7 Minute Workout launched in mid 2011 with a binary based compensation plan, requiring affiliates to bring at least one new retail customer (student) each month to qualify for commissions.’

I’m not exactly sure when but sometime over the last few months 7 Minute Workout ditched their binary and have adopted the currently popular pass-up model.

In doing so, unless I’m missing something, it appears 7 Minute Workout have abolished the retail side of the business. As per the company’s own explanation of their new compensation plan,

Every time a person registers, they pay their small fee and we do two things;

1. We send you exactly 50% of their fee

2. We place them into your organization.

Now, as your client who is now your “downline member” promotes the product and earns their own cheques, they earn a cheque for you too.

There is mention of an “optional” affiliate signup, however this appears to be a token effort to distinguish affiliates from retail customers.

Affiliates shall be charged NO FEE by 7minuteworkout for setting up an account to join affiliate programs or to join any program.

7minuteworkout Affiliate Program is, however, only open to users of the service and deemed a “closed” affiliate program open to members only.

As per the 7 Minute Workout Terms Of Service Above, there’s no difference between a retail customer and affiliate, with signing up to 7 Minute Workout being the only pre-requisite for affiliate membership.

In addition to paying a recruiter 50% of fees paid to join 7 Minute Workout, the company also offers a 50% match on personally recruited affiliate’s earnings (level 1).

Anybody who joins 7 Minute Workout is eligible to participate in the compensation plan, with their own signing up for the program all that is required to qualify them. In my opinion this is not a valid differentiator between retail customers and affiliates.

No doubt on the legal side of things, in true psuedo-compliance form, it can be argued that having affiliates re-sign up to the same company at no cost is a valid differentiator between affiliates and retail customers.

Looking at the service itself, which is $47 a year it’s hard to argue any inherent value when 50% of this is paid out as a direct commission, and then a further 25% is paid out as a matching bonus (half of half is paid out to the upline which is 25% of the original sale).

All in all 75% of the fees customers pay to 7 Minute Workout are paid out in commissions, leaving a big question mark over the retail viability of the product.

Ironically enough this very issue is addressed on the 7 Minute Workout website itself, with the company explaining in their FAQ:

Product is tough! If you find a nice product most opportunities need to set the price at about 5 times more than competing products that can be easily be found on store shelves, and try to convince people on how superior the product is and then of course try to sell the dream so you forget you are paying $25 for something you can buy at Walgreens for $5.

The product needs to be viable and have stand alone value, as in you can prove people would pay for it even if there was no opportunity involved.

We currently have over 1000 members who do not promoter the business in anyway (sic) and just use the product.

Noting the 1000 figure, elsewhere in the company FAQ 7 Minute Workout mention

We only have members on a few levels so while membership is modest (10,000 or so)…

10,000 members and only 1000 who haven’t recruited anyone? Doesn’t 7 Minute Workout consisting of 90% affiliates pretty much conclusively prove the lack of retail viability?

Whether intentional or not, it appears 7 Minute Workout are quite happy to out themselves as not being retail viable. However you cut it, 90% of your revenue coming from affiliates is just not good enough and indicates a lack of viability without the attached income opportunity.

Prior to the recent compensation plan change affiliates had to bring in at least one retail customer a month, which, given 90% of the people using the program are affiliates, doesn’t seem to have been working out to well for them.

Changing the comp plan to suit your affiliate’s behaviour as opposed to analysing why your product isn’t attracting retail activity (hint, hint: 75% of the retail price is paid out in commissions), is not how you build a long-term and sustainable MLM business.

And before I get flooded with people going on about how amazing 7 Minute Workout’s product is and that it definitely works, be aware that I’m not questioning that. The viability issue of 7 Minute Workout’s product lies solely in the price paid, statistical number of retail customers the company has and ratio of the price paid that is paid out as a commission. That’s the issue here.

As per 7 Minute Workout’s “opportunity” page,

I also know you have seen good comp plans before, yet the product is lacking and is usually not much more than an excuse to churn money online until the F.T.C. shuts them down.

One can only wonder what the true value of 7 Minute Workout’s product is if at least $35.25 of every $47 spent is straight commission mark-up.

When a member pays us, we pay you 50% righr (sic) away because you brought them in. Then we give the person who brought you in half of what we gave you…then we give the person who brought them in half of what we gave them and so on.

The above is quoted verbatim from 7 Minute Workout’s FAQ. What does it sound like to you?