Arbonne Review: Interesting comp plan, erroneous retail
Arbonne launched its network marketing business in 1980 and operate in the personal care MLM niche.
Based out of the US state of California, Arbonne was originally founded in Switzerland by Petter Mørck. Mørck, originally from Norway, passed away in 2008.
Today Arbonne is headed up by CEO Kay Napier (right).
As per Napier’s Arbonne corporate bio,
Katherine (Kay) S. Napier joined Arbonne in August 2009. Kay brings to Arbonne three decades of experience in general management, marketing, international and strategic planning.
Napier’s bio goes on to detail a background in pharmaceuticals and fast food (McDonalds). No mention of network marekting experience is made, indicating that Arbonne is Napier’s first engagement as an MLM executive.
Read on for a full review of the Arbonne MLM business opportunity.
The Arbonne Product Line
Arbonne’s product line revolves primarily around personal care. There are far too many products listed on their website to go over here individually, however full product descriptions and pricing are readily available on Arbonne’s website.
For a more indepth look at what Arbonne offers, I strongly encourage readers to visit their website.
For reference, the general categories Arbonne market products in are:
- skincare
- bath & body
- hair care
- sun (protection)
- cosmetics
- fragrances and
- nutrition
The Arbonne Compensation Plan
The Arbonne compensation plan offers retail and residual unilevel commissions.
The unilevel compensation model Arbonne uses is modified from the standard model. It organizes downline affiliates into a series of groups, with generations making up the standard unilevel levels.
A Car Bonus is also offered at the Regional Vice President and higher affiliate ranks.
Commission Qualification
In order to qualify for commissions, an Arbonne affiliate (excluding Independent Consultants) must generate at least 150 PV of sales volume a month.
Independent Consultant ranked affiliates must generate 100 PV a month over a 12 month period (1200 PV in total).
Personal Volume (PV) includes sales to retail customers and an Arbonne affiliate’s own product purchases.
Arbonne Affiliate Membership Ranks
There are nine affiliate membership ranks within the Arbonne compensation plan.
Along with their respective qualification criteria, they are as follows:
- Affiliate (Independent Consultant) – purchase an “Independent Consultant Starter Kit” ($79)
- District Manager – either 1500 PV or 2500 GV in a month and then 6000 GV in one month, 6000 GV over two consecutive months (second month must be min 2500 GV) or 7500 GV over three consecutive months
- Executive District Manager – create one District Group first generation (see unilevel group explanation below)
- Area Manager – generate at least 24,000 GV over two consecutive months or 30,000 over three (min 10,000 GV in first and third months and at least 2500 from Central District group)
- Executive Area Manager – create one Area Group first generation (see unilevel group explanation below)
- Regional Vice President – generate at least 96,000 GV over two consecutive months or 120,000 over three (min 40,000 GV in first and third months)
- Executive Regional Vice President – create one Region Group first generation (see unilevel group explanation below)
- National Vice President – generate at least 384,000 GV over two consecutive months or 480,000 over three (min 160,000 GV in first and third months)
- Executive National Vice President – create one Nation Group first generation (see unilevel group explanation below)
Note that “pickup credit” volume is available at some affiliate ranks, subject to downline affiliates being at certain affiliate ranks. This pickup volume can be put towards an Arbonne affiliate’s personal membership rank qualification.
In addition to the following initial qualification criteria, the following monthly maintenance criteria also applies:
- District Manager – 2500 GV in Central District group volume
- Area Manager – 10,000 GV in Cenral Area group volume
- Regional Vice President – 40,000 GV in Central Region group volume
- National Vice President – 160,000 GV in Central Nation group volume
Retail Commissions
Retail commissions are offered on the sale of Arbonne products to non-affiliate customers.
Retail commissions are paid at a rate of up to 35% of the retail price paid for each order.
A 15% commission is payable on orders made “preferred customers” (autoship retail customers who pay a $20 joining fee).
Unilevel Commissions
Residual commissions in Arbonne are paid out using a modified unilevel compensation structure.
Before we get into the specifics of Arbonne’s modified unilevel however, I need to provide some definitions.
