Amway - The Amway Compensation Plan?

One of the major reasons why I think Amway is not such a good opportunity is because of the unfair multi tiered compensation plan. I have heard that Amway pays out about 32-33% to their IBOs, but I find it unfair in that you get rewarded for sponsoring people who move volume more than you do for actually selling products. I believe this is why so many IBOs are desperately trying to sponsor people and in some cases, deception and trickery is used in recruiting, which contributes to Amway's bad reputation.

This multi tiered compensation plan also rewards a few people at the expense of the masses. If an IBO works really hard and sold 100 PV worth of goods, that IBO would get $9 or $10 in a bonus from Amway and layers of upline would split up about $90. I fail to see how that is fair, especially when IBOs seemingly say "do the work and get paid". In this case, you do the work and your uplines get paid.

I think Amway would be more efficient by giving all IBO's 20-25% back as a bonus, with the remaining 8-13% in bonus (33 - 20 or 25) going to certain levels os achievers. I believe that this would truly allow someone to change their buying habits and gain some value. It would also be good for retention of IBOs because a 100 PV would get you a monthly bonus of about $60. If you sold 100 PV to customers, you would get the retail profit plus the bonus. I believe there would be less of an emphasis on sponsoring and more of an emphasis on selling. It would put less pressure on IBO's to recruit and sponsor, and I believe that Amway's reputation could be repaired in this manner. While you would have less emphasis on "going diamond", those who did achieve it could still get handsome bonuses.

I believe implementation of this type of compensation would also eliminate the endless need for cds and seminars. Sure, product expos and some teaching on salesmanship might help, but I believe that compensating the "majority" of IBOs would keep them interested in doing business and would lessen the need for tools. I believe this is a win-win for the majority of those in the business.

I'm sure some Amway apologists will find fault in my line of reasoning, but I believe this is a long term sustainable solution for Amway. Comments are welcome.

Amway - Diamond, Possible, But Not Likely?

When I was shown the plan, the plan was to go diamond. I believe that most plans shown result in the ultimate goal of going diamond. That appears to be the pinnacle of success in the Amway business. It certainly is the beginning of the speaking engagements and where you would be doing your own open meetings. You are the sought after person for functions and your faithful downline are your servants. These downline would be willing to chauffeur you around, mow your lawn, etc,. Anything to gain association time because you might say that one thing that propels their business to diamond.

In nearly every meeting I attended, the "diamond" lifestyle was flaunted. I attended a function called "Dream Night", which is still in existence, where some diamonds will present a slide show to display all the trappings of being a diamond. I also believe I have seen ample evidence that this still goes on in WWDB today. Anyway, I saw pictures of mansions, jet skis, jets, boats, ATVs, sports cars, designer clothes, shopping sprees, golf outings and other luxuries. While the diamonds may participate in these outings and may own some of these toys, I highly doubt that a diamond or even an above diamond lifestyle consists of basically dooing nothing, waking up at noon and going golfing and then spending the evening shopping and buying more extravagant items. In light of recent events in WWDB, i would say that hard times are falling on the diamond lifestyle. A prominent triple diamond went bankrupt and a host of other diamonds selling off mansions. While we don't know all the details of what is going on, we can certainly conclude that the economy has affected the diamonds as well.

But getting back onm topic. I understand the salesmanship of someone showing the plan, but for information seekers, just be aware that much of the extarvagance you may see is quite possibly an illusion. Just as in a real business, I sugggest that you see to inquire about business financials as real business owners do when getting involved in a new business venture. A lack of willingness to share and/or a lack of transparency by the person recruting you should set off red flags all over the place. Based on figures provided by Amway, it appears that less than 1 in 240 IBOs ever reach platinum. That is less than one half of one percent. And out of those few who reach platinum, less than one percent of them ever reach diamond. Even if you reach diamond, there's a good chance that attrition will eat away at your business before the shine on your diamond pin wears out.

Going diamond is possible, but highly unlikely. In a business where the evidence suggests that most people never make a single dime of profit, I would just caution prospects from jumping into the business blindly without asking tough questions and demanding answers. It's because Amway recruiters will always show you what is possible, but not what is likely.

Amway - My Job Is A Pyramid?

One of ths things I take issue with is how uplines will create an us versus them mentality in the business. Thus friends and family who care about you suddenly become "negative" and association with them should be limited. In some cases, people are discouraged from excellence in their jobs or professions because it takes the focus off of their Amway business. What I was told was to do my job, but my radar should always be on for new prospects. Some crossline IBOs turned down promotions at work because they did not want to have to work longer hours or take the focus off of their Amway businesses.

