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.
What is the Nikken Opportunity
We thought we'd let some Nikken Consultants tell us about their business opportunity it in a short video:
That video certainly make this look like an opportunity which could change your life and set you on the path to financial freedom. While it's nice to see that there is a collection of Nikken Consultants who have made money, it doesn't explain how they earned it.
The video uses all the key MLM catch words like 'freedom', 'dreams'. They are telling us to join an opportunity to gain all these things, without really telling us what the opportunity is! We decided to do our own research. We looked at the Nikken consultatns Policies and Procedures manual. This includes their compensation plan (starting on page 19).
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.