Think that Beachbody’s mission of ending the tend of obesity with hard work, exercise, and eating right is a fad? Here are (2) great articles from CNBC and (1) from the LA Business Journal. Two of the articles were written in January 2011 and one was written in June  2010. The growth of the company is extraordinary and the fuel has been not only been in producing great products and supporting them with great service, but also by starting the coaching network. Josh Spencer is mentioned in the article in June 2010. Josh is one of our upline coaches who has seen tremendous success with the business. As of January 2011, Beachbody had 51,000 coaches and paid out $35M in commission to this network of Beachbody advocates. The article from the LA Business Journal (written on January 3) references 345 employees. Today (February 7) Beachbody announced their 400th employee!

There are not many companies these days that can do $400 million in sales and remain relatively anonymous.

Source: Beachbody

Yet Beachbody, a private company, grossed nearly as much as Groupon did last year and very few people talk about the robust engine that is behind exercise workout programs like P90X, INSANITY and Turbo Jam.

Under the leadership of co-founder Jon Congdon and Carl Daikeler, the company has developed a business model that seems to be Teflon, turning successful converts of its programs into network marketers who ensure that the brands flourish.

Many multi-level marketing companies are based on building a network of sellers and distributors getting rewarded based on the size of their network.

Most often, the people who have gotten in on the ground floor reap the greatest benefits while those late to the game struggle to make money.

What makes Beachbody’s network of distributors, called coaches, so successful is that these people have done the programs and are often in incredible shape. Their testimonial and therefore their business relies on how good they look, not whether they tell friends that a certain superfruit drink helps them have more energy or cures their stomach problems.

It seems like, more often than not, network marketing thrives on results which can’t be verified, but if my fat friend shows up with a six-pack, I’ll be more likely to believe he was doing an intense workout program.

Since starting the network marketing program three and half years ago, Beachbody now has 51,000 coaches who take a cut of videos and nutritional products they sell. Beachbody coaches sell $1 million worth of nutritional shakes under the brand’s Shakeology name a week. And it’s not cheap at around $120 for a month worth of servings.

“We could have built this company’s sales a lot faster at retail by selling at Walmart and Target,” Daikeler said. “But selling it through direct television (infomercials) and through our network works better for us.”

Daikeler says that his coaches serve as walking billboards and salespeople who want to help their family and friends by helping them lose weight through the company’s exercise programs. This is unlike many other multi-level marketing companies that solely rely on building a network to make more money.

And Daikeler doesn’t have to pay for testimonials, a common practice in the infomercial business space he plays in.

“The standard network marketing doesn’t work with our model,” Daikeler said. “This is not a ponzi scheme where if you’re the last one in, you don’t have a chance to do well.”

While the average lifespan of a multi-level marketer is three months, Daikeler says his coaches remain in the system an average of 18 months. It’s why he’s confident that by the end of 2011, there will be 150,000 coaches.

“We don’t promise it will replace your every day job,” Daikeler said. “That has been the case with about 1,000 of our coaches. But what it does for others is it keeps them in shape. In order to continue to have credibility selling, you need to continue to keep up. And so, it allows the people who want to fight obesity, to be motivated by the fact that they have skin in the game.”

By continuing to have more and more videos – P90X led to a harder workout, INSANITY, and that program is leading to The Asylum, which will come out in a few weeks – I don’t see Beachbody slowing down any time soon. And the non-traditional, more patient route of using those converted to the brand by really using it is a smart approach that I think will pay off nicely down the road.

Beachbody’s P90X Making Serious Money

Get fit quick infomercial products and videos have been around for a long time. But it’s a safe bet that when we look back on the industry 20 years from now, P90X might be considered the gold standard.

Source: beachbody.com Beachbody’s P90X

In the last couple years, the 12-DVD workout program, which includes a nutrition and workout guide, has turned into a $200 million franchise, making up almost half of the sales for Beachbody, the private company that produces a host of video fitness franchises, including Turbo Jam, Slim in 6 and Insanity, the new harder brother to P90X.

According to the Informercial Monitoring Service, a company that monitors how many times infomercials run to gauge how successful they are, P90X has been in the top 25 most popular infomercials for nearly four years.

P90X is a success because it is the exact reverse of what has been offered in the past. You have 90 days, but instead of working out for only minutes a day, you have workout hard for 60 to 90 minutes. The success stories and the bodies of those who do it turn out to be so outrageous that it ranks as one of the best word-of-mouth products you’ll ever see.

“When people climb the DVD version of Mount Everest, it is so viral,” Beachbody CEO Carl Daikeler, a 23-year infomercial veteran.

It wasn’t an immediate success. The company tried 14 different versions of the infomercial before they really started to make money in 2006.

“One of our other secrets is that we don’t put the product at retail,” Daikeler said. “It wouldn’t sell well on the shelf because part of our appeal is that inspiration that comes along with people seeing how it works on television.”

At $119.95, it is an investment. Add on the resistance bands and a pull up bar and it’s even more expensive. But Daikeler argues it’s nothing compared to a gym membership or the BowFlex, which sold for more than $1,000.

Plus, he says that investing the money in the program is part of getting into shape.

“If you don’t have skin in the game, you’re not going to finish this,” Daikeler said. “People who go get lap band surgery don’t have skin in the game. They get their surgery and then they get reimbursed by the insurance company.”

The workout is clearly not for everyone and requires a fit test before a consumer starts to make sure they’re up for what they’re about to go through. The product is fully refundable, minus the shipping, but Daikeler notes that P90X’s return rate is only 3.8 percent, which is very low for the industry.

Beachbody’s selling network is very impressive. It ranges from the people who call the 1-800 number by seeing it on TV or go to Amazon, where it is now one of that company’s top vendors. Once a consumer buys a product, he or she can get the assistance of a coach, who will interact with them virtually. That coach also gets credit for anything they sell to their P90X student, including Shakeology, a BeachBody created shake.

This multi-level marketing aspect of the business is growing, as many people who finish P90X, are now turning to it as a side business. Daikeler says the company has grown to 25,000 coaches/distributors in the last two years. Coaches get 25 percent of anything they sell.

Coaches include a former college baseball player named Josh Spencer. Spencer was financial analyst when he fell out of shape and ordered P90X in March 2008, phone in one hand and a bowl of ice cream in the other. After 90 days, he lost 25 pounds and 10 percent body fat and says he was in the best shape of his life.

Spencer started a Web site, I Want To Get Ripped, and began selling P90X and BeachBody products. With a pretty convincing YouTube video (see below) that has more than 800,000 views, Spencer is now the top selling “coach” in the country with 240 people under him. He says he’s not earning millions like some of the founding coaches, but the fact that he’s pulling in six figures a year led to him giving up his job as a financial analyst.

Daikeler is optimistic about BeachBody’s future. He says that Insanity, which came out in January, could one day surpass P90X in sales. The company keeps coming up with ideas so as not to get complacent and will support its business with $120 million in TV advertising this year.

For those who want something new every month, the company now offers One-on-One with Tony Horton, the face behind both franchises who is earning tons of money in royalties. It’s a once-a-month video with a new workout that costs $19.95.

Despite the rise of P90X and Beachbody, these guys have somehow managed to stay under the radar as far as the main press is concerned. But with the number of people buying what they have to sell, the story of their growing business is no longer a secret.