The company’s founder, Forrest C. Shaklee, is credited with manufacturing the first vitamin manufactured and sold in the US.
This dates back to 1915 with “Shaklee’s Vitalized Minerals”.
Forrest C. Shaklee was a Professor of Chiropractic, Doctor of Naturopathy and Doctor of Divinity. He passed away in 1985 at the age of 91.
Today Shaklee is headed up by Chairman and CEO Roger Barnett.
At the time of the acquisition Barnett was a managing partner with Activated Holdings.
Barnett has a history in finance and ecommerce. As far as I can tell, Shaklee was his first MLM executive appointment.
On the regulatory front Shaklee has had a pretty clean run.
Way back in 1970s Shaklee was pulled up by the FTC twice. Once in 1974 for false advertising and again in 1976 for retail price rigging. There hasn’t been any regulatory run-ins since.
More of a point of interest as opposed to a reflection of Shaklee’s MLM operations, I’d be remiss if I didn’t mention long-time Shaklee distributor John Cranney’s eleven-year Ponzi scheme.
We’ve covered that separately in an article published earlier this week.
Read on for a full review of Shaklee’s MLM business opportunity.
Although it started off as a multivitamin company, today Shaklee markets products in the nutrition, weight loss, personal care and home cleaning categories.
There are far too many Shaklee products to go through here individually, so we’ll focus on two of their “challenge packs”.
The Immunity Challenge Pack retails for $246.95 (on sale for $159 for first-time purchasers as I write this). It bundles
- two Life Shakes (meal replacement shake)
- one Vitalizer (nutritional supplement range available in men’s, women’s and gold)
- one Nutriferon (immune system supplement) and
- free shipping and preferred customer membership ($19.95)
- two Life Shakes
- one Vitalizer
- a 7-day Healthy Cleanse (day and night dietary supplement) and
- free shipping and preferred customer membership $19.95)
These packs appear to be entry points into Shaklee’s product range for retail customers and recruited affiliates.
A catalog spanning all of Shaklee’s products with retail pricing is provided on the company’s website.
In relation to manufacturing of their products Shaklee claims to
screen for over 350 contaminants, pesticides and impurities on every botanical ingredient (and) conduct over 100,000 quality tests a year.
The company also claims its products “are backed by more than 120 published scientific papers”. No specific examples are provided.
Shaklee does run a “Health Resource” website but studies cited there appear to pertain to ingredients used in Shaklee products, as opposed to the products themselves.
Shaklee’s Compensation Plan
Rather than provide straight forward compensation documentation on their website, Shaklee either provide too much marketing and not enough details (“opportunity brochure”), or full details with zero explanation (“dream plan reward chart”).
Because of this disjointed presentation, I had to rely on both documents to put together the following analysis.
For additional explanations, I had to rely on an additional “how it works” document published in 2013.
Note that I only used explanations provided in this document to understand the more recent documents, as I figured actual compensation figures from the 2013 document were out of date.
Retail commissions aren’t detailed in either of the two official Shaklee compensation documents provided on their website.
That said I believe retail commissions are paid out as the difference between the wholesale and retail price of products ordered by retail customers.
Preferred customers are Shaklee retail customers that receive a discount in exchange for placing a standing monthly product order (autoship).
Preferred customers pay less than retail customers but still more than the wholesale price.
This difference is paid as commissions on retail preferred customer orders.
Note that Shaklee charges preferred customers a once-off $19.95 membership fee.
Personal Group Volume Bonus
A Shaklee affiliates “personal group” is themselves, their retail customers and personally recruited affiliates.
Together, sales volume purchased by this personal group is referred to as “Personal Group Volume” (PGV).
Shaklee affiliates can earn a bonus on PGV, based on how much PGV they generate each month.
- generate 250 PGV a month and receive a 4% bonus
- generate 500 PGV a month and receive an 8% bonus
- generate 1000 PGV a month and receive a 12% bonus
- generate 1500 PGV a month and receive a 14% bonus
- generate 2000 PGV or more a month and receive a 20% bonus
Whether this bonus includes recruited affiliate volume and recruited affiliate purchases is unclear.
Shaklee Affiliate Ranks
There are twelve affiliate ranks within Shaklee’s compensation plan.
