Sramana Mitra: If you’re claiming that part of your secret stuff in building this company is this 30,000 affiliate network, then I need to understand how you got to 30,000 affiliate partners in two years. I’m looking for round numbers. Let’s say you pay 90% commission to one layer of affiliate and they go and recruit their own affiliate, how much commission is that layer of affiliate getting as they recruit their own affiliate? Two, I need to understand what the compensation structure is that drives this multi-layered affiliate structure.
David Sharpe: We have a pass-up commission structure. If I come in and sign up as an affiliate, and I go out and sell products to you, I keep my first sale, but I pass up my second sale to my sponsor. Then I keep my third sale, and I pass up my fourth sale to my sponsor. I keep my fifth and pass up my sixth. Then I pass up every fifth sale.
I’m motivated to go out and recruit other affiliates who are then going to pass sales up to me. That’s the main motivation that affiliates have to go out and recruit. When people in their team make product sales, second, fourth, sixth and every fifth sale is passed up to them.
Sramana Mitra: Yes, this is what I was looking for. This is not compensation; this is your business model. Otherwise, you could not get to a viral network of affiliates. This is the secret of your business.
David Sharpe: In my business, we call this the compensation plan. We’re just speaking in different terminology.
Sramana Mitra: Fair enough. This is what motivates your affiliate partners to go recruit other affiliates and also remain compensated through that process.
David Sharpe: Correct. When they recruit an affiliate, they don’t make a commission, because we don’t pay for recruiting. We only pay when a product is sold. If you pay that $19.95 a month affiliate fee, but you don’t buy any product, your referring affiliate doesn’t earn commissions. I only earn a commission when someone, whether it be a customer or an affiliate, buys a product. If they get a customer, they earn a commission when that customer buys a product. When they get an affiliate who goes out and sells products and builds a team, they can earn pass-up commissions from that affiliate’s production. Does that make sense?
Sramana Mitra: Yes, it does. Absolutely. So that’s really the idea driving the business.
David Sharpe: Yes, it’s the idea that’s driving the business. That’s the compensation model. There’re lots of other ideas that are driving the business.
Sramana Mitra: No, this is the idea that is driving the business. Everything else is secondary to this idea. This is why we call it the business model because it’s what allows you to make other people go recruit affiliates and both get paid. This is how the cascading network works. This is really the algorithm behind the cascading network.
David Sharpe: It’s very similar to any other multi-level marketing compensation plan where you can earn off multiple levels.