Wednesday, July 18, 2012

The Amway Business Is "Fair"?"

One of the bogus things my upline taught us was that the Amway opportunity was fair. That it was a completely level playing field. On the surface, that sounds right because "everyone starts at zero". While everyone does start at zero, the compensation plan is unfair to those who "do the work" and in my opinion, should be revamped so lower level IBOs make more money. It would probably help with IBO retention and maybe, some higher level leaders wouldn't have to work so hard to keep replacing people who quit.

If you are a new IBO, then you might not be really familiar with the Amway compensation plan. Amway pays out about 30+ percent of their gross as bonuses. Thus if you move 100 PV in goods, or about $300 in sales, then Amway pays out about $100 in bonuses. You as a new 100 PV IBO, would receive about $10 and your uplines, some of whom don't even know you exist, will split up the remaining $90 in bonuses. It truly is not a case of doing the work and getting paid. You are doing the work so upline gets paid. To add insult to injury, upline wants you to purchase materials that tries to convince you that this is a good deal.

And something very significant to think about. In what other sales profession are you compensated so low (3%)? I can only think of real estate, but in real estate, your sales are likely in the hundreds of thousands of dollars. In just about any other sales related profession, you get a much higher cut than 3%. Yes, your bonus or comission can be higher if you move more volume, but then you are likely receiving more money because you are now exploiting people doing 100 PV who get only $10 back.

Even after you consider the unfair compensation, you must factor in the cost of tools. Most uplines promote tools (cds, voicemail, functions) as vital to an IBO's success. Some uplines push the tools harder than others. But the tools purchases will often be the primary cause of IBO financial losses because the cost of tools will normally exceed an IBO's bonus. It is very common in the US for monthly tool purchases to exceed $200 a month on average, and very very few IBOs will ever reach a high enough level in the Amway compensation plan to earn enough just to break even. Also, the tools apparently do not work. There is no unbiased evidence to suggest that tools have any causal relationship to IBO success.

With Amway's spotty reputation and the unfair compensation plan, IBO retention is spotty. Many IBOs sign up and do little or nothing, and many IBOs don't even last a full year before they quit. What happens is IBOs begin to figure out that recruiting downline is next to impossible and therefore, generating more volume is nearly impossible, even for individuals with skills. If you are a new IBO or a prospect, I encourage you to sit down and really look at the math and factor in the cost of tools. There are many ways to earn a dollar, I just don't feel that Amway is an efficient way to do that.


Anonymous said...

Joe, in India a few Ambots think that there is nothing they can do apart from Amway. And because the country's income comes from outsourcing and present economic scenario worldwide is not great, they easily get many recruits too. However, the people who have been in the business are not moving up that fast. Simple reason being, high attrition rate, I mentioned the pricing issue in my blog as well. Because there are people who quit within 0-2 years period these guys get away with saying 'you do not make money in short term'. From one side it looks so, but the person who joined typically would have bought most of the expensive products, which are not required for the usage and also attend a few meetings. In Rupee terms he would have lost 4000-6000 in span of six months in the business. However, him losing money would have made his up line reaching their respective PV/BV goals. Especially in present inflation, even if you reach diamond, if you calculate amount of money spent reaching there would have easily squared up. The problem is none of these steps to attend meeting and forceble buying can be proven in a court of law. All these steps come as a package when you sign up for the business and people end up losing money. And no one joins to drag Amway to the court! If you go through the compensation plan from Amway it is impossible to make more money than you lose. Just because everyone starts at zero does not qualify to be fair, it should also allow you to grow your business the way you want.

Anonymous said...

The comp plan seriously sucks. Any kind of bonus or retail profit you gain from the Amway side of the biz, gets eaten up by the worldwide machine through the cost of tools and functions. WWDB is a vampire, sucking up all the ibo's amway profits they make. A duel business, very genius of them. I'd say to anyone, if you want to make some extra cash, just retail amway and do not affiliate with wwdb. You can make a good few hundred bucks of straight profit by having some customers that buy skin care and make up. That's easy. But if you're an ibo, you guessed it, you just dump that profit into worldwide, then the plat's and up share your money. You don't need training and sit through days of seminars to learn to retail. If you're a female, just use the darn light up lip gloss in public and girls flock to it. Seriously, my wife does it. She's made hundreds a month retailing. But up until now, since we were biz builders going diamond, we blindly threw it all away so our upline could buy a brand new hummer... Technically I own part of it... :/ Building WHO's dream?