Multi-Level Marketing 101
The opportunity to make money from home sounds like a dream come true, and a multi level marketing company (MLM) like Nu Skin can make that a reality.
But before you sign up it’s important to do some research on the company in order to make sure it’s right for you.
In this Nu Skin MLM review, we will take a look at Nu Skin’s MLM program from all angles so you can decide for yourself if it’s right for you. The most important is whether or not it’s a scam!
The multi-level marketing model has many different names, including referral marketing, direct referral marketing, pyramid selling, and direct selling; it can be used in a variety of firms (e.g., Amway and Mary Kay) or in our case, the MLM company Nu Skin.
MLM companies can be seen as either an opportunity to make money or a scam depending on who you ask. While there are people who have made millions with MLM opportunities like Amway, there are many more people who have lost money and wasted time because they didn’t do research before joining up.
This is mainly because MLMs are a system of marketing in which the salesforce is compensated not only for sales they personally generate but also for the sales of new recruits, which are also known as their “downline“.
This contrasts with traditional businesses where salespeople are paid only on their own sales. However, in multi-level marketing, commission rates may start out high and gradually decline over the multi-level network.
There are four distinct characteristics that make up the MLM model. They are:
- Set up
- Targets
- Oversight
- Payment plan
Set Up
The first characteristic of MLMs is their setup or structure. The most common structure that is associated with MLMs is the pyramid. Just as the name implies, the structure is made up of a person/leader at the top with multiple levels of distributors below it.
The person at the top earns a commission from all sales their “downline” makes and also for any sales made by people in the downline’s own downlines. However, the Federal Trade Commission (FTC) makes a clear distinction about pyramid schemes.
And that is if you have to recruit people to earn money then it is most likely a pyramid scheme. However, if you do not and earn commissions based on sales you make without recruit others, then it is not.
I know you are probably thinking, “WTF?”! That explanation seems pretty vague which is what I thought when I first read it. But it goes to show the slippery slope that multi-level marketing companies tread on.
The FTC goes on to caution you to do your homework when looking into an MLM company to make sure that it is a legitimate opportunity. Don’t just buy the fancy sales pitches that they are selling to recruit new distributors.
Targets
The second characteristic of an MLMs is its targets, otherwise known as “prospects“. The idea behind the target setting is to ensure that new recruits or downlines are chosen carefully.
The targets are usually drawn in by using phrases like “our products sell themselves” or “our people make the sales”. Another example of this would be, “we have 47,000 distributors and 11 of them made $1 million in commissions last year.” That sounds impressive until you realize that’s .002% of the recruits.
As with any business, targeting the right prospects with the right message is essential for success. And when you are in multi-level marketing, your customers become your prospects. Keep in mind that just because someone is considered a “target” does not mean they will sign up with you.
Oversight
The third characteristic of MLMs is their “oversight.” The oversight or supervision over the distributors in their network is often done through one on one training sessions, group sessions, and meetings.
It is during these sessions that the company will train their distributors with party lines or what is known as “the line.” This is complete information about the product, pricing, etc.
Ever wonder why distributors never tell you the full story until you sign up and become a part of their “downline?” That’s because they are trained to do that.
Payment Plan
The fourth and final characteristic is a payment plan that outlines how much distributors earn from both selling retail and from their downline’s activity. The plan illustrates the types of bonuses and awards available, whether they are in cash or merchandise, and how each is earned.
It also clearly defines the terms used by the company when referring to salesgenerated by you, your downline activity, performance requirements, inventory loading, etc. In my research of MLM companies, I have found that these payout plans can be very complicated and that you would need a full-time job to understand them.
What is Nu Skin?
The MLM company, Nu Skin has been around for over 30 years. They have their own line of skin care products, dietary supplements, and supplements to help people look and feel more beautiful and healthy.
This multi-level marketing company was founded by Blake Roney, Sandie Tillotson, and Steve Lund, and can be found on the New York Stock Exchange (Nu Skin Enterprises, Inc. – NYSE: NUS. In 2008, it was valued at over $2 billion. Since then, it has had steady growth, generating about $2.5 billion every year.
The company is based out of Provo, Utah. Currently, there are just under 1 million (currently 825,000) independent distributors and customers in Nu Skin’s program. This is not necessarily an indicator of their overall success, but it does give you an idea of what they have accomplished thus far.
Nu Skin is a networkmarketing company, which means that it’s not just about the product, but about building relationships with others in your network. Some would consider them an illegal pyramid scheme, but its business model is on par with other companies in the MLM industry.
In other words, you make money from commissions on the Nu Skin products that you personally sell as well as bonuses if you recruit people to become distributors. When they become a part of your team, you also earn a portion of whatever products they sell.
Are Nu Skin’s Products Worth Their Price?
