Vitel Wireless Review: Recruitment + vendor sales
When I first visited the Vitel website, the system demanded I enter in an existing members details or be randomly assigned to a ‘Platinum Executive Business Owners’ before proceeding.
Clicking the “randomly assign me please” button, I was then kicked over to a website where I could do one of two things:
1. Watch a video inciting me to join Vitel (without revealing any specifics about the company) or
2. Sign up and join Vitel
If I wanted any further information on the company before signing up, there was none. In order to find out more information about Vitel Wireless I actually had to close the Vitel website and hit up Google.
Not good enough guys.
Vitel Wireless launched in January 2010 and operates out of Texas in the US. Vitel was founded by James Pearson (photo right) and Scott Rogers, with Pearson serving as Chief Operating Officer and Rogers Vitel’s Chief Executive Officer.
Scott Rogers’ Vitel executive bio mentions involvement in a number of non-MLM industries prior to the launch of Vitel.
Rogers Vitel executive bio simply glosses over 2003-2010 stating he was a ‘successful entrepreneur for the last 8 years‘. I wasn’t able to actually nail down any specific MLM companies he’d been a part of.
James Pearson’s executive bio is even more vague simply mentioning the “retail finance industry” and ‘entrepreneurial spirit and finance management experiences‘.
As far as Pearson’s history goes, there doesn’t appear to be anything MLM related prior to 2010 and Vitel Wireless, at least not publicly.
The Vitel Wireless Product Line
Vitel Wireless don’t actually appear to sell anything themselves as a company, but instead offer a range of services through third-party vendor partners.
These services include:
- cell phones
- wireless phone service (post and prepaid)
- debit cards
- prepaid debit cards
- satellite tv
- home security
Note that the above services aren’t offered by Vitel Wireless themselves but are rather resold services of third-party companies.
The Vitel Wireless Compensation Plan
Vitel’s compensation plan is presented extremely poorly on the company website. There’s little explanation as to what anything means and there is little structure to how the compensation plan is prevented.
At first the reader is pointed to four separate PDF files outlining four unrelated commissions structures, then back on the main page Vitel launch into explanations about bonuses, residual commissions and membership ranks.
Additionally services not mentioned anywhere else on the Vitel website feature in the compensation plan documentation, including “Legal Care Services” and a “Benefits Network”.
In the Vitel compensation plan material a link to a booklet is provided and in perusing this it appears both these services are third-party offers and services made available to ‘Executive’ and ‘Platinum’ Vitel members.
Overview videos are also provided on the compensation plan page, however clicking the link does not work (the HTML link points to ‘%3C%21–/#echo var=site –>.myvitel.com’).
That said below I’ve tried to piece together the mess and make sense of the Vitel compensation plan as I’ve understood it. To keep things simple I’ve separated commissions paid to Vitel and then split with its members, and commissions paid to members directly by Vitel itself.
Vitel Membership Ranks
All of Vitel’s internal commissions are dependent on which of the six Vitel membership ranks a member qualifies for.
The six Vitel membership ranks, along with their qualifications, are as follows:
- Marketing Representative (MR) – default level of all new Vitel members
- Team Leader (TL) – generate $1000 in team volume, with no more than $750 having been generated by a single unilevel leg
- Area Sales Manager (ASM) – generate $10,000 in team volume, with no more than $7,500 having been generated by a single unilevel leg
- Regional Sales Manager (RSM) – have three ASMs in 3 separate unilevel legs and generate $30,000 in team volume with no more than $10,000 having been generated by a single unilevel leg
- National Sales Executive (NSE) – have three RSMs in 3 separate unilevel legs and generate $90,000 in team volume with no more than $30,000 having been generated by a single unilevel leg
- Regional Vice-President (RVP) – have three NSEs in 3 separate unilevel legs and generate $270,000 team volume with no more than $90,000 having been generated by a single unilevel leg
Note that the sales volume amounts above are cumulative totals and include membership fees paid by Vitel members you recruit.
There is also a Fast Track option for membership rank advancement in Vitel, which revolves around generating sales volume ultimately equating to $135,000 in volume (no more than $45,000 from any one unilevel leg) within 180 days of joining the company.
Third-party vendor commissions
Third-party vendor commissions cover all of the third-party products and services Vitel members are able to resell through the company.
Due to the vastly varying nature of the commissions paid out due to the differing nature of the services and/or products themselves, I won’t go into the specifics of the available vendor commissions here.
Commissions on the subscription of a service, sale or use of a product are first paid to Vitel by the applicable vendor, with Vitel then splitting the commission paid to them with the member who sold the service and/or product.
