Usana Watch Dog has been busy compiling more data about the Usana Health Sciences “business model” for distributors. He writes about what I already know from my years of research into multi-level marketing schemes: Nearly everyone loses money in these schemes, and those who do make living are almost always those at the top of the pyramid. 99% of the people lose money so that a fraction of 1% at the top can make the big money. That, my friends, is no legitimate business model.
Our friend Usana Watch Dog has compared the 2006 data compiled by Usana on their distributors to the data he was able to manually extract from what Usana currently publishes. You can see from the 2006 data that the vast majority of the distributors who are receiving commission checks are “sharers” or “believers,” and they were earning an average of about $200 per year. Incidentally, this $200 is not even enough to cover the minimum purchases the distributors are required to make in order to continue to be eligible to receive a commission check.
Below is the graphic that Watch Dog put together (click on it to see it full size). He has analyzed every distributor who has gotten a commission check from Usana. You see that currently, “sharers” and “believers” again make up the vast majority of the distributors who receive a commission check. We can safely assume that they again are earning that $200 (or very likely, less) per year.
The best data lies in what is not shown in either the 2006 chart put out by Usana, or the current diagram by Usana Watch Dog: The more than 600,000 distributors who never receive a commission check.
Click to see image full size
Tracy, I know that you try to report what you believe to be accurate information, however the claim that you make regarding Usana not providing earnings reports since 2006 is incorrect. The earnings report from Fiscal year 2009 is available on their website and is not behind their password wall. (I won’t include the link here, just look on their website under “Opportunity”, “Compensation”, “Average Income”)
For someone to spend so much time supposedly analyzing the data, I have to wonder why UWD did not do a simple search to obtain the most recent and current data. Seems sloppy to me.
Thanks Jen. I’ve updated this post and have grabbed the data you referenced. I will take a look!
Jen,
That is because USANA has dishonestly reported their distributor average earnings statements since 2008. Perhaps if you actually look at the numbers USANA gives, it should be quite obvious. I had to use USANA’s last honest reported calculations for average Earnings. In USANA’s earnings reports they use today, USANA only does the Average Earnings calculations on less than 5% of USANA’s distributors.
In otherwords, USANA only gives you an Average based on the top 5% of distributors who have received a check.
In all fairness, the 2009 disclosure shows the rankings as a “% of everyone.”
Jen,
Would you have rather I used the most recent numbers USANA gives and claim that the average Sharer makes, well, nothing I guess because USANA did not include Sharers in their 2009 distributor earnings statement. Okay, How about Believers.. The average believer makes $8,835 per year?? Just a couple years ago the average Believer made only $314.41… Oh wait, Notice the fine print on the newer earnings report? It says that “To be considered in a rank’s earnings, Associates must have earned checks at a median rank for at least 20 weeks.” Well so much for honest disclosure…
So Jen, that is why I use USANA’s last HONEST distributor income statement that was for the year 2006. That was back when USANA took the numbers from their computers and just disclosed them. But that information can be shown that almost everyone makes no profit. So what does USANA do now? They allow a special group of elite distributors get the data from USANA and design their own income disclosure chart. They purposely made the income chart only calculate a very small percentage of distributors, and have the audacity to call it an AVERAGE…
What’s even worse is that the income earnings for all of USANA’s other markets outside the United States have a much worse failure rate and USANA would never dare disclose those numbers. You know why this is true? Because USANA started in the US. As territories open, the elite distributors in the US do massive recruiting in these other countries. The result is that the US distributors are still on the top while those in the other countries are almost all on the lower end of the pyramid. Elite US distributors pillage the other markets before those citizens in those countries even have a chance to start. Of course this is all a whole other topic of discussion now…
My initial post was intended to point out a factual inaccuracy in Tracy’s original post. She originally indicated that 2006 was the last disclosure that Usana had made which is false, and she updated
the post.
UWD, you are free to use whatever data set you desire, and I am free to say that I believe your work is sloppy. You may have a valid reason for choosing to use data that is 3 years old, but I did not see on your graphic, or in your blog post why you chose to use the old data, only that “Usana has not published a relevant report since then” with no indication of why you believe the 2009 data is not relevant. Perhaps you had a valid reason why you used the 2006 data, but as you did not initially explain your rationale for using the old data, it is in my opinion that you provided sloppy reporting and analysis. Had you provided information on why you believe that the 2006 data is more honest than the 2009 data, I would not have criticized your analysis. Usana is not hiding the fact that the numbers shown require 20 weeks at that level, in fact that statement is mentioned twice on a single page document, once as a footnote, and once in their description of how the numbers were calculated.
