- Founded: 1998
- Headquarters: Santa Monica, Calif.
- Top Executives: Chairman and CEO Carl Daikeler, President Jon Congdon
- Products: In-home fitness video programs, nutritional supplements and personal-care products
Transformation. It’s an important word with many meanings for direct sellers. But at Team Beachbody®, it’s the whole business.
Team Beachbody distributors, called Coaches, are brand evangelists who have transformed themselves by using the company’s in-home fitness programs such as P90X®, INSANITY®, Ten Minute Trainer® and Brazil Butt Lift® and have decided to pay it forward. Their personal transformations turn each Coach into a living billboard that opens the door to conversations about how they can help others get fit and healthy.
Both the company and its Coaches have benefitted from transformation. Beachbody got started in 1998, when Carl Daikeler and Jonathan Congdon, now the company’s CEO and President, respectively, opened a direct response marketing business that made heavy use of infomercials. They didn’t set out to own a health and fitness company. Daikeler says they just wanted to make successful TV infomercials. Within a couple of years, they were focused on fitness.
But over time they recognized what they viewed as a gap in the marketplace. Many people would watch their infomercials, be interested, recognize the Beachbody name, but never order. Beachbody experimented with offering videos at Target stores, but the trial had little success. Clearly, they needed a different approach. They decided to fill the gap and take advantage of Beachbody’s brand awareness at the same time by adding a network marketing arm to their business.
“When you advertise your products on TV with over $100 million of ads every year, there is a lot more awareness created than people who will actually order,” Daikeler explains. “We felt it would be better to put the opportunity for selling these products into the hands of people who had success with them, rather than put them on retail shelves. Our hope was that the network marketing business would grow to be bigger than the TV business.”
Motivation for Transformation
In 2007 the founders launched Team Beachbody. The response was dramatic. People who were already recommending Beachbody tools to their friends were excited to get paid for doing it—plus, they now had additional motivation to stay healthy. Today they have grown into a force of some 100,000 Coaches who have successfully used the products to transform their bodies.
“We’ve all experienced that it’s one thing to lose weight, but it’s a whole other thing to keep the weight off, especially when it’s done through hard work and good nutrition,” Daikeler says. “So having this additional layer of motivation and financial rewards turned out to be an ‘aha!’ moment for us that we never expected. That’s why we feel that network marketing is the perfect way to solve the trend of obesity in this country. Put the prospect of financial reward into the people who need the motivation for behavior change. That’s how this trend will end.”
Team Beachbody’s Coaches are the missing link to reversing that trend, the company believes. Not only do they offer products that keep workouts interesting and challenging, but they provide the accountability, encouragement, recognition and support that keep clients in front of their televisions day after day, week after week—not watching reality shows or playing video games, but exercising to exhilarating exhaustion with Beachbody fitness programs. The Coaches’ major daily tool for keeping clients engaged: challenge groups they run through social media. Challenge groups provide a comprehensive approach. They combine a fitness program and premium nutrition, plus peer support and accountability among people with similar goals. Coaches facilitate the groups, providing the framework that helps people get off the couch, get started and then keep going.
Daikeler illustrated how important Coaches are last year at VideoPlus University, the annual educational event for direct selling executives put on by VideoPlus. When he asked a roomful of direct sellers how many of them owned a P90X DVD program—Beachbody’s 90-day home fitness system designed to get users in the best shape of their lives—hands went up around the room. Then the kicker: “How many of you have completed it?” he asked. Scanning the room and seeing very few hands in the air, he responded, “We’ve got work to do.”
That work is where Coaches come in. Team Beachbody makes the Coaching process about helping people first—“solving, not selling,” according to Daikeler. Challenge groups are one of their main methods.
Strength in Numbers
Daikeler says that the first challenge group consisted of Congdon, trainer Tony Horton and himself back in 2001. They worked out together to Beachbody’s first mega-successful fitness program, Power 90®, the predecessor to P90X—both created and led by Horton. The three held each other accountable for completing the video workouts over a 90-day period. Because they were using Horton’s video program, the emphasis within the small group, even for Horton, was on being an accountability partner.
“Over the course of 90 days, you need somebody to ask, ‘How’s it going?’ or even, ‘Have you started the program?’ ” Daikeler explains. “The value of any challenge group is that members will all contribute to helping everyone stay accountable and work toward the success of the whole. It’s great for network marketing because you’re not succeeding at anyone’s expense. The more you succeed, the more everyone succeeds because transformation attracts more people into the ecosystem.”
