ISN Coins Compensation Plan Review v2.0: Autoship redux

Last month I was contacted by ISN Coins founder and CEO Matt Barkes:

My name is Matt Barkes. I’m one of the founders of ISN. I apprecite (sic) you taking the time to evaluation ISN, however almost everything you have written is out dated.

After hiring Kevin Thompson as our MLM attorney we’ve made many changes to better the company for our members.

This being the case I respectfully request that you either modify the information to to (sic) reflect ISN currently or remove the blog.

I first reviewed ISN Coins back in 2012, so it wasn’t surprising to learn that the business might have changed since then.

Today we take a look at ISN Coins as it stands in 2014, read on for the review.

The ISN Coins Product Line

ISN Coins market numismatic coins and bullion bars, with the company’s online store appearing to have undergone significant upgrade since 2012.

Back then there wasn’t really much on there other than some MS69 Silver Eagle coins going for $59.

Today the ISN Coins webstore offers a bunch of numismatic coins from around the world. The “top seller” listed coin on the website is a “Random Date 1/10 oz Gold Eagles NGC/PCGS MS70” going for $254.

The ISN Coins Compensation Plan

The ISN compensation plan comes in at a whopping thirty three pages. “Core commissions” are paid out through a unilevel, however the way this is explained is confusing and tends to jump all over the place.

As such I’ve tried to present ISN’s compensation plan below in a more structured manner. In addition to upfront commissions (retail and autoship), two bonus pools are also available for higher ranked ISN affiliates.

Retail Commissions

Retail commissions are offered on all coin purchases through ISN Coins replicated storefronts (including discounted preferred customer orders).

Retail commissions are paid out on single product orders that cost less than $999 at 4%. Anything over $999 is paid out at 2%

Bullion Commissions

Any bullion sold through an ISN Coins replicated storefronts attracts a direct retail commission.

Bullion commissions are paid out at a rate of ‘$1 per ounce of silver bullion and $1 per gram of gold bullion‘ purchased.

Opening Order Bonus

The Opening Order Bonus pays out a commission on coin orders made by ISN affiliates (after they’ve joined), within their first 30 days of affiliate membership.

The Opening Order Bonus paid up four levels of recruitment:

• recruiting affiliate (level 1) is paid 6%
• the affiliate who recruited them (level 2) is paid 2%
• the affiliate who recruited them (level 3) is paid 2% and
• the affiliate who recruited them (level 4) is paid 1%

ISN Coins Affiliate Membership Ranks

There are fourteen affiliate membership ranks within the ISN Coins compensation plan.

Along with their respective qualification criteria, they are as follows:

• Manager – commissions qualified affiliate (100 PV a month)
• Director – recruit at least two affiliates, who each generate $100 a month in volume and have a total monthly downline volume of $300
• Silver Director – recruit at least two affiliates, who each generate $100 a month in volume and have a total monthly downline volume of $3000
• Gold Director – recruit at least three affiliates, who each generate $100 a month in volume and have a total monthly downline volume of $12,000
• Platinum Director – recruit at least three affiliates, who each generate $100 a month in volume and have a total monthly downline volume of $50,000
• Executive – recruit at least three affiliates, who each generate $100 a month in volume and have a total monthly downline volume of $100,000
• One Star Executive – as per above and have at least one Executive ranked affiliate in any one unilevel leg
• Two Star Executive – as per Executive and have at least two Executive ranked affiliate in two individual unilevel legs
• Three Star Executive – as per Executiveand have at least three Executive ranked affiliates spread out over at least three individual unilevel legs
• Four Star Executive – as per Executive and have at least four Executive ranked affiliates spread out over at least three individual unilevel legs
• Five Star Executive – as above and have at least five Executive ranked affiliates spread out over at least three individual unilevel legs
• Silver Executive – qualify as an Executive or above and have at least one Three Star Executive or higher ranked affiliate in three individual unilevel legs
• Gold Executive – qualify as an Executive or above and have at least one Five Star Executive or higher ranked affiliate in three individual unilevel legs
• Platinum Executive – qualify as an Executive or above and have at least five Five Star Executive or higher ranked affiliates spread out over at least three individual unilevel legs

Residual Commissions

Residual commissions in ISN Coins 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):

In turn, if any level 1 affiliates go on to recruit new affiliates of their own, they are placed on level 2 of the original affiliate’s unilevel team. If any level 2 affiliates recruit new affiliates of their own, they are placed on level 3 and so on and so forth down a theoretical infinite number of levels.

Standard residual commissions paid out via the unilevel are capped by ISN at eight levels. But how volume is generated is a bit murky.

In their compensation plan ISN state

On sales where customer commissions apply, the full core commission distribution, most commonly 3% of the purchase price, is paid proportionately through each level of the (unilevel).

This would suggest that everything purchasable by an affiliate or retail customer, excluding the Opening Order Bonus and bullion sales, generates volume into the unilevel at a rate of ~3% of the cost price.