- Central District – an affiliate and their downline
- District generation – when a personally recruited affiliate achieves the rank of District Manager, they “graduate” out of an affiliate’s Central District and form a first generation (any personally recruited affiliates of theirs at the District Manager rank form a second generation and so on)
- Central Area – an affiliate’s Central District downlines
- Area generation – when a personally recruited affiliate achieves the rank of Area Manager, they “graduate” out of an affiliate’s Central Area and form a first generation (any personally recruited affiliates of theirs at the Area Manager rank form a second generation and so on)
- Central Region – an affiliate’s Central Area downlines
- Region generation – when a personally recruited affiliates achieves the rank of Regional Vice President, they “graduate” out of an affiliate’s Central Region and form a first generation (any personally recruited affiliates of theirs at the Regional Vice President rank form a second generation and so on)
- Central Nation – an affiliate’s Central Region downlines
- Nation generation – when a personally recruited affiliate achieves the rank of National Vice President, they “graduate” out of an affiliate’s Central Nation group and form a first generation (any personally recruited affiliates of their at the National Vice President rank form a second generation and so on)
With the above definitions in mind, it’s easiest to visualise Arbonne’s unilevel commissions as four separate unilevel structures (District, Area, Region and Nation), each paying out independent of eachother.
A standard unilevel places an affiliate at the top of a unilevel team, with every personally recruited affiliate placed directly under them (level 1):
If any affiliates on level one go on to recruit new affiliates of their own, they are placed on level 2 of the original affiliate’s unilevel team and so on and so forth.
Arbonne don’t follow direct recruitment lines to define these levels, but instead use the generational definitions I’ve defined above (each of the for unilevel groups has it’s own respective generation definition).
What groups and how many levels an Arbonne affiliate is paid down depends on their affiliate membership rank:
- Affiliate (Independent Consultant) – 4% on the sales volume generated by personally recruited affiliates (no group)
- District Manager – 8% on level 1 of an affiliate’s Central District group volume
- Executive District Manager – 8% on level 1 of an affiliate’s Central District group, 8% on first generation volume, 2% on the second and 1% on the third
- Area Manager – as above for Executive District Manager plus 6% of an affiliate’s Central Area group volume
- Executive Area Manager – as above for Executive District Manager plus 6% of an affiliate’s Central Area group volume, 6% on first generation volume and 1% on the second and third
- Regional Vice President – as above for Executive Area Manager plus 3% of an affiliate’s Central Region group volume
- Executive Regional Vice President – as above for Executive Area Manager plus 3% of an affiliate’s Regional Area group volume, 3% on first generation volume and 2% on the second and third
- National Vice President – as above for Executive Regional Vice President plus 1% of an affiliate’s Central Nation group volume
- Executive National Vice President – as above for Executive Regional Vice President plus 1% of an affiliate’s Central Nation group volume and 1% on volume generated between the first to sixth Central Nation generations
Note that second generation commissions also require an affiliate to have at least two first generation payouts in that particular group. Third generation commissions require three first generation group payouts, fourth generation payouts require four first generation group payouts, fifth generation payouts require five first generation group payouts and sixth generation payouts require six first generation group payouts (fourth generation and higher qualifications are only applicable at the Executive National Vice President rank).
Also note that Arbonne calculate sales volume at a rate of 65% of the retail price of products sold.
Car Bonus
At the Regional Vice President and higher affiliate ranks, Arbonne affiliates qualify for a monthly Car Bonus (a white Mercedes-Benz automobile).
- Regional Vice-President (Central Region group volume only) – $800 with 40,000 GV, $600 with 35,000 GV, $400 with 30,000 GV and $200 with 25,000 GV
- National Vice President (Central Nation group volume only) – $1000 with 160,000 GV, $800 with 140,000 GV, $600 with 120,000 GV and $400 with 100,000 GV
Note that the Executive variants of the above ranks require the same Car Bonus qualification.
Joining Arbonne
Affiliate membership to Arbonne requires the purchase of an Independent Consultant Starter Kit ($79).
Conclusion
Once you break down Arbonne’s compensation plan, it’s rather simple. Getting to that point though is rather tedious.
The main barrier to understanding Arbonne’s plan is the manner in which it is presented.
At first I didn’t know where to begin as reading it to bottom made little sense. I had to start by acquainting myself with the unique terminology used by Arbonne, which is only described at the end of the document.
