IBOs Talk A Good Game?

 Having blogged for a number of years now, I have observed that Amway IBOs talk a good game about retailing, sponsoring and doing Amway business activities. They will tell you to set yourself up with 20 customers, sponsor 6 frontline, show a number of plans and set up certain follow ups with contacts, and doing other activities supposedly to build an Amway business. I find if humorous when these same IBOs start throwing insults or diverting the discussion when someone asks if they are actually making money. Of course, it would be understandable if a new IBO would admit they had not made a fortune as of yet, but it seems that even that response is not forthcoming from IBOs.  

It seems that the Amway business is simple enough. Buy some products, sell products and try to sponsor some downline in order to leverage your volume with your downlines. IBOs mistakenly believe that you can build it once correctly and that the income will flow into future generations. What goes unnoticed is that IBOs come and go with such a high frequency, that a business generating residual income would be like a sandcastle on the beach. You might build it nice and big, but the waves of attrition would quickly turn that sandcastle into nothing. The same would be true of an Amway business. The IBOs dropping out would wipe out your business unless you are constantly replacing the people who quit. IBOs like to talk about Amway sales and how the company is growing in sales, but the Amway sales have no relationship with making IBOs more profitable. 

IBOs may also toss in comments about how they are nicer people or how they are improving their marriage because of the Amway business. I often wonder how that can be when functions and meetings take you away from your family and spouse. I suppose it could be because the uplines talk about people being nicer or tossing out lies about Amway and the AMOs saving marriages. I remember a WWDB diamond talking about how WWDB members had a 2% divorce rate while the rest of society has a 60% divorce rate. Ironically, that diamond's marriage ended in divorce. I believe this crap is still taught as a WWDB IBO who blogs, had mentioned this tidbit on his blog last year. I don't believe Amway IBOs or anyone else has a higher or lower rate of divorce than society, but it becomes an issue when uplines teach it and their downlines repeat it. 

So, it would seem that IBOs talk a good game. They know what to say and how to act, but they're like poker players who are bluffing. If you call them on it, they are likely to fold in their hands because they don't have the goods. It is why many Amway discussions turn into a insult contest, when the IBO suddenly gets confronted with facts that are contrary to upline teaching. It's usually quite funny but I wonder if these folks question their upline or go on their merry way repeating uplines lies? It becomes apparent to everyone but the IBO when they are repeating crazy stuff taught by their upline. Good luck to anyone who tries to build this business against nearly insurmountable odds.

Inconvenient Facts?

 So many people get duped into thinking that they will somehow get uber wealthy by becoming an Amway IBO. Many recruiters will tell stories about how they were once broke, but signed up, endured challenges and now they are diamonds enjoying untold wealth and luxuries.  They may even tell stories about how they ran out of Amway toilet paper and winded up using Amway tissues or paper towels to remain 100% loyal to Amway products.  People get caught up in "dreams" and are often encouraged to ignore the facts. People running businesses should pay close attention to the facts because it tells you much about your business and your likelihood of success. But what are some facts about the Amway business that many people don't know about? I have outlined a few important ones for those who harbor dreams of going diamond:

1. The average diamond, according to Amway (before annual bonuses), earns about $150,000 a year. Yes, some of this may be supplemented with money from the sale of tools and functions, but after taxes and business expenses such as travel to and from the many functions that a diamond attends would leave a diamond living an ordinary middle-class lifestyle (and possibly in debt), not one with mansions and sports cars as portrayed in many functions or meetings. Update: Now Amway lists the average earnings at nearly $600k, but that is for Q12 diamonds (qualify diamond for all 12 months in Amway fiscal year). Q12 diamonds are the exception and not the normal in Amway. Amway no longer mentions "regular" diamonds but I have no reason to believe that the average diamond in Amway increased or decreased significantly.  A Q12 diamond is the rare exception and not the rule.

2. Most IBOs are NEVER able to sponsor a single downline. Pretty hard to develop six (6) downline platinums when most people cannot sponsor anyone. And how do you grow and maintain a group when most of your group won't be able to sponsor anyone despite all of the training?   Which begs the question, why pay for training that doesn't work?

3. Most Amway products are purchased by IBOs and not necessarily sold to customers. Name a real business that sustains itself by having its own workers or sales force purchase most of the goods. MLM is probably the only business where this occurs. Understandably, it explains why 99%+ Amway IBOs lose money.

4. For most IBOs, the cost of functions, standing orders and other support materials represent the reason why most business building IBOs lose money and it also represents a significant profit for some of the diamonds who sell the materials. Because Amway doesn't say which diamonds are currently qualified, you easily could have "former" diamonds who are still speaking at functions who make more on tools and functions than from Amway.  Would you pay money to see a diamond who perhaps qualified once in the 1980's and never qualified again, to hear what they have to say about building an Amway business?

