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jerry1952
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Joined: 14 Oct 2008
Posts: 5
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# Posted: 14 Oct 2008 11:39
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There is a business model on the net known as the "Australian 1 Up" or "2 Up." Some of the more well known companies that employ this compensation plan are: Liberty League International, EDC Gold, Coastal Vacations, and Passport to Wealth. (To name just a few) All of these companies offer valid products. Some offer a larger selection than others, but they all have some common denominators in their business model.
The classic Australian 1 or 2 Up works under the premise that the new recruit must first pass up either one or two of their first sales to their sponsor before they become qualified to receive commissions. At first glance, this may not seem a major problem, but under further scrutiny, this model does have some basic flaws.
The new recruit does all the promotion and work to make a sale, then once that sale is made, they must surrender their commissions to their sponsor. In other words, they are working for their sponsor and not for themselves. If it is a 2 Up model, then the first two sales are passed over to the sponsor. In some instances, such as Liberty League, after those first two sales are completed, the sponsor is then responsible for making three more sales, in which the recruit will then see commission. Once the recruit is fully qualified, they then break away from their sponsor and then go about bringing in their own recruits, and having the process repeat with them receiving the first one or two sales from their recruited members.
The questions that should come to mind are mainly, what are the incentives for the sponsor to continue to support and train their recruit, after those initiation sales are done? Remember, once the recruit becomes qualified, they are now their sponsor's COMPETITION. There is absolutely no financial incentive for the sponsor to continue to help, assist or train them, anymore.
Furthermore, once they do break away, they lose their recruits after one or two sales are made. They have to continue to bring in and train additional people into the plan in order to continue seeing any kind of income. If they recruit a cracker jack person, they never see any of the long term benefits, because that person does not stay with them, once they are qualified.
Herein lies the basic shortcoming of this business model. The reason many people fail in their online business is not because of lack of desire, but rather from lack of continued support and a constant and growing income flow. This model is usually a higher priced item , usually ranging from $2 - 9,000.00. Which is understandable, since the compensation is very short termed.
I want to reiterate that the problem is NOT with the basic company or with their products, These companies are all legitimate and offer valid products. The downfall is that their compensation and training program leaves a great deal to be desired.
On the positive side, these businesses do offer very hefty commissions, per sale. So, that should also be looked at when one is considering entering into this type of business.
As always, it is very important to do your due diligence, ask your questions, and see if a certain business model makes sense for you and your needs.
The Australian 1 Up program has created many successful people, but it does require a lot of work to maintain.
I hope this has been of some help.
See you at the top.
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mountainmom5
Joined: 30 Aug 2007
Posts: 1115
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# Posted: 15 Oct 2008 09:22 · Edited by: mountainmom5
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Well said jerry1952,
I might add that the reason people are drawn to this type of structure is because of the high commissions.
People that are in real estate, for example are used to making higher commissions so it appeals to them and they are salesmen so they are more likely to find success with this type of business model.
When I got involved with Coastal Vacations, it was because I had gotten so burnt by mlm that I had sworn them all off so when I was researching , I only looked at the ones that were NOT mlm....lol
( I have since changed my mind on that but that is where I was at the time I came across CV and I am sure that I am not the only one caught in that mindset!)
You are right - it is work , just as in any home business - it takes work . dedication, motivation and consistency to get to the top, no matter what business model you pick!
So I agree, that you just have to find what best fits your needs. I don't know about all the other models but with CV, you own your own business and different directors work in different ways to help the new associates get into profit more quickly .. for instance, some of them split the commissions on all the pass up sales - others help their new members get started with advertising costs, etc.
It's all good,
Viola
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alexa
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Joined: 8 Sep 2008
Posts: 95
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# Posted: 15 Oct 2008 10:05 · Edited by: alexa
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jerry1952: Remember, once the recruit becomes qualified, they are now their sponsor's COMPETITION. There is absolutely no financial incentive for the sponsor to continue to help, assist or train them, anymore.
On the contrary, that's not actually how it works at all! That's a (very) popular misconception based on only looking as far as the payments for the entry-level product. To put it a bit bluntly (sorry!) it completely misses the point.
I'm no admirer of LLI at all, and I'm really reluctant to say anything that might come across as praising the company, but it's a little bit annoying and terribly misleading to see the basic facts so deeply misrepresented as this, and conclusions drawn on that most mistaken basis. I'm afraid you've really missed the point here!
The irony is that it's actually rather cleverly designed to give sponsors more of an incentive to support and train their groups of people than they have in a conventional MLM set up. (LLI is a network marketing company, but not an MLM one).
This subject gets discussed in many different forums, often by "LLI-bashers" (of whom I'm not far off being one myself sometimes, to be candid), but this widespread belief that after your new associate has passed up their two (or one) "training sales" you're somehow "in competition with them" really is a total misunderstanding, though often corrected by people who know the facts, and I'm afraid your whole post above is based on a misunderstanding, Jerry.
Sales of the second-level and third-level products (which is where successful LLI people make 85% to 90% of their income) come through those very associates, and their groups, whom you're describing as being "in competition". As a sponsor, you have every possible incentive to train, coach, support and work with your group and ensure that they make as many entry-level sales as they possibly can, because that's where almost all your future income comes from. That's why it's classified as network marketing, by the law and the regulators, and that's why it really is network marketing too.
