Friday, April 17, 2015

Is Amway A Disaster From The Start?

I was thinking about how propsects are invited to see the plan. In many cases, there will have been a bit of deception or half truths told in order for an IBO to get a prospect in front of the plan. But then I thought about the plan and how much deception was used in the plan itself by the speaker.

Thus, IBOs and new prospects are deceived right from the beginning. The speaker might make some small talk, and get the prospect to agree on certain issues, such as income tax and insurance eating away at your paycheck, etc. When a prospect hears this, it will make sense and they will agree and trust the spaker somewhat. Afterall, the speaker has been built up to be a financial whiz and all.

Then the deception begins.............

The speaker might talk about IBOs saving 30% on products righ from the start, which is false. Here's some information debunking that age old myth:
http://www.amquix.info/Save30_myth.html

Then the speaker might talk about 98% of people being dead or broke by age 65, which is not true. The speaker might talk about 90% or more of small businesses failing in the first year. These little factoids (which are untrue) are apparently used to make other opportunities seem flawed in comparison with the Amway opportunity.

The speaker might then talk about how the Amway opportunity is cheap to get started, and has little or no overhead. But the problem is that many dedicated IBOs will get hosed as their upline will begin to teach them that they need to invest in their business in the form of voicemail, book of the month, standing order and attending all meetings. These expenses nearly guarantee that an IBO will end up with a net loss of income. What's more, upline may teach that this is success! Appalling!

So a question for IBOs and prospects. Is it a good opportunity when you have been lied to or deceived right from the outset?

Tuesday, April 14, 2015

Join Amway And Build Someone Else's Dreams?

One of the issues I have with the Amway plan is that the newest IBO, possibly the one who does the most "Work", receives the smallest compensation. Amway pays about 30%+ of their revenue back in the form of bonuses. An IBO who does 100 PV receives a 3% bonus and somewhere, uplines and sponsors receive the rest. Some of the upline may not have even met the IBO who actually did the work. Is that really fair and is that a level playing field? What do some of these uplines do to deserve the lion's share of the bonus you worked to get? Yes, the upline diamond may show the plan in an open meeting, which may help you, but then again, you pay for entrance into that meeting. If you have no guests to bring, you paid and received no benefit at all.

Many uplines will talk about dreams and fulfilling your dreams. But if an IBO would stop and think for a moment, you can easily see that you are building the dreams of the Amway owners and your upline, but not your own. You receive a tiny portion of the bonus for the volume that you move, and then in addition, if you are on the system, then you are also paying upline in the form of tool and function purchases for the priviledge of giving them bonuses with your product purchases. Dreams are being fulfilled, but not yours.

It is why your upline diamonds can parade around on stage with designer suits and show you their fancy cars and mansions and other toys. It is because they are cashing in on your efforts and your tool and function purchases. You are making their dreams come true. Your dedication to moving volume and purchasing standing orders are fulfilling dreams. The upline dreams. Yes, someday you can hope to have your own group of downline to exploit for your own benefit, but unless you are adding members to your group regularly, you will never achieve the kinds of dreams that uplines talk about. In the meantime though, you are definitely helping someone upline achieve their dreams with every function you attend. Ironically, the upline leaders will tell you to never quit, even if they don't know your personal circumstances. They don't want you to quit because their income is affected. Sometimes in business, quitting is a wise business decision that must be made unless you want to bleed money longer and longer. Quitting Amway doesn't mean you can't try something else to fulfill your dreams and goals. More than likely, any option you choose will be better than losing money in Amway.

Here's a challenge for IBOs and/or prospects who are being recruited into the Amway business. 100 PV will cost around $300 a month and dedication to the tools system will cost you around $200 a month or more on average. Would you not be better off simply writing a check to your upline for $100 and not even joining? Would you not be better off staying home and watching television instead of joining? If you read all of the information available on this blog and still decide to join, goo d luck to you, but remember this: Whose dreams are being fulfilled by your participation? Yours or your upline?

Monday, April 13, 2015

Amway And College?

Many IBOs justify their involvement in the system of cds, tapes, books and seminars by comparing it to college. They claim they need this education and that it is much cheaper when compared to a college or university. Of course this is the upline propaganda that IBOs are fed, much like the concept that a job is a bad idea. Some unethical uplines will advise young students to forego college to pursue an Amway business. If that happens, run away fast!

