Friday, March 15, 2019

Why Amway IBOs Fail?

Over the years, there must have been tens of millions of IBOs who had some experience with Amway. Obviously, not all of these folks got involved in a system or had the intention of trying to make millions of dollars. But looking at the business as a whole, the number of people who make a significant income from Amway is a tiny fraction of 1%. If a typical platinum has about 100 IBOs in a group, then you can conclude that platinum is in the top 1% of all IBOs. And we know that many IBOs quit and go through the business each year. The attrition rate can be staggering for bigger pins who need to keep working to replace those who quit.

But the question that seems to be ignored is why so many IBOs end up failing? Now for the sake of this discussion, let's exclude IBOs who do nothing and quit. Let's talk about IBOs who make an earnest effort. Often, the serious IBOs will be on the system consisting of voicemail, standing order, functions, books and other meetings. These all come at a cost, therefore, IBOs need to make several hundred dollars a month or more just to break even. I might add that a rank and file IBO who earns about $200 a month from Amway is way above average and the vast majority make far less than $200. Amway reports that the average income of active IBOs is about $200 a month but that includes the diamonds and other big pins. Therefore, the average business building IBO is operating at a loss.

Let's look at some of the reasons why IBOs cannot succeed. In general, Amway product pricing is higher than local big box retailers. Amway pays bonuses, therefore the bonus payout is included in the price of the products. I suppose a platinum gets a good deal, being at the 25% level, but a platinum is in the top 1% of IBOs. The majority of the rest receive a paltry 3% which leaves them at a loss when business expenses are factored in.

Past IBO abuse and past IBO behavior makes it nearly impossible, at least in North America, to find potential downline IBOs and customers. Seems everyone knows of someone who was tricked into an Amway meeting or was deceived about Amway in some manner. I believe Amway has seen a decline in sales in North America, with foreign countries being responsible for any current growth in business.

Another factor is that IBOs are taught by uplines to engage in too many activities that do not produce income. Attending meetings, listening to cds/audios, reading books and other functions cost the IBO money. They do not result in more sales to customers. These non income producing activities seem to be the majority of an IBO's activities, thus it's easy to see why so many IBOs fail. While system leaders claim that their system works, there is no reasonable evidence to support this claim. Just the fact that new diamonds and emeralds are so rare these days suggest that the system, with their severely limited success is producing less success these days.

All told, an IBO's chance of succeeding in earning long term sustainable income is so tiny that IBOs seriously would be better off buying lottery tickets instead of buying tools such as standing orders and function tickets. At least buying lottery tickets would not use up 10-15 hours per week of your time, and your chance of winning is about the same. The system doesn't work, it is why most IBOs fail.

9 comments:

Anonymous said...

I can’t speak for you or the other people who visit your website, but I really haven’t thought of upline that way. They want your group to expand and grow, because as you pointed out their income grows with it. When a person studies the plan they will see that in the beginning IBO income is generated off the business volume (aka product sales), then that same IBO earns more as the group volume grows. The IBO then generates income from the differential between the volume they generate (aka Height on the scale) compared to what their frontline IBO’s generate. The goal is to reach 7500 PV, then teach frontline IBO’s and IBO’s in depth to reach 7500 PV, this allows the IBO to earn the Leveraged Residual Income.

A problem arises when some IBO’s are unfortunate to sponsor someone who reaches 7500 PV before them, if sponsoring IBO’s don’t generate at least 2500 PV monthly outside the leg or frontline IBO or an IBO in depth at 7500 PV (aka the Platinum Level *where the System/Tool income is introduced) then the sponsoring IBO won’t get the differential. So that IBO can’t receive the residual income but they will receive special recognition at the seminars because they are now “Silver Producers” which is great, but since they have no outside volume they will experience very close to what Joe Cool experienced… praise, respect, and access to special meetings and upline counsel, but the money won’t be there, just the added expense of moving tools down through the group.

