ACN Review: $499 affiliate fee and services
ACN (an abbreviation for “American Communications Network”) launched all the way back in 1993, initially operating as ‘a marketing arm for a long-distance reseller called LCI Communications‘.
That relationship ended in 1998 until LCI was sold off, at which point ACN broadened their product and service offering. Today ACN are involved in a number of MLM niches, including utilities, communications, home entertainment and security “and more”.
Based out of the US state of North Carolina, ACN was co-founded by four individuals who, to their credit, have retained their executive positions within the company.
Greg Provenzano (second above) serves as President, Robert Stevanovski (fourth) as Chairman and Mike (third) and Tony (first) Cupisz (twins) as Vice-Presidents.
Chip Barker (right) was brought on as CEO in 2007. Prior to his CEO appointment, Barker served as ACN’s Chief Operating Officer of European Operations.
Due to the age of the company and a lack of information provided in their ACN corporate bios, what each of the four ACN co-founders did specifically before launching the company is a bit of a mystery.
Taken from Greg Provenzano’s personal website (“gregprovenzano.com”):
Greg is a born entrepreneur who had a very successful career in the network marketing industry that began in 1984. He spent nearly a decade examining the industry before founding his own direct sales company
A biography for Robert Stevanovski on an ACN marketing site reads:
After entering the network marketing arena in the late 1980s, Robert held senior positions with two highly successful marketing companies.
ACN Founder Robert Stevanovski These experiences positioned him as one of the driving forces behind the formulation of ACN.
The biography also credits Stevanovski with having ‘managed several businesses throughout the 1980s, directly influencing growth and expansion‘.
In his ACN corporate bio that appears on replicated ACN affiliate websites (which differs from the main corporate bio), Mike Cupisz is credited with having ‘built several successful companies prior to founding ACN.‘ Tony Cupisz bio claims he ‘has worked in direct marketing since 1986‘.
I wasn’t able to find any information on what Chip Barker was up to prior to ACN.
On the regulatory front, ACN has run into problems with the Montana Commissioner of Securities and the Bureau of Consumer Services in Pennsylvania.
In August, 2010 the Montana Commissioner of Securities and Insurance Monica Lindeen announced the issuance of a Cease and Desist Order and Notice of Proposed Agency Action against ACN, Inc. and several of its founders for allegedly operating a “pyramid scheme.”
In September, 2010 the Commissioner moved to vacate the Cease and Desist Order in full settlement of the case.
In the course of the Commissioner’s investigation, the Commissioner determined that the actions giving rise to the initial concerns were not part of the ACN business model, but instead were isolated instances taking place by certain ACN’s independent representatives in Montana.
The Commissioner and ACN agreed that ACN would implement additional training with its independent representatives.
On June 13, 2002, ACN settled a case with the Bureau of Consumer Services in Pennsylvania wherein it was alleged that a small number of IBOs were “slamming”, or switching consumer services without authorization.
ACN disputed the allegations and the exact details of the settlement are under court seal.
Nothing too serious, although the settlement under seal indicates a likely “we’ll pay the fines but don’t admit to anything” resolution. The Montana cease and desist appears to be related to marketing efforts by the company’s affiliates.
ACN haven’t been pinged since for this, so hopefully that indicates the company and it’s affiliates have cleaned up their act.
For additional information, a read of ACN’s Wikipedia entry is recommended. Otherwise, read on for a full review of the ACN MLM business opportunity.
The ACN Product Line
Due to the nature of ACN’s offered services, I believe they vary from market to market they operate in. As such, the following product information pertains to ACN’s US offering only.
At ACN, Independent Business Owners simply offer the services that people are already using and spending money on every day, including phone service, wireless, natural gas and electricity, merchant services, high-speed Internet, TV, home security and automation and more.
All of ACN’s services are offered at a retail level as follows:
- digital phone service – $24.99 a month (a local and long distance service is also offered, with prices determined by the area the customer resides in)
- local and long-distance phone service – price determined by area customer lives in (I clicked Michigan as an example and was quoted $22.99 plus additional charges or $38.99 (Intnl and Asia-Pacific specific coverage extra))
- wireless service through “Flash Wireless” – $32 to $67 a month plans
- power plans through “XOOM Energy” – prices and energy services offered (electricity and natural gas) vary from state to state
- satellite tv – offered through DirecTV ($24.99 to $34.99 a month) and Dish ($19.99 to $44.99)
- home security – offered through Vivint ($53.99 to $69.99 a month) and ADT ($36.99 to %52.99 a month)
- internet – offered through a variety of internet providers
- merchant services – offered through Anovia Services (ACN branded), no pricing provided on Anovia Services website
With the exception of ACN’s phone services, the remainder of services offered are done through agreements (dealerships, affiliation or the setting up of a secondary company (Flash Wireless, Anovia Services), with third-party merchant providers. ACN themselves only appear to act as the middleman and do not provide the services themselves.