Along with their respective qualification criteria, they are as follows:
- Affiliate – sign up as a Shaklee distributor
- Director – purchase 100 PV of product each month and generate and maintain 2000 PGV a month
- Senior Director – maintain Director qualification and recruit and maintain a Director ranked affiliate
- Coordinator – maintain Director qualification and recruit and maintain two Directors
- Senior Coordinator – maintain Director qualification, maintain two personally recruited Directors and generate and maintain 10,000 GV a month
- Executive Coordinator – maintain Director qualification, recruit and maintain three Directors and generate and maintain 20,000 GV a month
- Senior Executive Coordinator – maintain Director qualification, maintain three personally recruited Directors and generate and maintain 30,000 GV a month
- Key Coordinator – maintain Director qualification, recruit and maintain four Directors and generate and maintain 50,000 GV a month (no more than 50% from any one unilevel leg)
- Senior Key Coordinator – maintain Director qualification, recruit and maintain five Directors and generate and maintain 75,000 GV a month (no more than 50% from any one unilevel leg)
- Master Coordinator – maintain Director qualification, recruit and maintain six Directors and generate and maintain 100,000 GV a month (no more than 50% from any one unilevel leg)
- Senior Master Coordinator – maintain Director qualification, recruit and maintain eight Directors and generate and maintain 200,000 GV a month (no more than 50% from any one unilevel leg)
- Presidential Master Coordinator – maintain Director qualification, recruit and maintain eight Directors and two Master Coordinators or higher, and generate and maintain 500,000 GV a month (no more than 50% from any one unilevel leg)
PV stands for “Personal Volume” and is sales volume generated by sales to retail customers and a Shaklee affiliate’s own purchases.
PGV is PV generated by a Shaklee affiliate and their personally recruited affiliates.
GV stands for “Group Volume” and is PV generated by a Shaklee affiliate and their entire downline.
Shaklee pays residual commissions via a unilevel compensation structure.
A unilevel compensation structure places an affiliate at the top of a unilevel team, with every personally recruited affiliate placed directly under them (level 1):
If any level 1 affiliates recruit new affiliates, they are placed on level 2 of the original affiliate’s unilevel team.
If any level 2 affiliates recruit new affiliates, they are placed on level 3 and so on and so forth down a theoretical infinite number of levels.
Shakless caps payable unilevel team levels at six.
Residual commissions are paid out as a percentage of sales volume generated across these six levels as follows:
- Senior Directors earn 6% on level 1 (personally recruited affiliates) and 3% on level 2
- Coordinators earn 6% on level 1 and 4% on level 2
- Senior Coordinators earn 6% on level 1 and 5% on level 2
- Executive and Senior Executive Coordinators earn 6% on level 1 and 2 and 4% on level 3
- Key and Senior Key Coordinators earn 6% on levels 1 and 2 and 4% on levels 3 and 4
- Master Coordinators earn 6% on levels 1 and 2, 4% on levels 3 and 4 and 3% on level 5
- Senior Master and Presidential Master Coordinators earn 6% on levels 1 and 2, 4% on levels 3 and 4 and 3% on levels 5 and 6
The Infinity Bonus allows a Shaklee affiliate to earn beyond the first six levels of their unilevel team.
The Infinity Bonus is a bonus percentage, paid out on sales volume generated in each unilevel team leg.
- Senior Coordinators earn a 2% Infinity Bonus
- Executive Coordinators earn a 3% Infinity Bonus
- Senior Executive Coordinators earn a 4% Infinity Bonus
- Key Coordinators earn a 5% Infinity Bonus
- Senior Key Coordinators earn a 6% Infinity Bonus
- Master Coordinators earn a 7% Infinity Bonus
- Senior Master Coordinators earn a 7.5% Infinity Bonus
- Presidential Master Coordinators earn an 8% Infinity Bonus
The Infinity Bonus is coded, meaning Senior Coordinator and higher ranked personally recruited affiliates will impact Infinity Bonus rates.
E.g. a Senior Key Coordinator earns a 6% Infinity Bonus. They will be paid 6% on sales volume generated across their unilevel team legs.
If they have personally recruited Senior Coordinator or higher ranked affiliates, the Infinity Bonus paid out on those legs is reduced.
For this example, let’s say one of the legs is a personally recruited Senior Executive Coordinator.
