Saturday, January 24, 2009

Why Network Marketing?

I love creating things, building something that will be productive and solve a problem. I also like building income over the long term. Creativity, contribution, and constant steady year-over-year growth... that's how I approach what I do.

Beachbody exceeded $300 million in sales last year, largely due to the success of infomercials like Turbo Jam, P90X, Ten Minute Trainer, Slim in 6 and Hip Hop Abs. We have the most compelling pipeline of new products and infomercial since we launched the company. So, why network marketing?

I believe the real opportunity in fitness is not in building a huge monolithic company that simply sells product to people. Companies have been trying to leverage fitness to build huge businesses for decades. Yet the obesity trend grows, and no fitness company has really succeeded in getting people to REALLY embrace what it takes to get healthy and fit. Not the equipment makers. Not the gym chains. Not the weight loss centers. Not even Beachbody. Yes, we continue to grow, infomercial by infomercial, selling great product to people, and we've had some amazing success stories. But many people still will start-then-quit just like everything else they've tried unless there is another dynamic at work.

That's what the Beachbody Coach Network is about -- adding the powerful dynamic of peer-support, the "Share" of "Play, Shake and Share", to help people stay accountable to their desire to get healthy and fit.

Our network marketing business is 16,000 coach-distributors strong and growing fast. We assign customer leads to qualified coaches (for free) when one of our TV customers says they want support to succeed with their program. The coach helps that customer set their start date, and stay accountable to consistency. Our coaches are not fitness experts or nutritionists -- but friends who care about revolutionizing how people approach their own health and fitness.

In exchange, in the future when those customer leads purchase another product from Beachbody, the coach gets the commission.

And it works. Anne Dovel sent me this email string... Amazing stuff:
From: Anne Dovel
To: Carl Daikeler
Subject: new customer lead

Hey Carl. Been a while since I’ve sent you a thumb’s up for everything you do. I thought you’d like to see a customer who is grateful for the coaching program. :) Thanks for everything. I hope you had a wonderful holiday and wish you a healthy, happy and prosperous New Year. :) Anne

Hi Anne! I am proud of the difference that I see. I know I can do this. It just takes time and effort. I honestly can't thank you enough for all your help. I am really grateful that Beachbody started the coaching program because I don't know that I would have been able to do all this without your help. I know my husband was trying to help me but he couldn't really come up with a menu for me and he really doesn't understand where I am coming from about hating the way I look. You do because you are a mom too and I think that is so cool to talk to you. You understand so much more than anyone else I've talked too. But anyways I will talk to you later. I hope you get your knitting fixed.


Anne gets it, and now another customer has had success. As Anne said to Susan in a reply: "The reason Beachbody started the coaching was because they found out that someone had a greater chance of succeeding even if they just had someone to talk to who had been through the challenges they are going through!"

And it's a win-win that will continue to grow. I know that because I get so many emails like this one from part-time coach Joey Petri. While many coaches are still working their way to their first check and income is always a factor of skill and effort, here's a young coach who is one of the many people who are turning this opportunity into a dream job:
I just wanted to share this with you guys because I'm super excited.

I added up all my commission checks from 2008 and I earned $13,394.98!!! This is amazing to me and I know that 2009 will be an ever bigger and better year. This money allowed me to go to school full time and pursue a 2nd degree in Phys Ed, this allowed me to live in my place and not move home, this paid my bills and my gas. (Disclaimer I also had some help from my savings as a pharma rep.) This is going to make 2009 an amazing and exciting year. Thanks again for all of your support!!


P.S. Traci, I still remember our 5 minute conversation at Tony's Camp in NY and I told you about how I was considering going back to school for my phys ed degree. You said Beachbody would allow me the freedom to do what I want to do and I'm so thrilled and excited to continue to make that conversation, that dream, a reality.


So when people ask me "Why Network Marketing", I respond that it is an imperative. Growth is one thing, contribution is another. This business model has both, and instead of one giant company, we're going to be a company of a million coaches, each their own independent company, helping 100 million people get healthy and fit. That's what we will achieve, and that's why network marketing is a priority!


Anonymous said...

Though there may be certain benefits of the coach network, I think it's a net loser for Beachbody. Even for die hard, loyal customers like me, the whole coach thing wreaks of a multi-level marketing scam. I believe you're well-intentioned, but the coach set-up appears unscrupulous from the outside. In the end, I think it leads to people doubting the integrity of your fitness programs, and that's too bad because they are absolutely the best DVD workouts available. If I were you, I'd ditch the coach network and put more resources into keeping your customers happy by improving customer service and shipping.

Carl Daikeler said...

First, thanks for your business. As far as looking like a scam goes, that's what they said about infomercials... but we've shown that a marketing medium of ill-repute isn't what's guilty, it's simply misused by unscrupulous people. Look at the P90X infomercial. It's more entertaining than most of the stuff I see on TV! And it's promoting a product that's getting people into incredible shape.

Network marketing as a business model has been abused for decades. But the power of people-helping-people is undeniable. The last the society needs is a giant "Wal-Mart of fitness". What I think is needed is a million people with an incentive to help those around them incorporate fitness and portion control into their lives. We've created that incentive. And that incentive, combined with "absolutely the best DVD workouts available" (thank you!) plus constant improvements in customer service and shipping equals a revolution in health and fitness.

