USANA is NOT a PYRAMID

The "PYRAMID" word continues to be used in discussions about USANA. As I have read the charges and the defense arguments, it seems clear that there is a lack of understanding as to what constitutes an illegal Pyramid scheme and how to recognize a legitimate company.

Kevin Grimes and Spencer Reese are among the most conservative and knowledgeable attorneys when it comes to the FTC's regulations for direct selling and case law. They have written a clear and concise primer that covers this issues nicely. It would be helpful for USANA haters and USANA defenders to take time to read this primer:

http://www.mlmlaw.com/library/guides/Primer.htm

I think you'll find that (despite what conculsions you may have drawn about direct selling) USANA is NOT a PYRAMID.

USANA Management: WAKE UP YOU ARE AT WAR!

Once again I have opened the newspaper to find yet another story about a USANA executive who has 'misrepresented' credentials. This time it is Gil Fuller who I respect and have defended in earlier posts. For each of these "credential scandals" I could write several paragraphs about why the whole "scandal" is nothing more than smoke and mirrors -- Minkow's attempt to divert attention from substantative issues -- but enough already.

USANA is reportedly paying big bucks to a PR firm in New York, but they are either not listening to the firm's advice, or need to hire a new firm. You can't sit back and wait for Minkow to uncover the next smoking squirt gun. You know his tactics, you know what he is trying to do, he is so predictable, and yet USANA continues to sit in their fox hole, arms over their helmets waiting for the next M80 to explode.

GET AGGRESSIVE! It's time to invite every member of the executive team to a 'tell all' meeting. Go line by line over every resume made public and make sure there is nothing else that could be made to look dishonest. Get Fred thinking about how Minkow could be 'gaming' the statements and then develop a pro-active plan to get out in front of him.

Everyone knows Ladd has been less than effective the past x years -- so why risk having him on your Medical Advisory Board? Clean your own ship! Take this opportunity to pull into a fresh water dock and get the barnicles of the hull.

USANA is fortunate to have great field leaders, but they can only do so much. They can only defend the company from so many New York Times or Wall Street Journal stories. If there is more, let it all come out at once -- in a USANA issued press release -- and then move on.

And GET a SPOKESPERSON on the road to New York. The Wall Street Journal and the New York Times have reputable reporters who will talk to USANA Executives. Anyone who sits across the room from Minkow and Fuller will believe Fuller every time.

And finally, find out WHO IS FUNDING MINKOW? You have more money than he does. Hire your own private investigators. Find his money source and give them a chance to defend themselves in a court of law.

This is war, and it's time for USANA to show some signs that they have the ability to defend their company -- not just their own reputations.

Read Len Clements Thoughtful Response to FDI

Len Clements recently posted a point-by-point white paper anyone interested in USANA and FDI should read. In that response Len said:

"I am the founder and CEO of MarketWave, Inc.2, a research, education and consulting firm exclusively serving the network marketing industry, and the author of the book “Inside Network Marketing”. I have worked full time over the past 17 years studying and analyzing the MLM industry and have worked to expose the frauds and pyramid schemes that often try to disguise themselves as legitimate MLM operations. As one of only five court-certified experts in multilevel marketing in the United States, I am acutely aware of the difference."

Read the entire article on his website: www.marketwaveinc.com...

Show Me The Money!!!

This is admittedly a side to my monologue of the past few days, but I have one question for FDI: "Who are you being funded by?"

Look at the Google Ads on this page; clearly FDI is paying big bucks to actually advertise to generate interest in this story. Who is paying for the ads, and who is paying for the video and the research? Something smells bad....

Clear the Smear: A tribute to Fuller, Wood and Waitley

For me, the toughest part of watching the Minkow attacks on USANA have been the personal attacks aimed at Gil Fuller (see my previous mention of him in my archives), Dr. Tim Wood and Dr. Denis Waitley.

