Melaleuca is an online wellness shopping club that employs network marketing as a business strategy.
There are a lot of debate on whether Melaleuca is a MLM company, but most of these arguments are missing the point.
It’s inconsequential whether Melaleuca is a MLM. It’s a fact that it has been around since 1985, and during all these years there are people who made it into a home based business.
If you want to build a business around Melaleuca, the correct questions to ask yourself are those that are personal to you.
What skills are needed to be successful with this business opportunity? Do you have the right mindset and motivation? How to make money with Melaleuca?
You’re doing the right thing by reading Melaleuca reviews and investigating this opportunity thoroughly, because not everyone is suitable for this business model.
Owner: Frank Vandersloot
Price: $29 one-time + $19.90/year + $55/month in products
Should you join Melaleuca?
Only if you are comfortable with face-to-face marketing and recruiting people
Is Melaleuca a Scam?
A common question when it comes to starting a Melaleuca home-based business comes down to whether the company is a scam.
If you find yourself asking the same question, rest assured that Melaleuca is not a scam. Nor is Melaleuca a pyramid scheme, because it has over 500 actual products that make money for the company.
Melaleuca sells a wide range of eco-friendly and health-related products via the network marketing business model, which is completely legitimate.
In fact, it is a decent company that has been around for more than 30 years.
However, if you are here for the money, it is not going to be as easy as they make it sound. Not to mention you will need to pay a sum just to get started.
Even though there is real money to be made, the way some Melaleuca representatives recruit and push for sales may turn people off. This is especially true if they are deceptive or manipulative.
This is a common problem for most network marketing companies, and it is not just Melaleuca’s problem. You can find obnoxious network marketers everywhere.
It’s fine if you are not comfortable with the network marketing business model. Personally, I’m terrible at both recruiting and face-to-face marketing. I would’ve failed miserably with this business model.
Not only that, I’m not a big fan of some cult-like members who glamorize everything about their network marketing companies (no offense, this was simply my personal experience).
If you are like me, I’d say you should look elsewhere. There are other ways to make decent money from home without joining a network marketing company.
I make a comfortable side income online every month while holding my full-time job, and I’ve never met a single customer.
With that said, if you think you have what it takes to succeed with Melaleuca, let’s dive into the review and understand it as a whole!
Table of contents:
What is Melaleuca?
Frank Vandersloot and his introduction to Melaleuca
Before Melaleuca was founded by it’s current CEO, Frank Vandersloot back in year 1985, it was actually under a different name.
Back then, it was called “Oil of Melaleuca“, and it was created to market a tea tree oil formulation called the Melaleuca Oil.
Unfortunately, this company was shut down by FTC within the same year after FDA began investigating the company for illegal medical claims.
After that, out of the remnants of the previous company, Frank Vandersloot founded Melaleuca Inc. that we see today.
Today, Melaleuca spans over 20 countries selling nutritional supplements, household cleaning products, bath and body products, as well as essential oils.
How Does Melaleuca Work?
As an online shopping club, Melaleuca focuses a lot on selling their products through their website (even though they sell at retail locations too).
To buy their products, you need to create an account at Melaleuca website. However, the process is not as straight-forward as it should be.
You need to jump through a few hoops just to become a Melaleuca customer.
Taken from Melaleuca official FAQ
Since it is a network marketing company, Melaleuca puts a heavy emphasis on referral marketing.
You need to contact a Melaleuca representative just to get a customer account and start shopping.
If you call their hotline, Melaleuca will assign you under an existing distributor. We’ll get into more details on why it is designed this way.
Another issue that comes to mind is the opacity of product pricing. You can’t find the current price of their product on the official shopping site.
No pricing information is available on Melaleuca shopping site
Naturally, this makes comparing prices harder, and there are complaints out there that Melaleuca products are overpriced.
Some people argued that the products are priced higher because they are more concentrated, but it’s really hard to tell if the prices are really justified.
Nonetheless, it’s undeniable that Melaleuca has managed to market its products in more than 20 countries and doing well at that.
The company has achieved $2 billion in annual sales in 2017.
With that said, whether or not you can make money selling Melaleuca products is another story altogether.
In the sections below, we’ll look at the costs, compensation plan, and earning potential of a Melaleuca distributor.
