Vemma’s retail comp plan – the new MLM benchmark?
One of the my staple fallbacks if I’m not sure about retail in an MLM compensation plan, is to recommend asking a potential upline about it.
See how they qualify for commissions and try to get a sense of what their retail volume is. Compare this to their recruited affiliate volume and you’ll have a pretty good idea of what you yourself will be focusing on.
After a scuffle with the FTC over whether not affiliate’s should be able to qualify for commissions at the expense of retail focus, Vemma’s new compensation plan is the most retail orientated I’ve seen to date.
And that’s great news for the industry.
The core of Vemma’s new compensation plan is the “51% rule”:
You will only be paid on the volume in your organization if your organization’s sales to Customers are at least 51% of the total
sales for your entire organization. You will be paid on all volume that meets this requirement.
In other words, if 51% of your volume is Customer volume, and 49% of your volume is Affiliate volume, you will receive commissions on the entire 100% of your organization’s total volume.
For example, if you had $100 in organizational volume of which $51 came from Customers and $49 came from Affiliates, you would be paid on the entire $100.
However, if only $40 of your organizational volume came from Customers and $60 came from Affiliates, you would not be paid any amount on your organizational volume.
TO QUALIFY FOR ANY OF THE COMMISSIONS AND/OR BONUSES DESCRIBED IN THIS COMPENSATION PLAN, AT LEAST 51% OF THE TOTAL SALES FOR YOUR ENTIRE ORGANIZATION MUST COME FROM CUSTOMER SALES.
The above is straight from Vemma’s new compensation plan documentation, and spells out the need for affiliates to generate retail volume.
Not enough retail volume = no commissions. Period.
There is a contingent of the MLM industry who will continue to see this as an “attack on the industry”, which to be honest baffles me.
I mean let’s have a real think about what the FTC, through the court, has mandated Vemma enforce.
Rather than rely on self-reporting and *winkwinknudgenudge* optional retail, Vemma affiliates do not get paid residual commissions unless the majority of their sales are to retail customers.
Retail customers. Isn’t this what MLM is about?
Finding retail customers and getting paid when your downline does the same, with any downline volume commissions incidental to this core model, is a healthy model for the MLM industry.
Why then is there a sizeable component of the industry against these new changes?
And it’s not just Vemma outsiders either. Vemma themselves, by way of owner BK Boreyko’s own handling of the changes, reflects opposition seething just below the surface.
On November 13th, John Wilson, a Vemma affiliate, responded to BK Boreyko’s compensation plan announcement on Facebook with the following:
I worked for 3 years to be a Gold now you are screwing me out of the commissions I earned.
Boreyko himself replied:
John, I know how you feel. Know this, I’m not the one screwing you. It’s not fair, but I have to follow 100% the court orders.
Presumably Wilson does not have anywhere near the required 51% retail volume, and has been earning a commission each month based on recruited downline purchases (otherwise known as a chain-recruitment pyramid scheme).
But rather than acknowledge this, BK Boreyko agrees he’s being “screwed” out of commissions. But don’t point the finger at him, this is the FTC’s doing.
How dare they put a stop to an autoship chain-recruitment scheme and force Vemma to enforce retail quotas! Who do they think they are?!
That Vemma opt to see this as a screwing of affiliates with insignificant retail activity, instead of the company being at the forefront of a new era of retail focus in MLM, is disappointing to say the least.
Outside of Vemma corporate the resistance to retail is equally as troubling.
The USA is not longer the Direct Selling Center of the universe, Asia is, and rules are there less strict.
The statement was made in a piece titled “Legit Direct Selling Companies, Ponzi’s, Pyramids And Our Opinion”, with the implication being the US standard for Ponzi and pyramid schemes, despite these labels extending beyond a legal scope, does not apply globally.
According to Nuyten, scams in Asia are justifiable because “the rules there are less strict”.
The thing is, “the rules” (in the US or otherwise) don’t determine whether or not an MLM company is or isn’t a Ponzi or pyramid scheme – their business model does.
And for pyramid schemes, that isn’t clarified any clearer than whether or not genuine retail sales are taking place. It doesn’t matter if your MLM company is based in the US, Asia or the moon.
The rules simply determine the level of punishment those running such scams face. And in that respect I totally agree with Nuyten;
Asia is miles behind the US in stamping out Ponzi and pyramid scheme scams. Europe isn’t much better.
But again, that in no way justifies the existence of such schemes. In the absence of regulatory action Nuyten has a responsibility to evaluate the opportunities he directly and indirectly showcases (promotes) on BusinessForHome.
“The rules are different” can not justify promo pieces for obvious scams that regularly pop up on the front page of Nuyten’s blog.
But I digress.
The bitter truth of the matter is that had Vemma themselves been enforcing retail activity quotas, affiliates like John Wilson shouldn’t have been getting paid. Perhaps not an “all or nothing” scenario as is currently in place, but certainly not much with little to no retail activity taking place.
How much retail activity is taking place in Wilson’s downline I have no idea. But it can’t be much if he feels he’s getting screwed over.
Personally I think any affiliate’s relying on autoship chain recruitment getting “screwed” out of commissions is great. This is exactly what the FTC wanted to stamp out of Vemma.
And once this is done and precedents have been made, the rest of the MLM industry will, if they haven’t already, be put on notice.
I myself have already adjusted my reviews, focusing much more heavily on the emphasis that retail quotas are no longer optional (which in MLM means totally ignored).
Long term Vemma is going to have to make this compensation plan work. They’re going to rely on retail customers and if the retail activity isn’t there – Vemma and Boreyko are done.
And that’s not anyone getting screwed out of anything. This is what Vemma should have been enforcing themselves all along.
But they didn’t, and so here we are.
Take a long hard look at the MLM company you’re in, your own retail sales volume percentage and see if you stack up.
Personally I think Vemma are going to lose the FTC case hard, with these new retail focused comp plan changes either adopted industry wide, or forced through litigation.
Vemma have tried to wiggle and seek out the grey in the court’s orders. They’ve thus far been blocked at every turn.
Once the FTC’s lawsuit against Vemma concludes, you can bet other companies who have failed to enforce a retail focus will be next.