If you are looking to join Nu Skin as an inexpensive way to get good skincare products, Nu Skin may not be the right choice. Their products are of high quality, and the ingredients in them have been clinically tested, but they are on the pricey side.
For example, their ageLOC Rejuvenating Gel Mask costs $71 for a 1.7 oz tube if you purchase it retail. We found the same gel mask on Amazon that only cost $56. That is a $14 difference. You can check out their product price guide here.
For this reason, some will argue about whether or not they’re overpriced since there are cheaper alternatives available like gel masks made from natural ingredients and that can be found in your local drug stores such as Walgreens or CVS.
However, if you are looking to become an Independent Distributor (Brand Affiliate), you can get it for about 30% off. Bear in mind, that these high prices for their cosmetics and nutritional lines might be a turn-off for potential customers.
The Nu Skin Business Opportunity
You know that everything you buy has a face behind it. Don’t take any chances when looking for your next gig, which is why I always do my research before signing on the dotted line of anything new or unfamiliar to me.
It’s important to make sure there are no hidden costs and weigh whether this opportunity will be worth your time in every way possible, including financially.
In the case of Nu Skin, you have to make a sizeable investment, have a sizeable customer base, and develop new recruits to your downline in order to realize this opportunity.
But, if you want an opportunity to get a discount on the product and use it yourself before trying to sell it, then Nu Skin might be for you. But again, I would question why bother with a discount when there are cheaper options available?
I am more inclined to believe that Nu Skin is a good opportunity for the person that has some residual income and can take advantage of the opportunity to build a business.
I would recommend joining as a customer first, so you can try out the products and see what you think before taking that financial risk.
In my opinion, any business opportunity should have an income opportunity that is within your control of making money. The way it appears with Nu Skin is that it’s one of those opportunities where it’s only as good as the effort you put into making sales.
How Much Does It Cost to Join Nu Skin?
According to the NuSkin website, getting started as a distributor will cost you nothing, but the signup process seemed a little convoluted. I tried filling out the online application on the Nu Skin site, but I could not get past the sponsor ID requirement.
It seems you need to be referred by an existing distributor in order to finalize the application as a Nu Skin distributor. The same goes for signing up as a customer, but you can bypass this requirement and start buying products as a customer.
I think this would be a total turn-off for anyone who is compelled to sign up as a distributor because the process is not straightforward. And these days, we want things to be simple.
However, if you still desire to press on and become a distributor, then you are going to need to invest in a business kit. Business kits provide you a base package of products that you can use to give out as samples.
Depending on which product line you want to promote, expect to pay at least $370 for a kit. If you go all in, then expect to pay upward of $1600-3000. That’s a pretty hefty penny to shell out when you are just getting started.
If I wanted something like this as part of my lifestyle, especially if I’m going to put in some work anyway, there are plenty of other opportunities out there that offer less risk or upfront capital requirements.
But then again, not all incentives are created equal. So it really depends on what your motivations and expected outcomes are.
Can You Make Money With Nu Skin?
The amount of money you can make selling Nu Skin depends on what you’re comfortable with investing your time and financial resources.
The Nu Skin’spaymeout plan is designed to reward Nu Skin distributors for the sales of products and services that they personally retail, wholesale, represent or distribute as well as their personal downline organization.
There are two basic ways Nu Skin distributors can earn compensation:
- Products sold at retail and purchased at wholesale prices. (Sharing Bonus and Retailing Bonus)
- Receiving a commission off your product sales as well as the sales by fellow Brand Affiliates and other distributors on their team (aka Building and Leading bonuses)
Retail Sales
Nu Skin distributors enjoy a variety of forms of compensation. These include but are not limited to commissions and bonuses. People sign up as distributors for a number of reasons.
Some join to hone their skills, manage a business, or grow a distributorship. Others sign on as distributors but never are involved in any business activities. As a result, most of them don’t make enough to qualify for commissions.
From what I can tell, a person selling products in order to generate revenue will take forever and it will probably cost you a pretty penny because the products are somewhat expensive.
Bonuses and Commissions
Distributors can also receive commissions for product sales they have made and by others on their team in all regions where the company does business, with the exception of China where multi-level marketing is prohibited by the Chinese government.
But the bonuses are where you stand to make money selling Nu Skin products. According to the payment plan, active Brand Affiliates can earn building bonuses and leading bonuses.
Building bonuses are paid on a weekly basis and are calculated based upon the percentage of group volume generated by your team (Consumer Group) called Building Blocks. Building blocks are 500 points of sales volume and start at a margin of 5% and scales to 40%.rpayout
For example, let’s assume the initial sales volume for your group was $500. This means the first building block bonus you would receive would be $25 ($500 x 5%).
