Earlier this year, I ventured into an initial exploration of Lyconet, prompted by ongoing critiques of Lyoness’s accounting unit investment model. Lyconet emerged as a purported solution to disentangle the affiliate marketing aspect from the MLM investment opportunity that Lyoness was known for.
However, since my preliminary review in February, tangible developments regarding Lyconet have been scarce. Even now, navigating to the Lyconet website leads to a rather underwhelming experience – a mere login page greets visitors, offering little to no insight into the program itself.
Alt text: Lyconet website login page in December 2014, showing a basic interface with no public information about the career program.
Details regarding the compensation plan or the essence of Lyconet remain conspicuously absent from their online presence. Nearly a year post-announcement, the Lyconet website stands as a testament to unfulfilled promises.
I’ve been patiently awaiting the release of the Lyconet compensation plan to conduct a thorough evaluation of Lyoness’s revised approach. A Polish version surfaced approximately a month prior, yet concerns arose about regional variations in the compensation structure.
Dismantling the nuances of a compensation plan that might not align with the US version seemed an inefficient use of resources.
Fortunately, a BehindMLM reader recently provided a copy of the Lyconet US compensation plan. This twenty-one-page document proves to be as intricate and perplexing as its Lyoness predecessor.
Nevertheless, I’ve undertaken the task of dissecting its components to discern how Lyconet’s novel direction diverges from Lyoness’s original compensation framework.
For clarity and ease of understanding, I’ve categorized the plan’s key elements under distinct headings. A concluding section will encapsulate my overall assessment.
Elimination of Shopping-Only Customers
Despite its intended separation from the controversial accounting unit investment scheme, Lyoness heavily emphasized the shopping component of their previous compensation model.
Non-affiliate shoppers were considered the retail backbone of the income opportunity. Given that Lyoness primarily facilitated access to discounts, this premise was consistently debated.
Nonetheless, Lyoness did not impose signup fees on non-affiliate shoppers, limiting the controversy to the broader income opportunity context. The Lyoness shopping portal itself functioned without inherent issues.
Lyconet, however, has opted to eliminate non-affiliate shoppers entirely.
Referred to as “members,” all Lyconet sign-ups, including Lyoness customers, are now entitled to compensation extending two recruitment levels deep (unilevel).
Through the “Friendship Bonus,” Lyconet distributes 0.5% (equivalent to 50 cents per $100 spent) of purchases made by personally recruited affiliates and their direct recruits (level 2).
Crucially, this commission is accessible to anyone registering with Lyconet or Lyoness as a customer, effectively dissolving the distinction of a non-affiliate customer base within the opportunity structure.
Existing benefits from Lyoness are retained, notably cashback rewards and “Shopping Points,” which appear to be rebranded as loyalty credits.
The Lyconet compensation plan specifies that Shopping Points:
can be redeemed for attractive Shopping Point Deals and generous discounts on products sold in the Loyalty Mall.
Signing up as a Lyoness shopper remains free of charge.
Affiliate Commission Qualification in the Lyconet Career Program
Beyond the Friendship Bonus, the affiliate aspect of the Lyconet opportunity necessitates commission qualification for affiliates to participate in the Balance and Career Programs.
Lyconet affiliates can achieve qualification through two avenues:
- Generating a minimum of 350 Shopping Points via personal purchases and customer acquisitions.
- Recruiting at least five affiliates, each generating 150 Shopping Points.
Upon meeting commission qualification criteria, affiliates secure a twelve-month qualification period. Meeting these requirements within the qualification period resets the duration for another twelve months.
For instance, fulfilling qualification in January extends eligibility until the subsequent January. Should the affiliate requalify in June of that year, the qualification period shifts to June of the following year.
The commission qualification period is invariably calculated from the month of the most recent qualification attainment.
The Balance Program: Echoes of the Past?
Shopping Points are central to commission calculations within the Balance Program. According to the Lyconet compensation plan, these points accrue from:
- Purchases made using a Lyoness cashback card at participating Lyoness merchants.
- Transactions with a Lyoness-branded Mastercard at Lyoness merchants within the Mastercard program.
- Voucher acquisitions from Lyoness merchants.
- Purchases made through the Lyoness online shopping portal.
For the Balance Program, the credited Shopping Points generated by the Marketer’s entire Shopping Network (i.e., his entire Lifeline as well as Shopping Points from his own purchases and/or orders) will be converted into Units.
These Units are booked weekly into the Balance Program and the Marketer receives compensation on a weekly basis.
