Monday, January 10, 2011

Why Most IBOs Fail

Over the years, there must have been tens of millions of IBOs who had some experience with Amway. Obviously, not all of these folks got involved in a system or had the intention of trying to make millions of dollars. But looking at the business as a whole, the number of people who make a significant income from Amway is a tiny fraction of 1%. If a typical platinum has about 100 IBOs in a group, then you can conclude that platinum is in the top 1% of all IBOs. And we know that many IBOs quit and go through the business each year. The attrition rate can be staggering for bigger pins who need to keep working to replace those who quit.

But the question that seems to be ignored is why so many IBOs end up failing? Now for the sake of this discussion, let's exclude IBOs who do nothing and quit. Let's talk about IBOs who make an earnest effort. Often, the serious IBOs will be on the system consisting of voicemail, standing order, functions, books and other meetings. These all come at a cost, therefore, IBOs need to make several hundred dollars a month just to break even. Amway reports that the average income of active IBOs is $115 a month. Therefore, the average business building IBO is operating at a loss.

Let's look at some of the reasons why IBOs cannot succeed. In general, Amway product pricing is higher than local big box retailers. Amway pays bonuses, therefore the bonus payout is included in the price of the products. I suppose a platinum gets a good deal, being at the 25% level, but a platinum is in the top 1% of IBOs. The majority of the rest receive a paltry 3% which leaves them at a loss when business expenses are factored in.

Past IBO abuse and past IBO behavior makes it nearly impossible, at least in North America, to find potential downline IBOs and customers. Seems everyone knows of someone who was tricked into an Amway meeting or was deceived about Amway in some manner. I believe Amway has seen a decline in sales in North America, with foreign countries being responsible for any current growth in business.

Another factor is that IBOs are taught by uplines to engage in too many activities that do not produce income. Attending meetings, listening to cds, reading books and other functions cost the IBO money. They do not result in more sales to customers. These non income producing activities seem to be the majority of an IBO's activities, thus it's easy to see why so many IBOs fail. While system leaders claim that their system works, there is no reasonable evidence to support this claim. Just the fact that new diamonds and emeralds are so rare these days suggest that the system, with their severly limited success is producing less success these days.

All told, an IBO's chance of succeeding in earning long term sustainable income is so tiny that IBOs seriously would be better off buying lottery tickets instead of buying tools such as standing orders and function tickets. At least buying lottery tickets would not use up 10-15 hours per week of your time, and your chance of winning is about the same. The system doesn't work, it is why most IBOs fail.

P.S. Joecool's blog just celebrated their 100,000th visitor just yesterday, in 2 years of business!

9 comments:

David said...

Congrats on your 100,000 visitor milestone Joe! Keep on blogging and informing potential IBOs about the real hazards and pitfalls of the Amway opportunity.

Joecool said...

Thanks! You know what's ironic? If not for the like of creepy Amway defenders such as Bridgett Baron continuing to insult and slander me, I probably would have quit blogging about Amway a few years ago. Maybe I'll be around for another 100,000 visitors!

rocket said...

Great Post Joecool!

Here's to another 100,000 information seekers!

The truth isn't as evasive as it once was!

rlaurens said...

Congrats! Just like one 'dimend' used to say: One million people here we come!

happy said...

I am not sure what you mean by a business are you making money off of talking about Amway online? Or did you just mean you hit a milestone ?
There is a group of women that are growing in numbers that want a place to blog about Paul Tsika and how he is destroying marriages. We do not know how to set all this stuff up , so would you be willing to have a blog on him that we can all post on?

Joecool said...

I don't know who Paul Tsika is.

Anonymous said...

i know what amway is: A CULT! :)

Anonymous said...

Most businesses fail too. Most people who go to college do not work in the field they studied in. Most people will not have enough in savings when they retire.

You point?

Joecool said...

Where's your link showing that "most businesses fail"? That isn't what the SBA says. And that's unlike 99+% of Amway IBO's who fail.