Then I had to scroll back up to the rank bonuses, which are presented in “wall-of-text” paragraphs that offer no visual representations. Once you’ve got your head around the terminology Arbonne use (most of which can be translated into industry-standard language), then you have to go through each rank for tidbits of information pertaining to the particular commission or bonus you’re looking up.
A re-write of the Arbonne compensation plan document would go a long way to assisting Arbonne affiliates trying to explain the compensation plan to prospects. Not to mention members of the general public doing their own due diligence.
With that out of the way, Arbonne itself has a readily retailable product line. And despite the complexity with which they official present the compensation plan, it and detailed product information are readily provided by Arbonne. So top marks for that.
Likely due to the age of the company, Arbonne’s product range is extensive and covers a broad range of personal care and nutrition niches. With that in mind affiliates should have no trouble marketing Arbonne’s products to a retail audience.
That said, unfortunately Arbonne’s compensation plan does little to encourage retail activity.
If I could make one change to the Arbonne compensation plan regarding retail activity, it would be eliminating the inclusion of an affiliate’s own purchases as “retail volume”.
I think the idea behind this is that Arbonne assume, carte blanche, that affiliates will “resell” their purchased products. How, if at all, Arbonne monitor this is not clear. I found nothing about it mentioned in the compensation plan.
In any event, Arbonne’s definition of retail volume is flawed – affiliate purchases are not retail volume, irrespective of what they do with the product after they’ve purchased it.
The end-result is erroneous definitions of retail volume scattered throughout Arbonne’s compensation plan:
Personal Retail Volume (PRV): The retail value of products achieved by an Arbonne Independent Consultant in a calendar month, including Retail Volume from sales to his or her registered Clients and Preferred Clients and sales and purchases under an Arbonne Independent Consultant’s own Arbonne ID.
That last bolded bit is clearly not retail volume. Yet irrespective of what an affiliate does with the products they purchase, Arbonne counts it so.
Aside from a gross misrepresentation of actual retail activity taking place within the company, this problematic due to Arbonne’s 150 PV a month requirement.
In order to participate in management qualification programs and in the various bonus and override programs, Arbonne Independent Consultants must accumulate a minimum of 150 in Personal Retail Volume (PRV) each month.
They call it “Personal Retail Volume”, yet it’s entirely possible for an affiliate to self-fund this qualification.
Ideally an affiliate would be marketing to retail customers and have a healthy mix of downline affiliates and retail, however there’s absolutely no incentive to do so. Removing an affiliate’s own purchase volume counting towards their 150 PV a month requirement would go a great deal towards ensuring some retail activity was taking place.
Instead, Arbonne effectively have a “don’t ask, don’t tell” policy and just count every affiliate purchase as retail volume.
The compensation plan definition of retail commissions was also rather erroneous too:
Up to 35% retail commission from the resale of Arbonne products purchased from Arbonne at a 35% discount from the Suggested Retail Price (SRP)
Resale? That’s not retail volume.
Arbonne offer online replicated storefronts and presumably retail customers can order directly from the company via affiliates, so why Arbonne include this erroneous description of retail sales in their compensation plan is a mystery.
The major problem with Arbonne is that it’s entirely possible for chain recruitment to exist, with affiliate’s self-qualifying themselves for commissions and solely focusing on recruiting affiliates who do the same.
Recruit enough and sales volume quotas are reached, eventually pushing an affiliate through Arbonne’s affiliate membership ranks. At no point is retail activity required or encouraged within the compensation plan itself.
The counter to all of this would be an insistence that retail activity is taking place. But then you’d have to ask “based on what?”
Personally the blanket assumption that all affiliate purchases count as “retail sales volume” just doesn’t cut it for me. It’s simply not good enough.
What I will give Arbonne credit for is a straight-forward approach to affiliate procurement. There’s no silly packages to purchase here or upfront volume loading. You pay your $79
I’d strongly encourage prospective Arbonne affiliates to check with their uplines as to how much actual retail volume (none of this self-purchase or reselling crap) they generate each month, versus self-purchase, reselling (if applicable) and recruited affiliate volume.
Anything less than a rough 50/50 split could indicate evidence of a chain recruitment business model in effect.