The ACN Compensation Plan
The ACN compensation plan is not readily available on the company’s website. ACN does have an “opportunity” page on their site, however it simply presents visitors with a lengthy marketing spiel and then asks them to sign-up as an affiliate.
Only once an affiliate has clicked the “join” button are they then presented with the ACN “Independent Business Owner Agreement”, buried within is a link to the ACN compensation plan.
There is no indication that the compensation plan will be made available once a visitor clicks the affiliate sign-up button.
The plan itself pays affiliates to either purchase or sell services offered to customers. This generates Customer Points which, along with bills sent out to customers then determine how much an affiliate is paid.
In addition to this, the company also pays out a Customer Acquisition Bonus, which is tied to recruiting ACN affiliates and getting them commission qualified (requires the sale of services).
With so many third-party services available through ACN, the company has simplified commission calculation by designating point values to services offered:
- phone services – 1 to 9 points
- wireless – 2 to 3 points
- energy – 1 to 5 points
- merchant services – 1 to 3 points
- home security – 1 to 3 points
- TV and high-speed internet (bundle) – 1 point
- TV – 0 to 2 points
- high-speed internet – 1 point
- tech support (charged service) – 1 to 3 points
Points are allocated per service signed up for by a customer for the life of the service subscription.
ACN Affiliate Membership Ranks
There are eight affiliate membership ranks within the ACN compensation plan.
Along with their respective qualification criteria, they are as follows:
- Team Trainer – pay ACN $499
- Qualified Team Trainer (required for commission qualification) – acquire 5 Customer Points and sell or purchase at least 3 preferred services
- Executive Team Trainer – acquire 7 Customer Points, sell or purchase at least 3 preferred services and have a Qualified Team Trainer in two individual unilevel legs (1 each)
- Executive Team Leader – acquire 15 Customer Points, sell or purchase at least 4 preferred services and have an Executive Team Trainer in three individual unilevel legs (1 each)
- Team Coordinator – acquire at least 200 Customer Points through at least three individual unilevel legs (at least 600 points total)
- Regional Director – have a Team Coordinator in at least two individual unilevel legs (1 each) and a third unilevel leg that has generated at least 200 Customer Points
- Regional Vice-President – have a Team Coordinator in four individual unilevel legs (1 each) and have a downline generating at least $150,000 a month in customer bills (max $75,000 can be counted from any one individual unilevel leg)
- Platinum Regional Vice-President – have a downline generating at least $300,000 a month in customer bills
- Senior Vice-President – have a Team Coordinator in at least six individual unilevel legs (2 legs must contain a Regional Vice-President ranked affiliate and one a Regional Director) and have a downline generating at least $500,000 a month in customer bills (max $250,000 can be counted from any one individual unilevel leg)
Direct Subscription Commissions
ACN pay an affiliate a direct commission when they sign up a customer to one of their offered services. This commission is paid out as a percentage of the bill charged to the customer (which in some instances can exceed a monthly subscription charge).
How much of a percentage of the bill is paid out as a commission is determined by how many Customer Points an ACN affiliate has:
- 1 to 29 points – 1%
- 30 to 39 points – 3%
- 40 to 59 points – 5%
- 60 or more points – 10%
Residual commissions in ACN are paid out using a unilevel compensation structure.
A unilevel compensation structure places an affiliate at the top of a unilevel team, with every personally recruited affiliate placed directly under them (level 1):
If any level 1 affiliates go on to recruit new affiliates of their own, these are placed on level 2 of the original affiliate’s unilevel team. If any level 2 affiliates recruit new affiliates, they are placed on level 3 and so on and so forth down a theoretical infinite number of levels.
ACN cap initial unilevel commissions at seven levels, however deeper levels can be earned on via a generation bonus (see below).
Commissions are paid out on the bills charged to service subscribing customers that belong to affiliates in the unilevel team, paid out as a percentage of the bill itself.
How much of a percentage is paid out depends on what level of the unilevel team the affiliate whose customer is paying the bill is placed:
- levels 1 to 3 – 0.25%
- level 4 – 0.5%
- level 5 – 3%
- level 6 – 5%
- level 7 – 8%
Note that residual commissions on energy subscriptions for “large businesses” are capped at four unilevel levels (percentages as above).
Commission eligibility on the first seven unilevel levels must be qualified for as follows:
- levels 1 and 2 – 10 Customer Points
- levels 3 and 4 – 20 Customer Points
- levels 5 and 6 – 40 Customer Points
- level 7 – 60 Customer Points
An ACN affiliate can earn on bill volume beyond the first seven unilevel levels via a generation bonus.
A generation in ACN is defined by affiliates in any given unilevel leg that are placed beyond the first seven levels. Once a Regional Vice-President or Platinum Regional Vice-President is found, the generation expands down a further seven unilevel levels before it is capped.
