I believe that Amway IBOs have approximately a 50% attrition rate for the first year alone. If you look at a 5 year window, I believe the attrition rate is something like 95%. So what we're saying is that out of 100 IBOs, only 5 will be around in 5 years, or out of 1000 IBOs, 50 will remain after 5 years. This is extremely significant because if you are a business builder, you will need to replace half of your IBOs every single year. For this reason, I am very doubtful that there are IBOs who "built the business right and built it once", who no longer do Amway related work, but still collect significant residual income. I would guess that significant income could be defined as being enough to live a lifestyle in the top tax bracket (for the US) without having to report to a J-O-B.
Now I understand that some IBOs take it personally when I bring up subjects like this. It is because they have been deceived by some upline diamond or big pin who has sold them on a dream of financial prosperity for life if they will only work hard for 2-5 years. I once thought so too, but realized that there isn't a single diamond that I know of who built the business right and walked away to enjoy the beaches of the world while truckloads of money rolls in. Kinda makes you wonder why you see Crowns still working, and diamonds actually quitting or resigning. I have asked the question many times and it has never been answered. Can anyone name a few people who built their business right and built it once who is currently enjoying these lifelong residuals? Also, if that were a benefit, why doesn't Amway say so?
Instead, you have a constant and endless flow of motivation being sold to IBOs. This motivation comes in the form of cds, books, meetings, functions and other things like voicemail messages. It's sad that IBOs have to continue to pay through the nose for motivation and "teaching" about the Amway business when there are cheaper and more efficient means of communication. For example, why would you need an expensive voicemail when a facebook group account can disseminate messages to your group in seconds at no cost? It is because the uplines want to extract every possible sent from their downline. Because of the internet, I believe people are starting to figure things out and avoid the systems altogether. I hope Joecool's blog contributes to this.
All the motivation IBOs truly need is to see a net profit at the end of the month. If IBOs actually earned an extra $200 a month, or $50 a month, or $600 a month as advertised, there would be no need for motivational speeches. The IBOs would simply look at the growth in their finances and they would keep going. The poor retention rate is easy to explain. IBOs are losing money because of the system expenses and they lose their motivation to continue. If you are an IBO or a prospect, stop and think for a minute. If you are making an extra $200 a month with minimal effort, would you need functions and other materials to motivate you? Or would you have intrinsic motivation from the profit? All the motivation you will ever need is a net profit. Take that to the bank.
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When I was prospected for Amway back in 1970, the big draw for me was the promise of residual income that was guaranteed, and which would never end. The idea that I could do Amway for a few years and then quit completely, with a steady lifetime income from the down-line I had built up, was very enticing.
But I soon realized that it was a total fraud. Even if you are successful in recruiting new Amway members into a down-line, there is no way to prevent those members from dropping out (as most of them will eventually do, sooner or later). You have to keep showing the damned "Plan" endlessly and repeatedly, to thousands of potential prospects. It never stops!
Everyone in Amway is vulnerable to this built-in tendency for a down-line to collapse if it is not sustained constantly, and filled with replacements for those persons who quit the scheme. No one can "quit" Amway and expect his down-line to keep on working and sending him money. The down-line will just dry up in a very short time. There won't be any "residual income."
It's different with a traditional business, where you slowly build up customer loyalty because of the good quality of your products or services. But even in those businesses you have to work steadily to maintain that level of customer loyalty. You can't just sit back and think that the business will simply generate money on its own, like an oil well.
In Amway, the situation is even more fragile, since there really isn't a solid base of satisfied non-IBO customers who like and want the various Amway products. The vast bulk of Amway products are self-consumed by IBOs who are desperate to maintain their PV levels. For this reason, stability in Amway is essentially linked to constant recruitment of new IBOs. As one Amway defender once put it, "This isn't a business opportunity about products and popular demand for products. This is a business opportunity about business opportunities!"
What did that stupid statement mean? Simply this: Amway is about convincing other people to be in Amway.
I remember a comic strip ("Mutt and Jeff") where the two characters were discussing Jeff's "business." He said to Mutt: "My business is doing great! I started with ten bucks and I bought a horse. Then I traded the horse for a used car. Then I swapped the car for a sewing machine. Then I exchanged the sewing machine for a refrigerator. Then I sold the refrigerator for ten bucks!"
Mutt said "Jeff, you didn't make any money on all those deals."
Jeff then replied triumphantly, "Yeah, but look at all the business I did!"
That's kind of what is going on in Amway. You go through all sorts of motions and operations to convince yourself that you are an "Independent Business Operator," but in fact you don't make any significant income at all. You're just pretending to be a businessman.
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