How Much Does it Cost to Join Melaleuca?
There are 2 levels of memberships when it comes to joining Melaleuca.
A Direct Customer membership is free to join, and there are no monthly commitment needed.
Direct customers pay regular prices for the products.
A Preferred Customer membership costs $29 one-time membership fee, and a yearly renewal fee of $19.90/annum.
While Preferred Customers enjoy 30% to 40% discounts on their products, there is a minimum auto-ship requirement of 35 Product Points each calendar month.
In other words, a Preferred Customer must order at least 35 Product Points (roughly $55) worth of products every month to stay as an active Preferred Customer.
Preferred Customers can specify which products they want to receive for every month.
They can also specify a Backup Order that will be shipped to them in case they do not hit 35 Product Points in any single month.
If you want make money with Melaleuca, you have to become a distributor by submitting the “Independent Marketing Executive Agreement” along with your Preferred Customer membership application.
|Type of membership||Costs||Perks||Requirement|
|Preferred customer||$29 one-time fee|
$19.90/year renewal fee
$55/month on products (minimum)
|30% - 40% product discounts|
Loyalty shopping dollars once become Lifetime VIP member
|Minimum monthly order of 35 Product Points|
|Distributor (aka Independent Marketing Executive)||$29 one-time fee|
$19.90/year renewal fee
$55/month on products (minimum)
|30% - 40% product discounts|
Loyalty shopping dollars once become Lifetime VIP member
|Minimum monthly order of 35 Product Points
Submit Independent Marketing Executive Agreement
Total costs to become a Melaleuca representative:
$29 one-time membership + $19.90/year renewal fees + ~$55/month in products
How to Make Money with Melaleuca
According to the official Melaleuca compensation plan, there are 2 ways for you to make money with the company (accurate at the time of writing):
You earn commissions when customers buy Melaleuca products.
You earn bonuses when you advance in ranks and expand your team’s total sales volume.
Some companies allow you to make money just by recruiting members. This can become a problem where members just focus on selling hope and recruiting instead of selling the real products.
In fact, this is how many pyramid schemes operate. Fortunately, Melaleuca is much better where they reward members for selling products more than recruiting members.
Making Money with Commissions
As a Melaleuca marketing executive, you earn commissions from customers who are:
- Enrolled by you
- Enrolled by your referrals
You are paid commissions when customers in your Marketing Organization (customers who were referred by you) purchase products from Melaleuca.
The commissions are calculated based on how many Product Points these customers purchase in a given month.
Customers enrolled by YOU:
- Product Introduction Commission:
When you enroll a new customer, you receive 50% of Product Points on purchases in the customer’s first month.
- Personal Customer Commissions:
From the customer’s second month onward, you receive a percentage of Product Points based on how many active personally enrolled customers you have during that month.
Customers enrolled by YOUR REFERRALS:
- Organization Commissions:
You receive 7% of Product Points on purchases by customers who are enrolled by your referrals. Depending on your rank, you get paid for between 2 – 7 generations/levels down.
- Presentation Point Commissions:
This is earned when you hit Director 5 rank and above. You earn $5 for every presentation you make after you hit 10 Presentation Points in any given month.
To be honest, I was never a big fan of compensation plans that pay commissions for many generations.
While it sounds good from the distributor’s point of view (you make more passive commissions the higher you rank), it also means that the product are priced higher.
No matter how you look at it, the commissions have to come from somewhere. In most cases, this translates to more expensive products, which makes them harder to sell.
Melaleuca mitigates this to some extent using 30% – 40% discounts on their Preferred Customer membership.
For people who are ready to commit monthly fixed purchases, the discounts may be substantial enough to justify the purchases and convert them into customers.
Making Money with Bonuses
There are multiple bonuses in Melaleuca compensation plan, and they are paid when you:
- Advance in ranks
- Help your referrals advance in ranks
- Increase the number of customers in your marketing organization
- Qualify for car bonuses
Let’s look at them in detail.
There are a whopping 49 ranks in the Melaleuca compensation plan, from Product Advocates all the way to Presidential Director.
The advancement bonus is paid starting from Director level (rank 4) at $100, all the way up to $1 million (yes, $1 million) at Presidential Director rank.