In college, it is true that not everyone graduates, but approximately half of those who start college end up graduating. Those who do not graduate still benefit from their education on a year to year and course by course basis. When you are job seeking, a college degree will give you more options than those who don't educate. This claim cannot be made by Amway IBOs. The education an IBO receives by seminars and cds do not even equate to success in Amway, much less in other venues in life. Only a small fraction of IBOs ever reach platinum, which supposedly is the break even point. So as an IBO, you have less than one half of a one percent chance to break even as compared to approximately a 50% chance of graduating college.

Also, once you graduate and receive your degree/diploma, it is complete. In Amway, there are many many many examples of people who reached levels as high as diamond or above who could not maintain the level. There are also many examlpes of diamonds who quit Amway. If there were such a thing as "residual" income, why would anyone quit when they could sit back and watch the cash roll in. I think the answer is quite obvious.

There is also no evidence (as far as I know) that your Amway related education of cds and seminars actually work. The tiny fraction of 1% of successful IBOs is not a good case for arguing the success of the system. Colleges on the other hand, have accreditation standards, which is nothing like the ineffective Amway accreditation of groups such as BWW, WWDB or Network 21. It is well documented that college grads earn more than non college grads and we know that the average income of Amway IBOs is about $202 a month gross income. Bottom line there really is no comparison.

The fact that IBOs even dare to compare a college education to their teaching in Amway is a joke. Try telling a prospective employer about your Amway education and see what that gets you. LOL

Friday, April 10, 2015

Amway Customers?

One of the apparently common practices among major IBO groups is still the concept of "buy from yourself". I believe IBO leaders teach this because most people are not good at or not comfortable selling goods and services. And this is not uncommon. In general, people do not enjoy selling and the Amway presentation is usually careful to avoid making the impression that you need sales. Instead, you might hear terms like self consumption or being a prosumer.

Therefore, to teach buy from yourself makes the business an easier sell. In reality, an Amway IBO is simply a comissioned salesperson with no benefits. But presenting the opportunity that way is unlikely to yield results either, thus the buy from yourself has become a common practice. It makes it sound easy to just buy your own goods (or change your shopping habits) to reach 100 PV and qualify yourself for a bonus. Then you just get others to copy what you are doing. Easy right?

However, buying from youself makes you a customer and not a business owner. Buying from yourself doesn't generate your business a profit. Would you open a car dealership to buy a car? Now I am not suggesting that supporting your own business is a bad idea. What I am suggesting is if you are the primary or exclusive customer of your Amway business, then you aren't really running a business. You are simply a glorified customer. And technically, without sales, you don't actually qualify for a bonus.

What an IBO is really doing is paying his upline's bonuses. Amway overcharges more than 30% of the cost of their product. They have to do this in order to be able to pay IBO bonuses. Since most IBOs are at 100 PV or less, the lion's share of the bonuses earned are channeled upline when a purchase is made. It is not a level playing field as some IBO leaders might suggest. Yes, you might be able to surpass your sponsor but you will never surpass a tenured diamond no matter how hard you work because that diamond has a lot of influence over your business.

What compounds the situation and makes it worse is when an IBO pays for standing order or attends functions where some of these IBO leaders may teach this bad business practice. You as an IBO already pverpay for products for which upline gets most of the bonus, but then the problem is compounded by IBOs paying to receive this bad advice. When I was an IBO, I heard speakers talk about skipping rent or mortgage payments to attend more functions, or having your family skip a meal so you can buy standing orders. Buying from yourself is just another example of bad advice given from upline to downline. What makes it worse is that the uplines profit by giving bad advice.

Are you buying from yourself almost exclusively? Can you think of any truly successful business where the owner is the main or possibly the only customer? I can't think of any.

Thursday, April 9, 2015

Are Amway Diamonds Really "Free"?

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 is it possible 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 the complete their day jobs, thus a diamond ends up working nights?

Now Amway has stated that the average diamond (non Q12) earns about $150,000 a year. That is a decent income, but after taxes and paying for basic monthly 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. Is that freedom?

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 worked a 9-5 job. For one thing, a diamond needs to maintain personal group volume 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 I believe he 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. But up and coming pins shine and drop out regularly like so many other IBOs. The diamond's effort must be endless.

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 and to attend out of town functions.

After breaking down projected income and considering projected expenses, I can only conclude that a diamond probably lives a 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. Is that what you consider "freedom"?

Tuesday, April 7, 2015

Amway Success?

Many people consider the platinum level in Amway as a significant achievement in Amway. While it may be nice to achieve that level and gain recognition from the Amway corporation, I will point out that there was a study done in Wisconsin where the attorney general analyzed and found that the top 1% of Amway distributors (Includes platinums) on average, lost money. The study is somewhat dated, but I will also point out that today, there are MORE expenses associated with running an Amway business than before. (Voicemail, books, functions, standing orders, shipping). I would guess that it's possible that platinums lose more today than when the Wisconsin study was done.