For this leg, the Senior Executive Coordinator receives a 4% Infinity Bonus on their own downline volume.
This means the Senior Key Coordinator who recruited that affiliate only receives a 2% Infinity Bonus on that leg (6% minus 4%).
What this effectively means is that no Infinity Bonus is paid on same rank or higher ranked unilevel team legs (i.e. affiliates you’ve recruited who are at the same rank as you or higher).
Starting at the Senior Key Coordinator rank, Shaklee affiliates earn a percentage match on personally recruited affiliates.
- Senior Key Coordinators earn a 10% match on personally recruited Senior Key Coordinator and higher ranked affiliates
- Master Coordinators earn a 15% match on personally recruited Master Coordinator and higher ranked affiliates
- Senior Master Coordinators earn a 20% match on personally recruited Senior Master Coordinator and higher ranked affiliates
- Presidential Master Coordinators earn a 25% match on personally recruited Presidential Master Coordinator ranked affiliates
Prove It Bonus Program
The Prove it Bonus Program rewards affiliates with a bonus $75 on every group of three Prove It Challenge packs they sell in a month.
This comes to $150 per Prove It Bonus qualified for.
The Presidential Bonus is an “up to 1%” volume bonus available to Presidential Maser Coordinators.
With the patent-pending Presidential Bonus, you’ll continue earning on every generation of business partners in your entire organization.
You literally get paid on everything you have ever developed!
Beyond the above marketing spiel, no specifics are provided.
Shaklee’s Rank Rewards are based on timed qualification criteria starting at the Director rank.
- Director – generate 3000 GV a month for six consecutive months in your first year and receive a trip for two to Shaklee’s Global Headquarters, plus a vineyard dinner
- Senior Director – generate 5000 GV a month for three consecutive months and qualify for a $225 to $250 monthly Car Bonus for three years (ongoing 5000 GV a month requirement)
- Senior Coordinator – generate 7000 GV a month for three consecutive months and the monthly Car Bonus increased to $325 to $375 a month for 36 months (7000 GV a month ongoing requirement)
- Senior Executive Coordinator – generate 9000 GV a month for three consecutive months and the monthly Car Bonus increased to $400 to $450 a month for 36 months (9000 GV a month ongoing requirement)
- Key Coordinator – maintain Key Coordinator rank for three months and receive a “once-in-a-lifetime trip to an international bucket list destination”
- Senior Key Coordinator – generate 13,000 GV a month for three consecutive months and the monthly Car Bonus is increased to $450 to $500 a month for 36 months (ongoing 13,000 GV a month requirement), and receive another “once-in-a-lifetime trip to an international bucket list destination”
- Master Coordinator – generate 15,000 GV a month for three consecutive months and the monthly Car Bonus is increased to $550 to $600 a month for 36 months (ongoing 15,000 GV a month requirement), receive an “exotic international destination” trip and a trip to Shaklee HQ for a private dinner with Shaklee’s CEO
- Senior Master Coordinator – receive an “international trip experience”
- Presidential Master Coordinator – receive another “international bucket list destination” trip and luxury vehicle
Note that Car Bonus tiers appear to be based on what type of car the Car Bonus is put towards (the 2013 compensation document cites the higher amount for “fuel/hybrid” cars).
Shaklee affiliate membership is available in two options:
- Distributor Welcome Pack – $49.95 to sign as a Shaklee distributor
- Prove It Challenge – $208.95, provides Shaklee distributor membership and comes with an assortment of Shaklee products
Both options provide three months of Shaklee online retail store access. I searched high and low for ongoing costs related to maintaining access to the online store but came up blank.
This puts a question mark on whether there are any ongoing membership costs related to being a Shaklee distributor.
Given the length of time Shaklee has been around for, there’s obviously something to the company’s products.
Unfortunately I’m not convinced that’s the reason Shaklee has been able to pay a claimed $9 billions in commissions.
Not to take anything away from Forrest C. Shaklee back in 1915, but we’ve come a long way since then. These days multivitamins are pretty much everywhere.
Beyond multivitamins Shaklee do sell a sizable range of products in other niches, so in some ways they’ve adapted with the times.
In others, such as compensation, not so much.
In going through Shaklee’s compensation plan, I didn’t really get a sense of any particular retail focus.
