Team Beachbody Scam: Find The Truth

By | March 28, 2017

Most everyone has seen the infomercials for the Beachbody products. Did you also know that Beachbody is a Multi-Level Marketing company? If you know about the business opportunity then you have heard some call it the Team Beachbody Scam. In this article, I’m going to dig into Team Beachbody and find the good and bad about it.  Let’s start at the beginning.Team Beachbody scam income

History

Carl Daikeler and Jon Congdon founded Beachbody in 1998. Carl Daikeler is the current CEO  and Jon Congdon is the current President and Chief of Marketing for Beachbody. They started out in and are still based out of Santa Monica, CA.

In 2007, they started the multi-level marketing part of their company called Team Beachbody Coach Network. The independent distributors are called coaches. Team Beachbody currently has over 450,000 coaches in their network.

In 2006, Michael Neimand was hired to help launch Team Beachbody. Michael had 20 years executive experience in the MLM industry. He had prior senior management experience while working at Herbalife. He is currently the Division President for Network Marketing with Beachbody.

In 2010, Beachbody hired Jeff Hill to increase the number of coaches in Team Beachbody and increase it’s revenue. Jeff had 18 years of executive experience in the MLM industry working for companies like Tahitian Noni International, Shaklee International and Melaleuca. He is currently the Division President for Network Sales with Beachbody.

Product

Beachbody has a variety of popular fitness and weight-loss products. If you have ever seen an infomercial then you have most likely seen one of their products. P90X and Insanity are a couple of the workout programs you can purchase from the infomercials or from their website. I have personally purchased some of these products. They are great workouts and well done programs. I would recommend any of the workout products.

Beachbody also sells some nutritional supplements. The idea is to take the supplements along with doing the workouts to improve your fitness or weight-loss. The most well known of their products is Shakeology. This is a nutritional shake that you drink in place of eating a meal. This has all the vitamins you need and lowers your calorie intake by replacing your meals.

I’ve also tried the Shakeology. It’s one of the best tasting meal replacement shakes that I’ve tried and I’ve tried many. The big problem I had with Shakeology at the time was the price. I can go to Walmart or a Vitamin store and get other brand name meal replacement shakes for much less money. After trying many different shakes, I now believe the best path to weight loss is eating real foods i.e. vegetables and meat and stay away from supplements in general.

Another Beachbody product available is the Beachbody On Demand. This is a membership website that gives the customer unlimited access to all of the fitness and nutrition products offered by Beachbody.

Team Beachbody Direct Selling Division

Team Beachbody scamIn 2007, Beachdody started their Direct Selling Division which is another way to refer to Multi-level marketing. This division is the Team Beachbody Coaches Network. The distributors are referred to as coaches. The coaches are people who will help others with their fitness programs by using the beachbody products. One of the selling points of the program is that you can make money while helping others get into shape.

Sounds great doesn’t it. Let’s take a closer look at the compensation plan and income disclosure statements and see how good it really is:

Compensation Plan

Team Beachbody does have a compensation plan available online. Click here to take a look at it.

Let’s dig into this compensation plan:

First thing to look for is what will you earn in commissions for selling the products.

You can see that Team Beachbody has several commissions. Remember that Beachbody has a membership program. Each time you have a customer join that membership i.e. Team Beachbody Club, you earn a 40% commission on that monthly membership.

Your customers membership status impacts the amount of your commission earned when they purchase products. When your customer is not a club member, you earn 25% on their purchases. When your customer is a club member, you earn 15% on their purchases.

At first glance this may seem messed up to you but I would be very happy with this commission structure. When your customer is a club member, your getting 40% monthly on that membership. If they joined the club then they like the products and will be purchasing regularly. That means you’ll have a steady income coming in. With the non-club member, the purchase is most likely a one time deal.

Team Beachbody Challenge Packs

You’ll notice they also have the challenge packs. What is a challenge pack? It’s a package deal of the on-demand service and the nutritional product to include shakeology. These are monthly purchases. The recruitment/sales tactic is to give someone a challenge to achieve a fitness goal in a specified time period. The products in this pack will help them to achieve their fitness goal.