Daikeler says that the rate of success for people in challenge groups is much greater than among people who just buy products from a TV infomercial and choose to go it alone.
To provide even more incentive to help clients achieve their goals, Team Beachbody offers the Beachbody Challenge contest, complete with daily, monthly and quarterly cash awards, as well as a $100,000 grand prize awarded annually to the most inspiring male and female success stories. To enter, people who have completed any Beachbody fitness program simply submit their “before” and “after” photos, along with their transformation story. The most compelling stories are considered for prizes, and everyone who enters receives a T-shirt. A sister challenge is the Ultimate Health Transformation Challenge, which is open to people who use the company’s nutritional products such as Shakeology® or Beachbody Ultimate Reset™.
In each challenge, both the winning customer and their Coach are rewarded. More than 2 million people joined the Beachbody Challenge last year. Between the $500 daily prizes, the $1,000 monthly awards, the $5,000 quarterly awards—which also include a travel prize—and the yearly grand prize, Team Beachbody invests well over $1 million a year in the challenges.
One Beachbody Challenge Grand Prize winner, who has since become a Coach, was recently featured in People magazine’s annual “half their size” issue and appeared on Good Morning America, where he was quick to plug Team Beachbody for helping him lose 200 pounds.
|Beachbody’s core purpose statement is proudly displayed in the Santa Monica, Calif. headquarters.||P90X||The “Shakeology Wall of Ingredients” displays the host of superfoods and ingredients found in every serving.|
Products That Produce Results
The challenges also provide tens of thousands of additional success stories to promote Beachbody. “Before” and “after” photos go into infomercials, DVDs and on websites, helping to fuel the further success of Coaches, and of the company. And challenge groups themselves produce a collection of successful clients who have worked with a Team Beachbody Coach. Their success and enthusiasm turns them into a constantly expanding warm market for new Coaches.
“The most fundamental and important thing about our business is customer success,” Daikeler emphasizes. “Selling products is one thing, but for long-term business success and ongoing growth, customers have to get results.”
Clients take a multipronged approach to achieve their best body ever and to compete for awards. In addition to joining a challenge group, they choose from Beachbody’s catalog of fitness DVDs or classes at gyms across the country, designed to provide an appropriate solution for everyone, from the beginner to the competitive athlete. The DVDs feature fitness celebrities such as Tony Horton, Shaun T, Chalene Johnson and Leandro Carvalho, who lead video “classes” with their unique, results-producing workouts. The classes in gyms are run by Beachbody certified trainers, many of whom are also Team Beachbody Coaches.
But winning the war on weight isn’t about exercise alone. Nutrition plays a vital role in weight loss, ongoing fitness and in recurring monthly Coach commissions. Team Beachbody’s nutrition powerhouse is Shakeology, a low-calorie, high-nutrition meal replacement shake that is available exclusively through Team Beachbody Coaches, which helps boost Coach retention and commissions. Repeat Shakeology sales are at the heart of a Coach’s commission check. The strategy works. Shakeology is the company’s fastest-selling brand, with revenues that have grown from $6 million in 2009 to almost $200 million last year—all by word-of-mouth. Team Beachbody supplements those sales with its entry into the cleanse marketplace, Beachbody Ultimate Reset. Derm Exclusive™, Beachbody’s TV-promoted anti-aging skincare products, complements the growing product line as well.
The pipeline of new products, videos, challenges and online support, as well as the Coaches’ dedication to the company’s mission to end the trend toward obesity, combines to create a high level of Coach retention. Daikeler believes that the company’s strong brand plays a big role in retention, as well, and he says that Beachbody’s ongoing program of infomercials supports the success of its Coaches.
“I consider Beachbody and Team Beachbody to be one company, and the job of the advertising machine that falls under the Beachbody umbrella is to generate more awareness and more new customers that we can assign to our Coaches,” he says. “In network marketing the hardest thing for a new entrepreneur is to expand their prospect list once they’ve run through immediate friends and family. Through advertising and lead generation, we can expand their prospect list for them. It’s one of the things most exciting about our brands. A Coach can walk into Starbucks wearing a P90X T-shirt, and people start up conversations with them. I call it ‘wear and share.’ It’s been one of the most amazing aspects of this business for people who don’t like the idea of selling.”