Apologies if I appear argumentative, that's not my wish at all. But it's honestly rare to find a post like the above in which a houseful of totally erroneous conclusions has been built on a simple misunderstanding.
In LLI, the new distributor is no more "in competition" with his "upline" than any person in any MLM company is by definition, if you want to look at it that way. If you're in any MLM deal, every person to whom your new recruit sells a product is a person to whom you can't sell that product. This doesn't put people "in competition", though, because in the long run you'll gain from your recruits' own groups of people, exactly the same as you do in companies like LLI which use a 2-up model. You'll just gain rather more, in LLI, it has to be said.
Back to the drawing-board, Jerry, I think! 
I don't want to spend an hour repeating all the mechanics of the thing, but suffice it to say that at WAHM.com, thenetworkmarketingforum.com, scam.com and in many, many other forums, there are habitual discussions of this very mistaken point, usually started by someone who wrongly imagines that you're "in competition" with your own new people after they pass up their own 2 sales, and eventually it's always explained by someone who actually knows the facts. It's just a "popular myth"!
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mountainmom5
Joined: 30 Aug 2007
Posts: 1115
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# Posted: 15 Oct 2008 10:24
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alexa: jerry1952: Remember, once the recruit becomes qualified, they are now their sponsor's COMPETITION. There is absolutely no financial incentive for the sponsor to continue to help, assist or train them, anymore. On the contrary, that's not actually how it works at all! That's a (very) popular misconception based on only looking as far as the payments for the entry-level product. To put it a bit bluntly (sorry!) it completely misses the point.
hmmm... I am not gonna argue either here but you are both right to a certain degree.
Once again, I can only speak from the CV aspect as that is the only one that I am familiar with but from my understanding LLI works similarly...
Once the recruit is qualified, there is no monetary gain to be made whatsoever and they are somewhat in competition, and jerry1952 is right, there is no incentive to help them other than the friendship you have created by this time!
They brought you their pass up sales which are new recruits that you are now working with and training and in return they will bring you their pass up sales which will qualify them out and now you should have several more new associates to work with, etc, etc...
alexa: The irony is that it's actually rather cleverly designed to give sponsors more of an incentive to support and train their groups of people than they have in a conventional MLM set up. (LLI is a network marketing company, but not an MLM one).
umm... I may not understand correctly here but after having worked both systems, I would have to say there is just as much incentive to work with your team in an mlm setting as it will always benefit you to set up new people under existing members to benefit both you and your newest associates... where in the Aussie 1-ups or 2-ups, once your new assoiciate is qualified, there is nothing more to benefit from them... ever, except for the new team members to train...
Not much difference, really, in my humble opinion.
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alexa
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Joined: 8 Sep 2008
Posts: 95
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# Posted: 15 Oct 2008 11:39 · Edited by: alexa
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mountainmom5: Once the recruit is qualified, there is no monetary gain to be made whatsoever and they are somewhat in competition, and jerry1952 is right, there is no incentive to help them
Sorry, Mountainmom. The last thing I want is to have arguments with anyone here. But for the benefit of anyone else less experienced reading the thread that is honestly just completely wrong!
There is every financial incentive to help them, and LLI's comp-plan was actually designed specifically that way to maximise that incentive, because it's through THEIR future people that the greater proportion of YOUR own second-level and third-level sales arise, and those are 85+% of your income.
The more they sell "Beyond Freedom", the more you earn: that's the key point here!
There's a little video that explain it really clearly on the LLI website.
Why do people have such difficulty understanding this?! 
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mountainmom5
Joined: 30 Aug 2007
Posts: 1115
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# Posted: 15 Oct 2008 12:34
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sorry - I guess LLI must be different after all than CV... they must have more of an mlm twist to it and that is okay - there are a lot of successful people in LLI
I need to do my homework better next time - lol
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alexa
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Joined: 8 Sep 2008
Posts: 95
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# Posted: 15 Oct 2008 12:48
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Sorry, I freely admit I know nothing about how the comp plan for Coastal Vacations works - maybe as you say they are not the same.
The LLI people I know (and that's three of them, and two I know pretty well) just get a bit exasperated when people suggest that sponsors end up "in competition" with their people who have passed up 2 sales. The reality is exactly the opposite: almost all their own future incomes come from and through those people, and they need them to do well! ("Beyond Freedom" sales are under 15% of the sales volume, which isn't too surprising when you look at the prices of the higher-level products, which I admit is one of the many things I dislike so much about the company, myself).
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alexa
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Joined: 8 Sep 2008
Posts: 95
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# Posted: 15 Oct 2008 12:56
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jerry1952: If they recruit a cracker jack person, they never see any of the long term benefits, because that person does not stay with them, once they are qualified.
This just couldn't be more wrong, Jerry. You're really spreading misinformation here - it's actually exactly the opposite! "That person" is where all their future higher-level sales come from. I don't think there's an LLI person here to correct you, by the look of it, but have a look at the compensation-plan video on their site and think about how the payment for all the higher levels work, and you'll see what I mean!
For myself, I wouldn't ever work in a company with a 2-up comp plan (there's nothing "Australian" about them, by the way, that's just a misnomer that arose from the name of an old Australian card game called "2-up"!), because I would hate to have to ask my new recruits to give me all the money from their first two sales, just after they've spent $1,500 themselves on getting started, and I wouldn't be willing to do it. But that's a different point altogether.
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