Monday, January 7, 2019

Success Is Very Unlikely In Amway?

So many eager young people join Amway with the hopes that they will retire early, live a life of luxury and basically enjoy life with no worries. Most of the people who join Amway are very likely to be motivated, hard working and wanting more out of life. Their intentions are great but it leads to the question of why do so few people actually get anywhere in Amway and why are there so few new diamonds, at least in the US and Canada?

I think part of the problem is that the folks who recruit new prospects into Amway often imply that everyone has a chance to be a diamond and they also imply that it's not that difficult. I heard comments once that going platinum was so easy that someone's dog could do it. It's obviously not true when less than one percent of IBOs ever reach the platinum level and even those who do often are unable to maintain that level of volume.

Now let's break it down to numbers. A platinum group is often typically 100 to 150 IBOs. Of course not all of them are busy moving products or recruiting downline. A diamond group is six platinum groups plus some side volume, thus a diamond group is likely to have 750 to 1000 IBOs. Being a platinum can be compared to being the manager of a company and a diamond is like being a CEO of a big organization. In a job, you can work your way up and eventually become a manager or CEO. Some IBOs think they can never achieve those goals at work, but they mistakenly think they can surpass their sponsors in Amway so it's a better deal. But even if you earn more than your sponsor, does that mean you will eventually reach platinum or diamond? I think a better gauge of success would be those who go diamond. Diamond is often portrayed as the pinnacle of success and is the target shown in "the plan".

However, as I stated, going diamond would also be like achieving the level of CEO in a company. There is only so much room at the top. That is true. While there can be many diamonds, you would still need to have about 100 to 150 downline to achieve platinum and you would still need six platinum downline groups equating about 750 to 1000 downline IBOs to be diamond, plus your personal group. Thus a diamond is like a CEO who creates his own company. Factor in that half your group is likely to quit each year, thus you must replace hundreds of IBOs every year to maintain the minimum qualification of platinum or diamond. Add the in name "Amway" that makes some people cringe and maintaining a group is a daunting task. Imagine being a CEO of a company that loses half of their employees every year. That's what a diamond "lifestyle" includes.

It is my informed opinion that a diamond lifestyle is one of hectic schedules, constantly working to help your groups maintain volume and bringing in new IBOs, plus sponsoring and maintaining your own personal group of 2500 PV volume. If you cannot maintain 2500 PV personal volume, I believe you would not qualify for some of the bonuses paid by Amway. Also, because the rest of the workers normally works 8-5 or so, a diamond is out working the night shift and odd hours trying to keep the group intact. Also, factor in the travel to functions for speaking engagements and a constant churning of meetings and you have little time to actually work your business and spend time with family. Sadly, many people join to gain more time and money and they often end up with less time and less money because of their involvement with the constant meetings and functions.

So can someone succeed in Amway? Certainly it has been done, but I believe that many diamonds are possibly busier working odd hours than someone with a job with regular hours. The diamond lifestyle may be shown as fabulous, but I believe the reality is not as nice a picture.


kwaaikat said...

Thanks for unpacking it. I’ll work with the 750, the lower end of this estimate.

If 750 people are required to kind of deliver something an IBO signs up for (in terms of income, not so much free time, not so much residual nest egg), then the maximum success rate is 1/750, or 0.13%, and the theoretical minimum failure rate is therefore 99.87%. An Amway defender that does not agree needs to come back with a number of dowline they claim is required to deliver to an aspiring business builder, what they sign up for. Perhaps it’s 500, in which case failure rate is “only” 99.8%. Even if a business builder that joins can get what he signs up for with 20 dowline, which is a ridicilous claim, then the minimum failure rate is “only” 95%. Sure some downline can build their own groups, if they get downline under them, but the ratio will remain the same. That is a design restriction, if every member of a group works 24 hours with super human dedication, using the latest tactics and the best recruitment tools..., but x number of downline are required for every success, then the failure rate in that group will be subject to the same minimum.

Even an exceptional motivated charismatic hard working dedicated individual who feel they can beat the odds, can:

1) Only do so at the expense of the great majority that must fail to support his wealth.
2) Probably make a huge success of an alternative real sales opportunity, work himself into a position of more free time, and have more self respect with no stealth brand hiding tactics required.


I’ve been approached once again last month by a N21 person looking for some “sharp people to join the team of highly successful entrepreneurs”. I heard the person out politely, and probed to hear if it’s still the same. When I presented the “I’m not into sales” objection, I was assured there was no sales. It was, I was told again, basically about changing personal buying habits and effective networking to help others succeed. In other words, another admission that it’s about recruiting people who hope to recruit in turn, which falls back onto requiring a signifficant number of downline to succeed, as per this article, which underscores the high build in minimum failure rate. The person was actually telling the truth, at least about the hopeless proposition of viewing it as product sales. If the commission was decent (say 20%) for competitively priced products, then one would have been able to imagine it as a sales opportunity. But the commissions at point of sale are low, and the products expensive, which nauturally makes recruitment (of recruiters) the only viable way to make money. Not something, I imagine, Amway would emphasize when defending pyramid claims to authorities.

Unfortunately the person was too enthused to critically examine how this would play out. In this case it was a middle aged single working mom, excited at spending more time at home, and solving retirement worries. Quite likely, she will see less of her children, and loose money for a while, before hopefully calling it the day, or tone down her activity. A business builder who is going to make it worth it, needs people like her (and needs to replace them with new hopefulls) to make his buck.

Since the math never works, the trick would naturally be to keep downline like her from facing reality for as long as possible, so even the cult like behaviour (often attributed by defenders to “some rare bad apples”) is in large part encouraged by the very design of the system.

Joecool said...

Thanks for your comment. Amway diamonds and the diamond lifestyle looks fabulous but it's like seeing all the neat stuff that some new lottery winner buys. It looks good and appeals to many. It appeals to many until you break down the math.

It's sad but Amway isn't a game of chance as Amway defenders like to claim, yet the results of the Amway business is comparable to a lottery where a small fraction of 1% win anything while the rest are losers. The only difference being that in a lottery, you buy a ticket and no other effort is required.

That's what makes Amway such a scam. Not only do people wind up losing money, but the time and effort spent chasing this scam also takes away from someone's family and friends.