Industry Definitions

by Dan Jensen, Jenkon International, Inc.
Accumulated Group Volume (AGV)
A Representative’s group volume from the day he or she becomes a Representative to present. This value does not clear or reset each commission period; it continues to grow.

Accumulated Personal Volume (APV)
A Representative’s personal volume from the day he or she becomes a Representative to present. This value does not clear or reset each commission period; it continues to grow.

Active
Only Active Representatives may have earnings. A Representative is considered Active when they have a predefined minimum amount of Personal Volume and/or a predefined minimum amount of Group Volume within a set predefined period of time. Some plans impose other requirements as well.

Back End
A term used to describe the portion of a Step-Level / Breakaway plan which pays commissions to breakaway representatives. (Also see Front End)

Bonus Volume (BV)
The Qualifying Volume from the sales order that will be the volume credited for a sale. It is added to the Personal Volume (PV) of the purchasing Representative, his Group Volume, and the Group Volume of any upline Representatives according to the plan. This volume may optionally be different than the volume on which the commissions are paid (See Commissionable Volume).

Breakage
Many Representatives are either unqualified or ineligible to receive some or all types of commission each month. When the company retains unpaid commissions, it is called Breakage. Breakage also happens when an order is placed by a Representative who is close to the top of the genealogy such as a Representative sponsored directly by the company or an orphan. In these cases, some or all of the commissions that would normally be paid to an upline are retained by the company because there are few, if any, Representatives in the purchasers upline. Please note that commissions are always paid upline. When the upline is small or nonexistent, the company retains the unpaid commissions, causing Breakage.

Breakaway
When Representatives are promoted to a certain title, they “break away” from their sponsors and are thereafter called “breakaway” Representatives. Their group volume is no longer included in their sponsor’s group volume. Breakaways are entitled to additional compensation, which is usually referred to as a Generation Override. Breakaway positions are usually considered sales leaders.

Commissionable Volume (CV)
The pre-assigned value of each product purchased, and on which commissions are paid. It is in the currency of the country in which the order was placed (though the eventual commission check may be issued in yet a different currency). Sales aids usually have no Commissionable Value. Commissionable products have a Commissionable Value, which does not have to equal the price paid for the product.

Commissions
An amount paid to a Representative on his or her direct and downline Commissionable Volume. It usually comprises Commissionable Volume within his own Group. Some plans call all forms of payment to Representatives a “commission”.

Compression
See Roll-Up. Also used to describe the impact on a genealogy when a Representative is terminated. In this case, the downline of the terminated Representative is linked to the sponsor of the terminated Representative causing a “compression” effect on the downline.

Distributor
A person or entity in the genealogy with a class of “D” (Representative) is a Representative. Anyone who gets credit for a purchase or can receive commissions must be in the genealogy. All Representatives must sign a Representative Agreement to avoid being considered employees of the corporation. Some companies allow two or more people to join together as a single Representative entity. Often called a “Representativeship” or Independent Representative.

Downline
The Representatives personally sponsored by a Representative, as well as all the Representatives they sponsor, etc. Example: You sponsor Jim, who sponsors Mary, who sponsors Ted. All these Representatives are in your downline.

Enrolling Sponsor
A Representative who recruits another (new) Representative or customer into the business is a Sponsor. This person may be different from the Sponsor assigned to the new recruit in some compensation plans such as Matrix or Binary. It may also be different if the Enrolling Sponsor of a Representative is terminated. In this case, the Representative is placed under the sponsor of the terminated Representative. (Also see Sponsor, Compression)

Exemptions
Representatives may be permanently or temporarily exempted from meeting certain requirements for qualification. These should be clearly defined but not published. Representatives should not expect to be exempted when they fail to meet their qualifications even when they have an ‘excuse’. Reality requires this capability, however, to deal with corporate mistakes and other exceptions.

Front End
A term used to describe the portion of a Step-Level / Breakaway plan which pays commissions to non-breakaway Representatives. (Also see Back End)

Genealogy
The downline sales organization of a company or Representative often called simply a Downline.

Generation
The relationship between an upline breakaway and a downline breakaway, not including non-breakaways The first breakaway in any leg is called a first generation breakaway. Generations are counted based on this period’s fully qualified title.

Generation Override
The commissions paid to upline Generations based on Group Volume. This is only paid to Breakaways.

Group
A Representatives entire downline, but not including any breakaway Representatives or their groups.

Group Count
The count of Representatives in a group not including one’s self. Also called Group Size.

Group Volume (GV)
The total of all Personal Volume (PV) sold by a group for a commission period. This includes one’s own Personal Volume (PV).

Inactive
Each commission period (month?) that a Representative is not Active, he is considered Inactive.

Leg
Each personally sponsored Representative and all his or her downline. Also referred to as Line of Sponsorship. If a Representative recruits five other Representatives and places them on his first level, each recruit comprises a Leg of the sponsor. Leg is also used to signify a single chain of Representatives where “A” sponsors “B” who sponsors “C” who sponsors “D”, etc. Together, they are often referred to as a Leg.