The comp plan does mention that single item purchases over $1000 are generate 1.5% of the cost-price in volume, but everything else appears to be 3%.

What is absent is an explanation of how much per level is paid out. The Autoship commissions are clarified below, but as for how everything else is paid out through the unilevel – that information is absent.

Finally, note that at the Executive rank an affiliate is able to earn beyond eight levels through an Executive Depth Bonus. This bonus continues the 3%/1.5% commission beyond the eighth unilevel level, paying out until two Executive ranked affiliates are found in a unilevel leg.

Once a second Executive ranked affiliate is found beyond the first eight unilevel levels, the Executive Depth Bonus will be capped eight levels deeper than the level this affiliate was found on.

Note that the Executive ranked affiliates must be found in each individual leg, with each unilevel leg considered independently of the others. If no second Executive ranked affiliate is found, then the Executive Depth Bonus pays out till the end of the unilevel leg.

Autoship Commissions

Referred to as an “Advantage Bonus”, ISN pay out a commission each time a customer or affiliate signs up for a monthly autoship order.

The affiliate whose customer it is or who recruits the affiliate signing up for autoship is paid $20.

A residual $3.75 commission is paid on autoships sold by an affiliate’s downline, via a unilevel compensation structure, as follows:

• Manager – levels 1 to 4
• Director – levels 1 to 6
• Silver Director – levels 1 to 7
• Gold Director or higher – levels 1 to 8

Residual commissions are also paid out on autoship orders, paying out $6.25 per order using the same unilevel qualification requirements above.

Note that an affiliate can earn deeper than eight levels via the Executive Depth Bonus (see unilevel commissions).

Autoship commissions paid out via the Executive Depth Bonus reduce the $3.75 and $6.25 payments to a flat $2 (both initial and monthly residual).

Collector Pack Bonus

The sale of a Collector Pack generates a $75 commission which is paid to either the affiliate who made the sale. Their upline can also earn a commission as the Collector Pack Bonus payout is determined by an affiliate’s membership rank.

• Manager – $25
• Director – $50
• Silver Director – $60
• Gold Director – $65
• Platinum Director – $70
• Executive – $75

A maximum of $75 is paid out, meaning that if the affiliate who makes the sale is at a rank lower than Executive, the system will search the upline for higher ranked affiliates to pay the rest of the $75 available to. Once an Executive is eventually found, whatever remains payable is paid out.

Eg. If a Silver Director sells a Collector Pack, they are paid $60. If their immediate upline is a Platinum Director, they receive $10. $5 remains to be paid out so the system will then continue to search for an Executive ranked affiliate to pay the remainder of the bonus out to.

A residual second level commission of $5 is also paid out, with an affiliate needing to be at the Silver Director or higher rank to qualify. This second level commission is only paid out once to the first available Silver Director or higher ranked affiliate found in the upline after the entirety of the first level $75 commission has been paid out.

VIP Pool

ISN’s VIP Pool is ‘made up of 2%of the entire company’s business volume‘, excluding any orders made during the Opening Order Bonus period, and is paid out to affiliates via shares.

ISN Coins affiliates earn shares in the pool based on their affiliate membership rank:

• Active Manager – 1 share
• Active Director – 10 shares
• Active Silver Director – 30 shares
• Active Gold Director – 50 shares
• Active Platinum – 70 shares
• Active Executive – 90 shares

If an affiliate qualifies as an “ISN All Star”, each share they have is worth double its value (ie. if they have 30 shares, it’s equivalent to 60).

To qualify as an ISN All Star, an affiliate must qualify at the Director affiliate rank within 30 days of joining the company.

ISN recommends affiliates do this by recruiting two affiliates and getting them to spend at least $300 (combined) when they sign up:

Leaders Pool

Similar to the VIP Pool, the Leaders Pool is made up of 2% of ISN’s company-wide business volume.

Available to Platinum Director and Executive affiliates, the Leaders Pool (split 1% between Platinum Directors and Executives), is also paid out via shares.

Qualified affiliates earn shares in the pools according to the ranks of recruited affiliates in their downline:

• a Director ranked affiliate in at least three individual unilevel legs = 1 share
• a Silver Director ranked affiliate in at least three individual unievel legs = 3 shares
• a Gold Director ranked affiliate in at least three individual legs = 5 shares
• a Platinum Director ranked affiliate in at least three individual legs = 7 shares
• an Executive ranked affiliate in at least three individual legs = 10 shares

Note that an Executive’s shares count for a share of both bonus pools. And as with the VIP pool, if an ISN affiliate qualifies as an ISN All Star, their shares receive double value.

Car Bonus

If an ISN affiliate qualifies and maintains a rank of Gold Director or higher for two months, they qualify for a $600 a month car bonus.

The car offered is a ‘white, silver or black ISN branded Mercedez-Benz’.

Note that if an ISN affiliate doesn’t wish to purchase a car, they can elect for a $400 monthly cash bonus instead.

