway into the ‘Rich Dad’ business owner quadrant. At best, he was in the self employed quadrant. He didn't have a boss and he could work his own hours, but his income was not passive.  In the case of this meeting, and I'm sure many others, he put in hours of work for absolutely no income.

Small note of caution
Making reference to Rich Dads, and cash flow quadrants, may cause Amway distributors to become agitated.  No matter how hard you try and explain to them that they are working, and their income is not passive, they've already been convinced to believe their version of these things.

Will You Make Money With Amway

We recently finished a review of the Amway Earnings Disclosure. Our research suggests that 52% of ABOs never earn any commission and 45% quit every year.

For the 48% who did remain active for the entire year, Amway tells us that the average annual income was $2,484. They claim this includes retail commission, but we are not convinced. It’s quite likely that what they call retail commission is really just a rebate on products purchased. Even if we take their word for it, on average Amway ABOs earn less than $50 a week.

We’ve said it before, and we’ll say it again, but commission is not profit. The commissions paid to ABOs does not take into consideration the time, effort and expenses incurred in running an Amway downline. If we were to include all costs, we’d expect to find that over 90% of Amway ABOs are losing money.

Is Amway an Illegal Pyramid Scam

While all MLMs closely resemble illegal pyramid schemes, they are in fact legal. The reason dates back to a 1979 FTC ruling vs Amway. Amway was charged with being an illegal pyramid scheme, but after 4 years in the court system, they managed to survive.

The FTC case did find that ‘Amway had made false and misleading earnings claims when recruiting new distributors’. The FTC found that Amway differed from Pyramid scams because they did not charge a large joining fee. The case also found that Amway did not promote inventory loading, which would leave distributors with a stockpile of product which could not be returned.

The FTC case did have some rulings against Amway. For example, distributors were banned from making false claims about their profits. Amway was also required to make certain disclosures available to distributors.

In our opinion, one of the most significant outcomes of this case was the ‘70% rule’. This rule legally requires distributors to consume or sell 70% of their product before they are allowed to place a new order. This ruling was designed to prevent hyper-consumption and stock piling. In other words, they didn’t want people to spend money on products they couldn’t use or sell

The most notable result of this case, was that Amway made some changes to their paperwork. If you read the fine print, there will be rules against making false income claims. There will also be something about a requirement to cancel future orders if you’re still holding 30% of your previous order.

Sadly the changes have mostly amounted to words on paper buried in the fine print of the contracts which probably never get read. When it is found that false income claims are made, they’ll claim ‘it was a rogue distributor’. If people are found to have put themselves in debt, they’ll claim, ‘we can’t monitor whether or not IBOs are in fact making retail sales’. It may be possible to return goods, but that doesn’t mean that it’s easy.

It’s true that it is possible to join Amway (or any MLM) for only a small ‘joining fee’. However the joining fee will probably not be your only upfront cost. If you decide to join, it’s more than likely that people in your upline, will encourage you to also spend a significant amount on product. They may even call it a ‘starter kit’. They may hype it up as a way to get you going and to help you learn about the product. In reality, they want you to spend money so they can earn commission.


Our Final Say

It is possible to make money in Amway, but it's very difficult and requires a lot of work. Before you sign up to become an IBO, bare in mind:

• Very few people generate a profit - only 0.3% of MLM members will turn a profit. In the early years, it is unlikely that you will make any real money from Amway. You might earn a commission cheque or two, but chances are your income will be less than your expenses

• You can not succeed unless you aggressively recruit new members - the only way to be make money in Amway or any MLM, is to have a large number of people beneath you in the system. You will need to approach as many people as possible, and try your luck at recruiting every one of them.

• Amway is a job - Amway is not an investment for passive income, it's an opportunity to have your own business. Building your business will take time, and in the early years it is unlikely that you will see any profits. In fact until you have a large team it is more likely you will lose money with Amway

As always, we'd love to hear from you, please share your comments and feedback in the section below

For more posts like this, look at our list of mlm reviews. 

]]>Will I Make Money With AmwayFinance GuyMon, 18 May 2015 13:54:24 +0000https://www.finance-guy.net/streetonomic/make-money-with-mlm5388101ae4b04631a5e04b76:547fcdcce4b0d77d6ee4509e:551a141ee4b035515881663d

Has anyone ever invited you to be part of their 'network marketing team'?  For most of us, the answer is probably, 'this has happened more than once'.  As I sit and think about it, I can recall having been 'recruited' 13 times (over the last 20 years or so).  My curiosity has lead me to join more than one MLM, but I did not stay in the system very long.

As The Finance Guy, I decided it was time to look at the streetonomics of Multi-Level Marketing.   We will look at:

• Why MLM members want you to be part of their team

• How MLMs are promoted

• Can you make money in network marketing

• What the numbers tell us about Multi-Level Marketing

 

Why Do Multi-Level Marketing members want you in their team?

The answer to this is simple:  Multi-Level Marketing companies have an intense focus on recruiting new members. They will drum it in that you can only be successful in Network Marketing, if you recruit more members and build what most of them call a 'down line'.  In essence, it doesn't matter who you are or what your background is.  You are fully qualified to be part of a network marketing team.  Everyone is a prospect, and the more you sign, the better.

Members are encouraged to recruit everyone they know to join their network.  The mentality is something along the lines of:  MLM is 'something that anyone can do'. If you believe in the system, then why wouldn't you invite everyone you know to be part of it?  The more people you sign up, the more you can earn from their activity.  You can potentially make money from all the business generated from not only the people you recruit, but also the people that they recruit. 

Theoretically, to build a network, all you need to do is sign 5 people (first layer down line), if they each sign 5 people (25 second layer down line), you have a network of 30 beneath you.  If your second line each sign 5 people (125 third layer down line), your personal network has 150 people. By the time you've got 5 layers in your down line, you'll have a network of 3,905 people.  Now imagine if you each recruited 7 people instead of 5, then you'd have a network of 19,607!  But why stop at 7? There is no limit to how many people you can recruit! So go out and sign as many people as you can. Sounds pretty simple doesn't it?

How are Multi-Level Marketing Companies Promoted

There are literally hundreds of MLM companies, and new ones are always emerging.  Over the years, I've been approached 13 times to join a direct marketing team.  The companies I was invited to join were:

• Amway - on 5 separate occasions

• USANA - twice

• Herbalife - twice

• Nu Skin

• A company that sold websites (name forgotten)

• A company that sold lottery tickets (name forgotten)

• A company formed by disgruntled former Amway members (name forgotten)

I've been approached by strangers at parties, by colleagues at work, and by friends and even one family member.  The MLMs and the people recruiting me vary, but they all use a very similar system.

