Compensation: A Real Life Example of How Unilevel MLM Commission Works

doTERRA Compensation Plan: How Unilevel Works

This is part of a series on doTERRA Compensation Beyond Theory. If you are looking at pursuing network marketing to either supplement or replace your income, this article will give you insight. I am a doTERRA Wellness Advocate, so I can only speak on how doTERRA's compensation plan works, but the principals are generally the same: building a network marketing business is long term and is not get rich quick but it is worth building. doTERRA's Comp Plan doTERRA's comp plan on a single page. doTERRA's comp plan is simple and easy to understand. This gives me a level of security, because I know exactly how I am paid and I can explain it to others.

Unilevel Commission There are three major components to the doTERRA monthly check: Power of 3 Structure Bonus, Leadership or Diamond Bonus, and Unilevel Commission. (Other components include Preferred Member Bonus and Retail Profit). To read about all the components of the monthly check, click here. Today I will be writing about the Unilevel commission. 

Unilevel Commission is where the bulk of your check in the long run. It is the most stable part of your income. You make a percentage off the sales in your organization. Let's say if you have thousands of people ordering, if you have a few who don't order that month, it has little effect on your commission. The Power of 3 Bonus and the Leadership/Diamond Bonus are bonuses or money added to your monthly for good performance. Although $1500 or $4000 bonus sounds exciting what's even more exciting is the 5%* commission you receive on repeat orders in your organization. 5% doesn't seem exciting at first. On a $100 order, that's a $5 commission, but as your organization grows to thousands of people, it adds up. *Unilevel Commission start at 2% and goes up to 7%

Beyond Theory Not a Pyramid Scheme "You sign up 6. They Sign Up 6 and before you know it you'll have millions of people!" Critics are quick to point out that this is unsustainable as the theoretical numbers projected are not possible.

Projections like this paint a picture of an illegal Pyramid Scheme. Some network marketers paint that picture with their business.

In this article, I will show you how network marketing REALLY works by showing a real life example.

Have you ever been to a network marketing opportunity presentation that seems to good to be true? All you need is 3 people. Those three get three people each. Those nine get twenty seven and before you know it you have millions of people on your team and are making a fortune. It is no wonder that mlm/network marketing gets a bad rap and is often viewed as a get-rich-quick or pyramid scheme. Because we are human, it doesn't work this way. There are two major reasons:

  1. The first three people you sign up may not be builders.
  2. The rate of duplication is dependent on your leaderships and the leaders you develop. For some people, duplication slows down on the 3rd level, for others it slows down on the 10th. For some, duplication doesn't go past the first level.

Rather than teach theory, I am going to share REAL NUMBERS. Commission Summary I took the data 21 pages of one of our monthyl commission reports and inserted it into a Microsoft Excel Worksheet. I used the SUMIF Function to total the Volume and Commissions on each level. I used the COUNTIF Function to count the orders. An analysis of the summary help me understand the benefits to doTERRA's Unilvel Commissions[/caption] Keep in mind this is only, one component of the doTERRA Monthly Check. I took  one of our older commission report with 21 pages of data and imputed it into an excel spread sheet. I chose a month which did not have any special promotions that boosted sales. Total Sales for that month (that was within pay range) was 99,735 points (approximately $99,735 in sales that had that month). 735 people placed a monthly order. 124 people placed an order with enrollment kit or order with enrollment (which pays in Fast Start and does not contribute to Unilevel Commission). For this particular month, $5,817.16 in unilevel commissions was earned. Disclaimer: The figures below are from a single report in our organization and is no way a reflection of the average distributor. It is used to illustrate an example of how much Unilevel commission an organization with 99,735 points in volume (in pay range) would make. This may vary from organization to organization.

How much do people order every month?Average OrdersA compensation plan is only as good as the orders people place. If no one is ordering anything, you can't make money. It's important to choose a company that have products in demand. Having a large selection of products give members more choices on what to order and encourage ongoing purchases. 91 percent of the people that joined dōTERRA as a consultant did so primarily to get high quality essential oils at a discount or to share essential oils with others. This indicates that most people would continue their order regardless if they receive income. Profit is not their motive to order, which increases stability and retention. The average order in our organization is 135 PV ($135 order). This indicates effectiveness of doTERRA's product of the month program which encouraged orders more than 125 pv. On some months, there are promotions that incentivize members to order more than $200. The month I chose to do a study on was an average month with no such promo. 88% of commissions were from orders more that 100PV, but don't disregard the 30 cents you make on a $6 order, they add up. In this month, $690.98 were from a total of 279 orders less than 100 PV! Unilevel CommissionsHow network marketing income works through leverage and non-linear growth Network marketing is different than sales. Sales can help you with enrollments, but what you get paid on is duplication. Skills in leadership are needed to duplicate. In doTERRA' compensation plan, you are paid 2% on the people you enroll and sponsor, your "Frontline" or "Level 1." If you sponsored 100 people and each ordered $100 each that month, you would receive only $200* in Unilvel commissions (2% of $10,000) if they did not signup anyone. Imagine signing up 100 people and only making $200 a month!!! This can discourage many people, especially if this was not explained in advanced. That's why it's so important to teach compensation and the fundamentals that drive commissions. Don't worry, if you do sign up 100 People, as long as you do the business right, you should have a lot of business partners to work with. 

