Friday, June 19

Is Beachbody A Pyramid Scam? Myths And Facts About the Network Marketing Industry

If there's one thing I know about boss babes, it is that they know how to trust their gut. Intuition is one of those superpowers we lady-folk seem to especially possess and when we are tuned into it, magic can happen. Learning to follow those soul-stirrings can lead us down all sorts of paths to adventure.

However, a true girlboss knows how to combine her intuition with business smarts. She follows her heart but backs it up with her research. She isn't just blindly running off cliffs, she is making calculated moves based on guts, gumption, and grit. So it's no surprise to me that so many boss babes find themselves among the ranks of networking marketing businesses. It makes sense to me, as a feminist, because the network marketing industry is one of the only here in the US where women get paid DOLLAR FOR DOLLAR what their male peers make for the same work.
Confetti-toss break for wage equality!

I really am bummed that this is even a post I need to write. But unfortunately it is. Because we live in a broken world where people take advantage of other people and our friends get hurt and we put up walls and skepticism. With court rulings fresh in people's minds, NYTimes articles going back and forth, and a plethora of not-actually-accurate blog posts filling the internet with misinformation, this is a conversation that needs to happen before we go placing a scarlet letter on an entire industry and its people who are just trying to support their families. In my industry, the direct sales industry (also called "network marketing" and "multi-level marketing" or "MLM") just like in any industry, we've had some bad apples. And since I know if you are reading this, you're one of those with-grit-and-gumption girlbosses I mentioned earlier, responding to that stirring inside that tells you that this is the path but also doing your due diligence to research and learn and back your intuition with cold, hard, facts and knowledge, I decided to break down some myths about this industry, and explain how and why Beachbody is backed by legitimacy and integrity in our industry. (aka... why this is not "one of those pyramid things")


Toss your hair into a messy bun, grab your coffee (because it's time to get down to serious business talk!) and let's dive in with some myths and shedding of light...

MYTH 1: Pyramid schemes are hard to distinguish from MLM companies. So it's a riddle!
LIGHT: Joseph Mariano, President of the Direct Selling Association (the governing body in the world of reputable MLM companies and the industry standard and watchdog) went on record recently explaining that Multilevel Marketing is not synonymous with a pyramid scheme. The former is a lawful industry (just like banking, dentistry, or retail) the latter is an illegal operation that should be prosecuted to the full extent of the law.  And here is the main difference between the two as defined by Mr. Mariano, "There is no riddle. Federal law and statutes in a majority of the states clearly define a pyramid as an operation that pays salespeople primarily for recruiting additional members into a network instead of selling products. The Federal Trade Commission further warns that pyramids may require members to buy large amounts of inventory, meaning you couldn’t consume it yourself, or unwanted items." (source) Beachbody, unlike some other companies, is built on the retail sales of actual products to consumers. In fact, Beachbody started as a company just selling workout programs without a network attached. We are unique in that fact that the network was not added until later instead of a company building a network and then having to invent a product for it's network to sell. So our company is built on products for consumers, not on selling an opportunity alone.

MYTH 2: You can't really make money in an MLM. Most people fail. It's a scam. 
LIGHT: There are no guarantees in any industry. Just as many people try a new career path and fail, get hired for a job and then fail, or try to start their own business and fail. This industry is no different than that. But in fact, the idea that "most people fail" is a misstatement. 91% of direct sellers say their experience in direct selling meets or exceeds their expectations as a business where the harder they work, the more money they can make. And 84% say that direct selling meets or exceeds their expectations as a good way to supplement their income or make extra money for themselves. (source) Some red flags to watch out for are startup costs. How much do you have to pay to get going with a company. If the startup costs are substantial, watch out. Legitimate MLM companies want to make it simple for you to get started and your costs should cover your startup kit which should be low. (source) (Beachbody's coach sign up fee is $39 for your kit. But, if you sign up at the same time that you purchase a program and shakeology to use for your own fitness journey, they actually will allow you to sign up as a coach FOR FREE.) Another red flag is if a company does not sell its products to consumers. Like I said before, the majority of Beachbody's profit is based on sales of its workout products and supplements to consumers. Slow clap.

MYTH 3: The majority of people who try MLM quit. It's rare to be successful. 
LIGHT: In fact the turnover rate in the network marketing industry is on par with the retail industry. We also have to take into consideration that there is a large number of people who begin a network marketing job as a seasonal income generating activity, not as a long term business goal. Those people aren't quitting or dropping off because they weren't successful. They stop because they reached their goal. (source) And as an anecdotal add on... almost all of the people that I started in training groups with when I started as a Beachbody coach have stuck with it and been successful. Very few that I knew have quit. Sure, not everyone who gets into direct sales is good at it. But not everyone who gets hired at Starbucks is good at being a barista either (seriously, someone wrote my name as "Pecka" on a cup once). Or a doctor. Or a lawyer. You get the point.

MYTH 4: People lose money because they are forced to buy a bunch of products they can't use. And then get stuck with thousands of dollars of product after they quit. 
LIGHT: With reputable companies, this is highly regulated and companies must have a buy-back policy in place and in writing. In fact there are a lot more protections built into the direct sales industry than most other entrepreneurial options! (source) With Beachbody, we are very different in that coaches are not required to buy any specific product or quantity of product to have an account or earn money. I've heard some people claim that Shakeology is what Beachbody uses for this but that is untrue. Coaches are not required to buy Shakeology to be coaches. They are encouraged through optional incentive programs to use it as a way of maintaining integrity so they are not selling something they don't use and enjoy themselves, but they are encouraged to use just what they need and not more. Since Shakeology is meant to be consumed each day as a supplement, anyone with a build up of Shakeology has gotten to that spot because they were not using it regularly for their health, as they really should be if they believe in the product, not because Beachbody forced them to overbuy. Here's another example... Let's pretend your doctor told you that you need to take a vitamin every day for a month and prescribed you a bottle of 30 pills that you bought. If you took those every day as prescribed you would not end up with a surplus. If you did not follow your doctor's directions, at the end of the month you would end up with extra and from the outside it could appear that the doctor oversold you. However, upon investigation anyone could see that the surplus was because of you not utilizing it as you should, not because the doctor oversold you. Make sense?

MYTH 5: It's all about recruiting, and if you don't do that you can't make money. 
LIGHT: It's pretty clear to any business-minded person that without a doubt, expanding and growing is an important part to any business. The same is true in network marketing. For network marketers looking to build a substantial business, recruiting and mentoring others to success is an important aspect to growth. But, recruiting is not a requirement for making income in legitimate MLM's. (source) In Beachbody, you can start earning income off commissions from the sales you make right away (without ever having recruited a single person) and you can continue to do that for as long as you like. However, since this is network marketing it does behoove big-dreamers to build a network and grow, just like in any business. Growth is always good.

But how can you really be sure? If you're a girlboss, you're savvy so do your research! Ask questions. Companies accepted into the Direct Selling Association go through a rigorous application process where their business plans, marketing plans, assets, etc are evaluated and reviewed to make sure they are in compliance with FTC and DSA guidelines. Also look up companies on the Better Business Bureau (Beachbody has an A+ rating) and make sure they are part of the DSA. (Beachbody is a member. In fact, Beachbody was recently honored by the DSA with an Excellence in Sales Force Award for it's new coach training!) You can find the DSA Code of Ethics (that Beachbody complies with) here. You can also find the FTC's guidelines about this subject here.

You got this boss babes!

confetti image source: shop bando

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