Step 1: The soft invitation - 
Someone you know (or have just met at a party), invites you to 'learn about an exciting new opportunity'.  This is usually accompanied by some flattery along the lines of 'I am only telling you because I think you'd be amazing at it' and 'I only introduce people if I see they have potential to succeed'.  In my experience, these invitations are usually very vague.  If you ask any questions, the answer is usually 'come along to the meeting and all your questions will be answered'

Step 2: The Presentation - 
The meeting you were invited to, is a presentation of how that particular multi-level marketing company works.   This is usually not run by the person who recruited you.  At this point you meet someone in the 'up line' who is positioned as senior member of the system and therefore an authority on the subject.  These presentations are often done in a group or even seminar a environment.

Regardless of which MLM you are looking at, the presentation,  will inevitably follow a similar format and will include high energy explanations about:

• Why Network marketing is the way of the future. It removes the middleman and gives money back to you. The philosophy of the company is to sell directly and save money on distribution channels

• How easy it is for people to succeed in MLM. This is something 'anyone can do'. You don't need to be a salesman

• The products they sell. They are not available in supermarkets because they are 'too good'. The vitamins have helped solve all sorts of medical conditions.

• Flashy diagrams showing you how much money you will make with even a modest down line

• Success stories, somebody else was hugely successful, therefore you can be too! The stories include a rags to riches tale, and focus on the point that 'this system is your key to financial freedom'.

Step 3: The Hard Sell - 
In my experiences, this was usually not done by the person who recruited me.  The final push  is run by someone in their up line.  It's the part when you are told that 'today is the best time to join', and reminded that 'all your dreams can come true, if you are a believer'.   In my last encounter with such a person, I said I was unwilling to sign on the spot because I wanted more time to properly analyze the opportunity.  This did not go down very well.  He acted as if I'd insulted his mother, and his religion at the same time.

Can You Make Money in Network Marketing?

It is possible to make money with MLM, however we believe it is highly improbable.  In his free e-book 'Multi-Level Marketing Unmasked', Jon Taylor found that 99.7% of people will lose money in network marketing.  So for every 1,000 people who join a network marketing team, 3 will earn more money than they spend. So if I want to have 5 successful people in my first down line, I have to recruit 1,665 new members, so that 5 of them will be successful.

This may be  a system that 'anyone can do', but it's also a system in which, only 1 in 333 people are successful.  To try and understand why it is so difficult for network marketers to turn a profit, we looked at the compensation plans for Amway, USANA, Herbalife, and Nu Skin.  As expected the system for earning money with each, are  congruently unique and similar.

Each MLM has their own version of paying commission, and they are all share similar characteristics. Unfortunately we believer that they are structured in a way that makes it very difficult for anyone to turn a profit in network marketing.  For example:

You have to 'qualify' to earn any commission -  You are awarded 'points' when you buy products.  This creates what we view as 'synthetic demand' for the products.  Network marketing members are ordering product in order to remain 'active'.  They order in excess of what they would personally use or what they can on sell at a retail margin, which causes them to stock pile the products.

Most of the money spent is by members - Network marketing companies acknowledge that very little of their sales are due to retail demand.  Most of the product being ordered is by members for personal use (or to satisfy volume quotas).   Sales are not driven by market forces, they are driven by members buying for volume targets.  If very little money is coming from outside the network, then the only way for people to profit, is at the expense of people in their own down line.  

It is a zero sum game -  In the absence of organic sales, your up-line can only make money, if you spend money.  The stories you hear about the struggling single parent who is now a millionaire might be true.  However they leave out an important detail, which is: Every one of those million dollars came from other members of the network who are below them in the MLM hierarchy (which is not pyramid regardless of how closely it resembles one).   Money made by one member of a MLM team, has been lost by another.

A System Prone to Negative Incentives -  As we previously noted, the only way most people make any income in network marketing, is from signing new members below them in the system.  Once you are in the system, your up line will receive commission on any money you spend.  It is in their best interest to tell you to 'you are perfect for the team' and to 'keep spending that monthly quota'.  The more you spend, the more they earn.  They may believe that you can succeed in multi-level marketing, but in reality, they need your money coming into the system in order for themselves to succeed.

Multi-Level Marketing Does not remove the middle man -  Direct marketing companies will tell you that their companies are 'selling directly to you'.  At best, this is a misconception, at worst it's an intentional misrepresentation.  You can order products directly from the company, but they will pay a commission to the person who recruited you, and several others above you in the chain.  They will tell you that you have the potential to 'earn commission' from your down line.  In reality you are becoming another middle layer in the distribution chain between the supplier and your down line.

What the numbers tell us

To analyze the numbers, we looked at the compensations plans as well as the annual reports and income disclosure statements of Amway, Herbalife and USANA.  Unsurprisingly, our findings suggest that only people who are very high up the network marketing structure, are making any profit.  Below is our interpretation of the data we read for each company:

Amway

Your earnings in Amway are based on a combination of PV (points based on how much you and your down line spend) and BV (the dollar value assigned to how much you and your down line spend). The amount you earn, is based on the amount that you spend, as shown in the table below:



You might have a hard time spending $22,500 per month on product, but this becomes easier once you have a down line.  Anyone you personally sponsor, will 'pass up' volume to you.  If you are new to the system and manage to generate enough volume to qualify for a 3% payment, then your sponsor will get 3% from you sales (6%-3%).  Their sponsor will get 3% from your sales (9% - 6%) and so on until the full 25% has been paid.   

This 'pass up' system, encourages people to sponsor as many new recruits as possible.  However there is no incentive to nurture recruits and help them succeed.  All that matters is that money is being spent.  If an individual is losing money and earning nothing, the money they spend is still feeding the system, and sending 25% commission up through the hierarchy.

Amway has a disclaimer which appears frequently on all their documentation.  It is based on figures from 2010, and states that:

Only 46% of IBOs were 'active', and 'The average gross monthly Income for 'active IBOS' was $202 per month

Based on the figures in the Amway compensation plan, they are telling us - Less than half the people who join remain active. And on average, those who remained 'active' and worked the system, lost money.

