2012 Modification Summary

Transcription

1 2012 Modification Summary Over the last six years, Young Living has been experiencing unprecedented growth. In that time, Young Living s global growth has increased at a rate of 15% year over year, and the number of active distributors and leaders has tripled. Due to these rapidly rising numbers, we are averaging an increase in commission payout of a quarter of a percent per month. With our commission payout currently at 48.6% (compared with the industry average of 42 45%) we will soon find ourselves with an unsustainable rate. At that point, we will not be able to maintain a consistent budget that allows us to support normal business functions and growth, as well as our high level of support to our members. Since 2005, Young Living has been able to avoid making changes to its compensation plan, something that is unheard of in this industry. However, in order to remain a sustainable and fiscally responsible company, Young Living has made some modifications to the policies and procedures, compensation/bonus plan, and the Essential Rewards Program. Policies and Procedures What has been modified? Duplicate Accounts Trust Accounts Sponsor Changes End-of-Month Qualification Ordering Enroller/Sponsor Policy Preferred and Professional Customer Options Duplicate Accounts Customer names, mailing and/or shipping addresses, ACH (auto check), credit card numbers, SSNs, and TINs are limited to one account only. Distributors who do not adhere to this policy will be issued a letter and will have 30 days to respond. If the distributor fails to respond within 30 days, their original account will remain active and any duplicate account(s) will be placed on hold. Trust Accounts Trust accounts must be run by a trustee, an independent individual without a distributorship. Any commissions made on this account must be placed in a trust fund. The trustee must provide Young Living with legal documentation proving that both of these requirements are met. If proof is not provided, Young Living will review the account and determine if further action is necessary.

2 Sponsor Changes A distributor can move themself from under their original sponsor, but cannot move members within their organization. Distributors of any rank can move themselves after six months of inactivity, or six months without placing an order. A new member may request a sponsor change within five business days of enrollment by calling Young Living Customer Care, or within 30 days of enrollment by sending a written request to Young Living s Corporate Resolutions department. A member s upline or sponsor may not request a sponsor change for members in their organization. Any sponsor change may affect upline bonuses. No duplicate accounts can be involved in a sponsor change. If a duplicate account is found, the change request will be denied, and the duplicate account will be cancelled. All sponsor changes must be requested in writing and approved by Corporate Resolutions. Qualification Ordering Sponsors will no longer be able to place orders on downline accounts for the purpose of bonus buying, gifting for volume, or backdating. If orders are placed with the intent to qualify, Young Living will recoup commissions that had been paid on those orders. Distributors caught or suspected of placing orders with the intent to qualify them will be contacted by Young Living and may face corrective action up to and including forfeiture of commission, commission retractions, and/or termination of account. Enroller/Sponsor Policy In order to simplify the sign-up process, the Enroller option will be eliminated. Distributors may still place new members in their organizations; however, there will no longer be any Enroller benefits, such as Start Living Kit, Star Performance, and Matching bonuses. Sponsors will now receive those bonuses. This policy will take effect January 1, Preferred and Professional Customer Types As of August 1, 2011, new members will no longer be able to sign up as preferred and professional customers. The only member types remaining will be customer and distributor. All existing preferred and professional customers will have the option of becoming a retail customer or wholesale distributor. To become a distributor, they must purchase a Start Living Kit or place a one-time order of at least 50 PV, and provide a Social Security Number or TIN. If they do not provide this ID number by November 30, 2011, they will automatically become retail customers on January 1, 2012.

