Comparing compensation plans
"Did you know that the minimum required OV (Team Volume) for a doTERRA® Presidential Diamond is 162,000 OV, while other companies require their top leaders to have 1 million or more in team volume? doTERRA is also unique in that it has a retention rate of more than 70 percent, while other companies average 10–20 percent. A major reason for this loyalty is doTERRA provides a product that 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.
In the direct selling world, there are three basic compensation plans that companies use: binary, breakaway, and unilevel. Of the three, doTERRA decided that a unilevel plan was the best option for Wellness Advocates. Why? The answer is in the comparison.
What are the three types of compensation plans?
Only two people can be placed on your frontline.
Compensation is based on the group volume of each leg.
Commissions are usually paid on the weaker leg.
This plan is not driven by levels, but the volume within an organization is limited for payouts.
When a distributor doesn’t qualify, commissions return to the company.
Your business-focused downline breaks away from your team when they decide they want to build for themselves.
There are monthly team volume requirements for all leaders.
When a leader breaks away, they take their volume with them.
Leaders are then paid on the number of generations of downline groups.
Each builder is paid on individual levels.
Structure is very important. The placement of individuals in your downline is key.
Requirements for rank and bonuses are based on OV (team volume) and width.
There are no limits on width or depth, but you are only paid on a limited number of levels (seven in doTERRA).
What are the pros and cons of each plan?
The plan is easy to explain.
There are frequent payouts.
Usually people are only paid on their weakest leg. There is no reward for the leg that represents the greatest amount of effort.
You have to have two legs to get paid.
The plan faces regulatory challenges, both from the FTC and abroad.
It is only good for single-product companies.
It is more beneficial for business owners than consumers.
Revenue is not continuous—it will be up sometimes and down just as quickly.
Your payout could be very large.
It is a great plan for those with exceptional recruiting and selling skills.
The plan itself is difficult to understand.
Distributors have a tendency to stockpile product.
The plan pays the highest levels the most money, while significantly less goes to the lower levels.
There is a low retention rate.
It creates competition within the organization.
It provides a great option for part-time distributors.
There are supplemental bonuses.
The payouts are large.
There are no limits on the number of people who can be on a distributor’s frontline.
Residual income is secure.
There are limited levels of pay.
It requires time and hard work to build.
It is usually slower to build.
There are smaller checks initially.
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 doTERRA. 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."