Removing personal purchases from the monthly “retail” volume quota would go a long way to bolstering the legitimacy of Arbonne’s business model, without the need for assumptions or “don’t ask, don’t tell” (otherwise commonly referred to as MLM grey areas).
Why they haven’t already implemented this change in over thirty years of business is a complete mystery to me.
Approach with caution.
Perhaps because the company, like other “legit” MLMs with an actual product that some consumers might want, can potentially sell substantially more product if there’s an exploitable “scheme” element in the compensation plan.
I mean, I could start a “nutritional product” company … let’s call it “Not Backed Up By Science Inc” … and decide that a MLM model is the best way to expand product awareness and grow the company.
If my compensation plan focuses strictly on retail, my market is restricted to those who see greater value in my product than in those of my many competitors.
However, if I structure the compensation plan in a way that encourages selling the opportunity, rather than the product, I’ve expanded the monthly market for the product to include “consumers” who may have little or no interest in my product but a great deal of interest in my “opportunity”.
Which substantially boosts the sale of my product and likely the size of my CEO compensation package.
And I still have (sort of) plausible deniability, e.g., “I had no idea some distributors were marketing our program in a pyramid scheme manner.”
This struck home to me after reading a recent article where the CEO of a nutrition company … the name of which I can’t recall … that had switched from bricks and mortar to a MLM model indicated that sales had significantly increased after the switch.
I found myself wondering how much of this might be attributable to an increase in sales to interested consumers and how much might be a by-product of the new “opportunity” being marketed in a “pyramid scheme” manner.
Is the CEO of a publicly traded company, who is, in theory, answerable to the shareholders, likely to care where the sales come from … particularly when their compensation and/or continuing employment may be tied into sales and/or sales growth?
And obviously this disinterest would be even higher for the powers that be in a MLM “business” where they’re also positioned in the compensation matrix.
There’s an obvious benefit to the management of so-called “legit” MLM model companies to have an exploitable, for pyramid scheme marketing purposes, component in the distributor compensation plan and little or no downside so long as a portion of sales are to actual consumers who see some value in the product.
I realize my comment is of an “excellent grasp of the obvious” nature for folks like Oz and other MLM vets who visit this site however hope it might be of some interest to any MLM newbies being romanced with a “company has track record and legit product” line by someone pimping a MLM “opportunity”.
Oh, Oz, you left out that Arbonne filed for Chapter 11 bankruptcy reorg on 2010 and is now a little better.
http://www.ratbags.com/rsoles/comment/arbonne.htm
Thanks for that Kasey. I did a basic search but didn’t turn up anything, which I did think was odd for such an old company.
Then I caught up trying to understand their comp plan!
The counter to all of this would be an insistence that retail activity is taking place. But then you’d have to ask “based on what?” —oz
the basis would be :
1] the products ARE retailable
2] the retail margin is healthy at 35%
3] there is no front inventory loading , just a starter kit [ i’m hoping its refundable]
4] there is no perforced PV requirement at affiliate level just the condition that IF the affiliate does 150PV a month they can avail of the commission structure.
i cannot understand what you mean by ‘encouraging’ or ‘ensuring’ retail, any more than this . retail cannot be forced , but the conditions can be created, that retail will naturally ensue .
it’s a bit silly to suggest that retailable products WILL NOT get retailed because there are no enforced rules like : ‘make 10 retail sales or else’. it would be impractical and mostly FAKE .
of course it is possible that ALL affiliates will only self consume their PV and create a endless chain of recruitment. it is equally possible that retailable products will be sold at retail .
either ways there is NO guarantee. so choose the path of least harm . dont allow inventory loading and have a retailable product.then assume the best . there’s nothing MORE you can do , really.
Except disqualify self-purchase volume from monthly PV requirements.
That way affiliates can still purchase what they want to use/consume, and it’s ensured that retail sales are being made.
that would not be fair . affiliates are customers too .
this is established by law , so we cannot wish it away.
Not retail customers.
Except disqualify self-purchase volume from monthly PV requirements.—oz
how would that stop affiliates from dumping the required PV in their garage?
you can never know what affiliates do with the product they purchase. maybe 100% is sold at retail .maybe 100% is flushed down the toilet ? how can you know? you could do some survey shit , which no one will believe, anyway.
remove inventory obligations for the most part , have a good return policy , and let the people do as they like. there’s nothing more you can do , really.