There is a video on YouTube where a college student gets an Amvox message from his Upline Platinum (which he plays for the audience) stating that the Platinum just purchased a new credit card so he can purchase the Tools for his group which he must then move downline. The college student assumes that if the Platinum IBO is making the money shown in the business plan the Platinum IBO shouldn’t need to use a credit card to purchase his groups tools. But since he is at the Platinum level he earns the % Override income on a successful group or groups (IBO’s generating 7500+ PV)and they are now qualified to participate in the System/Tool income. The System/Tool Income (aka the Businesses Dirty Little Secret – which hasn’t been a secret for several years) is going to be more profitable than the Amway product volume. More on that in Part 2 of this post.

This explains the residual/passive income that Network Marketers are really after, but IBO’s won’t get that when the PV falls below 7500 or if you don’t generate 2500 PV in another group/leg outside the leg that is 7500 PV or over.

I don’t know what the % Override was when Joe Cool was involved, but a few years ago it was 4%, and recently the corporation raised it to 6%. Now the benefit of this is that your 6% Override will be on whatever volume that group is generating… so if that Platinum Group in depth is at 10,000 PV your 6% Override will be based on that volume, and additionally if any of the Platinum’s Frontline IBO’s manages to generate 7500+ PV you get a 1% override on that volume also, so any IBO would earn 6% Passive Residual Income on a 7500PV group AS LONG AS IT CONTINUES TO GENERATE 7500+PV EVERY SINGLE MONTH!

But as Joe Cool points out most people never get to these levels, and some people get to them, but can’t maintain them… plus this doesn’t include the poor IBO’s who can’t build 2500 PV outside the group they have that is at 7500 PV or above.

Hard Truths
-MLM Guardian

Anonymous said...

Part 2
Now let’s get back to the Dirty Little Secret, that isn’t a secret anymore – The System Income, which becomes available when you can maintain a personal circle of 7500 PV for 6 months and retain it.

So the System Income is rather interesting, and regardless what anyone thinks, is in fact where the big money in Amway is created. Doug Wead in fact refers to it as investing in your upline’s future, and in many ways this can be seen as a negative thing, which Joe Cool, Anna Bannana, Robert Fitzpatrick, and other Network Marketing Critics love to point out. So it was shady to find out about this later on, as it’s not revealed when a person first sees the business plan, however in contrast it’s also beneficial.

Think about being mentored by an upline emerald or diamond, now if your 20 levels deep or further down in a Platinum Leg (or above) for them coaching you personally won’t benefit them much, maybe a few more cents on their monthly paycheck because they don’t get paid beyond the overall group volume, but they are making a few dollars a week off you based on what System Tools and Functions the IBO plugs into, so that is a benefit to them. (aka a motivating factor to continue to coach you). Joe Cool has pointed out that he wouldn’t invest any more time into his people/IBOS/group when he was at the 4000 Level with Eagle parameters, just Imagine what an IBO’s upline Platinum’s and above are thinking… there isn’t much of a difference. So building the group via Amway Product Volume won’t lead to the dividends that the System income can eventually generate, even though the Amway Product Bonuses are pretty amazing, and they keep increasing. Yet building a group to that level will take a lot of hard work, I mean a lot of hard work, and the investment won’t be cheap either…

Truth usually hurts
-MLM Guardian

Anonymous said...

Part 2
Now let’s get back to the Dirty Little Secret, that isn’t a secret anymore – The System Income, which becomes available when you can maintain a personal circle of 7500 PV for 6 months and retain it.

So the System Income is rather interesting, and regardless what anyone thinks, is in fact where the big money in Amway is created. Doug Wead in fact refers to it as investing in your upline’s future, and in many ways this can be seen as a negative thing, which Joe Cool, Anna Bannana, Robert Fitzpatrick, and other Network Marketing Critics love to point out. So it was shady to find out about this later on, as it’s not revealed when a person first sees the business plan, however in contrast it’s also beneficial.

