Losing Your Shirt?

 One of the issues I have with the Amway plan is that the newest IBO, possibly the one who does the most "Work", receives the smallest compensation. Amway pays about 32% of their income back in the form of bonuses. An IBO who does 100 PV receives a 3% bonus and somewhere, uplines and sponsors receive the rest. Some of the upline may not have even met the IBO who actually did the work. Is that really fair and is that a level playing field? What do some of these uplines do to deserve the lion's share of the bonus you worked to get? Yes, the upline diamond may show the plan in an open meeting, which may help you, but then again, you pay for entrance into that meeting.

Many uplines will talk about dreams and fulfilling your dreams. But if an IBO would stop and think for a moment, you can easily see that you are building the dreams of your upline, and not your own. You receive a tiny portion of the bonus for the volume that you move, and then in addition, if you are on the system, then you are also paying upline in the form of tool purchases for the privilege of giving them bonuses with your product purchases.

It is why your upline diamonds can parade around on stage with designer suits and show you their fancy cars and mansions and other toys. It is because they are cashing in on your efforts. You are making their dreams come true. Your dedication to moving volume and purchasing standing orders are fulfilling dreams. The upline dreams. Yes, someday you can hope to have your own group of downlines to exploit for your own benefit, but unless you are adding members to your group constantly, you will never achieve the kinds of dreams that uplines talk about. In the meantime, though, you are definitely helping someone upline achieve their dreams with every function you attend. Ironically, the upline leaders will tell you to never quit, even if they don't know your personal circumstances.  This will happen until you quit, or until you lose your shirt then quit.

Here's a challenge for IBOs and/or prospects who are being recruited into the Amway business. 100 PV will cost around $300 a month and dedication to the tools system will cost you around $250 a month on average. Would you not be better off simply writing a check to your upline for $100 and not even joining? Would you not be better off staying home and watching television instead of joining? If you read all of the information available on this blog and still decide to join, good luck to you, but remember this: Whose dreams are being fulfilled by your participation? Yours or your upline?

Amway Is Fair?

 One of the many 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. 

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 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. 

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 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.

The Business Creates Debt?

 One of the things I noticed is that many Amway IBOs who support the Amway opportunity seem to be in debt. I know that being in debt is one of the reasons these prospects are drawn to the opportunity, because they believe that they will earn so much cash that their debts will go away. I remember seeing a presentation where the speaker touched on how people were in debt with credit cards maxed out. Thus, this business is for you because you can earn enough to pay off those credit card bills or maybe go diamond and pay cash for everything.  At the very worst-case scenario, you will save money is what the presentation shows.

In my informed opinion, the speakers who promote Amway in this manner are unethical at best, because they will teach IBOs to live below their means, cut expenses, and reduce debt, only to turn around and have the IBOs spend their cash on tools and functions. It's not really debt reduction, but simply redirecting an IBO's purchases towards things that benefits the upline. It is why I often wondered why a speaker would say it was okay to go in more debt, only to invest in their Amway business. I mean, debt is debt and if IBOs are to reduce their debts, they should also be cutting their Amway expenses and focus on selling products, which can result in immediate cash.

I also believe many diamonds to be hypocrites. I heard many of them speak about how diamonds pay cash for everything, including their homes. I find it quite humorous and very hypocritical of some of these speakers who were exposed as having their homes foreclosed. One of these speakers, a prominent triple diamond, apparently had filed for chapter 7 bankruptcy some years ago because he could not service his debts which included mortgages. This was public record in the State of Montana.  How does a diamond have debts if they for everything in cash?

I also believe that many diamonds may be drowning in debt, more so than the downline that they teach. Why do I believe this? Because they portray lifestyles that are not sustainable on the incomes they have. Sure, a diamond may have a $250,000 income consisting of Amway payments and tools. But if anyone does the math and considers taxes and business expenses, these magical diamonds suddenly don't have much cash left over to be able to purchase mansions and sports cars. So how do they obtain these trappings? I believe many diamonds might be financing their cars and homes and may actually be in heavy consumer debt while trying to portray a diamond lifestyle.

Amway pundits may argue that hey, at least these folks don't have to answer to a boss and wake up early to go to a job. While that may be true, most job people don't have to stay up until 3:00 in the morning showing plans and having night meetings to motivate their downline. Furthermore, a diamond must have to live in fear that a scandal could tear apart their group or that a disagreement with an upline could get you cut off from tools profits.

To summarize, I don't believe diamonds are that different than the rank-and-file IBOs. They get divorced, they have debts. They may have bigger incomes, but that is all relative. A man with a $50,000 a year salary could live comfortably and debt free while someone who earns $250,000 can be drowning in debt because they live beyond their means while the $50K man lives below his means. The evidence is there, diamonds live excessively and many flaunt wealth. In the book, the millionaire next door, Stanley and Danko say that people who flaunt wealth, often are not wealthy. Are you as an IBO, drowning in debt? Maybe you are simply following the example of your upline diamond? Maybe?