Sometimes that conversation begins with the fact that the stranger already owns a P90X program—or other Beachbody fitness program—but has faced challenges.
“Every person who buys our program through TV will encounter the same challenge: ‘How will I get my nutrition under control now that I’m getting my exercise under control?’ The answer is Shakeology,” Daikeler says. “Even if that person in Starbucks is already doing the exercise program, let me help nutrition with Shakeology. Every time someone starts a conversation about one of the fitness programs because you’re wearing the logo, it’s an opportunity to help them solve the diet problem.”
All that opportunity is fueled by infomercials that sell fitness video programs directly to consumers, and Daikeler strongly believes that the channels are more synergistic than competitive. Even the Beachbody website cross-promotes Team Beachbody.
Motivated by Mission
The whole package helps attract and retain Team Beachbody Coaches, but the overriding key is the company’s mission to end the trend toward obesity.
“It’s one of the reasons we experience less turnover in our network,” Daikeler says. “People aren’t first attracted to the business because of any get-rich-quick potential. We don’t really preach the financial opportunity as much as we promote the health, fitness and life transformation opportunity. If people come through the door with the right intent—achieving that mission—they’ll be around for a long time because the products work. It’s also why we attract people who were never interested in network marketing before. Getting themselves healthy, fit, and then doing it for their family and friends is a big problem they want to solve. The fact that they can generate income is an outrageous benefit that often surprises people who really succeed in generating substantial interest.”
Daikeler describes a Team Beachbody Coach’s job as encompassing three vital behaviors. First, the expectation is for them to be a product of the product—work out and drink Shakeology to become a walking billboard for their own Coaching businesses. Second is to be visible and vocal about being involved with a fitness program, and to invite people to their challenge groups. Finally, they are expected to stay involved with personal development. Team Beachbody invests in Coach development by making a library of resources available in each Coach’s online back office.
All that investment—in Coaches, in advertising, in challenge rewards, even in philanthropy—is creating steady growth. The company plans additional technology investments to make its programs more accessible, as well as recognition and TV advertising that celebrate its Coaches’ achievements.
There’s a lot to celebrate. Team Beachbody has achieved strong, steady growth year over year among Coaches and revenues. Its mission to transform America from a nation where two-thirds are overweight or obese creates a substantial opportunity for Coaches who are committed to being part of the solution.
“Through our core mission and core values as a company, from the top down, we promote what our priorities are if you want to be aligned with Beachbody,” Daikeler summarizes. “The message coming from me and Beachbody is that we want to have a very positive impact on people around us and on society at large. It’s the basis for creating products, making changes to existing products, and for how we recognize the leaders in our business. In any business, it’s important to have consistent messaging on the things that are important. In our business, it’s about helping people fulfill their goals and transform their lives.”
Picky Practices Produce Premier Product
One evening, when admitted veggie-hater Carl Daikeler, also Team Beachbody’s Co-Founder, Chairman and CEO, was having dinner, his nutrition-expert wife Isabelle told him: “You eat like a second grader.”
Daikeler owned his poor eating habits. But the self-described pizza-and-burger guy just doesn’t like vegetables. So he challenged his wife.
“You’re the nutrition and formulation expert,” he recalls saying. “Why don’t you create something that will give me the nutrition I need?”
At first Isabelle refused. She had gone through that process for other companies, developing highly nutritious meal replacements packed with superfood ingredients. But then the accountants got involved, insisting that the cost was too high and the margin too low. But she was now married to a company’s top decision-maker, and he assured her that she should go for it. He encouraged her, promising that he wouldn’t let cost undermine the objective of delivering on the promise of creating “the healthiest meal of the day” for Carl himself.
Isabelle built a team that included Darin Olien, who BusinessWeek called “Superfood Man,” to develop a formula for a shake that includes 70 of the world’s most nutrition-dense foods. The shake, now available only through Team Beachbody Coaches, is called Shakeology. At first glance, it seems a little pricy at $120 for a month’s supply. But Daikeler says it’s worth every penny—especially considering the host of superfoods and healthy ingredients in every serving.
“I have hardly missed a day with that shake in three and a half years,” he says. “The few times I have missed, I feel the difference. That’s saying a lot for a guy who has never eaten cauliflower.”
Apparently, a lot of people agree with him. The shake generated almost $200 million in revenue in 2012.