A quick look at the differences between the 2006 data and the 2009 data reveals that Usana has changed the way that they report the numbers, it took all of 20 seconds to see a significant difference and then see the “20 week” notice in 2009 that was absent in 2006. In 2006, it would appear that they as you stated simply did a data dump of all distributors who purchased a product even once during the year, the result is a low average income because a significant portion of people quit shortly after starting (and yes, some lose money)
In 2009 (and perhaps in pervious years, I didn’t look) they chose to look at active distributors who had received commission at a level for 20 weeks or more. This eliminates the data for individuals who join and quit within a few months, and it also eliminates the data for individuals that quit within the first few weeks of the fiscal year (whether they made $0/week or $20,000/week.). Usana’s 2009 isclosure
clearly states how they calculated their claims and the percentages of active and all distributors that attained that earning level. This data set provides more realistic figures for what someone who is a good salesperson and works hard is likely to attain for their efforts.
Lets assume (for the sake of simplicity) that for every 10 people that decide to join, only 2 decide to try throughout the year to make an income (the rest have learned that sales is not their thing, have had events in their life that do not provide them with the time that they had when they initially signed up, or perhaps they were not seeing the continuing benefits that they initially experienced). Those 2 people earned $1000/month each in average commissions, the remaining 8 earned nothing (because they chose to drop out). The average for the 10 people is $2000/10 or $200/month average, but for those that worked for the entire year earned on average $1000/month.
Which data set is more accurate, I think it depends on your perspective, for a distributor, the 2009 data provides numbers that reflect what is typically attained once the business has been established while advising the reader that the average earnings reflected account for approximately 12% of Usana’s total distributors for the year. The 2006 data helps the critics because average earnings are lowered which shows an increased number of people who lose money when you factor in typical expenses (ignoring the fact that someone who dropped out in week 1 of the fiscal year only had expenses for
that 1 week and not for the rest of the year). The truth I believe is neither is more accurate. Each individual that gets involved is different, they go in with different goals and intentions ranging from becoming a multi-millionaire while sitting next to the pool doing nothing to purchasing the product for their own use and occasionally selling to friends and family who may simply want to try the product. When you look at 100 distributors each with their own individual goal, and each with their own individual skills and determination what does “average” tell you? In a word, NOTHING!
At the end of the day, I honestly don’t care as I am not involved with Usana, nor are any of my family members or friends (that I know of), nor am I or any family members involved in any MLM. I simply want to see accurate data and information being reported from both sides, and where certain assumptions or limitations were considered that those assumptions and limitations are clearly documented to allow an educated person to make their own
decisions. I have known many people that have tried MLM, some have met and exceeded their goals, (some stayed with the company after their goals were met, others quit), others have jumped from company to company looking for the “quick buck” and failed miserably.
Jen,
I am sorry I did not explain why I did not use USANA’s latest distributor earnings report on my latest blog posting. But as I have explained already, all reports after 2006 were dishonest and misleading.
You wrote “In 2006, it would appear that they as you stated simply did a data dump of all distributors who purchased a product even once during the year, the result is a low average income because a significant portion of people quit shortly after starting (and yes, some lose money)”
Sorry, but you are incorrect about this. In order to be “Ranked” and be part of those income figures, you must be at least a “Sharer”. When the distributor receives a $40 commission check, they become a Sharer. When the receive a $100 check, they become a Believer, and so on. In order to be eligible to receive the commission check, that distributor must have at least activated their distributorship. In order to do that, the distributor must personally purchase atleast 150 points worth of product ($160+). Then, in order to remain commission eligible, the distributor must personally purchase 100 points ($107+) worth of product every 28 days. Then and only then can the distributor receive a commission check. If the distributor fails to personally purchase this required amount, the distributor loses all group volume points used to pay commission to the distributor.
So everyone calculated in that 2006 Distributor Income Statement was actively participating and trying to make money at some point in the year. They were not simply those who only purchased 1 product and quit… Also, those who are unranked can also be trying to actively participate in the opportunity and are simply unable to sell USANA’s overpriced product. They could be maintaining an active distributorship and paying their fees, but not having any luck.