A second generation then begins, until another Regional or Platinum Regional Vice-President is found, with the second generation capped again at seven levels past the second ranked affiliate.
If no ranked affiliate is found, the first generation (or last uncapped generation) extends down the entire length of the unilevel leg. Note that for the purpose of defining generations to pay the Generation Bonus on, each unilevel leg is considered individually from the rest.
The Generation Bonus pays out in exactly the same manner as it does for Vice-President ranked affiliates, but instead of capping a generation seven levels past a found Vice-President ranked affiliate, the rank required changes to a Senior Vice-President ranked affiliate.
The generation bonus unlocks at the Regional Vice-President affiliate rank, paying out slightly different percentages at the Platinum Regional Vice-President and Senior Vice-President ranks.
Regional Vice-President affiliates 1.5% on the first generation, 1% on the second and 0.5% on the third.
Platinum Regional Vice-President affiliates earn 3% on the first generation, 2% on the second and 1% on the third.
Senior Vice-President affiliates earn 2% on the first and 1% on the second generation.
Note that residual commissions on energy subscriptions for “large businesses” are capped at one generation irrespective of Vice-President rank, and only pay out 0.5% on the first generation’s bill volume.
Customer Acquisition Bonus
ACN’s Customer Acquisition Bonus revolves around recruited affiliates becoming commission qualified within thirty days of joining the company.
Commission qualification requires an affiliate to generate at least 5 Customer Points and sell or purchase at least 3 preferred services. At least one of the preferred services sold must be supplied to an address “outside of an affiliate’s household”.
A quick glance at the ACN compensation plan reveals that most of the services provided through ACN (bar most of the internet and some of the TV, merchant services and phone services) count as preferred.
The Customer Acquisition Bonus pays out using the unilevel compensation structure, paying out commissions over two generations.
A generation in the Customer Acquisition Bonus is defined when an affiliate at the same or higher rank of the affiliate qualifying for the commission is found. As with regular unilevel commissions, each unilevel leg is analysed independently from the others.
How much of a Customer Acquisition Bonus is paid out per qualified affiliate found is determined by an affiliate’s membership rank:
- Team Coordinator and Regional Director – $50 per qualified affiliate in the first generation and $20 in the second
- Regional Vice-President (including Platinum) – $30 per qualified affiliate in the first generation and $15 in the second
- Senior Vice-President – $30 per qualified affiliate in the first generation and $10 in the second
Team Customer Acquisition Bonus
The Team Customer Acquisition Bonus is an additional bonus paid out when an ACN affiliate hits specified qualified affiliate targets in any given month.
For the purpose of qualification, both personally recruited and indirectly recruited affiliates count towards the required targets.
How much of a bonus is paid out and what the specified targets are depends on an affiliate’s membership rank:
- Executive Team Trainer – $100 for 2 qualified affiliates, $500 for four, $1000 for six, $1500 for nine, $2500 for twelve and $3000 for fifteen
- Executive Team Leader – $200 for 3 qualified affiliates, $750 for five, $1500 for ten , $2500 for fifteen, $3000 for twenty, $4000 for twenty-five, $5000 for thirty $6000 for thirty-five and $7000 for forty
- Team Coordinator – $500 for five qualified affiliates, $1500 for ten, $3000 for fifteen, $5000 for twenty, $6500 for twenty-five, $8000 for thirty, $10,000 for forty, $12,000 for fifty and $25,000 for one hundred
- Regional Director – $1000 for ten qualified affiliates, $2500 for twenty , $4000 for thirty, $6000 for forty , $10,000 for fifty, $15,000 for seventy-five, $20,000 for one hundred , $30,000 for one hundred and fifty
- Regional Vice-President – $2000 for twenty-five, $5000 for fifty, $7500 for seventy-five, $10,000 for one hundred, $15,000 for one hundred and fifty, $25,000 for two hundred and fifty, $50,000 for five hundred
Note that the above is paid on what ACN refer to as an affiliate’s “open line”. An open line are affiliates in any given unilevel leg until an affiliate of the same or higher affiliate rank is found.
Regional Vice-Presidents (including Platinum VPs) are paid the highest bonus possible between a calculation of their Regional Vice-President and Regional Director open lines.
And finally, any new affiliates in a different country to the qualifying affiliate are counted pro-rata. I believe this indicates that open-lines are geographically restricted.
As per the ACN Independent Business Owner Agreement, the cost of ACN affiliate membership is $499.
With such a plethora of services on offer, my initial reaction was that the ACN compensation plan was going to be a giant swimming mess of confusion. Thankfully that’s not the case.
By consolidating product use into a point-style format and paying out on the bills issued to customers, the ACN plan is relatively straight forward and easy to digest.
