(Behind MLM appears in The Paper courtesy of Oz at behindmlm.com)
The Javita compensation plan revolves around a unilevel organisation.
The Javita unilevel organisation creates a new leg underneath you for each member that you personally recruit into the Javita business opportunity.
Javita’s unilevel compensation plan plays off on a stronger and weaker arm of your business. The strongest leg of your unilevel is weighed up against the rest of your legs (which collectively make the smaller leg during comparison), and these are closely tied into Javita rank advancement. This in turn directly impacts your unilevel percentage payouts.
Business Volume and Organisation Volume
The Javita unilevel compensation plan revolves around the concept of Business Volume (BV) and Organisational Volume (OV).
Business Volume is a value added to the sale of Javita’s products. Roughly, it equates to about 70-80% of the dollar value of Javita’s products.
Organisational Volume is the total amount of BV generated by your unilevel team. This counts all levels deep as well as an infinite amount of levels wide, in other words it covers the BV generated by your entire organisation.
Within the Javita unilevel compensation plan there are nine ways for Javita members to earn commissions and they are as follows;
Direct Commissions are available on Javita’s products but details on exactly how much a Javita member will make are a bit sketchy.
There’s roughly a 30% margin markup on all Javita products between wholesale and retail, meaning that the relevant BV per item sold sits at roughly 70% of the wholesale price and supposedly the profit you make is the 30% difference between the whole and retail price.
For example, a Javita 24 stick box of instant coffee will go for $35 and carry with it a BV of 25 (71.4%).
Purchasing a box of instant coffee from Javita for $35, you’d then go on to sell that retail for a total of $45.50 (or $1.90 a stick). The difference of $10.50 I believe is your direct commission profit.
Whether or not you have to share any of this with Javita is unclear at the time of publication.
Note that at this time Javita instant coffee will only be sold online and presumably only by the box. Once sold, Javita will directly ship to your customer.
If you want to sell the sachets as singles or give them away as samples, you yourself will need to purchase a box and go from there.
The Star Bonus
To qualify for the Star Bonus, Javita members must first qualify as a ‘Star’. Members wishing to become ‘stars’ have two options open to them;
The Star Elite Rank
The Star Elite rank is achieved where upon a new member to Javita joins the company with the ’qualified business pack’ ($599) and within thirty days recruits two new members to Javita who also purchase the $599 pack.
Star Elite members are entitled to receive the Star Bonus, Car Bonus and receive ‘a waiver of the hold time for the Rank Advancement Bonuses at Consultant II and III‘.
The Star Bonus
Once members have qualified for the rank of Star Elite, they are then eligible to receive what is called the ‘Star Bonus’.
The Star Bonus is sort of like a mini 1×2 cycling matrix that pays members out each time it is filled.
The basic idea is that as a Javita member, you have two matrix positions under you. When you enrol someone into Javita and they purchase the $599 joining pack, you fill one of these two matrix positions.
If you fill both positions under you within a 30 day period, you ‘cycle’ and get paid.
The cycle payouts are as follows;
- 1st cycle = $50
- 2nd cycle = $100
- 3rd cycle = $15
- 4th cycle = $200
- every cycle after the 4th = $200
The Star Rank
To qualify at the Star level (this will apply to existing members who have been with Javita for longer than 30 days or who fail to meet the Star Elite requirements), members must recruit two new members to Javita who join with the $599 pack.
Unlike with the Star Elite rank, there is no time limit on this criteria however Star members are only eligible to participate in the Car Bonus program.
The Car Bonus
Details are a bit sketchy at this point but the Javita Car Bonus appears to be your standard Car Bonus offering.
In a nutshell, as you advance your rank in the Javita Compensation Plan, you’re awarded an increasing payment on a new or used car lease.
Usually there’s specific requirements on the age and condition of the car and some companies even limit the color, make and model of the car too.
Oh and if you quit or drop down in membership rank the car lease payments are entirely your problem, not the company’s.
Update 5th September, 2011 – The car bonus is only available to US members of Javita and only American made cars (they haven’t specified which models yet) are covered.
For those who don’t want a car payment or for members who live outside of the US, a ‘cash bonus’ option is available. The cash bonus option pays out 50% of the car bonus and is bundled with member’s monthly commissions.