You wrote “In 2009 (and perhaps in pervious years, I didn’t look) they chose to look at active distributors who had received commission at a level for 20 weeks or more. This eliminates the data for individuals who join and quit within a few months, and it also eliminates the data for individuals that quit within the first few weeks of the fiscal year (whether they made $0/week or $20,000/week.).”
Last year, USANA’s calculations were 16 weeks. The year before that (2007) believe it or not USANA never explained how they did it: http://www.usana.com/media/File/Prospecting%20page/Tools/US/USANABusiness/US%20AveIncome.pdf
and you call my work sloppy? Notice USANA’s reported Sharer HIGH versus LOW… Then before that was the 2006 earnings report, which was not accessible to the public unless you were a distributor logged into their account. Same with 2005.
So when USANA made their distributor earnings statement publicly accessible, they cherry picked only those that have received 20 or more commission checks for the year. However, USANA still calls it an AVERAGE INCOME STATEMENT.
My whole qualm with the report is that they use the word AVERAGE. That is their dishonesty. USANA would be more honest if they called the report “Upper 12% Distributor Earnings Report”
You wrote “…Usana’s 2009 isclosure clearly states how they calculated their claims and the percentages of active and all distributors that attained that earning level. This data set provides more realistic figures for what someone who is a good salesperson and works hard is likely to attain for their efforts.”
Funny you use the word sales person. Preferred customers keep dropping quarter after quarter. So sales is not their forte. Now if you used the word “Recruiter”, than that would be more accurate.
You wrote “Lets assume (for the sake of simplicity) that for every 10 people that decide to join, only 2 decide to try throughout the year to make an income ….. The average for the 10 people is $2000/10 or $200/month average, but for those that worked for the entire year earned on average $1000/month.”
Umm, there is a flaw in this hypothetical (assuming you are trying to relate this to USANA somehow)… You would have no idea that 8 of the 10 people dropped out or did not try! For all you know, all 10 people tried throughout the year and only 2 made any money.
USANA does not disclose enough information regarding their distributors to know what any of their intentions are. Phony voluntary survey data is useless. It is as useless as a survey asking distributors if they are happy being a distributor for USANA. All 100% would say yes whether they have made thousands or lost thousands of dollars. It is a worthless survey.
So how can you or USANA assume that those not making any money aren’t trying? Fact is, the numbers are extremely bad for USANA and their distributor and USANA along with their elite distributors had to come up with a way to portray their business opportunity in the best light as they could. Instead of being honest, they had to prop up numbers that are irrelevant and even completely made up. Example: USANA states the Believer’s HIGH was $22,220 for the year. Divide that by 52 weeks and you get $427.31 per week. Umm, that’s impossible for a Believer because a Believer can only make $100 at any given week. The most a Believer can make is $5,200 for the year. So USANA’s Distributor Income Statement is flawed. They made up numbers like they did in the 2007 year: Sharer HIGH of $111,429 which would be $2142.86 per week. Sharers can only made $40 per week…
You wrote “Which data set is more accurate, I think it depends on your perspective,…”
The 2006 report is more accurate, but they are both not good enough. USANA should report data on all their distributors world wide, broken down by country. They should disclose how many distributors in each level are actively maintaining their 100 Personal Purchase Volume points throughout the year. They should disclose how many distributors quit after 1 month of being recruited, 3 months, 6 months, and 9 months. They should disclose how many distributors they recruited throughout the year. They should disclose how many distributors actively maintain their Income Maximizer (Downline Management / Webhosting / Tax Advantage / eCards / Webmail) for $19.95 per 4-weeks. Or how many distributors actively maintain their Web Conferencing Fees ( $6.99 per 4-weeks). They should disclose how many distributors have been in USANA for 1 year, 2 years, 3 years, 5 years, 10 years, 15 years. Heck, they should just simply disclose an honest report like every other business has to do throughout the country.
But I guess that depends on USANA’s perspective. I mean, why be honest if it means nobody will join?
Jen, I enjoy this exchange with you. You should read through my two site regarding USANA: http://www.usanawatchdog.blogspot.com and http://www.mlmpyramid.com
I wonder if associates who “receive a check” includes those who buy the expensive package and gets $100 or whatever they get back. I wouldn’t be surprised if it does. A better measure would be associates who actually made a profit but I guess Usana would never dare to publish that.