As for the services themselves, the phone service looks to be branded ACN and provided in-house (white-label or otherwise) – so the fact that the rest of the services belong to other companies isn’t really of concern. Especially when you consider commissions are only paid out on the bills paid by customers.
That said I’m at a loss to explain why it costs $499 to join ACN. Where does this money go?
ACN are quick to point out in their compensation plan that ‘compensation is earned at ACN only when customers are acquired’, but surely some of the $499 paid also goes towards the Customer Acquisition Bonus. Customers themselves aren’t paying any extra to make up the commission payout – so unless third-party merchants are paying a significant lead bonus to ACN, where else does this money come from?
This brings me to an important point regarding the whole Customer Acquisition Bonus (CAB) and Team CAB. Whilst not overtly suspect, both of these bonuses walk an extremely fine line that leaves them open to abuse.
And ACN seem perfectly aware of this, declaring in their compensation plan that
Compensation is earned at ACN only when customers are acquired. ACN reserves the right to retract the payment of any bonus or commission if it is found that a customer used to qualify for a bonus or a certain commission level was not a valid billing customer.
The specific wording of that warning indicates that ACN has had trouble in the past with fake customers being signed up so that affiliates qualify for commissions.
To their credit, ACN explicitly mention that at least one of the services sold required for commission qualification ‘must be outside of (an affiliate’s) household‘.
But what’s stopping me from signing up a friend, paying the bill myself and then having them cancel after a month?
Some ACN services require a sixty day commitment to generate a Customer Point, but why not eliminate any chance of abuse in the compensation plan by explicitly requiring a retail service sale on top of it having to be an outside household.
Surely something along the lines of a 90 day commitment requirement by a retail customer (can’t be paid for by an affiliate) with the household being external to the affiliate would completely eliminate any chance of abuse?
And I use the word abuse because with the CAB and TCAB paying out on affiliates qualifying themselves for commissions, it’s possible to totally absorb the cost of a few fake customers (or temporary subscription sign-ups followed by a cancellation) at the higher ranked CAB and TCAB payouts.
Like I said, given ACN’s warning I’m pretty sure that’s exactly what’s happened in the past. And how stringent they are today at “finding” non-valid billing customers is a mystery.
Why not just eliminate the temptation altogether. Nobody is going to be signing up and paying subscription fees for three months. Not even for the CAB and TCAB bonuses. And I think it’s perfectly reasonable to suggest that if they’re happy with the service, given the nature of the services offered through ACN, most customers will continue to pay for the service well beyond three months.
I feel the implementation of this would go a long way to reduce any question that fake customers are being signed up for affiliate commission qualification.
That said, if worked correctly the CAB and TCAB bonuses are fine. Although a 1 to 2 split in favour of self-purchase of services could probably do with a reversal (2 retail and up to 1 personal subscription sale for commission qualification). Even all three if they really wanted to drive home the importance of retail.
What I do hope is that the $499 affiliate fee isn’t just an attempt to stop affiliates working ACN as a recruitment scheme through the CAB and TCAB bonuses. Other than acting as a direct financial deterrent, I really can’t see why such a high fee is charged otherwise.
From a marketing standpoint, I imagine having to tell people it’ll cost $499 just to join is a big sales pitch killer. I mean how long is it going to take to make that back in service savings?
And on that note, given that other than the phone service ACN’s product line is pretty much outsourced, just how competitive are they?
Some of the online store links in the services section of the ACN website linked to replicated pages of the provider of said service. And the prices advertised certainly didn’t seem exclusive.
If I can get the same service direct from the company, as a retail customer why would I go through ACN?
Definitely evaluate what you can get locally versus through ACN as a customer before considering paying the $499 to sign up as an affiliate. Also checking with your upline as to how many Customer Points of theirs were generated by retail customer service subscriptions wouldn’t hurt either.
And if you really want to be sneaky, ask them what they’d do if they were one or two sales short of hitting one of the upper ranked TCAB bonuses (where anywhere from $4000 to $50,000 is on the line).
If you hear anything about temporary signups calling family and friends to do you a favor, run.
All in all if worked right ACN present an interesting collection of services to market through a well-thought out plan. I do however think the company can further decrease the chance of customer fraud with a few simple changes to their commission qualification requirements.
As it stands, there’s a little too much ambiguity with just requiring a subscription to be purchased for a separate household to the one the affiliate is living in. Oh and perhaps a breakdown of the savings possible when services are purchased through ACN rather than directly wouldn’t hurt either.
As an ACN affiliate it’s obviously going to be a challenge to keep track of every service offered in every US state and what the cost benefits are to a customer. They’ll likely need all the help they can get in that area so any initiative by the company to help out would, I’m sure, be appreciated by the ACN affiliate-base.
Bit of a mixed-bag this one, but if you do take the plunge – good luck!