All I know for sure is, many of the people who get involved are making money helping people succeed where they failed with fitness and weight loss for years. That's a win worth perpetuating. And that's why this is so important to see through.

My prediction is that in five years, people will look at this business model and wonder why gyms were ever so popular in the first place.

HaroldB said...

I am not bothered by the coaching concept. I feel I have benefitted from the knowledge of others on the message board along with the Beachbody fitness advisors and other staff members. Your customer service people are all knowledgeable and helpful (at least the ones in California are - the ones in the offsite location in India have rarely been able to help me although they have been very courteous). My concern continues to be weaknesses in Beachbody's shipping execution. I have received shipments from Beach body with DVDs missing. I have been struggling for the last six months with shipments of On-on-One with Tony Horton not arriving on time and having to be reshipped. Or getting an e-mail saying that my order has shipped and that I'll recieve it in 3-5 days only for it to take 23-25 days. That has happened four times in the last six months. Your products are great. The talent on your DVDs is great. Your people in customer service are great and yet I still feel frustrated with Beachbody because of the lack of execution in the shipping and delivery system. It might be time to complete the circle and work on that end of your business.

Carl Daikeler said...

There is not a day that goes by, not a management meeting, not a shipping report, and not a customer service call that's not scrutinized for issues relating to shipping. I know we can do better. But I know that there are few companies who advertise on television who care so much about the customer like ours. By going into network marketing, we stepped up our commitment to fix operational issues to better serve the customer. We launched a new fulfilment center in Ohio to get product to the East coast faster. We plowed millions of dollars into a new processing system that will become productive this winter. As much as we look to customers to be accountable to their commitment to fitness and a healthy lifestyle, we must be accountable to our performance - and that pursuit is our focus every single day.

JHS said...

I'd like to dovetail onto the comments of HaroldB and express similar frustrations. I too subscribe to the One on One w/ Tony Horton program. I have voiced my complaints using various means (Customer Service, My WOWY coach and that coach's support dept.). My BIGGEST gripe is I want the newest release of the DVD IMMEDIATELY shipped once available.

I've been told by Beachbody is this is not how the 'home-direct' program work. My response is I don't care about "typical" as I am not willing to participate in the Coach or Club programs. I should be treated BETTER as I am a full price paying customer.

The One on One program should be treated like a Magazine Subscription. I want my issue FIRST and do not want to wait weeks while I see others in the various blogs and forums (TeamBeachbody, Cathe et. al.) comment on how 'wicked' this workout with Tony is. I'm paying the premium and I don't like the wait.

So my BIGGEST gripe to Beachbody is separate the consumables (bars, pills & powders) from the durables (workout DVDs) and batch up the durable orders for immediate processing. I do not want to wait until a particular 'day' of the month before my order is processed.

John Simpson - 721 Scottsdale Dr - Richardson TX

Carl Daikeler said...

I totally agree John, and that to is something that we are working on, but (to my dismay) it is something that is more complicated to execute than I thought when I concieved of the one-on-one subscription.

Here's a work-around if you don't want to wait for us to sort this out: After you get your next DVD, cancel your subscription, and sign up again as soon as the new disc posts on the site, and you'll be back at the front of the line.

GreatDane said...

I do not understand why you John get in front of the line by canceling his subscriptions and signing up again? Could you please explain..

Carl Daikeler said...

Sorry if that was unclear, and I do understand this suggestion is only to help while we re-orient the programming so regardless of when you sign up for the one-on-one DVD's you will get them as soon as they are available. (Right now it's programmed to ship like vitamins... where you need the next shipment 30 days from the day you order.)

So... Right after you get your next one on one DVD, you call customer service to cancel. (This could truly be the dumbest CEO advice, ever). Then, as soon as you see the next DVD become available on the website, re-subscribe, and your subscription will be timed to the beginning of the cycle rather than simply on the monthly anniversary of your sign-up.

but again -- in the long run, we will fix this so when you subscribe, as soon as a new title releases everyone gets shipped on the same date. Sorry for the confusion and the delay.

Joey said...

Hey Carl,
I just wanted to say thanks for utlizing the email I sent you. That's really cool but again the cool thing is the fact that I've lost 49 total lbs and I'm in the best shape of my life. What tops that is the fact my own health and fitness, my commitment to bettering myself physically is inspiring those around me to do the same. I'm 28 years old. Was in pharma sales for 5 years pushing pills on doctors to prescribe to their patients. I thought I was helping people. What a joke. Now I am truley, for the first time in my life, really helping people and I get paid to do it. It is amazing.

On a side note, I've had shipping issues before and screw ups in packageing. Every person I ever talked to or dealt with in the customer service department in my 5+ years as a Beachbody customer has been nothing but super supportive, apologetic, and quick to fix the issue. As a coach when ever there is a shipping or packaging concern I am 100% certain and confident that BB will always do the right thing and correct the issue.

I'm still not a fan of the term Network Marketing or Multi-Level Marketing. What I am a fan of is "People helping people to lose weight, get in shape and change their lives both phsyically and financially." MLM or Network Marketing is just the business model and is, in my opinion, the only model that will allow this to work, grow and be successful. What you and Jon Congdon have opened up to the customers is just so much more than a business opportunity. It's an opportunity to finally change your life and lead a healthier, happier, more fullfilled life by taking care of yourself and then by helping others do the same. It's just awesome!

Thanks again and I'll see you in March at the Summit.

Joey Petri