These challenge packs are also used for the recruitment of coaches. If you purchase a challenge pack as a new coach, then the start up fee is waived.

On the challenge pack you can earn up to 36% commission.

If all you are to do was sell products, this is everything you would need to know. But with any MLM, the big money dreams comes from recruiting your team or down line.

Coach Recruiting Bonuses

The Team Beachbody recruiting bonuses is where things gets complicated and a bit fishy. I had to watch several videos and read some different blogs about how this thing works. I’m going to start this out with a video from Michael Neimand (Team Beachbody President of Network Marketing) who explains how the Team Cycle Bonuses Work:

 Unfortunately, Michael over simplified how this thing works in the hope of you will not notice a few things. First of all, your down line is split into two which is referred to as a binary plan. To become a Emerald Coach, you need to have recruited an active coach on each side of your binary plan which means you have recruited 2 people.  That’s simple enough right!

As an Emerald Coach, you are eligible to earn the Team Cycle Bonus. Here’s how it works. When your team earns 300 Balance Volume points, you can earn a $14 bonus. Simple, right? No, it’s not that simple.

The 300 Balance Volume points have to be split between the two side of your network. The side that earns more needs to have at least 200 Balance Volume points and the other side needs at least 100 points.  You got it now? You may be asking why would you want to do this?

Before answering that question, let’s define Balance Volume points. As a Team Beachbody coach, you earn Personal Volume Points (PV) for each item or membership you purchase or sell. The points equate to the dollar value of what you sold or purchased. If you buy something for $100, you get 100 PV. To maintain your status as an Active Coach, you need 50 PV each month.

Each of the coaches on your team are also earning these PV’s for their purchases and sales. Each of their PV’s counts as your Balance Volume Points. So the sales and purchases of your down line coaches drive your Balance Volume Points.

Team Cycle Bonus Examples

When people recruit for MLM’s, they always give scenarios where you earn lots of money.  Let’s be more realistic with these examples. Let’s start very simple:

Examle 1:

You’ve recruited two coaches name Joe and Jane. Since this a binary plan, Joe goes on one side and Jane on the other side. Your coaches are doing well. In the first cycle, Joe has purchase $100 worth of products and Jane has purchased $50 and sold another $150.

Joe has 100 PV

Jane has 200 PV

Your team has 300 Balance Volume Points.

Your Balance Volume Points are properly divide between the two sides (100/200) so you earn a $14 bonus.

Great, all worked as planned and you earned $14. Let’s look closer. Most MLM’s pay a commission on the down line. What does this equate to as a commission? $14 is 4.67% of $300. That’s a pretty good commission.

What happens if Joe only has 50 PV and Jane has 250 PV?

Okay, you still have 300 Balance Volume Points but you no longer have them divided up properly between the two sides. Joe has not earned enough on his side to allow you to get the bonus.  Your down line still has $300 is sales but you’re not earning any commission.

What happens if Jane becomes a super star sales person?

Joe is able to earn 100 PV but Jane is killing it with her sales and earns 2500 PV. Your Balance Volume Points will be 2600 but you’ll only earn a $14 bonus. Why? Because Joe’s side only has 100 points so you can only earn one bonus. Your down line had $2700 in sales and you earned $14 which is a 0.5% commission.

“Recruit more people to your weak side” says your sponsor.

So under Joe, you recruit 3 more people. Joe’s side of the binary plan now has 300 Balance Volume Points. Great. Jane being the super star has sold another $3500 in products for 3500 Balance Volume Points.

Total Balance Volume Points = 3800 = $3800 products sold by down line

Bonus earned = Joe 100 / Jane 200 x 3 (because Joe only had 300 points) = $14 x 3 = $42

On $3800 of sales you’ve earned $42 or a 1.1% commission.

Hopefully, you get my point with this example. With a binary plan, you have to keep the two sides balanced to maximize your bonus. If your two sides are out of balance you will not be earning as much as you could be. If you’re lucky enough to recruit a super star like Jane in the example, you better find another superstar to place on the other side of your binary plan to maintain the balance.

