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Is Herbalife a Pyramid Scheme? Truth About MLM

Last Updated on December 5, 2021 by Matt Zavadil

Sometimes I’m asked, is Herbalife a pyramid scheme?

Quick answer: No, Herbalife isn’t a scam or scheme. It’s a legitimate MLM business opportunity.

Herbalife provides its distributors with an opportunity to earn part-time income that they can eventually turn into a full-time business.

If that’s your interest, or you’ve already joined Herbalife, you’ll do this by selling products such as:

  • Nutritional supplements
  • Weight loss shakes
  • Skincare products, and more…

In this article, I’ll explore how Herbalife is anything but a “pyramid scheme”, and how you can build a real business in the health niche, one that will power your revenue for decades to come.

Is Herbalife an Illegal Pyramid Scheme?

It’s interesting to me how so many people are quick to call anything they don’t quite understand as “illegal” or as pyramid schemes.

No, Herbalife isn’t an illegal pyramid scheme.

We need to all calm down and ask ourselves why people ask, is Herbalife a pyramid scheme?

Why is this a question?

It stems from the inability of most people to get not only Herbalife, or network marketing, or any business to work for them.

90+% Of ALL Businesses Fail

According to research, you have a 10% chance to run a successful company.

Here are the failure rates:

  • First-year company failures: Over 21%
  • Second-year failures: 30%
  • Fifth-year business failures: 50%
  • One decade in: 70% of all businesses go under

Huh…

So, you mean that none of us are guaranteed to “win” when starting a business?

Yet, many network marketers yell “foul” when they don’t get the success they were “promised” after joining Herbalife or any other MLM company.

Who Am I To Enter This Discussion?

I’ve worked as a business coach for over a decade now. I’ve coached people in the following types of businesses:

  • E-commerce
  • Coaching
  • Network marketing
  • Course creators
  • Offline small businesses
  • Affiliate marketers
  • Website owners

I’ve coached people in niches that range from marketing to parenting to homeschooling to flower shop apps to addiction to weight loss to fitness to musician training to video production to…

…well, you name it 🙂

The common thread?

Most people honestly don’t:

  • Want to do the work required
  • Won’t pivot correctly when an idea doesn’t pan out
  • Don’t perform enough business research
  • Won’t move beyond their comfort zone to test their marketing long enough
  • Don’t invest enough time becoming the expert in their field
  • Quit too soon

Network marketing companies like Herbalife aren’t pyramid schemes.

It’s our basic human nature that stops us from seeing the success we want in any type of business we decide to go into, myself included.

I failed many, many, many times until I started to see the light go on around running a successful business.

You will, too. If you blame others for your inability to win in Herbalife, then you’ll never make any business work.

Those are fightin’ words, I know.

Most people will resist them and yell at me.

That’s cool. I’m OK with that because I know I speak the truth.

I encourage you to take the challenge and say,

“I will never quit. If I lose some money and time figuring out how to win, I will learn, get better and keep going until I get my goals accomplished!”

But, Didn’t the Federal Trade Commission Penalize Herbalife?

It did.

In 2016, the FTC and Herbalife agreed that Herbalife would restructure the way it paid out commissions. The new way leans more weight on the side of product sales than recruiting.

I think that’s great.

Its independent distributors are rewarded for moving product and making retail sales to their customers…exactly the way I’ve taught MLMers to do for years.

You can still work on the multi level marketing path to make money as well.

You can bring in new distributors. Your distributor makes money when they sell products and you earn override commissions on those sales.

Perfect!

That’s the very definition of the network marketing model.

It’s got nothing to do with Ponzi schemes or pyramid schemes. It’s a legitimate way to earn revenue with Herbalife as a business owner.

The FTC had a problem with the way Herbalife made it seem too easy to join the company and make life-changing income.

Again, I agree.

Network marketing companies should stay transparent about the fact that this isn’t a “get rich quick” deal.

You gotta work your ass off if you expect to make money in any direct selling company.

Never Call Yourself a Victim

Guess what?

Be prepared to work your ass off in any business endeavor, whether you try blogging, making money as an affiliate marketer, running an Amazon store, selling courses, or becoming a coach.

When the FTC paid off the Herbalife decision, they said “victims” got their payout.

That’s where I personally draw the line.

You’re not a victim if you join a business opportunity and don’t make money or lose money.

You’re another in a long line of people who couldn’t get their business dreams to pan out. It happened to me early in my career of making money in both network marketing and via Internet marketing.

I refuse to call myself a victim.

I didn’t understand business at first. Plain and simple. I grew up in a family with employee mentalities.

It took me time to figure out the entrepreneurial mind.

I didn’t sue and claim “victim”.

You shouldn’t either. You can learn how to win.

You gotta be smart, though.

Don’t wait until you spend over $100k on an MLM business like one “victim” in a lawsuit I saw online.

Stop sooner and ask yourself, “what do I need to fix, learn or adjust to start making this work?”

Call yourself a victim, though?

Game over. You’ll never build a business.

How Should Herbalife Distributors Think About The Opportunity?

All right. Enough of the “is Herbalife a pyramid scheme” talk.

Let’s get positive and show you how to make sure you win inside your Herbalife business opportunity.

Take a winner’s mentality.

The next time you’re confronted with someone who’s convinced that your Herbalife business model is a pyramid scheme, walk away without giving it another thought.

One area that I believe network marketing companies have it 100% wrong is their “training” that says “everyone is your prospect”.