54% of all IBOs were 'inactive' and therefore earned nothing.  Of the remaining 46%, the average gross income was $202 per month or $2,424 per annum.  Based on our calculation, the cost of being active is $300 per month, or $3,600 per annum.   We don't know what other expenses distributors incurred, but the average IBO lost at least $1,176 in 2010. Suddenly all that time and effort spent building the system isn't looking so good.



Herbalife

We calculate that, to be active in Herbalife, you need to spend approximately $370 USD per month, or $4,440 per year.  The most telling document we found, was the Herbalife Income Disclosure Statement from 2013.  In their own disclosure they state that:

88% of Distributors received no payments from Herbalife during 2012

Based on the figures in their table, we calculate that 10% of all distributors earned less than $4,440 in 2013, and therefore also lost money - They spent more on product to remain active, than they earned in commission.  In 2013 98% of Herbalife distributors did not turn a profit.

It is sold as a system in which 'anyone can succeed', but according to their own documents, only 2% actually will.  Herbalife will defend this data by claiming that most people do not join with the intention of making profit.  In fact the same income disclosure document states:

The majority (73%) primarily join us to receive a wholesale price on products

We are not going to challenge the legitimacy of this claim, but we do wonder how these people are obtaining a 'wholesale price'.   They buy the goods at the distributor price, which includes commissions to everyone in their up line.   They are ordering directly from Herbalife, but they we don't agree that this is a 'wholesale' price.  The are ordering through a long line of middle layers who they know as 'their up line'.

We could not find a more recent income disclosure statement, but we did look at the Herbalife 2014 Annual Report.  We built the table below using data from this annual report, as well as our own calculations:



Again the figures do not illustrate a system in which 'anyone can succeed'.  Firstly we can see that in 2014 the retention rate was 52%, would you join a business if 48% of the sales force quit in a single year?

 Almost 30% of every dollar spent is used to pay commission, at first this may look like a positive, but when we break it down, we see that the average 'sales leader' lost money.  Those who are making a profit are the 2% who are very high up in the chain.



USANA

There is no denying that money is being made at the top of the USANA network.  In early May, USANA Founder Myron Wentz became a billionaire. He's been at the top of the network for 23 years, and is a 51% owner in the company.  It must be lonely at the top, because based on what we can see, most associates are not making any profit at all.

To remain active in USANA,  you need to spend 100 points per month, which equates to USD $117.50 per month or $1,410 annual.  That is according to the USANA associate price list.  This money is your personal spending and you do not get any commission back on it, but the person who recruited you might.  

We read through the USANA income disclosure statement, which is based on data from 2011. The information contained in this document is presented in a format which is consistent with network marketing.  The most prominent feature, is a table showing how much the top 14% of all associates earned in 2011.  Conveniently hidden in the fine print at the bottom, it is stated that if all associates are included then:

The average yearly income was $616.72, with nearly one in three earning a check

Would you join a business if your chances of earning a single payment were less than 1 in 3?  Even if you were lucky enough to earn a payment, on average, associates who got paid lost $793.28.  (if they spent $1,410 to remain active for 12 months and received $616.72 in commission)  According to their own income disclosure statement, USANA won the Network Marketing Today 'Best Company' award 15 years in a row. A system where 84% of the members lose money, may not sound like the 'best company' in the industry, but they are the best of the three we looked at.  If losing almost $800 a year makes you the best, then why look at the rest?

For more recent data, we looked at the 2014 USANA annual report.  We built the table below using data from this annual report, as well as our own calculations:



The numbers tell a familiar tale.  The 'direct sales approach' adds a margin of 44.16% to the price of products. On average associates lost $410. With more than 2 thirds earning nothing at all.  Based on the numbers we found in USANAs documents, they may be the best multi-level marketing company in the world.  After all, their numbers suggest that 16% of USANA associates made a profit in 2011.  



 What are Others Saying About MLM

The balanced small business,
Now this page did some very useful research for us. First they agree that MLMs are everywhere. They estimate that close to 8% of adults (those over 18), have actually participated in at least one MLM. If we include everyone who has been ‘recruited’, then it would be difficult to find an adult who hasn’t come across an MLM at least once.

They also introduced us to the 40 page AARP 2018 Study of MLM. The combined research of Jon Taylor and AARP found that in any MLM:

• 50% of Recruits Quit in the First Year

• 90% Quit Within 5 Years

• 95% Quit Within 10 Years

Now let’s be blatantly honest. Any MLM opportunity, is a sales job. Any salesperson will tell you that skill plays a part, but having a great product or service makes life easier, after all it ‘sells itself’.

If you are not interested in being a salesperson, then MLM is not for you. If you are interested in sales, then the numbers above should be enough to make you consider other options.

If you were offered a sales job in a 50 year old company where half the sales team quits every year, and 9/10 quit in less than 5 years, would you accept the job? Well that’s what MLM is!

The Balanced Small Business claims that ‘not all MLMs are the same’. We agree and disagree with this statement.

It’s true each MLM sells their own unique product of service, so they are different. They also use variations of the MLM compensation model, some use Binary compensation, others stick to the original. Some sell oils, some sell diet pills, we’ve seen a few who sell life insurance…

No matter what they are selling, or how their payout works, the concept is the same. In MLM, you make money by convincing others to sell the same stuff you are selling.

The Washington Post
Research done by The Post found that most people make less than 70 cents an hour from MLM.

According to the Washington Post survey, 60% of MLM participants earned less than $100 per year, before expenses.

The Post agrees with us in their conclusion, they find that ‘most participants could earn significantly more money in exchange for a lot less time and money invested if they were employed in a minimum wage job’

While these earnings are dismal, the reality is that it’s likely that financials for MLM participants are actually worse. The same study from the Washington Post found that 1/3 of MLM huns admitted to borrowing money to fund their MLM side hustle.

This is particularly disturbing to us because not only are they losing money (after expenses), but they are also going into debt. This means that huns can be significantly worse off because of MLM

Like most of us, you may ask ‘why would someone go into debt with an MLM’?. Well throwing good money after bad is an unusual, yet common phenomenon.

The Talented Ladies ClubThis is a website with similar goals to ours. They want to provide information which protects people from the predatory ‘business opportunity’, which is MLM.

It comes as no surprise that they also reference the same AARP study we found and which was endorsed by the Federal Trade Commission.

The FTC found that 99.6% of MLM participants lose money. We understand this is a harsh fact. Consider this before you join any MLM. The FTC found that 249/250 people who join any MLM lose money.

