Dynamic compression explained

Dynamic Compression can be complex, but doesn’t need to be. In this commentary I will refer to the PDF you can download here.

So first things first: Page 1

A Wellness Advocate can share to a maximum of 2% and will share to the first level. In the same way, a Manager can share to two levels to a maximum of 3% (2% at level 1 and 3% at level 2). This grows to a Silver who can share up to 7% to 7 levels.

Looking at my example on Page 1 then, I set out the various levels in order vertically, with examples of what Personal Volume (PV) each Wellness Advocate has bought in a particular month, and on the right it shows the MAXIMUM % level they can earn to. Make sense?

Lets look at Page 2.

If we work through this as an example and focus on the 100 PV in GREEN all the way down at Level 8. This is the purchase by a Consultant of 100 PV. According to the Compensation Plan, dōTERRA looks at each sale and pays commission on that sale UP the line. (I think this is the best way to describe Dynamic Compression, instead of looking from the top down).

On that GREEN 100 PV, that Consultant at L8 will NOT get commission on their own purchase, but dōTERRA looks to pay UP and we ask: “Where is the FIRST LEVEL where we pay 2%?” In this case it pays 2% ($2 WhooHoo) to the Consultant on Level 7. On the same 100 PV, dōTERRA looks to pay 3% up to a second level, and this goes to the Manager on Level 6, who we know is entitled to 3% on 2 Levels. Make sense?

In the same way, and applying the same logic, dōTERRA pays up 5% to Director, 5% to Executive, 6% to Elite, 6% to Premier and 7% to Silver.

REMEMBER, this only happens is EVERYONE in the leg is on 100 PV LRP and entitled to earn commission!

Someone is NOT on 100 PV LRP.

Look at Page 3. In this example we have at Level 5, an Executive, who for some reason has not placed an LRP order (nothing unusual). So, they will not qualify for any commission.

Working the above example then, and in this case I have added ANOTHER Executive for ease of explanation, dōTERRA will still look to pay the 5% on the Level 9 (Green) 100 PV sale, up 4 levels. But because at 4 levels up, the Executive has NO LRP they cannot pay them, so they look further up to find: the NEXT Advocate who is ENTITLED to earn 5%, 4 Levels down – in other words the NEXT Executive up the line.

So, the Executive at Level 4 earns the 5%, $5 on the GREEN Consultant, actually 5 Levels down. In other words we see the first real example of Dynamic Compression, where a Consultant earns down further than the 4 levels you would expect.

This follows all the way up and in fact the Silver WA earns in this case 7% all the way down to 8 Levels. You see, if there are “gaps” in the leg where people do not have a 100 PV, dōTERRA tries to “skip” the gaps and make sure that someone gets the commission up the line where entitled to it, in the same % set out on the compensation plan.

Silver get paid on 7 Levels.

Looking at Page 4 then, focussing just on the Silver WA, I have now set out the commission they will earn on each sale below them. From the examples above, we know the Silver earns 7% on the sale in Green (down 7 levels). But Silver is also entitled to earn commission on the sale at 6% 6 levels down, ie. 6% on the Brown sale, and following my example they earn 6% on Red, 5% on Yellow, 5% on Purple, 3% on Pink and we know Silver will earn 2% on one level down at Blue.

Silver in this example then earns a total of $36.50 on all the sales down below them on this leg to 7 levels.

If we work that all out for the other Wellness Advocates, on Page 5, we can see across the page what each WA will earn, as they each earn down the appropriate number of levels and at the appropriate %.

For example, the Director at Level 5 we know can earn down 3 Levels, 2%, 3% and 5% so they earn 2% on RED Manager, 3% on BROWN Consultant and 5% on GREEN Consultant. Make sense.

dōTERRA Dynamic Compression

 

Lets get complicated – not really.

Taking this to a real life situation on Page 6. We see a 17 Level leg, with a Platinum at the top. There are a number of individuals who do NOT have a 100 PV – highlighted in RED – so we know we basically ignore them and they get no commission. Also there are a few with less than 100 PV so they too get no commission – eg. L5, L12 and L13.

IF we follow all the same steps and rules we discussed above, how will dōTERRA pay the commissions on the 106 PV sale at L17.

We start by looking up to find the “first level payment of 2%” and who is entitled to that – the Manager at Level 11. Why, well this Manager has 100 PV, can earn up to 2 levels and up to 3% so qualifies for this 2% payment.

We then look up again to find who is entitled to the 3% above that as a second level payment? Up, up to Level 7, where we find a Premier – entitled to earn up to 6 levels and 6%. Bingo!

Who gets 5%, up one more we find Elite, entitled to 6% 5 levels so qualifies. The next 5% goes up to the next Elite, skipping the Consultant with no 100 PV LRP at Level 5.

The next 6% pays up to the Premier on Level 3, and that makes 5 total payment.

Trick question, what happens to the 6th payment of 6%, it has to pay up to someone who qualifies for 6th level payments, and we know an Elite ( like the one at Level 2) cannot earn to 6 levels, only 5 levels (compensation plan rules). We therefore SKIP the Elite (even though they have 100 PV) and the 6th level payment pays up to Level 1 or Silver in this example as a Silver can earn a 6th (and 7th) level payment). Make sense.

The final 7% pays up to Platinum.

In this case therefore a Platinum actually earns down 7% on Level 17! WOW!

In the same way we can work through EVERY sale and pay up the tree. And if you are confused now, don’t worry, all you need to remember is dōTERRA NEVER WITHHOLDS COMMISSIONS. They always look up to find the next entitled person to earn, even where someone is not entitled. This is by far the best commission structure we have seen in a business like this. So be happy, go firth and multiply!