Leadership Magazines - Page 48

FEATURE ARTICLE Comparing Compensation Plans DID YOU KNOW that the minimum required OV (team volume) for a dōTERRA Presidential Diamond is 162,000, while other companies require their top leaders to have 1 million or more in team volume? dōTERRA is also unique in that it has a retention rate of more than 70 percent; other companies average 10–20 percent. A major reason for this loyalty is that dōTERRA provides a product people love and need. A second reason is that our compensation plan is designed to benefit our Wellness Advocates not only in the beginning, but also—and especially—over the long-term. WHAT ARE THE THREE TYPES OF COMPENSATION PLANS? BINARY • Only two people can be placed on your frontline. BREAKAWAY • Compensation is based on the group volume of each leg. • Your business-focused downline breaks away from your team when they decide they want to build for themselves. • Commissions are usually paid on the weaker leg. • There are monthly team volume requirements for all leaders. • This plan is not driven by levels, but the volume within an organization is limited for payouts. • When a leader breaks away, they take their volume with them. • When a distributor doesn’t qualify, commissions return to the company. • Leaders are then paid on the number of generations of down­line groups. UNILEVEL In the direct selling world, there are three basic compensation plans: binary, breakaway, and unilevel. Of the three, dōTERRA decided that WHAT ARE THE PROS AND CONS OF EACH PLAN? BINARY BREAKAWAY • Each builder is paid on in divid­ual levels. PROS: • The plan is easy to explain. PROS: • Structure is very important. The placement of individuals in your downline is key. • There are frequent payouts. • It is a great plan for those with exceptional recruiting and selling skills. • Requirements for rank and bonuses are based on OV and width. • There are no limits on width or depth, but you are only paid on a limited number of levels (seven in dōTERRA). a unilevel plan was the best option for Wellness Advocates. Why? The answer is in the comparison. CONS: • Usually people are only paid on their weakest leg. There is no reward for the leg that represents the greatest amount of effort. • Your payout could be very large. UNILEVEL PROS: • It provides a great option for part-time distributors. • There are supplemental bonuses. • The payouts are large. CONS: • The plan itself is difficult to understand. • There are no limits on the number of people who can be on a distributor’s frontline. • You have to have two legs to get paid. • Distributors have a tendency to stockpile product. • Residual income is secure • The plan faces regulatory challenges, both from the FTC and abroad. • The plan pays the highest levels the most money, while significantly less goes to the lower levels. • It is only good for single-product companies. • There is a low retention rate. • It is usually slower to build. • It creates competition within the organization. • There are smaller checks initially. • It is more beneficial for business owners than consumers. CONS: • There are limited levels of pay. • It requires time and hard work to build. • Revenue is not continuous—it will be up sometimes and down just as quickly. UNILEVEL PLUS. In looking at the pros and cons, the founding executives decided that the unilevel plan would be the most likely to achieve their goals for dōTERRA. However, they wanted to create a way that those who were just starting to build the business could earn money as well. That is why they added Fast Start and Power of 3 bonuses. In this way you can build a long-term income, but have bonuses to get you there along the way. They also added the Founder’s Club and Bonus Pools, so that your hard work and effort to get to higher ranks will be even more beneficial. Find more business tips on the doTERRA Business Blog at: http://doterra.com/US/en/blog-business. 48 dōTERRA ESSENTIAL LEADERSHIP I JULY / AUGUST 2016 www.doterra.com 49