What’s Wrong With MLM

Dr Taylor developed a 5 Step MLM evaluation system, which identifies 5 red flags. His research found that if any MLM raises 4 or more of these flags, then your chances of turning a profit are less than 1%. If you look at any MLM, we believe you’ll be able to recognize at least 4 of the following:

Red Flag 1 - Constant Recruitment of New Members
Most MLMs have some sort of incentive for recruiting new members. It might be in the form of a special bonus or some other incentive which encourages you to recruit as many people as possible, as quickly as possible. The problem with this, is that the focus is on finding new recruits, instead of building retail customers. This means that the majority of money comes from inside the MLM system, making it unlikely for anyone who isn’t near the top of the system to earn a profit.

Red Flag 2 - Promotion Through Recruitment
MLMs have overly complex payments systems or ‘compensation plans’. The amount of commission you can earn in any MLM will depend on your rank in their system. To earn higher commission rates, you need to grow what’s known as your downline. This can only be done by personally sponsoring new recruits, and convincing them to spend monthly amounts on the MLM goods or services.

While the volume requirements for promotion can theoretically be met through retail clients, you can not reach the higher pay levels unless you recruit new members.

Red Flag 3 - Pay to Play
They might refer to this as being ‘commission qualified’, ‘remaining active’, or something more inventive. The majority of MLMs will require you to personally spend a minimum amount on their goods or services in order to earn any commission at all.

This minimum spend often results in members spending on goods and services which they otherwise might not have purchased. This can lead to hyper-consumption, where members are buying ore than they can use. It is common for them to end up with closets full of unused MLM product.

Due to the pay to play requirement, many people end up losing money while trying to pursue the ‘business opportunities’, offered by MLMs

Red Flag 4 - Most of the Rewards go to your upline
MLMs use their complex compensation plans as a way to lure in new recruits. They show them how much you could earn and build your dreams of some day achieving financial freedom.

The problem with all these generous commissions, is that they are included in the ‘wholesale’ prices charged by MLMs. If you are a new recruit, then the commissions earned by your upline, are included in the price you pay.

Unfortunately less than 1% will ever make it to the upper levels of the MLM system, so that means that the other 99% will struggle to make ends meet, while sending commission to the top.

This is also why if you join a MLM, you’ll find all sorts of people in your upline encouraging you to keep going, and stay active. They’ll tell you stories about how important it is to not quit, but in reality, the longer you spend money, the more commission they earn.

Red Flag 5 - More than 5 levels in the payout plan
Dr Taylor warns that 'Excessive levels in a downline is another sign participants are expected to sell primarily to their downline, rather than to the general public.  This makes it an exploitative money transfer scheme, or product-based pyramid scheme'.

This confirms our believe that most of the funds come from inside the MLM system, instead of from actual customers. People are buying from the MLM because they think it will one day make them wealthy, not because they actually like the products or services.

Active members may claim that the love the products, but that’s mostly because they have built an association between the products and their financial dreams. In most cases, you can find better products in regular stores, and they’ll be cheaper than the ‘wholesale’ MLM versions.

Are MLMs Illegal Pyramid Scams

While all MLMs closely resemble illegal pyramid schemes, they are in fact legal. The reason dates back to a 1979 FTC ruling vs Amway. Amway was charged with being an illegal pyramid scheme, but after 4 years in the court system, they managed to survive.

The FTC case did find that ‘Amway had made false and misleading earnings claims when recruiting new distributors’. The FTC found that Amway differed from Pyramid scams because they did not charge a large joining fee. The case also found that Amway did not promote inventory loading, which would leave distributors with a stockpile of product which could not be returned.

This ruling effectively opened the door for other MLMs, who could now differentiate themselves from illegal pyramids based on the same findings. The main result of this is in the paperwork. If you read the terms and conditions or fine print on the MLM joining forms, you might find phrases such as
- Distributors must sell 70% of their stock before placing additional orders

While it’s nice to know that the FTC has set rules to keep MLMs legal, enforcing these laws is proving difficult. The MLMs simply claim that they can’t monitor how much product is sold to retail customers. If distributors make complaints when their financial futures turn out to me little more than a dangling carrot, they’ll say it was a rogue distributor making false claims.

It would be nice if this ruling which is now over 40 years old, was revisited, but for the time being we’ll just do our part in encouraging everyone to stay away from MLMs

Our Final Say

There are thousands of network marketing companies, and our research is in no way comprehensive.  Based on the information we have been able to find, it is our opinion, that the vast majority of people who join multi-level marketing companies, will lose money. 

We will continue to do our best to  do our best to provide an outside perspective on MLMs.  We often review individual MLMs at the request of our readers, so if there's one you think we should look at, just let us know in the comments section below.

For more posts like this, look at our list of mlm reviews. 

]]>Can You Make Money With Multi-Level MarketingFinance GuyFri, 08 May 2015 08:03:07 +0000https://www.finance-guy.net/streetonomic/flames-are-learning5388101ae4b04631a5e04b76:547fcdcce4b0d77d6ee4509e:554c6885e4b0257e5a68b56d

On Thursday May 7th 2015, a fire in burned for 5 hours in Perth’s Kings Park, burning 6 hectares (60,000 square meters) of our 400 hectare, best known national park. This is an area roughly the size of the MCG.  Like so many bush fires, this one was intentionally lit by people.  Unlike so many bush fires, it is not being labeled ‘arson’, and there is no search for the unknown fire bugs who started the blaze.

This fire is the first of what has been called a ‘prescribed burn’.  It is part of what is planned to be an ongoing scientific research project, which aims to study the best way to manage inner city bush fire risks.  A second 6 hectare fire is planned for Bold Park in City Beach.  The two locations were selected because of their proximity to the city, and suburban areas.

This is a long term project, and the burnt area in each park will be managed very carefully.  First they will divide the area in half. This will give both Kings Park and Bold Park two separate 3 Hectare sections.  One section will be set on fire every 6 years, and the other will be ignited every 12 years.

Is it just me, or does this research sound like it’s being run by Dr. Evil, and his band of mad scientists? The project was not being run by an megalomaniacal organization with aspirations of world domination.  The people on hand to monitor and control the burn were not an army of henchmen.  Instead this fire was managed by those we entrust to protect the very land they were burning.  The consortium included staff from Kings Park, the Department of Parks and Wildlife, and Fire and the Department Emergency Services.

