Thursday, June 23, 2016

Amway 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. It is my informed opinion that many IBOs quit because they aren't making a profit. Real profits would motivate people to stay involved in the business.

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 (functions and other tools) 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 commission 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. In other words, your profits come from your downline's pockets.

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.

4 comments:

Anonymous said...

Your upline will say that Amway is "fair" because they also want to say that all other companies there are "pyramid" in terms of heirarchical structure and that only Amway is the only one that offers "equal business opportunity"

Joecool said...

One thing that Amway leaders BS about is how Amway doesn't allow IBOs to advertise (without restrictions from Amway) to make if "fair" to IBOs. But that's BS in my opinion. If go getters want to advertise to make money, why would Amway care? Because Amway, in my opinion, only wants people to recruit others and have them all "self consume".

As long as recruitment occurs, Amway doesn't need actual customers. Even with the churn, Amway makes money as long as they move products and sign up kits.

Someone who is a go getter and good at selling, in my opinion, will easily and eventually find better products with better margins and with more competitive products than Amway. And that's why Amway restricts advertising.

Finneas Baker said...

Hey joecool! I've been following you and a few other Amway blogs "Anonymously" for a while now, but I've decided to start my own blog about the Amway business. I can no longer keep silent. I initially got involved in Amway because the girl I love more than anything became absorbed in this "business opportunity." Your thoughts on my perspective would be appreciated. :)

Joecool said...

Congratulations! I'd like to read your blog. Why don't you leave a link here and I'll check it out.

Regards to your girlfriend, she may snap out of it on her own but if she doesn't, it could be a long and painful ride for both of you. Keep an eye on her ongoing expenses versus her income.