In some cases, the speaker at open meetings or functions will put down people's jobs. A commonly used acronym was J-O-B = "Just Over Broke". Some leaders also would say that my job was a pyramid because you will never earn more than the boss. A completely ridiculous comparison because someone's job has no relationship with how people view the Amway business (i.e. an Amway pyramid) and in a job, every employee gets paid and has a net gain at the end of the month. Not true in Amway. If IBOs only use KATE for example, an IBO at 100 PV or less will already be at a loss, and that is not considering any other expenses that IBO may have. And while a job may have a hierarchy, or chain of command, the business owner and CEO or manager earns their salary from customers, not directly from the pockets of their employees.

Some uplines will laugh about people's jobs, stating that they wake up at the "crack of noon". What these same uplines may not tell you is that they wake up at noon because they are up at 3:00 in the morning doing nite owls for their groups and looking for recruits. These same uplines possibly can't do much with their downlines since their downlines mostly tend to have 9-5 jobs.

So if you are of the opinion that nobody should criticize the Amway opportunity
or IBO behavior, maybe uplines and IBOs should not criticize family and friends who disagree with or are not interested in the opportunity, and maybe the same uplines and IBOs should not criticize people who choose to work jobs. Don't most IBOs rely on their jobs as their Amway income is not sufficient to even pay for their Amway business related expenses?

Amway - Investing In Your Business?

One of the things that many Amway IBOs do is to purchase cds, books, voicemail, websites, seminar tickets, etc. These materials are supposed to help an IBO to succeed, but apparently the people who sell these materials are far more successful than those who use them. What makes these materials potentially harmful to an IBO's resources is that many IBOs are told that these "tools" are an "investment" into their business. I believe that these tools are simply a drain on an IBO's bank account and not truly an investment. I will explain.

If you owned a tradional business, you would have to come up with a lot more money than opening an Amway business. That is true, but a traditional business will likely come with a building and possibly some real estate. This is a tangible investment. If your business doesn't work out, you can still sell the land and/or building, or transfer the lease to another business owner and recoup some of your initial investment. Contrast this with former IBOs who endup selling their Amway tools on ebay or craigslist for pennies on the dollar. I'm not even sure they have any takers, except for morons who think the tools have any value.

Also, in a traditional business, you may have to make other "investments" such as perhaps purchasing a company van or other equipment that will help your business be efficient. These materials, while they will depreciate, still carry value and can be liquidated if your business is sold. What can an IBO sell to offset losses if they stop their Amway business? Sell their white board and easel I suppose, or they can try to sell their excess inventory if any, but generally, an IBO's business doesn't gain any equity. You don't own your downline. You don't own anything really, except the right to distribute products.

The way I see it, the purchase of tools is an investment. An investment into your upline's business. The more you purchase, the more your upline prospers.

Amway - Early Retirement?

One of the humorous things I read is when am IBO says he or she is 19 years old and will be "retired" at the age of 24 because of the Amway business. I erpsonally don't know of anyone who has retired primarily on residual Amway income, as many seem to claim. I am not suggesting that nobody has ever done this, but I suspect that there are so few people who may have done it that it is not noteworthy. Even the Crown Ambassadors appear to not only be working, but have very busy schedules where they are constantly on the run. The poor retention rate of IBOs would suggest that even a sizable Amway business could fall apart rather quickly without a constant replacement of IBOs.

I ask this of IBOs. Is your upline diamond, or someone in between you and the diamond retired because of (primarily) Amway income? Do you as an IBO have a projected date when you will "walk away" from the business and retire? When I was an IBO, I always wondered why nobody "walked away" from their business after they went diamond. I believe the answer is crystal clear. Because IBO turnover is so high, if a diamond were to walk away from the business, he would probably fall out of qualification in less than a year. The bonuses would disappear and the diamond would probably have to look for a job. There are many examples of diamonds who have quit, and in some cases, went back to work.

Many unsuspecting prospects may be lured into the Amway business with the hope of an early retirement. Amway recruiters may mention that control of time and money is the key to success, but ironically, for most who sign up, will end up with less time and money than if they did not join at all. For many people. especially young people, it might be a good idea to seek financial advice from a professional and to make long term investment goals. Am investment of about $200 a month can net you close to a million bucks after 30 to 40 years.

Yes, there may be "some" people who retired early due to (primarily) Amway income. But I don't know any. Do you?

Amway - A Likely Experience?