The illustration below outlines how the building blocks paid out at different percentages. The one key takeaway is that these percentages reset every month and do not carry over:
The next type of bonus is the Leading bonus. This bonus is paid out to you monthly if you have attained the rank of Brand Partner or Brand Director. Reaching these levels is dependent on how many Brand Representatives you have developed in your team.
I’m not going to even try and explain the payout at these levels because I failed my high school basic calculus class and I don’t want to mislead you. However, the tables below should hopefully provide some clarity. If not, you can read the Sales Payment Plan for more details.
Just to give you an idea of how much Nu Skin distributors earned last year. In 2020, the company paid approximately $161,333,653 in compensation to distributors living in the United States. Based on the table below, the average monthly payment breaks down to about $163 per month.
Pros
- The Nu Skin payment plan is one of the best in this business.
- It’s easy to get started, and you can even try it out for free first before committing.
- Nu Skin products are high quality when compared with other similar brands
Cons
- One common complaint about Nu Skin has been that it’s hard to get Nu Skin products outside of the US.
- Nu Skin doesn’t offer any discounts for its distributors, and it can be difficult to make a decent profit on sales.
- The company is known for being “somewhat” pushy with its recruitment tactics (see below).
Is Nu Skin a Pyramid Scheme?
There are many multi level
marketing reviews on the web discussing the legitimacy of mlms like Nu Skin, and whether or not they’re pyramid schemes. I’m not going to get into that debate here.
What I will say though is that Nu Skin is, but the company has had some legal problems both in the U.S. and around the world. In the 1990s, Nu Skin came under multiple investigations by the Federal Trade Commission.
First, in 1994, NU Skin was investigated by the FTC for making deceptive or unsubstantiated claims about its products. As a result, the company had to pay a one million dollar settlement and signed an agreement not to make any future false claims.
in 1997, the FTC once again investigated Nu Skin for making claims that are not true about their various supplements. The FTC also ordered Nu skin to stop using the misleading advertisements and material in question.
In this case, Nu Skin agreed to pay a $1.5 million civil penalty (the largest amount allowed under current law), as well as requiring them to submit future advertising materials for pre-approval from the FTC before they can be disseminated again.
After all of this, you would think the company would change its ways.
Nope!
In 2014, regulators in China accused the company of operating an illegal pyramid scheme. When the case was settled two years later, Nu Skin agreed to pay $47 million to the government of China.
This doesn’t surprise me because many multi-level marketing companies disguise themselves as a pyramid scheme to get around these regulations.
In my opinion, Nu Skin has been able to avoid being labeled a pyramid company by maintaining that its distributors are not buying products to get commissions, but rather to use the product and share their experiences with other people.
And I believe in the cases mentioned above, Nu Skin settled because it would be very costly to spend years in the courts trying to prove it is not a pyramid scheme.
One of the biggest concerns with a company like Nu Skin is that its high-pressure sales tactics will get in the way of your decision-making.
I know because this happened to me. It was very hard for me to be objective when it came to whether or not MLM was right for me, and I chose a company that ultimately caused me to lose money.
Now I am not saying that you will have the same experience with Nu skin, because they do a good job of selling their products, and this is why a lot of people get into multi-level marketing in the first place.
Final Thoughts
Nu Skin has been around for 30 years and is a billion-dollar company. There are over 3 million distributors of their products worldwide. It’s not easy to get rich quickly, as the saying goes.
But it can be possible if you’re willing to put in some work! If you want an opportunity that involves hard work and good discipline, Nu Skin might be what you are looking for. But before you start, be aware of the potential risks involved, and try to mitigate them by doing your research.
And if you do decide to sign up with Nu Skin, be an informed consumer; don’t let yourself get pressured into buying anything you don’t need!
Nu Skin MLM FAQs
Is Nu Skin FDA approved?
From the research I have done, the only FDA approval I could find for Nu Skin was for a facial spa device and its Pharmanex product line. This includes Ageloc R2, Ageloc Vitality, Ageloc Youth, G3, Lifepak, Tr90, S3 Scanner, Nutrition Solutions, Kids Health.
As for other Nu Skin products, I could not find any evidence that they were FDA approved. So far there doesn’t seem to be any hard evidence on Nu Skin’s FDA approval.
From reading their website, it appears that the only FDA-approved product they make is for Pharmanex and even then it is mostly nutritional supplements (not beauty/skincare).
Are Nu Skin Products Safe?
Given the fact that Nu Skin has been around for so 30 years and counting, I would say their products are probably safe.
However, customers should always be cautious when buying beauty/skincare products online or offline because not many stores screen these products for safety before selling them to consumers.
If possible, I would recommend checking out all the ingredients in a beauty product before purchasing it and if one does find an ingredient that could potentially cause allergies, I would recommend doing some more research on that ingredient before purchasing the product.
