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’. They explain their opportunity in the video below:
The 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.