West Australian Environmental Minister Albert Jacob, endorsed the project saying that it is: "Important for gathering vital information on how we can manage the fire risk to get the balance right between public safety and conservation"

The areas burnt in the study equate to 1.5% of Kings Park and 1.37% of Bold Park.  Mr Jacob was unconcerned because the area burned in Kings Park, was not near the popular spots. He went on to say: "With many rare and threatened species found on the Swan Coastal Plain, part of the research will investigate the ideal interval between fires to allow native plants and animals to thrive in highly fragmented urban environments."

The Science of Fire

I’m no scientific expert, but I have to wonder what they are hoping to learn from this exercise.  What do we know about fire?  It’s hot, it burns things, it grows at a faster rate when you add oxygen and flammable material.  Weather conditions such as hot dry windy days increase the risk of fire.  Will the study disprove any of this, or find new information?  I don’t think so.

They are not trying to study fire, they are trying to study ways to manage bush fire risks and protecting the natural environment. My hypothesis is that the research will find that the best way to manage bush fires is:

• Prevention – Manage fire prone areas by keeping a close watch on them in the dry seasons, and perhaps even going in and cleaning away some of the fallen branches etc which we all know help fires spread faster.  Taking steps to stop people intentionally lighting fires would be nice too, but I’m not sure lighting a fire will discourage others from doing the same thing.  ‘Starting fires is bad for the environment and illegal, but we can do it because it’s in the name of science’
• Reaction – In the event of a bush fire, react as fast as possible and take steps toward putting the fire out.  I am guessing that this can by either adding water to fire, or removing oxygen, by throwing sand on it or something similar…  It’s possible that these scientists will discover new and improved ways to manage fire.  After all fire was one of man’s first discoveries so the scientific community has thousands of years of experience to improve upon.
• Protecting the Natural Environment – As mentioned by the environmental minister, the area contains ‘many rare and threatened species’.  I’m neither a botanist nor a biologist, but I am certain that one effective way to protect the environment, is to not set it on fire.  The area they burned was not popular with people, so it wasn’t a playground or a picnic area.  It was untouched bush land.  I think the researchers will be surprised when, their research concludes that, setting rare and threatened species on fire, is bad for them.

Putting Things In Perspective

Maybe things aren’t as dramatic as we think, after they are only burning 12 hectares of natural bush land (6 Ha in each park).  What is 6 Hectares anyway?  It’s roughly the same land mass taken up by the Melbourne Cricket Ground.  An area capable of hosting a large cricket oval surrounded by a stadium capable of hosting 100,000 fans.  This study is burning enough natural park lands to build two MCGs.

Perhaps it was only a small fire, and the impact will be minimal… below is a photo of the fire taken from Singleton Beach. The pollution in the name of protecting the environment, is prominently visible 63 Kilometers from Kings Park.



I look forward to reading about the results of this study.  The advances in environmental protection and fire prevention are sure to outweigh the detrimental impact of having intentionally set a fire.

What Will Come Next?

 If scientists are trying to study bush fire prevention, by creating bush fires, I am worried about what may be in our future.  What if they decide to study:

• Road Safety – This could involve spending the day driving around and intentionally colliding with other motorists.
• Youth Drug Addiction – Are they going to visit schools and hand out illicit drugs to our children?
• World Peace – In an effort to study reducing the danger of war, will they fire a missile at a random nation?

As I said, I am not a scientist, and I am happy to be proven wrong.  But from an outside point of view, this study is nonsensical.  If you know more about this 'prescribed burn', please feel free to share in the comments section.

]]>Flames are LearningFinance GuyFri, 01 May 2015 08:05:11 +0000https://www.finance-guy.net/streetonomic/funds-beat-market5388101ae4b04631a5e04b76:547fcdcce4b0d77d6ee4509e:55406f49e4b0d8b561910dfa

Managed funds are popular way to invest in the share market. For a fee, you can have your investments managed by professionals.  There are funds available to suit a wide range of investment strategies.  Each managed fund has a mandate, which determines what type of investments they will use.  

Some funds invest in only one asset class, such as fixed interest or property.  Other funds invest a portion of their funds in each asset class. For the purpose of this article, we are focusing on funds which invest only in shares. There are hundreds of equity funds available.  Investors can choose funds which focus on:

• International Shares

• Domestic Shares

• Smaller Companies

• Larger Companies

• Specific Sectors, such as banks

• Specific Criteria eg. Only invest in companies who are environmentally friendly)

We pay a fee to have our money invested by professionals.  We all invest according to our personal goals and time frames.  Our reasons for investing may differ, but we all have one thing in common:  We want our investments to outperform the index, but, unfortunately most of us do not.

The 2015 Dalbar QAIB study has been released, and it has revealed that most of us do not beat the market.  The study, which was first released in 1994, is a quantitative analysis of investor behaviour.  It looks at how individual investors have performed  over the 30 years since January 1984.  

The data used for the Delbar study goes back to January 1984.  It covers a 30 year period, which, we feel, accurately captures the modern investment era. In this time, we've seen, the crash of 87, the 2000 tech wreck, and the GFC. We've also seen the birth of home computing, the world wide web, and online investing.  

The Dalbar QAIB Study shows that, over the last 30 years, investors in equity funds have substantially under performed the S&P 500 index.    The table below shows how investors in equity funds did compared to S&P 500:



Why Can't Investors Beat the Market?

Reading the Dalbar Study has lead us to believe that the best strategy is to 'set and forget'.  The more we try to trade the market, the more likely we are to lose money.  The main reasons individuals under perform the index are: 

1. Lack of Capital

2. Investor Psychology

These two factor create investment behaviors which result in below index returns.  The Dalbar study has broken this down into investors behaviors.

Market Timing - Individuals tend to sell after a significant down turn (selling low).  We tend to buy when markets are trending upwards (buying high).  Time in the market, is more important than timing the market.  Don't invest more than you can afford to lose, and don't panic.   Your goal should be to buy and hold, or set and forget. 

Unrealistic Expectations - Most of us will not beat the market.  We are playing the game with large institutions, wholesale investors, and direct investors.  Being above average means beating most of the players.  Individual fund investors have less money, and are paying higher fees (per dollar invested).  We are at a disadvantage from the start, rather than try to beat the market, we should set more realistic expectations.  It doesn't help that our returns are diluted by fees charged by financial planners and stock brokers.

Loss Aversion - We all want high returns, but nobody wants to incur a loss.  It is important that we understand that investing carries financial risk.   If we want the chance of above average gains, we must also accept the chance of losses.