The car bonus payouts are as follows;
- Supervisor II and III – $300 (only available to Star Elite members)
- Manager – $400
- Director – $600
- Partner – $800
- Chairman – $1000
Unilevel Commission Payout
Javita pays out a Unilevel Commission payout which is a flat 4% and based I believe around total organisation volume (OV) sold. In other words, you’re paid out 4% of the OV your unilevel organisation makes.
With a flat rate 4% paid out, the variable to determine the amount of commission paid out is therefore linked to the number of levels deep the commission runs.
The amount of levels paid out ranges from one level deep at the rank of ‘Associate 1′ to 14 levels deep starting at rank ‘Partner 3′ (more on Javita’s associate ranks later).
To put this into example, assume you’re an Associate 1, thus your paid out 4% of your level 1 unilevel organisation.
Assume your level 1 turns over 1000 OV, you’d then be paid a monthly commission (4% of OV) of $40.
Rank Advancement Matching Bonus
The Rank Advancement Matching (RAM) Bonus is a bonus offered to Javita members who advance through Javita’s associate ranks within specific time limits.
In total the personal payouts add up to $500,000 and spans 21 ranks over 60 months.
The matching component of the RAM bonus pays out 50% of a Javita member’s bonus to their direct upline.
For example, say you reach the ‘Consultant 3′ level within the specified 6 months, you will personally earn a $600 RAM bonus whilst your direct sponsor earns a $300 matching bonus.
Note that if you don’t manage to make Consultant 3 level within 6 months, you’re still entitled to a 50% RAM bonus, which in this case would be $300.
Also note that if your upline is a lower rank than the associate earning the RAM bonus, the matching bonus is reduced to 50%. In the above example, this would mean that the sponsor only earns $150 in a matching bonus.
The RAM bonus is only available to Javita members who sign up to Javita at the $599 entry point. Furthermore to qualify for the RAM bonus, Consultants, Supervisors and Managers must have held their rank for at least two consecutive months. For Directors, Partners and Chairmen this requirement is increased to three consecutive months.
The Manager and Director Bonus
Javita’s Manager and Director (MAD) bonus is paid out to Managers and Directors and consists of 2% of the net sales volume by country.
For example, Managers and Directors in Australia will earn a shares of 2% of the total Australian net sales volume, whilst US Managers and Directors will be paid out of a separate pool of the net sales volume of US Javita members.
Shares are awarded as per rank and are awarded as follows;
- Manager 1 – 2 shares
- Manager 2 – 3 shares
- Manager 3 – 4 shares
- Manager 1 – 6 shares
- Director 2 – 8 shares
- Director 3 – 10 shares
The individual share value depends on the total net sales volume of the country you’re registered in, and then by the total amount of shares held by Javita members.
Let’s say the total sales volume for a given month was $100 in the US, and that in total, Javita members held 150 shares in this pool.
Each share is therefore worth 66 cents and paid out accordingly based on how many shares you personally hold at the end of the month.
Based on this hypothetical, a Director 3 with 10 shares would take home $6.66 in MAD bonus commissions.
To qualify for the MAD bonus you need to recruit one new Javita member per month at the $599 startup option. Shares are then paid out monthly based on your associate rank.
Additional shares can be earnt at a rate of 1 per additional $599 new member signup you make on top of your first qualifying $599 signup.
The Global Quarterly Bonus
Notably Partners and Chairmen are left out of the MAD bonus and that’s where the Global Quarterly Bonus comes in.
Every quarter, 1% of the global sales volume of all Javita members is set aside and distributed amongst the company’s Partners and Chairmen.
Shares in the Global Quarterly Bonus are awarded based on rank and are as follows;
- Partner 1 – 2 shares
- Partner 2 – 3 shares
- Partner 3 – 4 shares
- Chairman 1 – 6 shares
- Chairman 2 – 8 shares
- Chairman 3 – 10 shares
To qualify for the Global Quarterly Bonus you must meet the BV requirements of 50 BV on autoship or 100 BV without, and hold the rank of Partner or Chairman.
Additional shares are earnt when a Javita member you’ve personally enrolled reaches the rank of Manager, Director or Partner for the first time.
$10,000 Monthly Growth Bonus
To reward those that recruit the most new business to Javita, the company sets aside $10,000 every month to be shared amongst the top five recruiters that month.
