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 opportunity, or just another MLM
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 create the 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 already 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 have used the 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:
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 your customer. You can also earn 40% commission if your customers purchase Beachbody on Demand memberships
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 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
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 2016 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 2016 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 2016 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 2016. 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 2016, 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.
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. 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. Here's one we recently did at home:
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.