How much of the commission Vitel splits is dependent on a member’s membership rank:
- Marketing Representative – 40%
- Team Leader – 45%
- Area Sales Manager – 50%
- Regional Sales Manager – 55%
- National Sales Executive – 60%
- Regional Vice-President – 60%
This commission is counted as a retail sale by Vitel and generates commissionable volume (CV) within the Vitel compensation plan.
Aside from being used to calculate direct sales commissions owing to Vitel members, this CV is also used to calculate residual commissions offered to members via a unilevel compensation structure.
Using the CV values assigned when a Vitel member sells a third-party vendor product or service, their upline qualify for override commissions.
An override commission is essentially a commissions spread out over various levels of a member’s upline.
Override commissions in Vitel are paid out as percentages of the applicable CV of the sale as follows:
- Level 1 – 15.5%
- Level 2 – 13%
- Level 3 – 10.5%
- Level 4 – 8%
- Level 5 – 6%
How many levels a Vitel member is paid out on depends on their membership rank:
- MR – paid overrides on Level 1
- TL – paid overrides on Levels 1-2
- ASM – paid overrides on Levels 1-3
- RSM – paid overrides on Levels 1-4
- NSE – paid overrides on Levels 1-5
- RVP– paid overrides on Levels 1-5
Because these are upline commissions, level 1 refers to the member directly above the member who made the sale. Level 2 is the member directly above the level 1 member and so on and so forth.
It can also be easier to think of override commissions as sales being generated by your downline. If they fall within 5 levels (or however many you qualify for as above), then you earn a commission depending on how many levels up you are of them.
Matching Override Bonus
A Matching Override Bonus is paid out as a percentage of the override commissions paid out to every personally recruited member in a Vitel member’s downline.
How much of a Matching Override Bonus a Vitel member earns is dependent on their membership rank:
- MR – pays 3%
- TL – pays 5%
- ASM – pays 10%
- RSM – pays 15%
- NSE – pays 20%
- RVP – pays 20%
Vitel offer a Generation Bonus to all National Sales Executives (NSE) and Regional Vice-Presidents (RVP) that allow them to be paid out residual commissions beyond 5 levels.
A generation begins when one NSE or RVP is found in a Vitel member’s downline, and ends when another NSE or RVP is found (NSE’s are paid out on NSE generations and RVPs on RVP generations).
For commission purposes, a generation is defined as all members between the first found NSE or RVP and the next one in their downline. A second generation would then be all the members between the second NSE and RVP and third one in your downline.
Note that each unilevel leg in your organisation operates independently with its own qualifying generations.
Using these generation definitions, NSE members are able to earn 3% of the total commissionable volume generated by up to 5 generations deep and RVP members are able to earn 5%.
The Vitel compensation plan offers members commissions for each new paid member recruited into their downline (either personally or via team effort).
- Executive members earn $5 per new Agent recruited (3 in a week = $15 bonus), $10 per Executive member recruited (3 in a week = $30 bonus), $10 per new Platinum member recruited (3 in a week = $30 bonus)
- Platinum members earn $5 per new Agent recruited (3 in a week = $15 bonus), $15 per Executive member recruited (3 in a week = $30 bonus), $25 per new Platinum member recruited (3 in a week = $50 bonus)
Both Executive and Platinum Vitel members are able to earn a Team Fast Start Bonus if they make $25 in CV sales volume (membership fees don’t count) in a given week.
The Team Fast Start Bonus pays out $3 on the team recruitment of any new Executive and Platinum members on levels 2-5 of a member’s unilevel organisation.
Additionally if Platinum members sell a single product with a CV value of over $25, they earn an additional monthly bonus equal to the sum total of the Team Fast Start Bonus earnt for that month.
Residual Recruitment Commissions
Both Executive and Platinum Vitel members earn monthly residual commissions everytime recruited members in their downline pay their monthly membership fees.
- Executive members earn residual recruitment commissions down 5 levels of their unilevel organisation – $1 for every Agent and $5 for every Executive and Platinum member
- Platinum members earn residual recruitment commissions down 7 levels of their unilevel organisation – $1 for every Agent and $7 for every Executive and Platinum member
In addition to dollar commissions paid out on the recruitment of new members, Vitel also offer service incentives to their members. These service incentives are “free” offerings of Vitel’s offered vendor products and services.
Qualification for Vitel’s Referral Bonuses incrementally range from the recruitment of 3 Executive or Platinum members to the recruitment of 25 Platinum members ($750 a month car bonus, with only Platinum members able to qualify).
Profit Sharing Pool
5% of the total commissionable volume made by Vitel members goes into a profit-sharing pool, which is then paid out to NSE and RVP members quarterly.
