USANA Downunder
The National Business Review (NBR) has a very interesting piece about Usana recruiting practices in New Zealand. The writer is describing a recruiting meeting held last year.
"One evening last May, about 450 people squeezed into a ballroom at Auckland's Crowne Plaza hotel where a young woman was explaining how to achieve "true health and true wealth" by selling products from Usana Health Sciences, a US-based vitamin company with thousands of distributors in New Zealand.
"Close your eyes and think about your childhood dreams," she said.
"Sing out your dreams."
There was an awkward moment, but then people started calling out visions of racecars, airplanes, fancy homes.
The woman, a Usana distributor, started flipping through a series of PowerPoint diagrams and talking about how Usana's unique compensation plan can help people achieve their dreams."
Sing out your dreams? What are the chances that a some of the members in the audiences were shills? Exactly how does this compliance technique work? There are obviously two principles at work here: social proof and association.
First, consider the nature of the individual who is likely to attend a "true health and wealth" meeting. Likely, they are seeking a simple solution to their complex health problems. Now, what on earth does your childhood dreams have to do with your current health problems? If you said "nothing", you lose the prize. Surround yourself with a room full of people insisting on a connection between current health and childhood dreams, and if you don't leave the room immediately, then the principle of cognitive dissonance predicts that you will likely change your views to match the current insanity in the room.
However, there is another less obvious compliance trick here. Consider what Usana says about its compensation scheme.
"Usana is a multilevel marketing company, or MLM, a rapidly expanding industry whose distributors work from home and make commissions based not only on their own sales but on sales by other distributors they recruit into the company.
Usana distributors follow a "binary compensation plan," in which one person recruits two others, those two recruit four others, those four recruit eight others, and so on.
According to several recruiting presentations NBR attended in New Zealand, each new Usana distributor must buy a minimum of about $445 worth of the company's business tools and health products, then continue to buy $290 worth of its health products every month thereafter in order to qualify for commissions.
Usana's critics say these monthly qualifying purchases are the reason so many of its distributors fail to make a return on their investments.
But Usana Executive Vice President of Operations Fred Cooper said most of the company's distributors don't think of themselves as failing -- they're happy to get $290 a month worth of Usana products for their own use, whether or not they sell anything.
In fact, Mr Cooper said Usana's research indicated that most of its distributors are "not interested in commissions." (my emphasis)
Much like our bad intuitions about induction which enable Ponzi operators, we have equally bad intuitions about our network of friends which enables Pyramid schemes. While it is likely that I know two other people to recruit, who may also individually know two other people, it is unlikely that all of these people are distinct. Too many of our friends' friends will know the same people.
Our network of friends is just not that big enough of a space for the recruitment to work. (Oddly, in other areas people do know this intuitively as the 6 Degrees of Separation.
It is no wonder that the "most of its distributors are not interested in commissions". This is a mathematical fact, given the size of most "distributors" network of friends. One has to wonder about what Usana means by the word "distributor", also. It appears that the correct term is "consumer". Then what Cooper says makes sense: most of our consumers are not interested in selling. I would certainly like to see the research that Cooper is referring to -it has a direct impact on their ability to recruit their sales staff.