5. Not working hard is not necessarily the reason for someone's failure. But conversely, working hard does not equate success in Amway. I would guess that out of those who work hard, it is still a fraction of 1% of hard working IBOs that even attain a significant profit. Doing nothing won't get you anywhere, but in this business, working hard often gets you nowhere as well. It is my informed opinion that the cost of the support materials is the direct reason why so many IBOs lose money, even out of those who work very hard.

I could go on and on, but these are a handful of facts that IBOs and information seekers should be aware of. I welcome differing thoughts and opinions, unlike many pro Amway supporters.

Conventional Business?

 One of the things I heard as an Amway IBO, and I believe is still said in some Amway meetings is that conventional businesses do not profit for up to five years. That's bogus. Conventional businesses make a profit as soon as they sell their first product. They may not have a net profit right away because of the initial investment into equipment and rental property, but they do profit by selling goods. The same principle would apply to an Amway business except that Amway IBOs have difficulty selling products. If you opened an Amway catalog and compared their prices to local retailers, you would know what I'm talking about.

Despite the small startup costs and the little to no overhead costs, most IBOs never turn a profit. I will acknowledge that many IBOs probably never do a single thing once they sign up. I believe there is an underlying story behind this as well, but I will move on. Out of the more serious IBOs, even in this group, most of them will never make a net profit if they are using tools. Factoring the cost of the website, the voicemail, standing orders, books and functions and cds, IBOs simply get drained of their money a couple hundred of bucks a month at a time. Amway uplines meanwhile, are earning nice profits on product purchases and someone upline are also earning profits on the tools. The tools carry a higher profit margin so it would make sense that some uplines earn more from tools than from Amway.

Toss in other challenges such as high prices for many products (higher than local retailers) and a crappy reputation from IBO behavior such as tricking people into meetings and you have an opportunity with nearly insurmountable handicaps. Yes, a rare few and usually charismatic people can overcome these odds, but only one or two out of tens of thousands are able to do so. And even those who reach the pinnacle of diamond, may not be able to maintain qualification. It's very common for someone to reach the level of emerald or diamond only to backslide and not qualify the following year. So much for residual income and walking the beaches of the world.

So, I don't know all of the detailed statistics about how long it takes for a conventional business to turn a net profit. It may take up to five years. But based on my experiences and some number crunching, I'd have to say that the vast majority of Amway Business Owners NEVER TURN A PROFIT - EVER, and most of them ending up with net losses when business expenses are factored in. And toss in the fact that Amway allegedly has little or no overhead costs and I can only conclude that the Amway opportunity sucks.

The Information Buffet BS?

 In the Amway business, most active IBOs are advised to trust upline unconditionally.  To think of upline as a coach or a mentor. These upline mentors or coaches are supposed to have your best interest at heart and they will guide you to success if only you will be open to learning. Many uplines, including my former uplines used to coin the term "copy" or duplicate. If you can do that you will be successful. Even the simplest of people can copy. The upline may crack a joke about getting thru school by copying. Thus, many IBOs follow exactly what their upline advises them to do. 

But then uplines turn the responsibility away from themselves. Many Amway defenders will also claim that downline should not simply follow the advice of upline. They may make a ridiculous claim that standing orders and functions contain advice that must be discerned. That information is like a buffet. You pick and choose what you need and discard the rest. If you are a new Amway IBO or prospect, let me tell you that is a load of guano (crap) that is being heaped on you. Your upline is touted as having experience and wisdom in the Amway business, which is why you are paying good money for voicemail, books, cds/audios and functions. So why would their advice be something you pick and choose? How would a new IBO know what to pick and choose?

Imagine hiring a guide for a trek in the wilderness. The guide is supposed to be an experienced outdoorsman, perhaps an expert. So, if he recommends that you eat certain plants or fruits, you trust that he is going to guide you right. Imagine eating something that made you sick to your stomach, only to have the guide tell you that he just points out plants and fruits and you have to discern which is good for you and which is not. You would fire the guide and tell everyone you know not to use that guide anymore, and rightfully so. 

But here we have these "systems" such as Network 21, WWDB or BWW that have been "guiding" IBOs for up to 20 years or more in some cases, and the number of diamonds are negligible. Sure there are many new platinums, but many tool consuming platinums have been found to be losing money or making very little money for their efforts. What's more, it would appear that Amway is losing ground in North America based on sales and revenue.  One can reasonably guess that any new platinums that break are simply replacing the volume for a platinum that no longer exists or a platinum that no longer qualifies. My former upline diamond appears to have all new qualifying platinums from the time I was in the business and here's the kicker. My former diamond had 6 downline rubies. As far as I know, none of these rubies are qualified as platinum anymore, although I have heard that one or two of these are still active, but as customers and not as leaders in Amway.  

