This review doesn’t mean that Rodan and Fields is a Pyramid Scheme or scam.
It is just the analysis of a company’s marketing method that more looks like a legitimate MLM.
However, you are the one who should decide after reading this article.
The Rodan and Fields History Review
Rodan and Fields is yet a skincare company that uses the multi-level marketing strategy.
It was started by Dr. Katie Rodan and Dr. Kathy Fields and is known for its rather popular skincare product called the Proactiv Solutions.
This skincare line was launched in 2002, and after trying to sell through high-end department stores, they decided to take on the word of mouth MLM strategy of sale eventually.
In 2006 finally, they stopped all over the counter sales and introduced ‘House Call’.
This was nothing but a type of multi-level marketing approach where the representatives showcase the product to interested buyers.
The question, therefore, at this juncture is that if Rodan and Fields multi-level marketing is legal or illegal and scam?
Is it a legitimate way of earning profits or can this be termed as yet another scam and illegal pyramid scheme opportunity ready to take advantage and exploit the financial hardships of many hapless individuals?
Before I go to details, I have to explain that MLM or multi-level marketing and even pyramid are not necessarily illegal and scam.
They are just some marketing methods that many companies use.
So you can’t call a company scam and illegal as soon as you you find out they promote their products through multi-level marketing.
Something which is illegal and is scam is in the way that members make money.
This is clearly explained here.
Is the Rodan & Fields a Scam or It Is a Legitimate Multi-Level Marketing?
How exactly does Rodan and Fields function?
Well, they operate quite similar to many other MLM in many ways, but the overall compensation plan needs a closer look and detailed study.
The core fact, however, remains same.
You get paid for selling their products and also for recruiting people under you to operate the same way you are doing under someone.
Apart, sales representatives earn profit via:
- Selling the Rodan & Fields product to both retail and preferred Customers.
- Commission earned from sales clocked by consultants and preferred customers in your circle.
- Overall team commission based on the entire team’s performance. The team is essentially the team you sponsor.
- Generation Commission is basically the commission that you earn on extended sales of the entire team.
- Performance bonus on achieving various milestones.
Well, you do not need anyone to mention it to you but their compensation strategy is not as simple as they make it appear.
And, it is rather convoluted in terms of realizing absolute level of profitability from them in any way.
Often, the profits in multi-level marketing companies deeply depends on the quality of the product.
However, that sure is not sufficient to help you earn a sustainable source of living.
The US Federal Trade Commission has clearly outlined how 95% of sale representatives associated with MLM are not earning more than $1000 every year.
That number in itself projects the sorry state of affairs.
The Rodan and Fields product might be great and the promotion of these could be relatively easier than a pyramid scheme with an unknown product range.
However, the fact is that the relative difference is not much and it essentially outlines the fallacy in the system.
Would You Term Rodan & Fields a Scam?
So the question that crosses your mind at this juncture is would you term Rodan and Fields multi-level marketing a scam?
Well, that is too strong a word and perhaps a regulatory authority like the US FTC is best geared to take a call on that.
However, what we can all accept in our personal capacity is that it surely is a risky type of business.
It is common knowledge that any MLM or a pyramid scheme has a slight bit higher risk potential as compared to other conventional business formats.
In almost all the cases, the only ones who make money are the ones who are at the top of the rung, the business owners and the initial few who comprise of the top of the pyramid.
Another reason why MLM can be a risky business is that it is illegal to promote any type of pyramid scheme.
Almost always, you will see the authorities are in the process of probing these multi-level marketing businesses.
We see the pyramid collapsing at some point or the other and the business shutting down for good.
So even if you have made a sizeable amount of money in this pyramid scheme, it is never a great idea to stick with this business option for too long.
You never know when they might just collapse suddenly and shut shop leaving your money in jeopardy.
While I would not hazard a guess about the legitimacy of the actual business, the MLM genre of businesses has been attracting bad publicity, and moreover, it is simple mathematics.
At some point in time, the demand for these products sold as pyramid scheme would begin to fade away.
This would herald the beginning of the downfall and eventual collapse of the business model like a pack of cards.
Recruits Slowing Down
One fact that inevitably sets Rodan and Fields apart from most of its other predecessors is the fact that they are not trying to push the huge financial incentives of joining an MLM.
In fact, the company has been quite candid in putting up the fact that 65% of its revenue is from retail direct sales to individuals who are not consultants.
High earners who get Lexus of their choice as incentive are free and far between.
In fact, a majority of them might make only a few thousand dollars every year.
To quote the numbers on the Rodan and Field multi-level marketing website, only 400 of the total 100,000 consultants have reached the Lexus level of success.
So… Is Rodan and Fields a Scam?
And, more and more aspiring potential sales reps tend to believe in the Rodan and Fields Lexus stories and consider them within reach.
That is what alone drives the recruitment initiatives.
However, the fact is that demand will at some point of time wane away irreversibly.
The consultants closer to the bottom of the pyramid often find it difficult to get fresh recruits.
Though many are gung ho about the product, the business aspect of it is seeing a major dent.
The question is what is the way forward for Rodan and Fields multi-level marketing now?
Rodan and Fields has been in business for 16 years.
According to their BBB records, they are good in resolving the customers complaints.
Therefore, Rodan and Fields is not scam because if it was a scam, it couldn’t work for 16 years.
The question is why some people think that Rodan and Fields is scam?
This can be related to the name of MLM or Pyramid that triggers the word “scam” in some people’s minds.
I mean some people think that the company is scam as soon as they hear that it is a MLM or pyramid scheme.
Ponzi schemes are always scam and illegal.
But multi-level marketing and pyramid schemes can be legal and legitimate if they don’t break some special rules.