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:
- bath & body
- hair care
- sun (protection)
- fragrances and
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.
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 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).
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.
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.
Affiliate membership to Arbonne requires the purchase of an Independent Consultant Starter Kit ($79).
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.