Thursday, March 31, 2016

Amway Numbers?

One of the things Amway IBOs are taught is to ignore facts, or to ignore numbers. I believe this is because the numbers are not pretty when you take a business like approach to the math behind the Amway business, for most IBOs. It is why upline teaching often "evolves" into things such as Amway saves marriages, or Amway makes you a nicer person, or that Amway is not about money, it is about friendships. That is a load of garbage. Business is about making a profit. If you hear some of these lines from your upline, it should be a red flag. Upline may also feed you other deceptive lines such as an IBO being successful because they showed up at a function, or because they just signed up for standing order. These are all just false lines to encourage an IBO who is not making money.

When you take a good look at the Amway presentation, the majority of IBOs are at the 100 PV level. At that level, they are spending about $300 monthly to reach 100 PV and for their efforts, they receive approximately a $10 check from Amway. Most IBOs will be encouraged to participate in some kind of system, often consisting of voicemail, websites, cds, books, seminars and other meetings. MOST IBOs will not recoup enough cash to cover any of these expenses, let alone all of them. At a glance, the system expenses may appear nominal such as $6 for a cd, $6 for an open meeting, $100 to $125 for a major function, $12 for a book. It is how upline gets you involved, and then after a while, an IBO starts to notice the negative cashflow and then a tough decision needs to be made. Either quit and cut the losses, or press on hoping that the system will eventually deliver on its promises.

What most IBOs don't notice, is that less than one half of one percent ever reach platinum. A fraction of one percent! And in many cases, platinums might break even or even suffer losses! So why would IBOs want to work so hard to reach platinum? They have less than a 1% chance of reaching that level. They have a tiny chance of maintaining that level, and they are still unlikely to earn any significant income at that level. A stody done by an attorney general in Wisconsin (Bruce Craig) revealed that platinum level IBOs averaged a net loss of about $900 annually. While Amway defenders will decry that the study is a bit dated, I will say this: The basics of the Amway business has not changed since that study was done, AND there are actually more system expenses today than there were back then, thus platinums may actually be losing more money annually than before. While not all platinums will lose money, I believe hard core dedicated platinums would stand to lose money.

As an IBO, I hope you are tracking your expenses versus your income. Most IBOs will see a negative cashflow month after month. Even though the Amway business is often promoted as low or no overhead, the system expenses (

9 comments:

Anonymous said...

One of the fake arguments that Amway up-line will give to a struggling IBO is the following: In every business venture, you incur heavy financial losses that are inevitable as a result of the startup process. So don't worry -- even if you are losing money now, you are BUILDING YOUR BUSINESS.

All of which is reasonable, but it simply does not apply to Amway! If I start up a photocopy shop and it takes me a year or so to get things going and make a profit, that's to be expected. But after that, I have to make money or my business is a failure. In Amway, however, you're all set up right from the start. And close to one hundred percent of new IBOs utterly fail to make any profit at all, ever!

Do many of them work hard? Do many of them labor diligently? Do many of them follow up-line instructions to the letter? Do many of them go to every meeting and night owl and lavish function? Do many of them purchase all the unnecessary crap like CDs and books and tapes and CommuniKate and Ditto? Do many of them force themselves to generate 100 PV or more every month? Do many of them hang in there for years?

Yes. Many of them do. AND THEY STILL FAIL!!!

So listen up, all you Amway IBOs out there: when your lying up-line or your fat-assed Platinum tells you not to worry about money losses because you are "building your business," ask him when the business will start to pay off. And don't let him give you some song-and-dance about how you'll have to attend the next big "function" to find out the secret.

And if he gets huffy and says "Never question up-line!" tell him to go find another sucker.

Joecool said...

Excellent post. When pitch Amway, the upline will say there is no overhead so you can profit quickly. Then they turn around and sell you tools and tell you that many businesses don't profit for 5 years or more. It's these little details and contradictions that many IBOs don't really notice until they're too far invested to want to just walk away.

