C ompensation Plan SECTION #2 R3-1010 1
Building an organization is the key to harnessing the full power of the network marketing business model. There are only 168 hours in a week, and there is a limit to how many hours any individual can work in that time period. With your help, other Field Representatives in your organization can build their own organizations, which could mean thousands of combined work hours. The best part is that you get paid on a percentage of the sales your organization generates! This is in addition to what you can earn on your own sales. So it is easy to see how over time, as your organization grows, you can earn more money with an organization than you could ever earn by yourself. You can also see how building an organization solves the problem of earning money even when you are not working. The compensation plan rewards you for your efforts in building your own organization of Field Representatives. Although there are actually four different bonuses that you can earn on the sales generated by your organization, we are only going to discuss two in this section. This is because the other two bonuses are earned at higher ranks of the compensation plan, and will therefore be covered in the next section. The two bonuses that we will cover in this section are the Recruiting Bonus and the Foundation Bonus. Advancing in Rank For the purposes of this section, we will discuss how to advance from 1-Star to 4-Star. The rest of the ranks will be covered in the next section, 5-Star and Beyond. Ranks In order to understand the rest of the Compensation Plan, you must first understand Ranks, since the percentages you earn on the rest of the bonuses are based on your Rank. The Life s Abundance Compensation Plan has nine ranks. The lowest rank is 1-Star and the highest rank is 9-Star. Field Representative Rank To achieve any rank, you must meet certain qualifications. The ranks you achieve in the Life s Abundance Compensation Plan are Paid As Ranks. That means if you qualify as a 4-Star one month, you are paid as a 4-Star. If the following month you qualify as a 3-Star, you are paid as a 3-Star, even though you previously attained the rank of 4-Star. So every month you are paid all your bonuses in accordance with the rank you achieved that month. 7
Personal Group Sales Personal Group Sales (PGS) includes your Personal Sales and the Personal Sales of all the Field Representatives in your organization. The chart below shows the Personal Sales (PS) and Personal Group Sales (PGS) requirements that have to be met in order to advance through the early ranks of the Compensation Plan. Requirements to Advance in Rank from 1-Star to 4-Star Recruiting Bonus As you may already know, when you joined Life s Abundance, you had two options: (1) joining as a Basic Field Representative, or (2) joining as an Executive Field Representative by purchasing an Executive Field Rep Pack. Based on our past experience, Executive Field Representatives are more successful than Basic Field Representatives. The Executive Field Rep Pack gives new Reps everything they need to start earning money right away. Without it, new Reps have to buy sales aids individually and often spend more money and don t get everything they need to get their business off to a good start. Executive Field Representatives are entitled to a very important benefit; they are eligible to receive Recruiting Bonuses. Basic Field Representatives are not eligible for Recruiting Bonuses. The good news is that you can become an Executive Field Representative at any time by purchasing an Executive Field Rep Pack. The Recruiting Bonus rewards you for your recruiting efforts. For each one of your personally sponsored Field Representatives who purchase an Executive Field Rep Pack, you will receive $30.00. 8
Foundation Bonuses The Foundation Bonuses are designed to reward you for building a solid foundation. You can do that by helping your Field Representatives build their organizations. Simply said, the Foundation Bonus pays you a percentage of the Personal Commissionable Sales (PCS) of Field Representatives in your organization, according to the schedule below. Foundation Bonuses Foundation Bonus Level 1 Foundation Bonus Level 2 Foundation Bonus Level 3 Foundation Bonus Level 4 Foundation Bonus Level 5 Foundation Bonus Level 6 Foundation Bonus Level 7 Foundation Bonus Level 8 2% 2% Foundation Bonus Level 9 1% As you can see, the amount paid on any particular Field Representative depends on three factors: 1. Your Rank (1-Star through 9-Star) 2. The level of your organization the Field Representative is on (Level 1 through 9) 3. The amount of PCS the Field Representative has in a given month All three issues need further explanation, so let s start with rank. Rank As illustrated above, the higher your rank, the more levels you can earn a Foundation Bonus on. It s easy to remember; a 1-Star is paid on one level, a 2-Star is paid on two levels, a 3-Star is paid on three levels, all the way up to a 9-Star that is paid on nine levels. 9
Levels And Compression The chart on the previous page also illustrates how the Foundation Bonus percentage you are paid varies by level. Let s talk about the general concept of levels, and we ll throw in a twist at the end. Levels and Compression The basic concept of levels is simple. If you personally sponsor a Field Rep named Peter, then Peter is on your first level. If Peter has any customers, they are also considered to be on your first level. If Peter personally sponsors a Field Representative named Jane, she is on Peter s first level, and on your second level. Jane s customers would be on your second level as well. Any Field Representative Jane personally sponsors will be on your third level. See the illustration to the left. Now let s make things interesting by adding some numbers. In the illustration to the left, you are a 2-Star. Peter has two customers. For this commission month, he has $60 in CS himself. His customers have $40.00 and $100.00 in CS themselves. His PCS would be 60+40+100 = $200.00. Your Foundation Bonus would be a percentage of that $200.00. Because Peter is on your first level, you would earn a Level 1 Foundation Bonus of, which is $20.00. In the example, we assume Jane has no PCS for that month. Jane has sponsored Pat, who had $70.00 in PCS. Pat is on your third level. What happens with Pat? Now we have to introduce you to compression. Compression If you have a Field Representative in your organization with no PCS in a given month, that Field Representative will be ignored or skipped when paying the Foundation Bonus. This means the Field Representative will not count against you as a level on your Foundation Bonus payout. This is so you are not penalized for having non-performers in your organization. For the purpose of paying out Foundation Bonuses, without compression, Pat would have been your third level, and you would not have been paid on her. Because of compression, since Jane has no PCS, you would instead receive a Level 2 Foundation Bonus of on $70.00, which is $5.60 on Pat. Compression is therefore a good thing, as it enables you to get paid a Foundation Bonus on up to nine productive levels of your organization, depending on your rank, not nine physical levels. 10