As you reach higher ranks, you receive larger advancement bonuses. Of course, only an extremely small percentage of Melaleuca representatives reach the highest ranks.
Based on Melaleuca’s statistics, 90% of their members who start a business with the company stay as Directors.
The pacesetter bonus is designed to give you momentum and push through the ranks quickly.
First, you need to complete the Independent Executive Agreement application and watch the “Melaleuca Foundations” video (available in Melaleuca’s website) within first 2 months of enrollment to kick-start the pacesetter program.
After that, you must advance in ranks according to the timeline specified in the table above.
If you fulfill the requirement above, you will receive double the advancement bonus each time you advance through the Director and Senior Director ranks.
You qualify for this bonus when one of your personal referrals advances from one rank to the next.
Just as we discussed above, when they promote to rank Director and above, they will receive and advancement bonus and a pacesetter bonus (if they promote fast enough).
As a sponsor, you will also receive these earnings in the same month as they do.
This is Melaleuca’s way of encouraging mentorship, and rewards marketing executives who help their referrals advance in ranks.
You’ll also be paid a set amount ranging from $2,200 to $5,000 for advancing personal Senior Directors 2 through the status of Executive Director.
Leadership Growth Bonus
You can earn this bonus under the following conditions:
- Reach Senior Director (rank 13 of 49) and above
- Have new growth in your Marketing Organization over 2-month period
- Produce an average of 30 or more Leadership Points
Leadership Points are a measurement of a leader’s contribution toward helping others achieve their goals.
How to earn Leadership Points:
- When a new customer is enrolled, the enroller gets 3 points, the presenter gets 2 points. An additional point is awarded to presenter if the customer purchases Value or Home Conversion Pack.
- Every time a marketing executive advances to Director (rank 4 of 49) and above, the leader with most Leadership Points in the marketing organization during the past 3 months get 10 Leadership Points that month.
From this structure, it is obvious that Melaleuca wants you to not only recruit new marketing executives, but to groom them into Directors and above.
They also reward marketing executives who are active at presenting and attracting new customers – which means that you will do well in this regards if you are a social butterfly who is good at marketing.
The car bonus is probably the bonus that generates the most hype.
While it is only available to Senior Director (rank 13 of 49) and above, it generates a ton of motivation for Melaleuca marketing executives.
It’s worth noting that the car bonus comes in the form of monthly subsidy, with increasing amount when you hit higher ranks.
When you achieve 20 Active Personally Enrolled Preferred Customers within your first 5 months (including the month of enrollment), you qualify for a one-time $500 bonus.
Again, notice how 20 Preferred Customers tie in nicely with the Personal Customer Commissions explained above.
According to Personal Customer Commissions, as long as you maintain at least 20 Active Personally Enrolled Customers, you will receive 20% commissions on your personal enrollees.
It’s obvious that this $500 bonus is designed to motivate you enroll customers, and to reach the optimal commission rate as quickly as possible.
How to Rank Up in Melaleuca
Melaleuca basic ranks and requirements
Now that we’ve looked at the bonuses, we should also understand what it takes to get these bonuses.
Let’s turn our attention to the requirements to reach each level. As discussed above, there are 49 ranks total in Melaleuca compensation plan.
Melaleuca marketing executives advance through the ranks in following order:
- Product Advocates (3 levels)
- Director (9 levels)
- Senior Director (9 levels)
- Executive Director (9 levels)
- National Director (9 levels)
- Corporate Director (9 levels)
- Presidential Director (max level)
Since the main focus of most new Melaleuca marketing executives is to reach the Director levels, let’s see what it takes to achieve these ranks.
The requirements are as follow:
- Number of active personal customers:
8 – 18 customers/month through Director ranks
- Average monthly Leadership Points earned:
1 – 9/month through Director ranks
- Monthly Organizational Volume (based on total Product Points from products purchased in a marketing executive’s organization):
1,000 – 17,500/month from Director 2 onward
~$1,571 – $27,500/month in organizational sales volume
- Personal enrolled group volume (based on total Product Points from a marketing executive’s personal enrollees):
1,000 – 15,000/month from Director 3 onward
~$1,571 – $23,571/month in personal enrollee sales volume
- Active personally enrolled Director:
1 – 4 from Director 3 onward
As you can see, there are more and more requirements to fulfill as you climb the ranks.