NSE members who generate $60,000 CV in two out of the three months for the quarter earn a share in 40% of the profit-sharing pool.
RVP members who generate $90,000 CV in two out of the three months for the quarter earn a share in 60% of the profit-sharing pool.
Joining Vitel Wireless
Membership to Vitel Wireless comes in three varieties:
- Agent membership – $29.95 a month
- Executive membership – $59.95 a month
- Platinum membership – $99.95 a month
First and foremost I can’t help but mention that the presentation of Vitel’s compensation plan, along with their website in general (demanding you sign up without divulging any company information) is horrendous.
I don’t know how many compensation plan revisions the company has gone through but I get the strong sense that what Vitel are using today has been cobbled together from a bunch of previous plans, with little to no thought put into how the plan now reads as a whole.
It’s stupidly complicated presentation wise and given the practical simplicity of the plan once understood, has no reason to be.
Part of the problem I believe also might be due to the fact that Vitel themselves only sell memberships, with all other services and products coming from third-party vendors. This I suspect is why members are given five confusing looking PDF files which are essentially a bunch of CV numbers with little to no explanation or presentation.
For a company that launched in 2010 I think this reflects extremely poorly on the Vitel business itself and I sincerely hope is not indicative of how the rest of the business is run.
That said, in breaking down the compensation plan I’ve identified two sources of company revenue and commissions.
The first are the vendor product and service sales, which I have no problem with. Well, I wouldn’t if Vitel were a single level affiliate program, but they’re not.
Because these third-party products and services aren’t offered by Vitel themselves, mechanically money is paid to the vendors, who then pay Vitel who then split the commission they receive with affiliates.
These commissions then translate over into commisionable volume and pay much the same as any other product-based MLM company using a unilevel commission structure.
Vitel themselves aren’t selling anything though and with the only other thing purchasable from Vitel being company membership, practically speaking that means Vitel themselves have no retail offering.
Again, not so much of an issue if they were a single-level affiliate program but when you look at the money Vitel themselves take in and what they pay out, things start to get messy.
For starters, revenue wise Vitel only take in membership fees. All vendor services and products are paid directly to the vendors in question, who then pay Vitel.
Out of the membership fees Vitel take in, they then pay out a series of recruitment commissions. And with membership fees counting towards CV that qualifies for membership rank advancement, it’s entirely possible to join Vitel, do nothing but pay your monthly membership fees, recruit other paid members and earn a sizeable monthly commissions check.
Infact, Vitel themselves even go ahead and encourage this themselves:
As a Platinum Distributor, if you were to personally enroll just seven Platinum Distributors like yourself and teach them to duplicate that through all seven levels, your potential residual earnings would be over $546,000.00 a month!
Even just five levels offers potential residual earnings of over $21,000.00 month after month!
Note that the recruitment bonuses Vitel pay out have to come from membership fees, as it’s highly unlikely the vendors would be paying out enough of a commission to Vitel to split with its members and cover the generous recruitment based commissions company pays out.
This then naturally raises the question of whether the Vitel compensation plan would be able to survive without membership fees being paid. And as far as I can tell, the answer to this is no.
Apart from Vitel not being able to remain competitive on their retail front if they were paying out recruitment commissions out of the commissions they received from vendors, the company state that if a Platinum Vitel member recruits six other Platinum members and thus qualifies for “free membership”, recruitment commissions are not paid out on these members.
Platinum Distributors who personally sponsor six other Platinum Distributors will have their business provided for free.
You will not earn residual on Platinum Distributors who receive a refund of the monthly fee.
Mechanically this is because once qualifying for “free membership”, these particular members cease to put any money into the system each month and thus there’s no money to pay out.
With Vitel themselves offering no product or services other than membership (their legal services and benefits system is bundled with membership and is not a sale in and of itself), and paying out recruitment commissions based on the recruitment of new members, ultimately what we have here is a pyramid scheme attached to a series of third-party legitimate vendor offers.
Again, nothing wrong with the vendor and CV (non-membership fee) side of the business, but there’s huge red flags here as far as Vitel membership fees and the abundance of recruitment commissions the company offers to its members.
If Vitel ceased to exist tomorrow, all of the vendor services and products would still be available because they’re not offered by Vitel themselves. The only thing that would stop would be the monthly membership fees and associated recruitment commissions.
Given that you can’t ask whether people would buy Vitel’s products without the attached income opportunity (because there are no Vitel products, a giant red flag in itself), the key question is then reduced to “would Vitel survive without its recruitment commission incentives and monthly membership fees?”
Not a chance.