Melaleuca is a wellness company offering Amway-level diversity of products for the home. Their consumer-packaged products are advertised as non-toxic, safe, and economical.
These green products are sold through their network distribution program, making them a top MLM company in their industry. Have I been involved?
This video explains:
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“Melaleuca” means Tea Tree, and stands for the company philosophy of offering products to make peoples’ lives healthier and their homes cleaner. They mostly rely on natural ingredients in super-concentrated formulas.
The company boasts over $1 billion in annual revenue. They’ve paid more than $3.6 billion in referral commissions to date. Needless to say, Melaleuca is a debt-free company.
CEO Frank L. VanderSloot has run Melaleuca since its founding in 1985. Mr. VanderSloot is a big deal in business circles and there is a long list of accolades attached to his name:
- U.S. Chamber of Commerce Board of Directors
- Idaho’s Business Leader of the Year
- Horatio Alger Award, Inductee of the Horatio Alger Association
- Idaho Hall of Fame
- Ernst & Young Entrepreneur of the Year, also CNN and USA Today Entrepreneur of the Year awards
Melaleuca is BBB accredited, which is more than most MLMs can claim. Sure, many have BBB ratings, but you don’t have to be accredited to have a BBB rating.
Products are sold in 18 countries
The main categories of products are pharmaceutical, personal care and household cleaning products. There are 350 wellness products and over 450 products overall.
Melaleuca products are bolstered by a study which featured them as the focus of research conducted on the efficacy of nutritional supplements. Melaleuca’s Peak Performance was the focus of the Freiburg Study, which showed reduction in free radicals and inflammation in the body. This can lead to major health benefits like improving cholesterol, lowering blood pressure, improve heart rate and glucose levels, and more.
Peak Performance is available in several different formulations according to the desired health benefit:
- Nutrition Pack
- Metabolic Health
- Total Health
- Heart Health
- Brain Health
- Bone & Joint
Their newest line of products are 100% pure essential oils, rolled out in Spring of 2015. There are 22 in all, plus 2 carrier oils and 5 exclusive blends. This is important, since the essential oils market is currently growing at 3.5% per year. Melaleuca hopes to cut into the $1 billion industry by accentuating its high quality standards and with its integrity (i.e. lack of making wild health claims about is products).
Their patent for Oligo technology gives them an edge in the competitive nutrition supplement market. Oligo binds minerals with amino acids and oligofructose for better absorption. The Oligo products are manufactured, housed, and distributed from the Melaleuca facilities in Idaho.
Melaleuca reports a healthy ratio of customers to distributors. That is, almost two-thirds of their customers are strictly customers, not distributors. That’ a sign of a healthy MLM, by the way.
Another sign is a strong emphasis on selling products over recruiting new distributors. Melaleuca has this too. Melaleuca distributors do not earn commission or bonuses for signing up customers or recruiting new distributors. They do, however, earn commissions when those people buy products. They do also reward “business-building” activities (i.e. recruiting) with bonuses to leaders who refer customers. This is new.
Melaleuca has received recognition from an economist with the Idaho Department of Labor. He makes the careful distinction between an MLM and a direct selling organization, calling Melaleuca the latter, not the former.
The difference? Distributors don’t make money from purchasing and reselling inventory. Rather, they refer customers and get a commission when those customers purchase something.
Melaleuca rolled out a new compensation plan in mid-2014. Here are the main points:
- Earn up to 27% commission on purchases made by your personal customers during their first month.
- Quality Customer Bonus: “quality” enrolling means you enroll a customer who purchases a Membership Kit and orders something during their first month of enrollment. This is available to Director status and above. Each Quality Customer after your first in a month will earn you $25.
- Career/Value Pack Commission: earn $30 on Value Packs sold and $50 on Career Packs sold during the first two months of any new customers.
- One-Time Advancement bonuses. Make it to Director level and all subsequent Director levels (1-9) and get $100, then $200, with bonuses increasing by $100 up to the final Director IX level, which gets you a bonus of $1000. Get to Senior Director and you get $2,000. Make Senior Director quickly and that bonus doubles to $4000. The bonuses keep on coming even beyond that, until you make to to Presidential Director and they shell out a million, just for your presidential self.
- Advancement Bonus Payouts.
- Personal Enrolled Customer Commission. As an active Director, make commission on personal customer purchases at a rate of 14%. When you get 20 customers you get 20%.
- Organization Commission. Every month you stay qualified, earn 7% on the first 150 product points purchased by your customers.
- Pacesetter Director Bonuses. Advance to Director status in “pacesetter” time and commission.
- Leadership Development Bonus.
- Director Development Incentive.
- Monthly Car Bonus.
As you can see, the compensation plan is a little complicated, full of Melaleuca-specific terms and dotted with complex qualifications. For a company who says they don’t reward for recruiting but mainly for product sales, there sure are a lot of “business growth” bonuses.
Melaleuca claims it pays out a yearly minimum of 51% of total annual Product Points produced by the company.
Melaleuca is great in theory: non-toxic products and lots of them to sell. However, their compensation plan is just too complex to be trusted. You need their glossary of terms to understand it all, and the value of Product Points, as well as how they’re achieved, is murky at best, impossible to discover at worst.
That’s not to say it’s all a wash, however. The company itself is very successful, even to the point of being powerful. This Fall, Melaleuca hosted a town hall meeting with Republican presidential candidate Carly Fiorina. Before that, candidate Marco Rubio spoke to Melaleuca employees at company HQ. Jeb Bush and Rand Paul have requested meetings with management from Melaleuca.
The compensation plan is tricky but their products, on the other hand, are attractive. They’re also useful, practical, and evergreen. Plus, everyone needs to clean and be clean. They fit nicely into the Melaleuca mission statement, which is clear and easy to live by. Clean your home, keep yourself healthy, save the environment, and feel good about all of it. So if green living is your niche, this might be your MLM.
But it’s still the same sad story of selling hype and the opportunity to make money…
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