The “units” mentioned strongly suggest the Balance Program is a reincarnation of the previous accounting unit investment scheme.
However, the Balance Program ostensibly operates on a points-based system, rather than direct affiliate investment into units, marking a potential shift.
The binary structure persists, positioning an affiliate’s unit atop two binary legs (left and right). Commissions are triggered upon sufficient unit accumulation on both sides.
Mirroring the former accounting unit scheme, five levels exist. The level at which a unit is created depends on weekly Shopping Point generation:
- 50 Shopping Points = 1 unit in Balance Category 1
- 150 Shopping Points = 1 unit in Balance Category 2
- 400 Shopping Points = 1 unit in Balance Category 3
- 1200 Shopping Points = 1 unit in Balance Category 4
- 4000 Shopping Points = 1 unit in Balance Category 5
Although not explicitly stated, unit generation likely follows a “best available” configuration.
For example, 1150 Shopping Points in a week might yield two Balance Category 3 units (800 points), two Balance Category 2 units (300 points), and one Balance Category 1 unit (50).
The Lyconet compensation plan does not clarify if residual points (less than 50) are carried over week to week.
Commissions are disbursed when 25 units materialize on each binary side via “subsequent units” (explained below).
A notable shift in Lyconet is the incremental commission payout, replacing the lump-sum approach:
- Balance Category 1 – 3 units left and right = $3, 5 units left and right = $15, 10 units left and right = $21, 15 units left and right =$33, 20 units left and right = $39, 25 units left and right = $48
- Balance Category 2 – 3 units left and right = $27, 5 units left and right = $45, 10 units left and right = $63, 15 units left and right =$99, 20 units left and right = $117, 25 units left and right = $144
- Balance Category 3 – 3 units left and right = $90, 5 units left and right = $150, 10 units left and right = $210, 15 units left and right =$330, 20 units left and right = $390, 25 units left and right = $480
- Balance Category 4 – 3 units left and right = $270, 5 units left and right = $450, 10 units left and right = $630, 15 units left and right =$990, 20 units left and right = $1170, 25 units left and right = $1440
- Balance Category 5 – 3 units left and right = $900, 5 units left and right = $1500, 10 units left and right = $2100, 15 units left and right =$3300, 20 units left and right = $3900, 25 units left and right = $4800
Commissions in Balance Category 2 are threefold of Category 1 payouts. Category 3 commissions are slightly more than three times Category 2.
Category 4 is tenfold of Category 2, and Category 5 similarly is tenfold of Category 4.
Crucially, an affiliate cannot generate a unit in any Balance Category until their upline (or their upline) does.
Subsequent Units: Fueling the Balance Program
Subsequent Units are essential for populating the Balance Category binary structures.
Units within any Balance Category are generated via:
Personal Units: Generated by an affiliate and their personal Lyoness customers.
Transfer Units: Generated upon the “maturation” of a unit in Balance Categories 1-4. A matured unit creates a Transfer Unit in the next higher Balance Category (e.g., a Category 1 unit maturing (25/25) generates a Transfer Unit in Category 2).
Customer Units: Stemming from shopping activities of customers recruited by non-Lyconet affiliates (Lyoness shoppers/affiliates). The first, eleventh, and every tenth unit created by these shoppers counts as one unit for an affiliate.
Bonus Units: Additional units awarded based on the incremental maturation of existing personal units (explained below).
National, Continental, and International Balance Units: Expanding the Scope
Adding complexity, Lyconet introduces four commission levels within Balance Categories.
Beyond the “Personal Balance” category, three additional tiers exist:
- National Balance – units within an affiliate’s country.
- Continental Balance – units within an affiliate’s continent.
- International Balance – units company-wide.
These higher-tier units are generated through the accumulation of bonus units (explained below).
Bonus Units: Layered Complexity
Bonus units are generated based on an affiliate’s own unit generation (including transfer and bonus units).