Affiliates only continue to purchase excess product it’s tied to commission qualification (typically monthly PV quotas).
Removing self-purchase volume from PV quotas and only using retail volume eliminates this motive.
if the motive is to qualify for commission , by subscribing to a PV quota , how will any ‘nomenclature’ change that motive?
i could call it self consumption and retail , or just retail , how would it change the motive?
affiliates will continue to purchase PV for commission, even if you disallowed personal consumption PV from the calculation.
The motive behind the purchase.
Cmon Anjali you’re not that fucking stupid. Stop wasting my time.
Is there any reason why I couldn’t pay the $79 and become an affiliate simply to enjoy the 35% discount?
Beauty products are expensive. Surely I’d make up the difference pretty quick.
No reason, but you’d still be an affiliate with access to the comp plan.
Preferred customers only get 20% (or 25% now can’t remember). Arbonne pay commissions on an affiliate’s own purchases so there’s that grey area too if you go over the PV monthly requirement for commission eligibility.
Why are their products so expensive? I can’t find the ingredients list
They don’t post their ingredients list because their products are mostly fillers with very little actual active ingredients. I found out only after a very long search on google as turns out one of their competitors got a hold of their ingredients list and analyzed the skin products.
They then sell at high prices saying it’s from Switzerland so it must be superior quality. Not really. Just another over-priced mlm scam me thinks.
I’ve been with Arbonne for 2 years. You can’t promote far or for long without retail customers, it just doesn’t hold up.
Also, it’s nice to purchase products for my personal use and get paid a small commission!
And sorry Frank, but you’re dead wrong. I’m a rather suspicious person, and the truth is actually the opposite of what you’re saying.
They’re “so” expensive because they DON’T use fillers, and since everything is very concentrated it lasts longer than you’d expect for the size of the product.
For a luxury brand, it’s actually cheap (see prices for other brands in that category).
Also check out the website for independent clinical trial results, they are pretty amazing.
lmao. sure you can when you convince enough marks. ponzis like my advertising pays is still doing it 2 years later.
So do you consider yourself your own retail customer?
You got that right. Everytime I go shopping, I tell my husband I saved him a $100 dollars because I bought a pair of $200 shoes for 50% off.
I completely disagree with this “interpretation” of the Arbonne Compensation plan. If anyone is going to take the time to write something like this and take a negative approach maybe you should educate yourself more wisely!
The PRV (Personal Retail Volume) you are referring to is sales from Clients/Preferred Clients/IC (Independent Consultant).
Clients pay retail which does occur in Arbonne all the time. PC’s get a 20% discount and IC’s get a 35% discount however all of these purchases are counted as the full retail volume of sales regardless of the actual price paid for QUALIFICATION of a management level ONLY!
PRV is more stating what the retail volume of sales were for that period not the actual price paid for the product. IC’s do not get paid on the PRV unless it was a sale to a Client paying retail.
I don’t see this as a negative thing in fact, this is a benefit to the IC.
As for the $150 PRV to qualify for commission yes this can be purchased by an IC but what good does this do if you ARE NOT selling products?
Signing IC’s up doesn’t get the sponsoring IC paid either. Product has to be SOLD in order for anyone to receive commission.
Furthermore, the IC is a consumer in their own business. Why shouldn’t their sales count in their PRV for qualification purposes.
Education is key. Next time try talking to the Arbonne IC’s instead of pulling a comp plan from a website and writing about it since you obviously can’t comprehend it.
Affiliate purchase of a product is not a retail sale. See recent FTC action against Vemma (or common-sense).
That much is true, however PRV can be self-funded which qualifies an affiliate for commissions. That is a problem, because if they then recruit other affiliates who self-qualify for commissions – they get paid.
That encourages chain-recruitment.
No buts, see above.
Irrelevant if only affiliates purchasing product are generating volume through the unilevel. That equates to a product-based pyramid scheme.
Because that would be a product-based pyramid scheme. Ask Vemma how that business model worked out for them.
Your comment is a pretty good explanation of precisely why I don’t do that.