Note that this isn’t a direct reward for recruitment alone, as the bonus shares are counted by the amount of new business volume (BV) brought into the company, rather than raw new recruit numbers.
Someone who brings in 10 new recruits who don’t buy or sell any coffee will be ranked lower than someone who brings in just one recruit who manages to purchase or sell Javita product.
The Monthly Growth Bonus is paid out ‘pro-rata’ which in this case I believe means it’s tied directly to the total new BV generated by Javita members. Members will be paid out proportionally from the $10,000 based on the share of new BV they have brought into the business that month.
The Business Development Fund
The Business Development Fund consists of 1% the local country volume per month and is to be used fund ‘member meetings for local meetings and travel, contests etc‘.
Javita state that the ‘company will disperse the funds based on clearly defined policies‘. What those exact policies are at this time though, are unknown.
I guess the basic idea here is to cover the expenses for leaders in various countries to get around and hold meetings with other Javita members. Inevitably Javita believes this will in turn encourage business growth and I guess a sense of greater community within their members.
With the vagueness in criteria currently available, they will have to be careful that it doesn’t turn out to be a potential sore point amongst their non-qualified members.
To reward those that make it to the upper levels of the Javita compensation plan ranks, Javita are offering one additional ‘contract’ at each Chairman level (3 in total).
What this effectively means is that at each Chairman level, you’re able to startup an entirely new arm on your unilevel organisation with yourself as a sponsor.
What this means is that as you grow this additional arm, you’re effectively ‘double-dipping’ on the bonuses paid out (excluding the Rank Match Bonus, which is not paid out on additional contracts).
Note that the requirements for Chairman 1 are a total of 1,000,000 OV with a minimum of 500,000 OV being generated by your weaker arm.
1,000,000 OV translates into roughly $1,300,000 of product sales a month so note that this isn’t something most people are going to be able to make use of.
The Javita compensation plan appears to be one of the more rounded compensation plans I’ve seen recently. Within the plan itself there seems to be a good balance between recruitment dependent bonuses and a focus on sales volume.
Even with the recruitment based bonuses (the MAD bonus and the Monthly Growth Bonus require at least one new signup a month just to qualify, and the Star bonus is entirely recruitment based), there is still solid foundation in sales volume.
This in effect means that despite being reliant on recruitment, the focus still remains on shipping product to qualify.
That said, the major weak point I can see with Javita’s compensation plan is that you don’t really have to retail anything.
Whilst I understand why the autoship requirement is there (to ensure that a minimum 30% difference between BV and the wholesale price funds the company each month per Javita member), it is possible that members can simply use it as a minimum requirement to make use of the compensation plan.
In doing this themselves they could then simply get new recruits to do the same which means that essentially we’ve got a company full of members just buying coffee themselves and consuming it. This obviously shouldn’t be the idea when you’re trying to market a consumable product.
To complicate this matter further Javita are offering all members a compulsory replicated website from which to sell their coffee products with.
Obviously members who solely rely on this website to retail Javita aren’t going to get anywhere. Coffee is already a highly competitive industry and what’s more it’s a firmly established one.
Third party branding of yourself and the coffee is ultimately going to be mandatory if you want to establish yourself as a leader within Javita, and for most people this simply isn’t going to happen.
Like any other company Javita only have one search engine ranking for their company name and those first few precious results are going to be most likely corporate, PR and partner sites owned by Javita themselves.
Thus with little opportunity to retail over the internet and attract genuine retail customers, the trap of just purchasing an autoship requirement and encouraging others to do the same might become enticing for some Javita members.
This issue aside, I believe the incentives are there to market Javita as a retail product if they can prove themselves to be competitive in the coffee marketplace.
Whether or not Javita’s members choose to do this or not is an entirely different matter. The option to use Javita’s compensation plan simply as an autoship scam or as a genuine retail opportunity both exist, and ultimately whichever proves to be more profitable is no doubt going to become the business strategy of choice between Javita members.
Which of these strategies is more profitable is something we’ve obviously got to wait for. With a launch date of June 1st, it’s only then that we’ll see how Javita members fare in the greater coffee marketplace and where the Javita product stands.
Once we’ve got a clearer picture of that, exactly how Javita members are using the compensation will become much more clearer.
For more information on Javita’s products, the company, the ranks themselves and my thoughts on the overall Javita business opportunity, check out BehindMLM’s Javita business opportunity review.