These three men have had long and successful careers and have distinguished themselves by their actions. In a world that seems to recognize and reward rhetoric rather than behavior -- these three men walk their talk. I have found each to be honorable, honest and respectful individuals.

Minkow has smeared all three of these men to the point that the uninformed would believe that they are evil and conniving men just out to make a buck. A careful examination of their personal lives and their business careers would reveal that these three individuals are good men.

I hope this campaign does not permanently scar the otherwise praise worthy careers that Gil, Tim and Denis have enjoyed.

For what its worth -- I think the greatest challenge facing USANA is the prospect that some day each of these three individuals will retire or move on to other opportunities and will leave a huge hole that will be near impossible to fill.

Does USANA have products with consumer value?

If an alien visited Mill Creek Junior High to watch its (the alien's) first and only basketball game, the alien might conclude "ALL BASKETBALL PLAYERS ON EARTH ARE SHORT AND WHITE." That headline would get a chuckle out of those of us on earth who have experienced March Madness.

Well, Minkow (who is somewhat of an alien to direct selling) visited USANA and somehow got fixated on one or two products and has conveniently forgotten the dozens of other products in USANA's line. His headlines reflect the small sample size of his study, and his conclusions have left those of us on earth chuckling a bit. Fortunately, I actually spent a year of my life studying this is exact issue (at USANA no less), and here are the facts:

1) The USANA HealthPak 100 -- delivers convenience -- not necessarily the lowest price. Believe it or not, it is expensive to package the vitamins in daily dosages and USANA charges a premium for the convenience of the pack. USANA's HealthPak 100 was never designed to be a retail product (in other words it was not designed to be resold), but rather to be purchased direct from the company. Fortunately, USANA has a Preferred Customer program which allows those who would otherwise be 'retail' customers to place their order from the company, be serviced by the company, and still allow their friend or family member to earn commissions on their purchases. Welcome to network marketing in the 21st Century.

2) USANA actually spent tens of thousands of dollars to conduct a pricing study. They acted on the information they collected (from current, previous and non-customers) and dropped their prices considerably in the spring of 2000. It was called the "Price Value Initiative" and it was a painful era for the company (by the way -- it was a calculated pain pill the company took and I believe it has paid off in the long run). For those who want to build a retail business and mark up the products, you would choose to use one of a dozen products packaged in bottles and made available at much lower prices than the HealthPak 100 and with plenty of room for a retail mark-up.

3) Pricing is a positioning tool, not just a measure of value. The world is full of brands for which consumers are willing to pay a premium. USANA has made an effort to get out of the commodity pricing of nutritional supplements by increasing quality and packaging services around the supplements. So even if its costs were lower than its competitors, it would use its price to establish in the minds of consumers the quality of its brand (and the brand includes the bundle of services that accompany what some might call the commodity in the package -- this bundle includes educated sales associates, personal selling, 800 call center, customer service and support, conferences and workshops, quality control, etc., etc...). USANA is not looking for the customer who wants to buy their vitamins at Wal-Mart for the best possible price -- they appeal to the discriminating consumer who is willing to pay for panache -- and there are hundreds of successful, profitable, companies who have built a business in other channels, with different commodities.

Is USANA perfect -- I don't know, I haven't been engaged for a few years and I'm not able to say whether or not they have remained vigilant in their pricing research, or if they have invested in the 'bundle' of services that strengthens their brand.

The GOOD NEWS: USANA has tons of research and significant consumer feedback to prove to any analyst, any judge, any regulator, or any customer that they care about delivering value and made difficult business decisions to respond to customer pricing concerns.

The BAD NEWS: I know of many direct selling companies who have not been so sensitive. This is an opportunity for improvement for the industry, and I invite all companies to engage in a rigorous analysis of their pricing to make sure that there is a legitimate consumer value proposition.

Direct sellers must constantly balance the value they are able to deliver to the end consumer with the business costs entrepreneurs must incur each month to qualify as a legitimate 'distributor' of the company's products.