Joining ISN Coins

Basic affiliate membership to ISN Coins is $39 upfront and then $19.95 a month.

An optional Collector Pack for $199 is also available. This pack is in addition to the basic affiliate cost, and comes with 1 silver coin, 1 silver bullion bar, affiliate training and “customer vouchers”.

Monthly autoship is also pushed pretty heavily which, if an affiliate signs up for it, results in an additional $104.95 a month cost.

Conclusion

When I first reviewed ISN Coins I was heavily critical of the fact that the business model lead itself to the recruitment of new affiliates and putting them on autoship.

Granted ISN have made a better effort in stocking their online store and changing up their compensation plan, but unfortunately the underlying business model appears to remain the same.

We can start our analysis by taking a look at three random coins offered on the ISN Coins webstore (“isnmoderncoins.com”).

The first coin appears on the ISN Modern Coins homepage as a “2014-P Aus Wedge Tailed Silver Eagle Mercanti Signed PCGS MS70”, and it’s listed for $119:

I punched the name of the coin into Google and the second result (Modern Coin Mart) has the same coin listed for $99:

Next I clicked Chinese Coins and a “2014 China 1 oz. .999 Fine Silver Panda 10 Yuan PCGS MS70 Mint State 70” coin popped up for $79.

Modern Coin Mart have the same coin listed for $59.95:

For my last comparison I clicked “5 Oz ATB Coins” (I don’t even know what that means), and a “2014 5oz. American the Beautiful Shenandoah National Park
NGC SP70 ER” coin popped up for $262.

Modern Coin Mark again wins out offering the same coin for $239:

Seriously, what am I missing here?

I’m not going to pretend like I know anything about these coins but consistently ISN Coin’s prices would indicate little to no retail value. Who, other than affiliates, are buying coins from ISN at inflated prices?

And that brings us to the compensation plan.

Despite the apparent lack of retail appeal, the plan does pay out retail commissions on coin purchases and retail autoship, so that’s good.

But fat lot of good the offering is if nobody is signing up for it. And that leaves us with the problem we had before, a business model tailored around recruiting affiliates and signing them up on autoship.

Mysteriously absent from ISN’s compensation is the breakdown of percentages paid out on non-autoship volume through the unilevel. And don’t forget, ISN call this core commissions…

What is provided though are explicit dollar values for autoship order payouts per level, including the Executive Depth Bonus.

Sort of gives away what’s truly being pushed here, doesn’t it.

Still not convinced? From the ISN compensation plan:

What would be one of my first goals when I become an ISN Business Pro (affiliate)?

To become an ISN “All-Star”.

As mentioned in the compensation plan breakdown, ISN’s recommended path for that is the recruitment of 2 affiliates and getting them to spend $300 combined. Two affiliate memberships + a Collector Pack each easily covers that.

And it gets even more obvious when the unilevel example provided by ISN exclusively focuses on autoship volume (ignoring everything else):

Other revealing factors are that in order to qualify for commissions, ISN affiliates must generate 100 PV a month in sales. In the event that retail customers aren’t interested in paying above-average prices for ISN’s coins, an affiliate can self-purchase their way to commission qualification.

ISN’s monthly autoship costs $104.95, which conveniently and obviously entirely be design generates 125 PV.

And for that, you don’t even know what you’re getting:

Each month you’ll receive an NGC graded MS-69 1oz Silver World Coin from our rotation of beautiful Government Struck World Coins.

Coins from somewhere around the world… that are supposedly part of ISN’s collection. Riiiiiiiiiiight.

Good luck trying to convince non-affiliates to sign up for monthly random coins they know nothing about.

Even the affiliate rank requirements are rigged around autoship, never once requiring retail volume and only requiring recruited affiliates to generate 100 PV a month (autoship).

If you’re still not convinced this is the same recruitment + autoship model I reviewed back in 2012, just ask the person recruiting you how much retail volume they were paid out on the last month.

Then ask them how much they made off affiliate autoship orders. I’d be extremely surprised if it was anything less than a gargantuan bias towards affiliate autoship volume.

And the Collector Bonus, way to just reword the recruitment commissions from the previous model. If  only affiliates are purchasing the Collector Pack (and I don’t see why retail customers would need customer “offer” coupons or marketing training), then this is pretty much a defacto recruitment commission.

You sign up affiliates, get them to purchase a Collector Pack and then get paid on it.

Finally, can someone explain to me why there’s fourteen ISN affiliate membership ranks when most of them have nothing to do with the compensation plan? Surely these could have been cut down to simplify the plan somewhat.

All in all if ISN’s coins were remotely competitive at a retail level then one might argue that a retail market is possible. Based on the coins I checked though (completely at random), this does not appear to be the case.

Thus all you’re left with is a re-incarnation of the problematic recruitment and autoship combination business model ISN were using before.

Granted this time around it’s not as explicitly obvious as before, but if only affiliates are buying coins (autoship or otherwise), then you’re pretty much looking at the exact same flow of money through the company.