Bonus unit tracking employs its binary structure (per unit):
- 5 units on both sides of a personal unit binary = 1 National Balance bonus unit
- 10 units on both sides of a personal unit binary = 1 Continental Balance bonus unit
- 15 units on both sides of a personal unit binary = 1 International Balance bonus unit
- 20 units on both sides of a personal unit binary = 1 National Balance bonus unit
- 5 units on both sides of a National Balance unit binary = 1 National Balance bonus unit
- 10 units on both sides of a National Balance unit binary = 1 National Balance bonus unit
- 15 units on both sides of a National Balance unit binary = 1 National Balance bonus unit
- 20 units on both sides of a National Balance unit binary = 1 National Balance bonus unit
- 5 units on both sides of a Continental Balance unit binary = 1 Continental Balance bonus unit
- 10 units on both sides of a Continental Balance unit binary = 1 Continental Balance bonus unit
- 15 units on both sides of a Continental Balance unit binary = 1 Continental Balance bonus unit
- 20 units on both sides of a Continental Balance unit binary = 1 Continental Balance bonus unit
- 5 units on both sides of an International Balance unit binary = 1 International Balance bonus unit
- 10 units on both sides of an International Balance unit binary = 1 International Balance bonus unit
- 15 units on both sides of an International Balance unit binary = 1 International Balance bonus unit
- 20 units on both sides of an International Balance unit binary = 1 International Balance bonus unit
Personal units are tracked within an affiliate’s downline unit generation, whereas National, Continental, and International Balance units utilize company-wide binary structures (per unit).
Balance Program Referral Commissions: Coach and Senior Coach Bonus
Lyconet offers referral commissions on Balance Program earnings through the “Coach and Senior Coach Bonus,” spanning two recruitment levels.
Affiliates earn 20% of Balance Program commissions paid to their personally recruited affiliates and 5% from commissions paid to their level 2 recruits.
The Career Program: Climbing the Ranks with Shopping Points
For the Career Program, the credited Shopping Points generated by the Marketer’s entire Shopping Network (i.e. his entire Lifeline as well as Shopping Points from his own purchases and/or orders) will be used to calculate the relevant Career Level each month.
The Marketer will receive monthly compensation.
Similar to the Balance Program, the Lyconet Career Program is also anchored to Shopping Point generation.
However, Career Program Shopping Points are exclusively derived from:
- Purchases via a Lyoness cashback card at Lyoness merchants.
- Transactions using a Lyoness-branded Mastercard at participating Lyoness merchants.
- Voucher purchases from Lyoness merchants.
- Purchases through the Lyoness online shopping portal.
- Lyoness’s “Loyalty Program.”
The inclusion of the Loyalty Program is somewhat redundant, as it is inherently part of the Lyoness shopping ecosystem.
Lyconet defines the Loyalty Program as:
A Loyalty Program created by Lyoness where Members shop and receive Benefits according to the Lyoness GTCs.
In essence, the Career Program rewards affiliates based on Shopping Points generated by themselves, their customers, and three levels of affiliate recruitment.
Compensation levels are determined by monthly point accumulation:
- 5000 Shopping Points – 3.7 cents per Shopping Point, no Career Bonus
- 10,000 Shopping Points – 4.8 cents per Shopping Point, $300 Career Bonus
- 25,000 Shopping Points – 5.6 cents per Shopping Point, $750 Career Bonus
- 60,000 Shopping Points – 6.3 cents per Shopping Point, $1800 Career Bonus
- 150,000 Shopping Points – 7.1 cents per Shopping Point, $4500 Career Bonus
- 400,000 Shopping Points – 7.8 cents per Shopping Point, $12,000 Career Bonus
- 1,000,000 Shopping Points – 8.6 cents per Shopping Point, $30,000 Career Bonus
- 2,500,000 Shopping Points – 9.3 cents per Shopping Point, $75,000 Career Bonus
Up to 50% of required Shopping Points at any Career Program level can originate from a single recruited affiliate and their downline (one unilevel leg).
Commissions from Shopping Points generated by recruited affiliates qualifying at different levels are reduced based on the level differential.
For instance, qualifying at level 3 (25,000 points) while a recruit qualifies at level 1 (5000 points) results in a commission of 1.9 cents (5.6 cents (level 3) minus 3.7 cents (level 1)) per Shopping Point from that affiliate and their downline.
Promotion to a Career Level occurs the month after qualification. Re-qualification the following month confirms the level for six months.
Failure to requalify the month after initial promotion results in confirmation at the level below for six months. Re-qualifying within the six-month confirmation period resets the qualified period for another six months.
Conclusion: Lingering Questions and Concerns About Lyconet’s Structure
The most significant concerns with Lyconet’s compensation plan are the continued absence of a genuine retail focus and the structure of the Balance Program.
The legitimacy of Lyoness’s retail sales to non-participants has always been questionable.
Ostensibly, Lyoness provides discounts on third-party products and services. They did not charge fees to regular shoppers (non-affiliates), and only direct investment into accounting units constituted a de facto affiliate membership cost.