Initially, you will focus on enrolling personal customers that buy products from you. From here you earn commissions based on the Product Points.
Once you have a stable pool of active customers that purchase from you every month, you will need to start recruiting new marketing executives under your name.
After that, you will need to train them in sales and groom them into Directors themselves (so you can advance beyond Director 2).
As you can probably imagine, it takes a lot of skills and hard work to succeed in network marketing companies.
Reality Check: How Much do Melaleuca Marketing Executives Make?
Latest income disclosure in 2017
Melaleuca has published a relatively recent income disclosure in year 2017, available from their official website.
According to their statistics, only 11% of all Melaleuca customers become a marketing executive. Most of them are strictly customers who do not build a business with the company.
Out of this 11% of business builders, around 90% are ranked as Director or Director 2 (at least 8 active customers). Their average annual income is $2,093.
This means that the vast majority of Melaleuca marketing executives make an average of $174 per month before expenses.
If we factor in the associated costs such as monthly purchase requirement, conference and travel expenses, as well as membership renewal fees, we may very well be looking at negative rate of return.
This is consistent with FTC’s report (page 8), where it cited that “approximately 99% of all Melaleuca participants lose money and therefore get behind financially because of their participation”.
This is also consistent with Dr. Jon Taylor’s report “The Case (For And) Against MLM“, where he found that 99.7% of all MLM distributors lose money after accounting for expenses.
A shorter version of this report is available on FTC website as well.
Based on these evidences, it’s safe to say that the odds are heavily stacked against you if you decide to become a Melaleuca marketing executive.
Are You Cut Out to be a Melaleuca Marketing Executive?
Let’s face it, nobody joins a network marketing opportunity to make money for the company.
Everyone joined at some point with just a single goal – to make more money for themselves and to provide a better financial life for the family.
However, you are going to get burned if you just charge in without the correct expectations and skillset.
It’s not easy to sell products. Try asking someone who earns a commission when they make sales at a store (e.g. the cosmetics industry). Chances are, they’ll tell you it’s more difficult than it seems to close a deal.
In these cases, the promoters sell products that people are already interested in.
How much harder do you think it will be to convince people to want your product in the first place?
After you succeed in selling, you must recruit members and advance in ranks to expand your earning potential. No matter what, you will need to recruit and train new marketing executives at some point.
Do you have the right skills and target audience to do so?
Let’s do a bit of self-reflection on whether you are cut out for the network marketing business model:
- Do you enjoy talking to people and introducing network marketing opportunities to others? Can you take rejections with a smile and keep pushing forward?
- Apart from your family and friends, do you have other ways of approaching new prospects? Don’t make the classic mistake of losing family and friends over a network marketing company.
- Are you ready to attend weekly or monthly meetings with your team and sponsor? Joining a network marketing team is a commitment. You are expected to recruit new members and/or make sales, or you are a liability.
If your answers to all three questions above is a unanimous “YES!”, then you most probably have what it takes to thrive in these companies.
I have been involved in network marketing before, and unfortunately, these were the top 3 reasons why I quit and looked elsewhere.
How I Make a Sustainable Side Income
If your answer to any of the questions above is a definite NO, you are probably not cut out to be a network marketer.
Fortunately, there are other avenues to make sustainable side income at home. One such methods is called affiliate marketing.
In affiliate marketing, you make a commission when you introduce relevant products and services to people who need it.
Most importantly, there is no need to recruit members, join sales teams, or even do face-to-face selling.
I’ve been doing affiliate marketing in the past 2 years and I have never had to answer to anyone, or meet any customer for that matter.
If you want to know how I got started, read about my story and my failures (I failed at various different opportunities before landing the right one).
If you are interested to get your hands on affiliate marketing, I have a great recommendation to get you started.
Do note that the article above contains affiliate links, and I’ll make a commission (at no extra costs to you) if you find any of the products useful and buy them.
This is how I make money with affiliate marketing, after all – by introducing people in need (such as you) to relevant and value-adding services (training to make money from affiliate marketing).
I hope this in-depth Melaleuca review has been useful to you. Do leave a comment if you have any questions or experience to share, I’d love to hear about it!