Is Xyngular a Pyramid Scheme?

XyngularIf you are looking into the business opportunity that Xyngular offers you might be a little suspicious of how they operate. The recruitment model that is used to bring in new distributors might seem a bit “scam-like” to you. Its also logical to wonder is Xyngular a pyramid scheme or not?

Because of the controversy surrounding this business I decided to write this post to clear up a few things related to this business opportunity. I’ll be going over the “pyramid scheme” side of this business and will clarifying whether or not I think its an illegal scheme or a legitimate business opportunity.

Xyngular Overview

Xyngular is a direct sales business in the weight loss industry. They sell products dealing with appetite control, anti-oxidants, gut support product, and more. And with the direct sales business model this means that individual distributors take care of all the selling and marketing. These products are not sold in retail stores.

Additionally, Xyngular has a mlm compensation structure. What this means is that distributors can actually make money by recruiting other distributors into the business. This is what is causing all the controversy and there are definitely some downsides to this business model that I will go over.

How Xyngular Could Be a Pyramid Scheme

When it comes to mlm’s like this you have to look at where the real business opportunity lies. Do they put more emphasis on recruitment of new distributors or on product sales to the general public?

Mlm’s can be legitimate but they can’t be too dependent on revenue from new recruits. If they do depend too much on recruitment that is where they cross the line and can be considered product-based pyramid schemes.

One good way to determine whether there is too much focus on recruitment or not is to look at the compensation plan and see what they push distributors to do. Do they give distributors more incentive to recruit or sell?

A Look At The Compensation Plan

The comp plan at Xyngular is a uni-level one that goes 8 levels deep. This means that you can earn commissions from the people you directly recruit in (1st level), the people that they recruit in (2nd level), the people that the 2snd level recruits in (3rd level), and so on up to 8 levels.

But in order to be able to earn that far down you would need to move up the ranks within this business. There are 4 ranks total, each of which have 4 sub-ranks. So pretty much you could say there are 16 ranks total. And if you want to take full advantage of the comp plan you are going to need to advance up the ranks.

So how do you do this? Well… the key is recruitment. If you look at the chart on the right here you will see the different ranks and the “QV Requirements”. This QV number is a measure of how much products are sold from your sales organization, which is basically another name for your downline (aka the people recruited beneath you).

Sound Like a Pyramid Scheme?

I know that this recruitment style business sounds like a pyramid scheme, and it obviously puts a lot of emphasis on recruitment, which is necessary to advance up the ranks…  but I wouldn’t call it one.

Why do I say this? Well because Xyngular does require distributors to personally sell products themselves too. And if you look at the statistics it seems that they do put a good amount of focus on this because according to a 2016 report 76% of all Xyngular members were product consumers, while only 24% were distributors.

Even though there is a lot of incentive to recruit, and this often leads to distributors recruiting like crazy even by deceptive means… I still can’t consider this a pyramid scheme. Its just not. It is close to the boarder, but I would still call it a legit mlm.

Final Thoughts On This Business Opportunity

Although I don’t consider this a pyramid scheme I still wouldn’t call it a very good business opportunity. The bottom line here is that with a pyramid style mlm structure like this only the top few % of distributors make good money. Those with the big downlines and lots of recruits make the majority of the money while new distributors and those at the bottom make little.

I was actually able to pull up the official income disclosure by Xyngular for 2016. And as you can see 93.45% of all distributors made much less than $500/mo on average.

That is just the way it works with mlm structured businesses like this. Most people fail. I just was looking into Pruvit’s business opportunity (another health related mlm) the other day and its the same story.

Anyway… that is it for this post… I’m tired of writing. If you have any questions, comments, or concerns please leave them below in the comment section ?

 


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