A typical platinum group often has 100 or more downline IBOs. Thus a logical conclusion is that less than 1% of IBOs can reach that level. It is also, apparently rare to maintain that level. Factoring in people who quit, one can conclude that only a fraction of 1% ever reach platinum. My former upline diamond had 7 frontline platinums in his heyday. Actually, 6 of them were ruby level. None of them hold the platinum level today. So you have a less than 1% chance of reaching platinum and then you are unlikely to be able to maintain that level. I also know of platinums who are not even in the Amway business anymore.

What serious prospective business owner would even consider opening a business where you have such a tiny chance of success? Even those who achieve platinum are likely to lose that level. If platinums cannot maintain their level, then it's easy to see why there are many former diamonds as well. It seems that people are willing to take a chance on an Amway business because the start up cost is low. But what is the point of doing all of that when the chance of making money is negligible and unsustainable?

To compound the problem, many IBOs spend a lot of time and money building an Amway business that is unlikely to give them any return on their investment. I'd guess that the average serious IBO would spend $250 a month or more on tools. That money invested over a number of years in mutual funds would give you a much better chance of achieving some dreams. Even putting the money in the bank would make you better off than the vast majority of IBOs. A serious business owner would want to know their realistic chance of making money. For some strange reason, prospects and IBOs seem to ignore this reality. They dream of only the best case scenario or what is possible. They seem to ignore what is likely.

It is because uplines are in the business of selling tools and distributorships. They are not truly interested in your long term sustainable success. If you don't believe me, try to stop purchasing standing orders and function tickets and see how much longer you are edified and given help from upline. Seriously, would a real business owner be interested in a less than 1% chance of success?

Monday, April 6, 2015

Amway Complaints?

Over the years, I have seen literally hundreds (if not more) blogs and testimonials about Amway. Most of them decry the pitfalls of being an Amway IBO. Most of the complaints cite the fact that Amway in general has higher prices than comparable retailers and the fact that the system consisting of voicemail, books, cds and seminars ate up any profits the IBO may have made and resulted in net losses for most. One particular Amway apologist bemoans the fact that the internet is full of bad testomonials about Amway. The reason why there are so many negative testimonials about Amway is because over the years, thousands, possibly millions either had a bad experience for the reasons I cited above, or personally know of someone who had a bad experience.

Amway defenders will often cite the fact that many IBOs sign up and "do nothing" as their defense to this. But I will easily point out that I haven't seen anyone say they signed up, failed to do anything or order products, quit and started blogging about a bad experience in Amway. These defenders will also compare Amway to the gym where people sign up and "do nothing". Whether true or not, I also do not see people who sign up and "do nothing" complain about not receiving health benefits by simply signing up. It is a very weak defense. Conversely, I have seen numerous accounts of folks like myself who did put in effort, some for many years, who did what upline advised and did not see the financial rewards that is promoted in "the plan".

Amway defenders will then try to justify themselves, saying that the better business bureau (BBB) receives few formal complaints about Amway. I will agree with this. Many IBOs never bother to file formal complaints to the BBB or to Amway because in many, probably most cases, the person who quits and may have had a bad experience, was sponsored into the business. The sponsor was often a friend or family member of the IBO who left the business. Many will simply leave and forget the episode and chalk it up to a learning experience in life. Some will complain, but really have to ne venue to voice their remorse about joining. Some of us have found the interent to be quite effective in sharing our experiences and our opinions on why the business did not work. This is what one Amway defender calls the "internet war". What I have pointed out is that critics most often simply point out what the IBOs themselves have done. In many cases, the IBO is his own worst enemy. Afterall, critics didn't deny Amway and Quixtar had a connection, nor did critics make up claims about perfect water, etc.

It would appear that most of the problems has a root in the AMO systems, such as WWDB, BWW, LTD, or N21. Now, not all upline leaders are unethical, but it appears that many are, and new IBOs have no way to identify the good from the bad. It also appears that some of these upline leaders will issue bad avice. Advice that is detrimental to the IBOs, but financially beneficial to themselves, such as telling IBOs to never miss a function, or to buy more cds. In many cases, these unethical uplines do not care about IBO success, their goal is just to move as many support materials as possible, so they can fund their "diamond" lifestyle. Sadly, it is also apparent that the diamond lifestyle may be a facade in some cases. An illusion of wealth portrayed as a recruiting tool.

If you recognize some of these warning signs, ask tough questions of your potential sponsor and visit this or some of the blogs linked to this one for more information.