And upline is clever to teach that success might be right around the corner or you might learn the one thing you need to go diamond and you don't want to quit when you could be on the verge of exploding your business.

The teaching is designed to get you in and to keep subtle pressure on you to keep you going even when you're losing money each month.

Paul said...

Joecool, according to the 2010 official Amway publication 'A Business Opportunity for Entrepreneurs' page 11, it says that "in 2009 0.18% of Amway IBOs were at Gold level getting an average annual compensation of $12,303 (Gross Income before expenses, NOT NET), 0.26% of Amway IBOs were at Founders Platinum level getting an average annual compensation of $40,125, 0.02% of Amway IBOs were at Founders Emerald level getting an average annual compensation of $142,181, 0.01% of Amway IBOs were at Founders Diamond level getting an average annual compensation of $609,541."
So 99.5% of IBOs make LESS than $12,303/yr BEFORE EXPENSES, with all those years and years of time and effort.
I am sure millions of Americans with J-O-Bs make much more than that with much less effort and time.
Who in Amway has financial freedom? 0.03% making more than $142,181? That's 3 out of 10,000. The other 9,997 are slaves to them working for less than minimum wage for years and years until they wake up and quit this slavery. Even those 0.03% can't afford private jets and the stuff they claim, they make less than average doctors and lawyers do.
Who would go into any business or profession with those odds of success and those numbers?
But I wanted to ask you, Joe, do you have any figures on Platinum level like the ones above? Thanks.

Ben Dover said...

Anonymous,

Love the enthusiasm, and I have to agree with most of your post until the 4th paragraph...I wouldn't even waste my time challenging someone that deeply indoctrinated, because nobody wins. The best thing to do is to slip out silently and pretend like it never happened. However, if you are into making a show of it, then the other thing to do is smash your whiteboard in front of them like they teach you to do with your alarm clocks when you "retire". I'm fairly certain they will get the message...oh and using hand gestures can be loosely encourage as well when exiting the building.

Paul said...

Joe, according to the 2010 official Amway publication 'A Business Opportunity for Entrepreneurs' page 11, it says that "in 2009 0.18% of Amway IBOs were at Gold level getting an average annual compensation of $12,303 (Gross Income before expenses, NOT NET), 0.26% of Amway IBOs were at Founders Platinum level getting an average annual compensation of $40,125, 0.02% of Amway IBOs were at Founders Emerald level getting an average annual compensation of $142,181, 0.01% of Amway IBOs were at Founders Diamond level getting an average annual compensation of $609,541."
So 99.5% of IBOs make LESS than $12,303/yr BEFORE EXPENSES, with all those years and years of time and effort.
I am sure millions of Americans with J-O-Bs make much more than that with much less effort and time.
Who in Amway has financial freedom? 0.03% making more than $142,181? That's 3 out of 10,000. The other 9,997 are slaves to them working for less than minimum wage for years and years until they wake up and quit this slavery. Even those 0.03% can't afford private jets and the stuff they claim, they make less than average doctors and lawyers do.
Who would go into any business or profession with those odds of success and those numbers?
But I wanted to ask you, Joe, do you have any figures on Platinum level like the ones above? Thanks.

Anonymous said...

Spot on. I have read that the average income for an IBO is about $180 per month and 0.26% reach platinum. What kind of business opportunity where 99% of slaves lose money?

Anonymous said...

You have hit the nail Joe! What you just said is the root reason why IBO's are taught to ignore facts and also why IBO's would have to lie, cheat and deceive people! That's because numbers speak the truth and truth hurts like a sword.

Joecool said...

Yes, .26 reach "Gold" and the average (gross) income for IBOs is $202 a month, but that includes the diamonds and crown ambassadors. The real life average income is probably $10 a month (gross). And the net income is a loss.

Joecool said...

And the upline leaders teach the IBOs to ignore the facts. Teaching IBOs to "fake it till you make it" or that losing money is success because you are investing in your business and other BS like that.