Are Prospects "Prey"?

 One of the big things that was taught by my Amway upline was to recruit people who are in need. People in need of time and/or money are perfect candidates is what I was told. You look for a need and use it as a chance to show the plan. Someone who may be looking for more income is likely to be more open minded. It is also why the upper-level pins will display signs of wealth as an enticement, to get people interested and hopefully excited in seeing the plan, and hopefully to get people to register for the opportunity. IBOs will wave around a copy of an upline's check as if a photocopy of a check is concrete evidence of true success.

Recruits will be asked about their dreams. Amway recruiters will then show a "best case scenario" of people with trappings of great wealth. Of course, they will not show you what is likely, which is a net loss due to the "system".  They will not explain about how standing orders and functions are what they consider necessary expenses of running an Amway business.  Thus, many who get involved to make more money end up with less money as a result of these business expenses (tools and functions)

At this point, the recruit may start to wonder if he/she might be able to attain the same level of success. The recruit starts to think if he can find "six" as they talk about in the plan. In a 2004 Dateline segment, the show panned in on people in attendance at a function. Some poor saps were in tears. They probably wanted success so badly that they can taste it. They feel that it is definitely within reach. Sort of like how you can see the end of a rainbow, but you can never reach it. That's how success is for the vast majority of Amway IBOs. They want success and will work for it, but sadly, it will never materialize.

There are few people on the stage and thousands of people in the audience. That's the way it has always been. Unless the compensation plan changes, that's the way it is likely to be forever and ever. The 6-4-2 plan has 79 IBOs at 100 PV. Considering the people who never do a thing and those who quit, you can assume that you need much more than 78 downlines to build a platinum business. And a platinum business is approximately where you start to break even, or possibly make a small net profit, depending on your level of dedication to the teaching system, which drains IBO's resources. That is because of the costs associated with being involved in a system such as BWW, WWDB, or N21.

For most IBOs who decide to try the business and the systems, they will likely end up losing time and money. LOSING TIME AND MONEY. Unfortunately, most IBOs sign up hoping to gain more time and money. Ironically, what they seek is what they have less of due to their involvement with the systems and Amway.

The Money Pit?

I've been blogging about Amway for a number of years now and I've learned quite a bit about Amway and how the system works. It is my absolute conclusion that the vast majority of Amway IBOs lose money because the system consisting of standing order, book of the month, voicemail and functions are a money pit. The system can never be satisfied. It must constantly drain money out of IBO's pockets in order to sustain itself along with the lavish lifestyles that some diamonds and upline leaders like to portray. Sadly, the system is promoted as the key to IBO success, but the reality is that the system is the very reason why the vast majority of business building IBOs on the system suffer net losses. IBOs often do not realize that they are systematically being drained of their money because it is done one standing order or one function at a time. What some uplines do to disguise this is to start teaching that the Amway business is about investing in your business, lifelong friendships, or making an IBO a nicer person, etc.  If you pay attention, the hype of money and wealth gets you interested then the teaching evolves into friendship, making you nicer, etc.

Let's look at some system components. Voicemail is absolutely unnecessary. With email, text messages, twitter, or even Instagram/Facebook to transmit messages for free, it is ridiculous for IBOs to pay for a technologically outdated means of communication. The functions are also a waste of money. With telecommunications, there is no need for so many meetings and functions. These functions, especially the ones where air travel and accommodations are needed set back many IBOs financially and they never recover. While I agree in general that open meetings are more effective in person, these are generally regional and not cost prohibitive as out of town functions. Standing orders are generally recorded at functions so when that happens, IBOs are paying twice to hear the same information. Book of the month I don’t have too much objection except that some of the books may be basically propaganda promoting the AMOs and the systems. The ones that talk about success principles are generally okay. But overall, I believe the return on investment is poor and, in many cases, a group of IBOs will actually spend more on tools than the number of bonuses generated from Amway.

Uplines avoid the discussion of scam by talking about the opportunity being hard work. Thus, IBOs don’t get the idea that it is too good to be true. Meanwhile they are often strongly encouraged to be on the system. Some IBOs are shunned if they don’t purchase tools, which might be against Amway rules. However, the shunned IBO might be better off because the ones who do invest in tools often find that the system is simply a money pit where money goes in and nothing comes out. As far as I know, there is zero unbiased evidence that the system produces any tangible results. If you in the US, you might be hard pressed to find newly emerging diamonds. Sure, there are some new platinums, but there is evidence that system platinums make very little or lose money, and many of them are not able to maintain that level of volume. The system is basically sucking money from the IBOs and channeling them to certain uplines, probably the ones who show off their new sports cars and fancy suits. Does this appeal to you?