Level
The position a Representative has in a downline relative to an upline Representative. Representatives personally sponsored are level one to the sponsor. Those Representatives sponsored by a level one Representative are level two, relative to the original Representative. (Also see Qualified Level)

Level Override
The commissions paid upline Representatives based on relative position in the genealogy. Note this is only paid to qualified levels. This type of commission is usually paid only in Uni-level compensation plans, not Step Level / Breakaway plans.

Orphan
When a new Representative joins a company, a Representative application form is completed and sent to the company. On the application, the new Representative’s sponsor name and account number is noted so the company can link the new Representative to his sponsor. Occasionally, the sponsoring Representative noted on the application is either incorrect or nonexistent making it impossible to correctly link a new Representative to an existing sponsor. In such cases, the new Representative is called an orphan. Procedurally, most companies have a Representative in their genealogy called “Orphan Account” to which all orphans are temporarily linked until their correct sponsor can be resolved. Commissions normally paid on the purchases made by orphans are usually kept by the company (called breakage) because orphans have no upline. Resolving orphan-sponsor linkages quickly is a high priority with most companies to avoid problems caused by not paying commissions to the correct upline.

Paid-as Title
The title a Representative is qualified for in each commission period. This title is not necessarily the Representative’s permanent “official” title. The Paid-As Title may change with each commission run but the Title does not. The Paid-As Title will never be greater than the permanent Title.

Personal Volume (PV)
The value of commissionable products purchased in a commission period is called Personal Volume or PV. It is based on the sum of each purchased product’s Qualifying Volume. It is credited to one and only one purchasing Representative in a commission period. It represents the total value of commissionable product purchased. It is usually included in the Representative’s Group Volume. When retail customers buy directly from the company, the Qualifying Volume of their order is usually included in the Personal Volume (and Group Volume) of their sponsoring Representative.

Qualifying Volume
The value of a commissionable product applied toward Representative qualifications in the compensation plan. This value is added to both Personal Volume (PV) and Group Volume (GV) when purchased. It is different than Commissionable Volume. Commissionable products have a Qualifying Volume, which does not have to equal the price paid for the product. (Also see Commissionable Volume)

Qualified
In most plans, a Representative is “qualified” if they can receive Generation Overrides.

Qualified Level
Some Uni-level plans pay commissions based on Levels instead of rank or title based on Qualified Levels. In these plans, a Qualified Level is represented by each qualified Representative in a single Leg or in a single chain of Representatives. Inactive Representatives are not counted as Qualified Levels in these plans. (See also Roll-Up)

Recruit
A Representative recruited by another Representative to participate in the compensation plan or business opportunity. Retail Volume The total retail value of commissionable products is called Retail Volume. Retail Volume is seldom used by compensation plans; most plans rely on wholesale values to determine Qualifying and Commissionable Volumes used in their compensation plan.

Roll-up
If a commission payment cannot be paid to a Representative due to that Representative’s being inactive, unqualified or not eligible in a given period, the payment will “roll up” to the next qualified, active and eligible Representative upline. In most plans, the volume does not roll up with the payment which would result in increasing the Group Volume of upline Representatives based on the poor performance of their downline – the practice of volume roll-up is not recommended while the practice of commission or override roll-up is recommended.

Sponsor
The Representative immediately upline of a Representative. It is usually the person who originally recruited the Representative but may be different if the Sponsor has inherited one or more people through Compression due to the termination of previously sponsored Representatives. It may also be different in plans that automatically place new recruits in certain spots or positions based on plan rules such as in Matrix or Binary plans. In these plans it is common for the sponsor to be different from the original Enrolling Sponsor. (Also see Enrolling Sponsor)

Stacking
A usually undesirable technique used by Representatives to manipulate the compensation plan. Stacking occurs when a Representative recruits other Representatives placing them in a single Downline Leg or chain instead of directly under the recruiting Representative.

Unencumbered Group Volume (UGV)
To avoid the Group Volume of one Representative inadvertently promoting his sponsor (and his sponsor, etc., which is often called Stacking), some plans require Group Volume used for advancement to Breakaway position to be derived from sources other than new breakaway Representatives. These other sources are most often other legs within the Group, which are not being advanced to Breakaway positions. The Group Volume derived from these other sources is considered Unencumbered Volume. This distinguishes it from the Group Volume used by a downline Representative that breaks away (encumbered volume). Some plans allow a portion of the Group Volume of a Representative achieving Breakaway status to be included in the Unencumbered Group Volume of his sponsor. For example, a plan might allow the excess or unused Group Volume of a downline Representative who is achieving Breakaway to be included in his sponsor’s Unencumbered Group Volume. The purpose of Unencumbered Group Volume is to avoid Representatives manipulating the intent of the compensation plan by funneling all their volume into one downline Representative which causes an entire leg to be advanced to Breakaway status. (Also see Stacking)

Upline
A Representative’s sponsor, along with his or her sponsor, etc. All Representatives in the genealogy above a Representative are referred to as his upline. For example, if A sponsors B who sponsors C who sponsors D, then the upline of D consists of A, B, and C.

All contents © Copyright Jenkon International, Inc. 1996. All rights reserved. Permission is granted to reproduce this article, AS LONG AS the biographical section above is included with the article.