Access to Capital - Staying in the market requires discretionary income. Ironically our ability to invest is at it's lowest when the economy is bad, and markets are down and cheap.  Rather than buying low, we need the money are are selling.  Conversely, we tend to have more money when the economy is on the rise, and so are market prices.

What Should You Do to Improve Your Returns?

The Dalbar Study believes that the keys to successful investing are managing your expectations and staying invested.  If you want to be a successful investor, don't be disappointed if you don't beat the index, and don't panic when markets fall.

A long term buy and hold strategy may feel like you are just a sheep in the herd, but why try and beat the market when you can bleat it?  Would we be taking it to far if we suggested they rename it to the Dalbaaa Study?

]]>Can Funds Beat the Market?Finance GuyFri, 20 Feb 2015 08:09:24 +0000https://www.finance-guy.net/streetonomic/digital-money5388101ae4b04631a5e04b76:547fcdcce4b0d77d6ee4509e:54dc6b77e4b0c2bd84e2421d

The internet has been a revolutionary technology.  It's changed the way we find information.  It's changed the way we communicate with each other, and now it's changing the way we transfer money.  Money has entered the digital age, it's never been cheaper or easier to send money to friends and family in other parts of the world.

We believe that a world leader in this development is M Pesa, and in particular, the success they have had in Kenya. We decided to have a streetonomic look at how M Pesa works, and also looked at other options for transferring money internationally to Kenya.  

We looked at sending Western Union, WorldRemit, and Bitpesa.   All three offer the ability to send money directly to M Pesa mobile wallets.  The first thing we looked at was the cost of sending either $200 or $1,000 Australian Dollars with each provider.  Our findings are shown in the table below:



PAll three essentially offer the same service, transferring funds directly to a mobile wallet, yet there is substantial difference in the prices charged. The cheapest way to send $200 is through Bitpesa, and the cheapest way to send $1,000 is through WorldRemit.  The most expensive of the three is Western Union.

What is a M-Pesa Mobile Wallet?

Mobile wallets are a way to store money on your mobile phone.  The most popular mobile wallet provider is M-Pesa, so we will use them for our streetonomic insight.   M-Pesa started in 2007 and is available through Safricom, which is the local Vodafone provider.  M-Pesa was named the Kenyan superbrand of the year for 2015. 

M-Pesa turns your phone into a digital wallet.  You can top up your credit the same way you buy air time, and can transfer funds directly from your M-Pesa mobile wallet, to another mobile wallet or bank account. M-Pesa has been successful with both individuals and merchants.

For small transactions, it's much cheaper than using a bank, and it's much safer and more convenient than using cash.  Whether it's sending money to relatives in other parts of the country, or buying a cup of coffee,  more and more Kenyans are choosing to use M Pesa to transfer their funds

M-Pesa has 19 million users in Kenya, and represents an estimated 43% of GDP.  For the first half of 2014  USD $12 Billion worth of transactions were made using M-Pesa.  They are also making an impact in other parts of the world.  Some of the highlights from the statistics we found, are shown below:

• USD $820 Million worth of Transactions for first half of 2014 in Tanzania
• 7.6 Million users in South Africa
• 78,000 transactions per day in India
• Uber is working on integrating M-Pesa into their app

Working with fiat currency, means that M-Pesa has to satisfy the financial laws of each country.  This includes rule around anti money laundering and client identification requirements.  The benefit to the customers is that deposits held with M-Pesa have the same legal protection as banks.

If your recipient does not have an M-Pesa wallet, you can also arrange for funds to be sent as mobile airtime (on the Safricom network), as a bank transfer, or arrange for cash pick up

BitPesa

If you are sending less than $350, then BitPesa will be your cheapest option.  They charge a flat fee of 3%, regardless of how much or how little you want to send.  BitPesa cuts out international banks by using Bitcoin.  This has enabled them to keep their prices low, but it also increases the financial risk of using them.

You can not send fiat currency with BitPesa, you can only send Bitcoin.  If you don't already own Bitcoin, then you need to buy some. Buying Bitcoin is simple enough, you can do so at any exchange, but it does add an extra layer of fees. We looked at Bitstamp, who charge a fee of 0.5% to buy Bitcoin, so our cost of transferring is now 3.5%.

Sending a precise amount of Kenyan Schillings also becomes problematic.  You have to first figure out how much Bitcoin you need, then pray that the value of Bitcoin doesn't fluctuate wildly before you complete the transfer.  BitPesa themselves acknowledge this risk, and their website quotes:

the price or value of Bitcoin can change rapidly, decrease, and potentially even fall to zero. Upon your confirmation of an Exchange Transaction, during the Transaction Period, we will honor the Exchange Rate quoted for the Exchange Transaction. However, we are not responsible for, and you agree to hold us harmless against, fluctuations in the Exchange Rate while Bitcoin is in your BitPesa Account or while a transfer of Bitcoin to or from your BitPesa Account is pending

BitPesa is a great option for small transfers, specially if you don't mind taking on some exchange rate risk.  It will be particularly appealing to people who are familiar with Bitcoin, and already hold the cryptocurrency.

If you live in an area where Bitcoin is restricted, then you will not have access to BitPesa

WorldRemit

WorldRemit is available for senders in 50 countries, who can transfer funds to 110 destinations worldwide, so this service is in no way limited to Kenya.

If you are sending more than $350, then WorldRemit will be your cheapest option.  On top of this, they offer guaranteed exchange rates, and the convenience and safety of being able to transact with normal fiat money.  Dealing with fiat money rather than Bitcoin, may be more expensive for smaller transfers, but for the extra cost, you are removing the financial risk.

Accel Partners are strong believers in the future of WorldRemit, and have invested $40 Million in the company.  Accel  have a reputation for identifying quality online investments and were early investors in Facebook, Spotify, and Dropbox.  

Western Union

Established in 1851, Western Union has been offering money transfer services since 1871.  They haven't just been doing this since before the internet, they were transferring funds 5 years before the telephone! In 1884, Western Union was one of the 11 stocks included in the original Dow Jones Industrial Average.

At the age of 164 the company is still a technological leader in the financial services industry.  Western Union offers a wide array of services including pre paid cards.  Western Union has over 500,000 locations around the world and more than 100,000 ATMs.  

Western Union is the most expensive of the options we looked at.  They are a full service option for those who want more than a simple transfer.  They also have the advantage of being an established brand with a well recognized name.  Consumers are more likely to trust the 164 year old Western Union, than a recent internet start up they have only just heard of.

