USANA

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www.usana.com

Usana is a nutritional company that has been around since the early 1990s. They were one of the first companies to take the idea of a binary and make a plan that could sustain itself, and had software to pay out properly. They really did a lot to help make the binary a credible compensation plan in a world where the unilevel and stairstep breakaway were the norms.  By the way, I will mention that my first MLM company was USANA and I built it for two years and even flew to Malaysia to open a new market as they were expanding there.

So how does their binary compensation plan stand up to the tests of time? And are all binaries created equal?

The short answer is not well, and no. While other compensation plans have evolved and improved, Usana still has a lot of the little pitfalls built into theirs.

Let’s take you through their income streams:

1) Retail Sales
If you found someone to sell the vitamins to, you could make the difference between the members price and the retail price… but their products are already pricey (though very high quality) so its hard to find people willing to pay that price. What most people do is sign their customers up as preferred customers who can now buy at the members price, or even the cheaper autoship price. Retail profits gone, but it does generate volume for the binary.

2) Up to 20% Weekly Commissions!
Well, Usana has made a change recently here. They’re following what the industry is starting to do, and rebranding a 10% payout on a 50-50 plan to call it a 20% payout! But they pay on a weaker leg… which means they take volume from both sides… which means your 20% of 1000 points on one side is really 10% of the 2000 used up (1000 from each side). So its exactly the same, but they try to make it sound better. And you don’t actually get 10% from the very beginning, you get 8% every week that you get to 250 on each side, but once you get to 500 on each side you’re permanently up to 10% from now on, and only get paid when you get to at least 500 on each side. So one way they pay out more is taking away from the person who needs it most – the one getting their very first cheque(s).

Balancing a binary 50-50 is very hard. You will always have one leg growing faster at any given time. Now if you get a chance to catch up, that’s ok – you can always make the money later. But the maximum you can make from your business center in Usana is $1000 per week, based on having 5000 volume on each side. Which is not very high. So then you would have a lot of volume holding over for the next week, but wait, there’s another catch. The maximum you can hold over from week to week is 5000 additional volume. What happens to the rest? Its flushed immediately. But what if you’ve got an amazingly strong team on your left side and they’re generating 15,000 volume per week? Then if you’re lucky enough to be balanced you’re getting paid on 5000, 5000 holds over for the next week, and the other 5000 is gone! But if that happened again the next week you’d be losing 10,000 wasted! That would mean you’d want to focus 100% effort on your smaller leg to help them catch up – even if you have amazing leaders in your big leg. Those two facts – a small payout cap and a small carryover cap discourage you from working with your big leg and encourage you to frantically balance all the time. And if its going quickly, you feel a sense of dread as this huge team is building and your volume is wasting away every single week. When you should be ecstatic that you have an amazing team growing! That’s the devil in the details.

If you pay more in your first month you can get 3 business centers instead of 1. And they encourage that if you do that, that you start building your legs from the beginning, 1,2,3,4 – leading to frustration, split focus, no momentum, and people dropping out as fast as they come in. The designer of the compensation plan encourages that to maximize payout. But maximized payout on slow or no growth is very little!

So each of those can make $1000 per week… so how do you make more? When you max out a business center for 4 consecutive weeks then you are awarded a new business center re-entry. You can re-enter a minimum of 8 levels down from yourself within your existing team. So you’re going to generate a whole bunch of new volume for your already maxed-out centre, and then start building 2 completely new legs from scratch. And that’s where you’ll be focused – not on your existing teams because the new volume there is just wasted! But if you can successfully do this many times you can seriously increase your income, like the 8-star diamonds who have maxed out at least 11 of these one month – which probably means they have a lot more than 11 of these.

3) Matching Bonus
Usana has been promoting the heck out of their new and exciting matching bonus. This isn’t automatic, and comes with a pretty intense qualification. If you become a Platinum PaceSetter in your first 6 weeks, by sponsoring 4 people personally and helping them each hit a sales target, then you get a matching bonus on your Platinum PaceSetters of 100% of their cheques for the next 32 weeks. Which can be a lot, but that’s a lot of IFs involved. You can get 25% even if you’re not a Platinum PaceSetter or 50% if you’re a regular PaceSetter (sponsor 2 and help them hit sales targets). So this COULD be a lot of money, if you hit these targets and help others hit these targets AND they make a lot of money early on.

But how many people hit the ground running hard and hit these targets? And if they do, how much money do they make EARLY ON? You can create amazing residual income in Usana, but not many do it in their first 8 months. So you’re getting 100% of not much. I’d rather get 10% of A LOT that people make in year 2, 3, or 10. That’s the way most matching bonuses work.

4) Incentives
If you hit the high ranks, you get lots of nice incentives. Which is based on hitting and maintaining volume targets. Which isn’t easy to do – but you do get rewarded. That’s not unreasonable.

5) Leadership Bonuses
If you can max out a lot of Business Centres, you qualify for additional leadership bonuses which can be a LOT of money. The company takes 3% of sales every month and pays shares of it out to all the people who maxed out a business center for 4 weeks that month. IF you maxed out 1, you get 1 share. If you maxed out 2, you get 1+2 = 3 shares. So the rich keep getting richer and richer and richer. The ones at the very top are making some amazing money and have great stories. But its hard to climb up that far. But the good thing is, there’s no downside to your people rising up too – so you really do want to help them, until you’ve got so much volume in that leg that they’re useless other than sustaining what’s already there.

6) Elite Bonus
If you’re in the top 25 income earners for the month, then the company gives you even more! Sharing 1% of quarterly profits with these people who are already making all the leadership bonuses, incentives, and massive weekly cheques. They sure try hard to make sure the stories at the top keep getting richer and richer… rather than sharing that money with the people at the bottom.

They do make an amazing claim to be the highest paying compensation plan… here’s the Canadian one:

$98,803 CAN is the average annualized income for an established full-time Distributor and $33,096 CAN is
the annualized average for all Distributors earning any commission cheque each month. (83% of Distributors
reported they joined “to improve their health”). 79% of those remaining earned less than one cheque a
month. Alternatively, of those that remain, 56% reported that they were not joining USANA “to earn
enough money to replace their full-time income”. Of these distributorships, 62% are not considered fulltime,
having maxed a business centre during the year. When all 126,146 Distributors are considered, the
yearly average income is $1,046 CAN with more than one of every three earning a cheque.

Established full-time means they maxed a business center. Most people never do that. And then they try to say that we’ll discount all the people who really just joined to get the products (even though they could do that as a Preferred Customer – you wanted to earn income if you became an associate as well). So if you look at all distributorships then the average income is much smaller, with only 1 in 3 earning a cheque. And if you consider that some of these uber-distributors are making $1,000,000 per year, there’s a massive majority that can’t even pay for their vitamins every month.

So the verdict is that its an old-school binary with some new rebranding focus – changing the name from 10% 50-50 to 20% of the weak leg… semantics since its the same thing! And then promoting a hard to qualify for matching bonus based on the lowest earning period of people’s careers. They do make sure the top leaders can make a lot of money – which means that people at the bottom can keep buying their vitamins and not getting rewarded much. But they get very high quality and costly vitamins every month!

Main issues are strict binary, low retention, market is COMPLETELY saturated and filled with health and wellness companies, it’s too late to get in on this game, and GWT just has so many more income earning streams so for the same work you can get paid several times more in GWT!!!