The most obvious tell is retail commissions aren’t detailed in any of Shaklee’s current compensation documentation. I had to dig up the 2013 document to confirm retail commissions were even paid.
The second major red flag that jumped out at me was Director qualification criteria, as presented in the 2019 documentation currently provided on Shaklee’s website (I couldn’t find any 2020 compensation documentation);
You work with your business partners to generate at least 2000 points in purchases each month, representing about 20 monthly customer purchases.
You also buy 100 points worth of products yourself.
If we run the math here, 20 recruited affiliates each purchasing 100 PV a month comes to 2000 PGV.
It’s pretty clear Shaklee’s expectation is affiliates purchase 100 PV in product each month and, to qualify for Director, all they have to do is recruit others who do the same.
This is problematic not only because it’s pay to play, but because maintaining 100 PV and 2000 PGV is standard throughout the rest of Shaklee’s affiliate ranks.
The only additions are GV and recruited affiliate ranks, both of which can be obtained by sticking to the “purchase 100 PV a month and recruit others who do the same” formula.
If this is all the majority of Shaklee affiliates are doing, that means the overwhelming majority of commissions paid are tied to affiliate purchases with no equivalent retail.
This would make Shaklee a pyramid scheme.
Considering we’ve seen a recent ramping up of the FTC going after this exact business model over the past few years, Shaklee not making changes to their compensation plan is a significant regulatory risk.
Ironically Shaklee’s 2013 compensation document categorically states that PV can come “from your own purchases and retail sales”. Somewhere between 2013 and now Shaklee has taken a step backwards, and now it’s “you have to purchase 100 PV a month”.
The quick fix is changing the 100 PV purchase requirement to a 100 PV retail volume requirement. That is 100 PV in verified retail sales each month.
This is such a simple change it begs the question, in light of the FTC’s recent crackdowns, why Shaklee haven’t implemented it.
Perhaps the majority of Shaklee’s affiliates wouldn’t qualify for commissions if the change was implemented. Whatever the reason, this is a compliance roadblock that shouldn’t be ignored.
Another anti-retail feature is Shaklee only providing new affiliates with a replicated retail storefront for three months. I searched high and low and couldn’t confirm whether continued access to a retail storefront was available for a fee.
Whether it is or isn’t, in 2020 it is absolutely ridiculous to gimp retail viability by charging for or simply not providing affiliates with a retail storefront. The cost to Shaklee is negligible (the entire system is automated) and there’s simply no excuse.
It plays into Shaklee having no apparent retail focus and just isn’t a good look.
The final niggle I had with Shaklee’s compensation plan is the high barrier of entry. To qualify for retail commissions a Shaklee affiliate has to qualify as a Senior Director. That’s 2000 GV a month, which is pretty steep just to qualify for MLM commissions.
If we go back to the 100 PV a month mandatory purchase, that’s twenty recruited affiliates – which most affiliates are never going to qualify for.
2000 GV could of course be achieved through retail sales, however the viability as previously discussed isn’t there – at least based on examination of how Shaklee themselves present their MLM opportunity.
On the plus side Shaklee make a pretty solid commitment to stand by their products;
Every Shaklee Product Is 100% Guaranteed.
We believe in the safety and proven performance of all of our products. If you’re not satisfied with any of our products, you can send them back to us for a full refund, even if the container is empty.
This is great to see but unfortunately then brings us back to why isn’t there a stronger focus on retail sales?
Given how long Shaklee’s been around I can’t put this down to ignorance. Instead it feels like carry over for what an MLM company might have been able to get away with in the past.
From presentation of compensation material to the compensation plan itself, Shaklee needs an overhaul. It’s easily the weakest link in the company.
As a prospective Shaklee affiliate, your primary concern is figuring out how your upline are running their Shaklee business. The company literature demands affiliates buy 100 PV a month (or more) of product, so your first step will be to confirm this.
What you’re then looking for is an equal match in verifiable retail sales. Don’t take vague reassurances for an answer here, you want to see actual product orders by retail customers (non-affiliates).
If those don’t exist, unfortunately that Shaklee affiliate is running their business as a pyramid scheme. And to be honest this wouldn’t surprise me.
Pending at a minimum changes to Shaklee’s compensation plan regarding retail volume and mandatory affiliate purchases, approach with caution.