Parter Store BS?

 I wanted to write this post because I was in a debate with an Amway IBO who is bragging about Amway partner stores. The tag line is Amway certainly does their due diligence, as well as partner stores as partner stores would not want to associate with Amway if they were a scam, etc. After reading this post, you will see that "partner" stores would be insane not to partner with Amway. Before going into that, maybe someone can explain what due diligence was put into partnering with Worldcom (formerly MCI) and Enron, for selling energy products and services. Surely all those high-priced lawyers must have known about these epic failures (scams)?

Now, when an Amway IBO refers to a partner store, we are talking about a one-way road. What I mean is that Amway sells products for these partner stores, but the partner stores don't sell any Amway products and have nothing to do with Amway other than a business agreement (apparently) to allow Amway IBOs to act as commission only salespeople for these partner stores. Amway IBOs take on all the time and personal expenses of moving partner store products, often at noncompetitive prices, and get a small commission only if they meet a minimum quota (100 pv), which is roughly $300 USD.

Imagine that a partner store basically has the entire Amway sales force potentially selling their products and the partner store can charge whatever they want. The Amway IBOs are often taught to buy from Amway and the catalogs, so the entire sales force often becomes loyal customers as well. And to make the deal even sweeter, the partner stores pay nothing unless the Amway IBO sells at least $300 worth of products, although partner store and Amway products can be commingled. In my way of thinking, it's a no brainer for partner stores to hook up with Amway. They have no risk and potentially a lot of addition sales. High upside and no downside.

And the cherry on the sundae for Amway and the partner stores is that Amway IBOs will also recruit and train other Amway and partner store commission only salespeople at their own time and expense. Amway and partner stores can't possibly lose!! I almost want to go an create Joecool's widgets and become an Amway partner store myself. If Amway people sell my $100 Joecool widgets that cost me $5 to make, I rake in huge profits and the most commission I would pay is about 25%. It's a great deal because Joecool has zero risk. I only pay if the product gets sold. and I don't pay if products don't move. I might even be able to sell Amway IBOs my catalog so they can sell my stuff. It's heads I win and tales they lose for me.

So, if you ever hear about and Amway IBO bragging about how Amway partner stores like Nike, Barnes and Noble or whatever big-name company might "partner" with Amway, you can laugh to yourself and to use Amway's own catch phrase: "Now you know".

Financial Freedom?

 Financial Freedom! That was one of the major battle cries I heard constantly when I was recruited for the Amway business. You gain control of time and money by creating residual or passive income. That is true financial freedom. You wake up at noon, no job, and just do whatever you please, whenever you please. I remember the speaker saying that broke/unemployed people also had freedom, but it was different because they were broke and could not afford to go golfing or do other activities that required money on a regular basis. 

I am assuming that this is still the case for many IBOs. Of course, upline leaders may toss in a disclaimer that you don't get rich quick as an IBO, but the pitch apparently still contains the financial freedom and residual income theme, based on my experiences with IBOs. IBOs still think they will be rich. Also, 2-5 years sounds like "get rich quick" to me. 

But hey, financial freedom would be a great thing, don't get me wrong. Who wouldn't want to be 35 years old with enough cash to never have to work again? I mean I could spend some time imagining how fun that would be. It would also be fun to imagine what you would do with all the cash if you hit the Powerball lottery as well. But for the starry eyed IBOs, I simply have a few questions for you to ponder. A few realistic questions that you should be asking yourself. The answers to these questions will tell you a lot.

1. Who in your group or upline truly has achieved financial freedom? Have you seen their financials or simply a display of wealth such as pictures of mansions and fancy cars? Mansions and fancy cars could just be a massive pile of debt. Not too long ago, there apparently were diamonds who had their homes foreclosed, and a triple diamond who was in chapter 7 bankruptcy proceedings. Find out if anyone in your group/upline has actually achieved the success that they are using to recruit you. Also, if they are financially free, why do they work at function after function? Traveling and speaking might not be a traditional job, but it is still work, nonetheless.  If you need to be somewhere at a particular time, and doing it for money, you are not free.

2. Even if you find someone who is retired and golfing every day because of Amway residual income, ask yourself what the likelihood is that you will be able to achieve the same results. If diamonds are still working, what chance do you have of success if you are new or experienced in Amway, and have few or no downline. More than likely, your chance of winning the lottery will be greater than your chance of achieving a significant residual income from your Amway business. Also, I don't know of any Amway retirees who built their business once and walked away with any significant residual income from Amway. Do you?