With Lyconet, everyone is an affiliate, either directly or by signing up as a Lyoness shopping member. The affiliate opportunity is implicit, and even regular shoppers earn commissions down two levels.
This effectively eliminates retail customers as defined in traditional MLM models.
Consequently, Lyoness, through Lyconet, no longer possesses non-affiliate customers purchasing products or services through their platform.
Everyone is involved in the income opportunity, which raises red flags. Legitimate MLM operations necessitate readily identifiable non-participant customers to avoid regulatory scrutiny.
The Balance Program appears to perpetuate the problematic accounting unit investment scheme.
The shopping aspect of Lyoness was ostensibly separate. Shopping generated cashback, and substantial spending could lead to unit accrual.
Lyconet drops the “accounting” prefix, simply terming positions “units.”
The mention of “orders” in the compensation plan is perplexing. Affiliates previously invested in accounting units, anticipating ROI upon sufficient new investments.
While Lyconet still generates shopping units, the possibility of direct investment remains ambiguous.
Despite the lack of clarity on the Lyconet website, the reference to shoppers placing “orders” in the compensation plan warrants scrutiny.
Lyoness’s website states:
The Lyoness Voucher for Loyalty Merchant Vouchers is the perfect gift. With the Lyoness Voucher you have exactly the right thing to shop with, because you can use it in a variety of ways.
You have the option of using the Lyoness Vouchers to pay for your online order at a Lyoness Loyalty Merchant. With Lyoness Vouchers you are always flexible and can order other Vouchers at any time without having to make a transfer.
Vouchers are receive digitally and are particularly convenient, as you can order them while on the move, pay for them using your existing Vouchers and redeem them immediately – and of course you will also receive Cashback and Shopping Points, the amount of which depends on the selected Loyalty Merchant.
Paying for vouchers with vouchers? This circular system echoes the investment-centric nature of the previous accounting units.
In Lyoness, affiliates invested in accounting units disguised as gift card purchases. Lyconet’s units are linked to Shopping Points, creating potential ambiguity.
The Lyconet compensation plan omits details regarding fees for voucher purchases or if vouchers can directly purchase shopping points.
Beyond the “orders” reference, the Lyconet compensation plan lacks explanation on how they contribute to Sales Point generation for unit acquisition.
However, it is clear that within an MLM context, vouchers do not constitute the sale of a product or service.
The Lyconet compensation plan consistently differentiates between actual purchases and “orders”:
Personal Units are generated using Shopping Points collected from the Marketer‘s purchases and orders.
This phrasing suspiciously resembles “downpayments,” Lyoness’s term for affiliate accounting unit investments.
If so, the problematic accounting unit scheme remains embedded within Lyconet.
At best, Lyconet is a shopping network facilitating unit generation through non-purchase of discount vouchers, with units yielding cash ROI upon subsequent unit generation.
At worst, Lyconet is a pseudo-compliance maneuver, further complicating the process of channeling new affiliate funds to earlier participants.
The linear structure of national, continental, and international unit placement strongly suggests a single-line cycler queue, akin to matrix cycler scams where participants pay for positions and await ROI based on company-wide position purchases.
A final observation concerns the rampant creation of phantom positions (transfer and bonus units).
These costless units generate ROI, similar to paid positions funded by affiliate investments.
Transfer units even escalate through Balance Program levels, yielding progressively higher ROI.
Where does this payout money originate? Are Lyoness merchants funding this in addition to cashback?
How can Lyoness sustainably compensate affiliates tens of thousands of dollars on revenue-neutral phantom unit positions?
My intuition suggests missing information in the Lyconet compensation plan – details clarifying the flow of affiliate funds to cover Balance and Career Program commissions.
Lyconet is designed to integrate with Lyoness’s pre-existing accounting unit liabilities. Lyoness faces substantial obligations to mature and payout on legacy accounting units.
Lyconet layers onto this, aiming to fund existing unit ROIs, attract new funds with a revised unit system, and somehow pay out significant sums on phantom units and Career Program bonuses, further straining resources.
Again, where does the promised payout money originate?
Lyoness’s previous model was mathematically structured, paying out only after a set volume of new funds entered the system. Lyconet seemingly abandons this transparency, obscuring the revenue source for unit and career bonus commissions.
Either a significant portion of the compensation plan is missing, detailing affiliate fund inflows, or Lyconet’s compensation plan mathematics simply do not align.
