The Story of Herbalife - Is Herbalife the Holy Grail of Network Marketing?
Herbalife. It's the holy grail of network marketing. The leader in the health and wellness industry. Possibly one of the greatest MLM companies ever created.
That's the hype, anyway. People love the product line, and many also succeed with their compensation plan. Here's a closer look at the company, the products, the money, and finally, the criticisms.
The Company
Herbalife is huge. It started in 1980, and 20 years later reported an income of $2.7 billion dollars. They sell products in 75 countries, and employ 4,000 people worldwide. Their independent representative network is massive; it involves about 2 million people worldwide, who both sell products and participate in the MLM aspect of Herbalife.
It all started out of the trunk of a car. Founder Mark Hughes' mother had struggled with eating disorders and unhealthy weight loss for much of her life, and upon her death Hughes attempted to create a weight loss product that focused on health. He did, and sold the product door-to-door from his car. He eventually incorporated MLM into his business, and things really took off. Within two years, he had expanded to Canada. In another four, the company was listed on NASDAQ.
The early days weren't without drama, though. The company was sued, and Hughes died in 2002 of an overdose. In 2008, the President and COO resigned after he was reported falsifying his resume.
The Products
Most of us know the products from commercials. They sell nutrition and energy snacks, vitamins, shakes, supplements, and personal care items. "Formula 1" is their best selling product. The effectiveness of the products has been disputed, and even a Herbalife-funded study showed that weight loss was not a primary effect of their products. But still, the company continues to sell with great success.
The Money
The compensation program works like most others in the MLM industry. Representatives make money from sales, and also from commissions on sales by people in their downlines.
The company claims that 25% of distributors reach the "Supervisor" level in the company. When a rep reaches that level, they are then allowed to grow their downline and start earning off of those extra commissions. Leaders (the first level in the company) average an income of about $2,400 per year (in 2009, at least).
So it appears that many people join and earn a bit of money, but in reality, only a quarter of reps advance further up the scale. The levels include Supervisor, World Team, GET, Millionaire Team, and President's Team.
So how can one ensure success with the company's products?
The Herbalife Technique
The company encourages its reps to go back to the company roots: selling door to door just like Mark Hughes did back in the day. As with many MLM companies, a reps first line of defense is going to friends and family. By hosting home parties, and taking products to places in the neighborhood, many reps hope to earn a sufficient living.
The reality, though, is that building a business through friends and family is more of a "pity scheme" than anything. It takes real, hard work to grow your downline and reach the top tiers of the company. That will nearly never happen when using outdated, face to face techniques as encouraged by Herbalife.
It's important for reps considering joining to start learning about up-to-date techniques first. Things like building a credible web presence, attracting hundreds or thousands of hits per day on your website, promoting Herbalife in the right places, to a targeted market. These are all skills that everyone should have before starting a new business.
Herbalife might be a great opportunity for those willing to build their skill-set first. It's all a matter of determination and individual responsibility for your own success.
That's the hype, anyway. People love the product line, and many also succeed with their compensation plan. Here's a closer look at the company, the products, the money, and finally, the criticisms.
The Company
Herbalife is huge. It started in 1980, and 20 years later reported an income of $2.7 billion dollars. They sell products in 75 countries, and employ 4,000 people worldwide. Their independent representative network is massive; it involves about 2 million people worldwide, who both sell products and participate in the MLM aspect of Herbalife.
It all started out of the trunk of a car. Founder Mark Hughes' mother had struggled with eating disorders and unhealthy weight loss for much of her life, and upon her death Hughes attempted to create a weight loss product that focused on health. He did, and sold the product door-to-door from his car. He eventually incorporated MLM into his business, and things really took off. Within two years, he had expanded to Canada. In another four, the company was listed on NASDAQ.
The early days weren't without drama, though. The company was sued, and Hughes died in 2002 of an overdose. In 2008, the President and COO resigned after he was reported falsifying his resume.
The Products
Most of us know the products from commercials. They sell nutrition and energy snacks, vitamins, shakes, supplements, and personal care items. "Formula 1" is their best selling product. The effectiveness of the products has been disputed, and even a Herbalife-funded study showed that weight loss was not a primary effect of their products. But still, the company continues to sell with great success.
The Money
The compensation program works like most others in the MLM industry. Representatives make money from sales, and also from commissions on sales by people in their downlines.
The company claims that 25% of distributors reach the "Supervisor" level in the company. When a rep reaches that level, they are then allowed to grow their downline and start earning off of those extra commissions. Leaders (the first level in the company) average an income of about $2,400 per year (in 2009, at least).
So it appears that many people join and earn a bit of money, but in reality, only a quarter of reps advance further up the scale. The levels include Supervisor, World Team, GET, Millionaire Team, and President's Team.
So how can one ensure success with the company's products?
The Herbalife Technique
The company encourages its reps to go back to the company roots: selling door to door just like Mark Hughes did back in the day. As with many MLM companies, a reps first line of defense is going to friends and family. By hosting home parties, and taking products to places in the neighborhood, many reps hope to earn a sufficient living.
The reality, though, is that building a business through friends and family is more of a "pity scheme" than anything. It takes real, hard work to grow your downline and reach the top tiers of the company. That will nearly never happen when using outdated, face to face techniques as encouraged by Herbalife.
It's important for reps considering joining to start learning about up-to-date techniques first. Things like building a credible web presence, attracting hundreds or thousands of hits per day on your website, promoting Herbalife in the right places, to a targeted market. These are all skills that everyone should have before starting a new business.
Herbalife might be a great opportunity for those willing to build their skill-set first. It's all a matter of determination and individual responsibility for your own success.
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