Example 2:

In this example, you have recruited 2 superstars in Joe and Jane. Joe has earned 2000 PV and Jane has earned 4000 PV.

With the 100 / 200, you have earn the $14 times 20 which equals $280 for the cycle. Hold on, there is a limit of what can be earned in a cycle. So you only earn $250.

Every level of this plan has a limit of what can be earned in each cycle. Why? I really don’t know. What it does is discourage selling and encourage recruiting. Interesting!

Example 3:

You are earning 25% commissions on selling products to your friend John.  He typically spends $200 per month with you. So you’re earning $50 in commissions. You decide to recruit join as a coach. He purchases his products directly and he earns 200 PV for his purchases. Those 200 points are added to your Balance Volume Points and will contribute to your Team cycle bonus.

Depending on which side of the binary plan John is on he’ll help you earn $14 or $28. That’s significantly less than if he stayed as a customer. You’ll be told that John can recruit and earn you more in your Balance Volume Points in the long run. Now your sacrificing immediate income for future potential income.

Enough examples, let’s take a look at what people are actually earning.

Income Disclosure Statement

Team Beachbody has an Income Disclosure Statement but they call it the Statement of Independent Coach Earnings.  You can find it here.

First thing to notice is how many coaches are being written off as not wanting to have a business. They only became a coach to get their products at a wholesale price. In the first paragraph, it says that only 33% of the coaches work it as a business. That means 67% of coaches are not working it as a business and will not be included in the numbers in the table.

If you are looking at Team Beachbody as a business this should be concerning to you due to the binary plan. How do you keep your binary plan balanced when on average 67% of your recruited coaches are only in it to get the wholesale discount. As seen in example 3 above wouldn’t you be better off keeping them as customers rather than recruiting them.

Check out the table and take a look at the % of All Coaches column. The Emerald Coach only make up 21.5% of all coaches. This is the first level that can earn the Team Cycle Bonus. They only 1.2 has achieved the next level which is the Ruby Coach. Then only 5.9% achieved the Diamond levels. Remember there are 15 Star Diamond levels. So these 16 levels make up less that 6% of the coaches.

Keep looking down that column. 71.4% of All coaches are the retail sellers. Remember in the first paragraph, they said 67% of coaches don’t even try to build a business. So they have been thrown into this row.

Average Incomes

On average an Emerald Coach earned $3,353 in one year. That’s not much. On average, a Diamond coach earned only $18,175 in one year. Still pretty low. This Star Diamond line is an average across 15 levels but on average earn $90,746 in one year.

Oddity Incomes

Team Beachbody scam cashDid you notice the high income on the Emerald Coach? $261,621 in one year. Wow, how did that happen? Remember at the Emerald Coach level, you only have 2 recruits and your Team Cycle Bonus is limited to $250 per week. If you max out you Team Cycle Bonus all year, you’ll earn $13,000 for the year.

The only way you earn that type of money at the Emerald level is to focus on retail sales. A 25% commission on retail products and 40% commission on the membership can add up quickly for someone with the marketing skills to sell large volumes. For a person that is capable of selling the products, it makes no sense for them to be recruiting their customers.

Team Beachbody Legal Issues

In my research, I didn’t find any lawsuits against Team Beachbody. I did find a number of upset customers and former coaches.

Is Team Beachbody A Scam?

In my opinion, Yes! Are they legally a scam? I’m not a lawyer so I can’t say one way or the other . Checkout here how the FTC describes the difference between an MLM and a pyramid scheme. I wouldn’t be surprised if the FTC is not investigating the Team Beachbody Scam in the near future.

Why do I think it’s The Team Beachbody Scam?

Beachbody has some great products with a good retail commission. I believe you could make some good money selling the products retail. You can see in the income disclosure that some one did exactly that.

With the binary compensation plan, the recruiting is the focus of growing your business. Having your down line coaches selling more products only helps you to a point as their is a limit to the weekly bonus. You need to grow your network to increase your weekly limit.

Then the most important thing to notice about the Team Beachbody scam is that most of their coaches earn very little money.

Regardless, if Team Beachbody is legally a scam or not it’s definitely a poor choice for a business opportunity.

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