One thing Amway promoters and apologists like to do is to paint a best case scenario when promoting Amway. I can't blame a promoter for wanting to show the best case scenario, but in my informed opinion, it's a matter of whether there is deception or outright lies in displaying that best case scenario. For example, when other "financial" gurus air their infomercials, they have a disclaimer to explain that success testimonials are a "unique" experience. Many Amway promoters apparently do the opposite and make it seem as if financial success in Amway is the norm and not the exception. But what is the more common or likely experience for an IBO?

I am not going to discuss the IBOs who sign up and do nothing, even if this may be common. (That's because there may also be reasons for this, such as deception or harrassment used by the recruiters).

I believe that for many, they will see the plan, usually the 6-4-2 plan which is to show how you can become a platinum. The speaker may slide in how all you need is six of these groups and you will be a diamond and make hundreds of thousands of dollars and walk the beaches of the world.

The reality for many is to sign up full of excitement, and thinking that certainly, some of their friends and family will agree that this is viable. So the new IBO will buy or consume 100 PV and may try to sell a few items. Eventually, this same IBO will talk to family and friends and many of their friends and family will show sour faces as they already had, or know someone who had a questionable or bad experience with an Amway IBO. I myself got tricked into a meeting at one time. They may listen to the standing orders and attend the meetings with the intent of succeeding as per the plan.

But after a few months, not many people are interested in registering, not many want to buy the products and it becomes increasingly harder to make contacts and to get new people to see the plan. The expenses start to add up. You have products such as laundry detergent or LOC that you don't need to replace but you have your defacto 100 PV quota, so you end up buying other things to reach that all important 3% bonus bracket. By now, you have a cache of household products and goods that you never really used prior to Amway, you notice that your checking account is shrinking as the products and the other expenses such as voicemail and functions are starting to add up.

You finally quit, in some cases with the now former IBO feeling embarrassed or ashamed that they even got involved in all this. They disappear and all of their former "lifelong" IBO friends could care less. They won't bother to complain about their experience, but may feel the need to vent if someone discusses Amway again.

In the final analysis, the bad experience and financial losses likely came at the hands of an AMO such as Network21, WWDB or BWW, but the attachment of a bad experience will be tied to Amway. This is a more likely experience than someone quitting their job to walk the beaches of the world.

Amway - Diamond Freedom?

When I was an IBO, I often saw my upline diamond driving around town dressed in a business suit. I used to think why does he keep working if he can walk away and collect residual income? My sponsor told me that the diamond only works because he cares about his downline and wants to help them. So there are two possible scenarios, the diamond is working to help his downline out of a genuine concern, or possoibly he is working because he has to! The only difference now is that the diamond works the nite and/or graveyard shift, because many IBOs are building the business after they complete their day jobs. **We should also note that my former upline diamond dropped down to the emerald level around 2005 and has since re-established his diamond level.

Now Amway has stated that the average diamond earns about $146,000 a year. That is a decent income, but after taxes and paying for basic expenses such as medical and dental insurance, the average diamond probably lives a very middle class lifestyle. Keep in mind that a large portion of a diamond's income comes in the form of an annual bonus, thus a diamond's monthly income may be quite small. Yes, diamonds may have other sources of income such as speaking engagements and income from standing orders and functions. But this income depends on the diamond's continued appearances and efforts.

So is it likely that a diamond is "free"? I would have to conclude that a diamond is not free, and may actually have to spend more time maintaining his group than if the diamond simply had a 9-5 job. For one thing, a diamond needs to maintain a personal group to keep qualifying for bonuses. With a poor retention rate in Amway, I am fairly sure that a diamond spends much time recruiting personally sponsored IBOs to maintain this group. Additionally, a diamond must help his six or more groups of downline platinums to maintain their businesses or face the possibility of falling out of qualification. My former diamond dropped down to the emerald level but has since re-qualified at diamond. A diamond must also dedicate time to reward up and coming movers and shakers, to keep them motivated. I got to spend time with my upline diamond when I was considered a promising up and coming pin.

In order to continue to receive tools income, a diamond must also travel to numerous functions and speaking engagements. Although the tools income allegedly doubles a diamond's income, it also adds a lot of expenses, especially if the diamond and his family travel first class to show off the diamond lifestyle.

After breaking down projected income and considering projected expenses, I can only conclude that a diamond probably lives a middle to upper middle class lifestyle, and probably works as much as a man with a 9-5 job, except that a diamond works nites and weekends. A good portrait of this is shown in Ruth Carter's book (Amway Motivational Organizations: Behind The Smoke and Mirrors). In the book, the diamond had a net income of over $300,000, but lived in debt, could barely pay his mortgage, and was always on the run from one function to the next.

I believe that diamonds may actually be busier at the diamond level than an average Joe who has a 9-5 J-O-B. The difference is that the diamond works the night shift. Is this the freedom you are seeking?