We expect that Western Union will continue to be an innovative force in the money transfer industry and we look forward to seeing how their services continue to evolve.  If there is a future for cryptocurrencies, we are sure Western Union will be a part of it.  They might even have their own alt coin!

 Our crystal ball couldn't tell us if the future will be mobile wallets, cryptocurrencies or some other technology, but it did tell us that the world is moving closer to a cashless society.   We look forward to what the future holds, and will be here giving our streetonomic view every step of the way.
































]]>Money Enters The Digital AgeFinance GuyMon, 15 Dec 2014 05:29:16 +0000https://www.finance-guy.net/streetonomic/the-streetonomics-of-coke/8/12/20145388101ae4b04631a5e04b76:547fcdcce4b0d77d6ee4509e:5485b212e4b09441f861899e

Last time you bought a Coke, did you look at the price, or did you just grab one off the shelf and pay for it?     Coke is available in more packaging options than any other drink.  Until recently I never paid much attention to the price, my decision was based on whether I wanted a big or small bottle or a box of cans.  I grab what I want and pay at the check out.

This kind of impulse buying is known as 'price indifference'.  The price does not play a role in my decision of how I buy my coke, but perhaps it should! I was recently buying coke in my local supermarket, and I noticed that in smaller print below the price tag, is a 'price per litre'.   It got me thinking, what if I had a streetonomic look at buying coke from my supermarket.  This streetonomic study was conducted on a Saturday night in a major supermarket chain located in Sydney Australia.  

I walked up and down the coke section of the soft drink aisle, and took note of the packaging options and their price per litre.  We can not comment on how the supermarket decides to set their prices. This 'study' should not be taken as a reflection on either the supermarket or the coca cola company. My findings are shown in the table below:  



On this particular night, it was possible to buy the same drink at prices ranging from $1 per litre, all the way up to $7.40 per litre.  Not only was it the same drink, but it was being sold in the same super market, in the same aisle, and all the packages were on shelves right next to each other!  It should not be possible, but some people are being charged 740% more than others (per drink) for the same drink, just because they chose the wrong bottle size!

The first thing I wanted to do was put together an arbitrage strategy using supermarket coca-cola. A 740% risk free return is something I'd happily do all day.  Obviously you can't repackage and resell the coke (at least not legally), so alas my dreams of instant wealth are still on hold.

I understand that there is a convenience factor so we pay more when we buy in smaller bottles, but this does not explain the pricing of cans.  Why would anyone pay $12 for a pack of 10 cans, when they can buy 2 6 packs and get 12 cans for $10.  The fact that the supermarket is able to sell in this way shows that I am not the only one who is price indifferent when buying coke.

The supermarket has shown me that we are either indifferent to price, or are willing to pay a hefty premium for the coke to be in a glass bottle.  To s00ee if we are truly price indifferent, I decided to look at how much different shops charge for the identical coke product.  I decided to look at the 600 ml bottle (served out of fridge so it's ready to drink).  This is what I usually buy on impulse for an instant fix of sugar and caffeine.

This part of the study was conducted in a part of Sydney known as Bondi Junction.  It is a very small area consisting of a large number of shops.  It took about an hour to walk through the junction and visit a few shops to look at the prices, my findings are shown below:



On the same day, within 10 minutes walking distance, you could buy the identical product for anywhere ranging from $3.00 to $4.50 (and that is based on the 4 locations I decided to visit). My hypothetical arbitrage opportunity to make 150% would require the petrol station to buy coke from me, at $4.50, after I've bought it from the discount store for $3.00.  I didn't try this, so if you discover it is possible, please let me know. 

According to my streetonomic study, we are price indifferent when it comes to buying coca cola, or this would not be possible.  If people cared about the price they were being charged, the only place that would make any sales would be the discount store.  The other shops would not be able to make any sales until they lowered their price to $3.00 

If I am filling up the car, and I buy a bottle of coke at the same time, I'll just pay the extra $1.50,  I'm not going to go out of my way to the discount store to save it.  So I will remain price indifferent because of the convenience and impulse factors

If I am in the supermarket, I will pay attention to the price per litre.  On the night I conducted the supermarket study, I originally took two 1.25 litre bottles off the shelf.  They fit in the fridge easily and 2 bottles would be enough for 6 people (we had visitors coming over that night).  After looking at the price per litre, I replaced them with one 2 litre bottle. I was not paying more than double the price per litre, even if it did fit in my fridge a little easier.

What do you think?  Will you pay attention to the price or are you going to grab whatever package seems best at the time?











]]>The Streetonomics of CokeFinance GuyThu, 04 Dec 2014 06:10:28 +0000https://www.finance-guy.net/streetonomic/fast-food-worker-strike5388101ae4b04631a5e04b76:547fcdcce4b0d77d6ee4509e:547fcdeae4b0212892a20001

Expect delays at your favorite lunch venue today, as they may be short staffed.  Fast food employees across the nation are planning to strike today. It is anticipated that the strike will occur in as many as 190 cities.  Workers from all chains are uniting to demand that their minimum wage be increased to $15 per hour.

It is a noble cause, the workers deserve a better standard of living, and a bit more money can make a lot of difference.  They are making a fair point, employees in fast food do earn less than most.  The Economic Policy Institute released a paper about the restaurant industry in August.  Average wages for restaurant workers sits at $10 per hour compared to $18 per hour for 'non restaurant'

So why do people work for fast food chains?  For one they are willing hire workers who may not be experienced or skilled enough to obtain other work.  I've always seen fast food outlets as 'an entry to the workforce'  we all had that first job on the resume.  Mine was at a magazine store stocking shelves.

Is a flat pay rise the best approach to this problem?  Rather than asking for fish, why not ask to be taught to fish?  McDonald's donates several million dollars to charity and even has their own charity 'Ronald McDonald House', which does wonderful work.  Why not direct some of that altruism to their own staff?  Think of it as an investment in your own staff (where as a pay rise would be a cost, not an investment). Here are a couple of ideas:

Subsidized study - Offer employees the opportunity to upskill themselves through knowledge. Offer a range of courses which can help qualify the employees for higher paid roles.  Hey you could even start the Ronald McDonald College for upskilling...