Think about being mentored by an upline emerald or diamond, now if your 20 levels deep or further down in a Platinum Leg (or above) for them coaching you personally won’t benefit them much, maybe a few more cents on their monthly paycheck because they don’t get paid beyond the overall group volume, but they are making a few dollars a week off you based on what System Tools and Functions the IBO plugs into, so that is a benefit to them. (aka a motivating factor to continue to coach you). Joe Cool has pointed out that he wouldn’t invest any more time into his people/IBOS/group when he was at the 4000 Level with Eagle parameters, just Imagine what an IBO’s upline Platinum’s and above are thinking… there isn’t much of a difference. So building the group via Amway Product Volume won’t lead to the dividends that the System income can eventually generate, even though the Amway Product Bonuses are pretty amazing, and they keep increasing. Yet building a group to that level will take a lot of hard work, I mean a lot of hard work, and the investment won’t be cheap either…

The Truth Hurts
-MLM Guardian

Rashid said...

If Amway product is super high quality then why not sell in open market . Any xyz how can sell vitamins and supplements even he don't know about humuan body .
Just joined Amway for making money and don't use their products. No govt or agency or international lab recognise / certified Amway product.
Amway is mother of MLM fraud business

Rashid said...

Get well soon Amway sick unit

David said...

Hi Joe Cool:
The other night I put Dexter Yeager into my Google search engine to see if I could get some of the latest info on him that wasn’t tainted by the spin that those associated with Amway and those organizations associated with Amway put on everything. It turns out that I got some very straightforward info about him. He died on January 6, 2019. I also read an obit in The Charlotte Observer that was written about him.
While I extend my condolences to the family, I am curious what your thoughts might be for the future of what remains arguably the largest organization in the world of Amway and MLM in general.
Maybe you could write a blog post on the matter. I quit Amway over 10 years ago. Though I don’t frequently read your blog anymore, you were helpful in my reaching the decision to quit and helping me with the transition once I did quit. I have never looked back!

Joecool said...

MLM Guardian, thanks for your comments. David, I wasn't aware that Dexter Yeager had passed away. While I don't celebrate the death of any Amway Kingpins, I do agree that Yeager was probably one of the biggest. I believe he started the tool industry. I believe he started a tape system with good intentions. His plan was to cut tapes so he could train and motivate groups at a distance. But soon after, I believe he found that tapes were cheap to make and very profitable.

You can cut tapes for maybe 50 cents to a dollar and sell them for $5 to $7. That's a serious profit margin plus the rank and file IBOs don't get a share from this.

As for what the future holds, I don't know. Ron Puryear passed away and WWDB keeps going so I would say the Yeager's death won't make a difference. His tool company will continue to do their business. I did notice that Amway sales/revenue from 2013 to now has shrunk quite a bit. From 11.8 billion in 2013 to 8.8 billion in 2018 is a significant drop. I believe that the function venues are shrinking and that tools sales must have dropped off as well. But because a sucker is born every minute, the tool scam rolls on.

However, because the internet makes information gathering so easy, I believe that it's harder for Amway and the tool promoters to gather the momentum they once had. My blog is only a small thing, but it's made a difference for those who got information that was valuable in assessing the Amway business.

I can't keep running this blog forever so hopefully, someone will come along one day soon who has the stubbornness like me to keep it going for a long time.

David said...

Thanx Joe Cool. I wasn’t aware that Ron Puryear had died.

Anonymous said...

I really don't quite understand what MLM Guardian is trying to argue. He seems to agree that no one makes real money in Amway until they are eligible for participation in the Systems, Tools, and Functions racket, and that IBOs who cannot generate any significant down-line are therefore condemned to be failures in Amway. I guess that's what he means by "Hard Truths." We all knew that.

But then he also praises as Amway having wonderful Product Bonuses, as long as you dedicate yourself to endless hard work, and as long as nobody in your down-line makes 7500 PV before you do yourself. Is that the whole of his case?

This and other websites have been dedicated to "the hard truths" about Amway for many years now. What exactly is MLM Guardian's basic judgment about Amway and its promises? Why is "The Dirty Little Secret" dirty, and why is it basically hidden from new recruits? It seems to me that he's arguing that Amway down-line should always remain poor, at least until Amway up-line gets rich.