So how do you make thousands (or tens of thousands) of dollars each month? In this example, $5,817.16 was paid on 99,735 points that month. Over 80% of commissions were paid on Levels 5 -7, 691 People I probably haven't even met (but would like to meet). The answer is simple: Leverage. You must leverage through duplicating your efforts. If people duplicated your efforts and results, how would your organization look like? Compressed Levels Network Marketing growth is not linear. It is not quite exponential but, as you can see here in a real life example, there are more people on the levels below.

You sign up Bob. He is your Level 1. Bob Signs up Sue. Sue is your level 2. You get paid on Sue, even if you don't know her. Bob can sign her up while you are sleeping, and you still get paid. This is network marketing. I know this to be true from experience. In the beginning, you will be working a lot. It may seem like you are making less than a dollar an hour you put in, but as your distribution grows, your efforts are leveraged. This is a stark contrast with sales. Sales superstars may have trouble, because they have no problem recruiting. They may wonder why network marketing works for them. Some quit prematurely and rather sale high ticket items to earn a bigger commission on their efforts. They don't understand the power of leverage. Leverage does not only increase your earning potential but is critical towards building passive and residual income. The following quote by billionaire J. Paul Getty* illustrates it best:

I would rather earn 1% off a 100 people's efforts than 100% of my own efforts.
Wealthy people understand the concept of leverage and passive income. Network marketing can be a part of building your wealth.

*Some attribute the quote to John D. Rockefeller.

Note: 7 Levels are paid to Silver and above wellness advocates. Elite earn 5 levels. Premiers earn 6 levels.

Why 2 to 7 Percent? Is it better to get a higher percentage on levels closest to you? doTERRA's compensation plan pays higher the further your organization grows. This is better in the long run. One wealth principal that we teach is to think about the long term. We are building an income not for the next year but income that last lifetimes, so that we can leave a legacy to the next generation. If this is your goal, you would a compensation plan that pays like doTERRA, from a low to high percentage.2 to 7% Unilevel Bonus In this example, if the unilevel commissions were paid from a high to low percentage, You would lose $2,107.05! (On organizations with higher volume, losses would be higher!!!)

doTERRA’s comp plan goes from low to high and is designed to give you more in the long run![/caption] Some companies claim paying high to low percentages help out the "smaller distributor" and plans like doTERRA only benefit the "larger distributor." This is not true. Compensation plans like doTERRA's help encourage and develop stronger leaders. Stronger leaders equate to higher growth and stability and people helping others succeed. To help all distributors, doTERRA offers the Power of 3 Structure Bonus. This helps a lot of people or the "smaller distributor" that are starting their business. For example, if a person starts off with three people ordering 150pv/$150 each. On unilevel commission that would only be $9 (2% of $450), but with the Power of 3 Bonus that would be $59 (That's over 13% of the volume paid in commission!) With the Unilevel commissions combined with a Power of 3 structure bonus, a person could receive over $1700 on an organization of less than 40 People! (and a volume less than 6,000ov/$6000).

 doTERRA benefits people that are starting out! We'll go over this in another article. doTERRA's comp plan benefit both the "smaller distributor" that joined the business and wants to make a few hundred dollars a month to the "big leader" who wants to make 100k a month. An example of compression in action. How we get paid more then 7 levels.

Unilvel Commission

At first glance, it looks like doTERRA pays on only 7 levels. In actuality, through "compression", more than 7 levels are paid. Example of compression 

Example of Compression.

The easiest way to explain this is if you have a large team and qualify for 7 Levels (Silver rank or above). You have someone on you 20th level who places a 100PV order. Under you, no one qualifies to earn the level 7 ($7 = 7% of 100PV) commission on this order. In some companies, this commission of $7 would go to the company and is called "breakage." 

In doTERRA's case, through compression, the commission breaks to you because you qualify for 7 levels. This also means, that people who don't place an order take up a level. For example, lets say you have 7 levels of people who don't order anything but someone on the 8th level places a 100pv order. In some companies, the commission breaks to the company and you receive nothing from that order. But in doTERRA's case, the Level 8 person is treated as your Level 1. This is a benefit of compression.   Getting Paid on More than 7 Levels doTERRA incorporates compression in their Unilevel. Without compression, over $1,300 would go to the company in this example. On a larger organization this figure would be higher.

 Understanding Real Life Experience Understanding how a compensation works in real life gives me a clear picture on what to do and what to shoot for. I hope this does the same for you. When people give theory without experience, it sets up false expectations that lead to disappointment and frustration. It makes you question whether network marketing income is real or not. For this reason, I decided to share some information. Network Marketing income is real, just like income in other professions. If you work hard and do the right activities with the right company, you will succeed. Most of the real network marketing earners like myself are busy building their business or enjoying life. I on the other hand love sharing this information and I hope this information helps you! There are a lot of misinformation and hype on how an organization grows. I hope this clears up some of the misconceptions. 

Unlivel is ONLY ONE component of a commission check, there are other monthly bonuses that add up to a really great check.

Holan Nakata

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