Create upskilling opportunities for internal promotion We are focusing on the staff who earn $10 an hour, but a fast food chain employs a huge array of people at pay levels which go all the way beyond 7 figures.  Give the workers a chance to spend a day in accounting or logistics, they might learn something hey maybe you'll even discover they have aptitude to work in that department.  Your future CEO might be offering someone fries at this very moment!  Think it can't be done?  Well then you haven't heard of David Murray, the bank teller who stayed with Commonwealth Bank and got promoted all the way up to become a successful CEO

Financial hardship is a common problem for fast food employees. A  This strike is great way to bring attention to the issue (it's how we learned about the problem). If the workers are successful, they will see their average income jump from $10 to $15 per hour, that's a 50% jump in hourly earnings.  

We'd all love a 50% pay rise, but would this be a solution and help bring these workers out of financial hardship?  Here at the Finance Guy, we have some concerns.  Here is a Streetonomic look at why an increase in pay may not be a lasting solution.

Profit maximization

We tend to say this a lot, but 'companies are in business to make money'.   There are two key elements in turning a profit, maximize your revenue and minimize your costs.  Wages represent the cost of labor, so naturally a pay increase to workers will see a matching profit decrease by the corporations.

Nobody would care if a fast food chain reports a few million dollars less profit for the year, right?  Wrong!  Unfortunately companies have people who benefit from their profits, known as stake holders.  If you own shares in McDonald's, then you are a stakeholder in their profitability.  

It would be wonderful if companies cared enough about their workers to ensure their quality of life.  After all with out these workers, there is no fast food chain, looking after this essential part of the business should be important, but unfortunately it is not.  If profits at McDonald's are down, we as share holders may lose a few dollars (if we sell), but the CEO and others in managerial roles, could lose their jobs.  

If the strike is successful and the hourly wage increases to $15 per hour, the decision makers at all these fast food chains are going to face substantial challenges.   How do they protect their profits if costs rise?  More importantly how do they protect their high income jobs, they need to make payments on all those luxury cars and boats, specially so close to Christmas.

One way to maintain profit if wages go up, is increasing revenue, but that would be difficult. Fast Food companies are already blasting advertising at us from every imaginable source, and they couldn't make it any easier for us to find them and buy their food.  They could rise prices, but that would be a slow and gradual process and would only work if they all did it.  Imagine if every fast food chain except Arby's increased their prices by 20%, where would you go for lunch tomorrow? 

An easier way to protect profits, is cost cutting, and the easiest cost to cut, is staff.  Rising wages will see fast food chains take drastic measures to reduce their staff levels.  Some staff will see reduced hours, while others will  be laid off completely.  

We expect that a rise in pay would create an outcome for employees where we will see:

1. Those who continue to work the same number of hours per week, and see a substantial increase in their income.  These are the big winners who have achieved the goal of the strike
2. Those who keep their jobs, but see reduced hours.  Working less hours for similar or slightly better pay is an increase in quality of life because you have more free time, but it doesn't solve the issue of financial hardship. Their income may go up or down a little, but overall they are still financially struggling
3. Those who are laid off completely - You successfully achieve an increase in pay from $10 - $15 per hour only to end up with no income at all and have to go find another job. Given how many workers have just been laid off, you probably wish you started looking for a new job before the strike or pay increase ever happened.

A pay rise may solve the financial problem for some employees, but this is offset by those who are now worse off.  

The Invisible Hand

If wages go up, companies will find ways to use less staff.  The current business model used by fast food chains, is based on the availability of low cost labor.  When you enter a fast food restaurant, you expect to see several employees behind tills, several more working in the kitchen, and a few in the dining area. 

If the cost of a worker goes from $10 to $15 per hour, they will find ways to use less workers. Think about the workers behind the cash register.  Usually you see around 5 of them at a time, so it costs $50 an hour to take your order (and payment), and give you an order number.  If this cost were to jump to $75 an hour, we would probably see some changes, here are some hypothetical changes we might see

Cash Registers - How hard is it to place an order, I'm sure, if provided with a touch screen, you could do it yourself.  Self check outs are already popping up in most supermarkets.  This technology would enable restaurants to have only one employee assisting with cash registers and placing orders.  Saving $40 an hour may not justify the cost of installing self check outs, but chains may be more willing to do it if it saves them $60 an hour.

Reducing the Dine in Service - Maintaining the dining area is another cost that can be cut.  New restaurants may have smaller areas with less seating.  As customers this means that dining in may become difficult and involve more waiting than before. To the restaurant it means paying less staff to keep the dining area clean and ready for the next customer.  

Staff minimization through drive through only restaurants - In Australia, some McDonald's locations are open 24 hours.  Being open all night is an expensive decision.  There will be several hours with very few customers, and (at least in Australia) workers receive a higher hourly rate for working these unkind hours.  How do they turn a profit from this?  Through staff minimization.  

McDonald's is open 24 hours, but from 11pm to 6am, only the drive through is available.  This means there are no staff needed to maintain the dining area, and rather than have 5 cash registers, they only need one or two to run the drive through service, which again can be reduced with a self check out system, hey why install expensive technology, I'm sure it could bee done from my phone using their existing wifi.  If you go ahead an develop an app for that, feel free to mention The Finance Guy when it becomes a big success :)

Drive through only is a reduction in total service.  Dine in is not an option, and if you arrive to a line of cars backed out onto the street and around the nearest corner, you may feel frustrated while looking at the 5 vacant cash registers inside.  But for McDonalds it is genius.  It reduces cash register staff from 7 to 2, (assuming the two drive through spots are staffed all day).  It reduces maintenance staff to zero, and it even reduces the need for kitchen staff.  

At most there will be two lanes for the drive through, so no more than two orders are placed at once. During the day, up to 7 orders may be placed at any given time.  Even when the cars are lined up around the block, the orders only come in two by two and a small number of kitchen staff can manage.  

Funneling the customers like this means that McDonald's is able to ensure that a reduced staff is able to cope.  It's a method which will frustrate some customers and cause some to go elsewhere.  It's a fall in customer satisfaction and a fall in potential revenue, but the restaurant is willing to accept these falls because the reduction in cost means they stay ahead in the all important pursuit of profit.

Well that's about all I have to say on this topic.  I will apologize in advance to McDonald's, I didn't mean to single them out, but once you use an example, it's just easier to stick with it :).

As always all feedback is welcome doesn't matter if it's positive, negative or indifferent.  Let us know what you think, should fast food workers get their $15 an hour.  What do you think the overall impact of a pay rise would be?  How far would it go toward solving their communal financial hardship problems?





















]]>Fast food workers across America set to strike, but is a pay rise a lasting solution?