3 Compensation/Bonus Plan What has been modified? Commission Qualification and Payout Personal Rebate Bonus Commission Qualification and Payout As a reminder and in accordance with our existing policy, to qualify for a commission or bonus check, a Distributor must have a minimum order of 50 PV during the calendar month. Members with the paid-as rank of Star and a above must have a minimum order of 100 PV during the calendar month. As of January 1, 2012, Customer PV will no longer count as your personal PV or qualify you for monthly commissions; however, PV from retail orders will continue to qualify or count toward your OGV and PGV totals. PV at the end of the qualification period, or calendar month, will not be the PV amount that will be used for commission or rank qualification. Rather, the PV at the end of the processing period will be used for rank qualification and bonus calculation for the prior month. The processing period is the time between the end of the month and the beginning of the commission run; typically falling between the 5 th and 8 th of each month. Order returns, cancellations, or adjustments made for the prior month will be reviewed when commissions are calculated and rank is determined. Please note that returns made at any time may still affect previously earned commissions, bonuses, and/or rank and cause them to be recouped. This will help Young Living avoid paying commissions on orders that did not generate revenue for the company. For example, Jane Doe is attempting to qualify for Silver rank. She has two Executive legs on the last day of the month. On the third of the next month (during the processing period), some of the orders in Jane s downline were cancelled, modified, or returned. Therefore, after the end of month adjustments were completed, only one of Jane s Executive legs still qualified as an Executive. Thus, Jane will not qualify as a Silver; nor will her group volume totals at the end of the month count as her commission totals once the commission run starts. According to the adjustments, Jane will now be paid as an Executive. Personal Rebate Bonus As of August 1, 2011, the Personal Rebate Bonus will be discontinued. This will allow us to reinvest those funds into areas of the business that will better serve our members.

4 Essential Rewards Program Essential Rewards Program Team Performance Bonus Essential Rewards Program In order to simplify the Essential Rewards Program, we have created some new automatic shipment options. Essential Rewards: PV Convenient, automatic order Discounted shipping Essential Rewards Plus: 100+ PV Convenient, automatic order Discounted shipping Rewards points Grace month If an order is between 50 and 99 PV, it will be considered an Essential Rewards order, and will offer the benefits of automatic, convenient, first-priority shipping, and a discounted shipping rate. Distributors who place a 100+ PV order will receive the full benefits of the Essential Rewards program, plus Rewards points, and one grace month per rolling 12 months. After August 1, 2011, there will no longer be a limit on how many monthly points can be earned; however, distributors may redeem a maximum of 350 Essential Rewards points per month. Starting January 1, 2012, Rewards points will expire on a rolling 12-month basis. Any existing points on a YL account as of January 1, 2012 will not expire until December 31, 2012, allowing distributors more time to redeem points they have accrued. Distributors must call the Young Living Customer Care Department to declare their grace month before the next month s order is shipped. Distributors must have an active Rewards Plus order to redeem points, and cannot redeem points in a grace month. Following the grace month, they can begin accumulating points again at the same rate as before. If the distributor misses more than one month, or drops below 100 PV without declaring a grace month, all Rewards points will be forfeited and the rate of accumulating points reverts back to 10%. Please keep in mind that the Essential Rewards template will remain active and continue to process on the selected date each month unless changed or cancelled by the account holder. Essential Rewards Achievement Bonus The Team Performance Bonus will now be known as the Essential Rewards Achievement Bonus. New distributors will learn to build and grow organizations that are wide and deep enough to achieve sustainability, longevity, and maximum earning potential. This bonus will also

5 provide a good jump start and quick return for these distributors, and will help them succeed in the long term, by generating steady unilevel commissions and generational bonuses. All of the following modifications will take effect January 1, Payouts and PGV Requirements As shown in the table below, payouts will remain the same, but PGV requirements will increase. Increasing the required PGV will help distributors to stabilize and strengthen their organizations as they build, leading to higher unilevel commissions over the long term. Payout 1 st Structure PGV 2 nd Structure PGV 3 rd Structure PGV L1 $100 1,500 2,500 3,500 L2 $500 1,500 2,500 3,500 L3 $2,000 1,500 2,500 3,500 Structure In order to qualify under the modified bonus plan, all structures will be required to have six distributors with Essential Rewards orders of 100 PV. Once you have three complete levels allowing you to reach the $2,000 payout, you have one structure. The maximum number of structures one distributor can earn will be three. This means that in order to qualify for the maximum number of structures, a distributor will need a minimum of 18 personally sponsored, or front line, distributors with Essential Rewards Plus orders. Please remember that bonuses are subject to change without notice. Any Questions or Concerns? We want you to know that we made these modifications to help our distributors continue to grow and succeed, and to help the company achieve sustainability and longevity. We appreciate your understanding and want to remind you that we are all here to support you as you adjust to the updated policies. Please contact your Regional Sales Manager, Sales Manager, or General Manager with any questions. You may also contact Young Living Customer Care at or custserv@youngliving.com or Young Living Resolutions at or resolutions@youngliving.com. We are extremely appreciative of our leaders who have made our record growth possible. Young Living has a very bright future ahead of us, and we look forward to continuing the journey with all of you.