Wrong!

You can’t sell Herbalife products to your friends and family.

You need to develop the mentality that you’re building your own company, not the Herbalife company.

You’ll sell far more protein shakes, make sales of other Herbalife products, or bring in more independent distributors if you get good at making Herbalife offers to interested people.

You’re In a Direct Selling Company (Act Appropriately)

You’re not an employee inside Herbalife.

That employee mentality is what caused so many people to fail at Herbalife and scream, “I’m a victim of a pyramid scheme!”

You’ve joined a business opportunity in the direct selling industy.

Act accordingly.

It’s a Business Model, Not a Job Position

The only way to win in a multi level marketing business opportunity is to develop a plan to become an expert in sales and marketing (more on this below).

If your Herbalife upline tells you that you can build a home business and make product sales by talking to people on your warm contact list, then your upline doesn’t understand how to help you win.

Harsh?

Nah, it’s the damn truth.

Learn what I’m about to show you and then teach your upline how it’s done LOL

Your “job” as an Herbalife company distributor is to market well enough to continuously find more people who want nutrition, fitness, skincare, and weight management supplements…

…and to find people looking for a business opportunity as Herbalife independent distributors.

While that’s your “job”, you ain’t in no J.O.B. (just over broke).

You didn’t get hired to punch the clock for guaranteed hourly wages.

Think like an entrepreneur from this point out. It’s critical to eliminate all thoughts about a pyramid scheme, or whatever else stops most people from entrepreneurial success.

How Can Herbalife Distributors Make Money?

Herbalife independent distributors can make money by eliminating anyone from their lives who:

  • Passes false information that Herbalife is a pyramid scheme
  • Tells them there’s something wrong with recruiting (tell that to your local real estate broker and watch him facepalm you)

Independent distributors in Herbalife can make money by doing the following:

  • Developing sales skills
  • Staying away from friends and family lists
  • Identifying consumers they don’t know interested in healthy lifestyles
  • Developing expert online marketing skills
  • Learning how to talk with prospects
  • Using their sales & marketing skills to sell products & recruit independent distributors into a great opportunity

Improve Your Sales & Marketing Skills

Sales isn’t just about talking – it’s also about listening. It’s about understanding your prospects and their needs.

You need to have strong communication skills. You should listen, understand, and show interest in your prospect’s or customer’s needs.

Being able to communicate face-to-face on Zoom is important because it’s an effective way to build stronger relationships with prospects.

Effective marketing is a way to make sure potential Herbalife customers and independent distributors know about your product, service, or company.

There are a few ways you can do this:

  • Advertising
  • Social media marketing
  • Publicity
  • Online marketing, which includes email marketing

Posting Product Pics Does NOT = Selling On Social Media

Social media marketing is a great way to grow your Herbalife business as long as you do it the right way.

Always use it as a tool for engagement rather than as a broadcast platform for self-promotion.

Post pictures/videos on what’s happening in your Herbalife business or even some updates about what’s happening in the industry.

However, never use the Herbalife name or product pics on social media.

If you do, you’ll lose customers and new independent distributors when they go to Google to investigate.

It’s more likely that they’ll join another one of the many Herbalife independent distributors who were smart enough to build out an online presence.

Legitimate Online Marketing Is Your Ticket To Herbalife Success

You need to get great at Internet marketing if you expect to get better at recruiting more Herbalife independent distributors.

Don’t use the friends and family Herbalife company training. Instead, find consumers interested in an ability to lose weight, improve their skin, or become healthier through fitness.

Herbalife Distributors Must Learn 4 Marketing Principles

Successful marketing is the key to your success in the Herbalife company. The four areas of successful marketing are:

  • Customer avatar
  • Offer
  • Sales funnel
  • Close the sale

Customer Avatar

Customer avatar refers to a specific type of consumer that you’re trying to reach.

It’s very important to identify the customer avatar because it will be your ideal target for product selling and recruiting independent distributors into the company.

For example, if you’re trying to reach a millennial who’s interested in fitness, you’re going to have a much different marketing approach than an older couple wanting healthy meal replacement shakes.

Offer

The offer refers to how you position the way you describe any one product’s benefits or the benefits of the Herbalife business opportunity.

Your offer needs to be persuasive enough for your prospects to take the next step, which is typically a lead form.

Sales Funnel

A sales funnel refers to the process of moving potential customers from one part of your marketing website or social media platform through a series of steps that leads them through an eventual conversion into a new Herbalife independent distributor.

The sales funnel is critical because it’s the way you’ll get your prospects to become new Herbalife distributors who will be able to promote and sell products for you.

Close The Sale

Closing the sale refers to getting a commitment from your prospect about buying a product or joining Herbalife as one of your next independent distributors.

It’s one of the most important aspects of sales and marketing.

Get good at closing.

It allows you to start rank advancing through the company compensation plan. You’ll sell more company products and become an ace at recruiting more MLM distributors.

Conclusion: Is Herbalife a Pyramid Scheme?

Now you know the answer!

It’s not a pyramid scheme. It’s a legitimate business opportunity that you’ll most likely fail in (bad news).

The good news is that you have full control over whether you do succeed in the company.

It’s a matter of improving your sales and marketing skills.

Are feeling unsure about how to improve those skills?

If so, I encourage you to pick up my free Herbalife training here. It’s all about how to become an expert online marketer so you can move more products and bring in new recruits each month.