Uplines also program their downline to take responsibility for the failure. Thus you have IBOs who did everything that was asked of them, only to fail. Yet these IBOs often blame themselves for their failure. It is my opinion that former IBOs who did everything asked of them only to fail should file a formal complaint against their LOS with the better business bureau. Amway defenders like to think that a lack of formal complaints means that the system works when clearly, there is no unbiased substantial evidence to suggest that the system works. It looks like some succeed in spite of the system, not because of.  The vast majority go system IBOs lose money.  

The catch in all this is uplines skirting responsibility for the outcomes of those they "mentor" and profit from. IBOs should ask if upline really cared about their success, why do you have to pay for any help that you receive from your upline diamond?

A Likely Experience?

 One thing Amway promoters and apologists like to do is to paint a best case scenario when promoting Amway. I can't blame a promoter for wanting to show the best case scenario, but in my informed opinion, it's a matter of whether there is deception or outright lies in displaying that best case scenario. For example, when other "financial" gurus air their infomercials, they have a disclaimer to explain that success testimonials are a "unique" experience. Many Amway promoters apparently do the opposite and make it seem as if financial success in Amway is the norm and not the exception. But what is the more common or likely experience for an IBO?

I am not going to discuss the IBOs who sign up and do nothing, even if this may be common. (That's because there may also be reasons for this, such as deception or harassment used by the recruiters).

I believe that for many, they will see the plan, usually the 6-4-2 plan which is to show how you can become a platinum. The speaker may slide in how all you need is six of these groups and you will be a diamond and make hundreds of thousands of dollars and walk the beaches of the world.

The reality for many is to sign up full of excitement, and thinking that certainly, some of their friends and family will agree that this is viable. So, the new IBO will buy or consume 100 PV and may try to sell a few items. Eventually, this same IBO will talk to family and friends and many of their friends and family will show sour faces as they already had or know someone who had a questionable or bad experience with an Amway IBO. I myself got tricked into a meeting at one time. They may listen to the standing orders and attend the meetings with the intent of succeeding as per the plan.

But after a few months, not many people are interested in registering, not many want to buy the products, and it becomes increasingly harder to make contacts and to get new people to see the plan. The expenses start to add up. You have products such as laundry detergent or LOC that you don't need to replace but you have your defacto 100 PV quota, so you end up buying other things to reach that all important 3% bonus bracket. By now, you have a cache of household products and goods that you never really used prior to Amway, you notice that your checking account is shrinking as the products, and the other expenses such as voicemail and functions are starting to add up.

You finally quit, in some cases with the now former IBO feeling embarrassed or ashamed that they even got involved in all this. They disappear and all of their former "lifelong" IBO friends could care less. They won't bother to complain about their experience but may feel the need to vent if someone discusses Amway again.

In the final analysis, the bad experience and financial losses likely came at the hands of an AMO such as Network21, WWDB or BWW, but the attachment of a bad experience will be tied to Amway. This is a more likely experience than someone quitting their job to walk the beaches of the world.

The Quota

  Most LOS groups that I know of, use 100 PV as the benchmark when promoting the Amway business. Many groups also teach that you simply "change" your shopping habits and you can easily reach 100 PV. This teaching creates an artificial demand for Amway products, and I believe that Amway sales would take a huge dip if not for this teaching. I also am of the opinion that for this reason, Amway had/has done little to reign in LOS abuses of downline.

100 PV is roughly equal to about $250 to $300 worth of products. Of course, your cost may vary, depending on whether you purchase a lot of CORE Amway products such as laundry detergent, and nutrilte vitamins. For many people, the 100 PV benchmark is seen as the minimum for a business building IBO. The problem for many is that Amway products are not competitively priced, thus it is a hard sell. If I can buy the same or a similar product elsewhere for a fraction of the price, I will. And most consumers feel the same way.

It is why some LOS groups adopted the "buy from yourself and get others to do the same" philosophy. Since most people do not like selling, and because of the high prices of Amway products, simply telling prospects to buy from yourself made the concept palatable. The problem with buy from yourself is that it reaches the borders of being illegal, in my opinion. That is because in a buy from youself environment, the only way for an IBO to make a profit, is to recruit downline to benefit from the volume rebates. That is because there is no outside customers to bring in cash from outside the circle of IBOs.

What makes this issue even worse is when you have LOS groups such as WWDB creating an even greater problem with programs such as eagle. If 100 PV is an inflated demand for Amway products, incentive programs such as eagle make it worse. How can a single person reasonably be expected to move 200 to 300 PV when most of it is personal consumption? The upline leaders use these programs as an incentive for downline IBOs, but in turn, they benefit financially by having more downline volume, as well as potentially enhanced tools sales by dedicated downline IBOs.

I challenge any IBO or prospect to take a close look at your Amway purchases. Are you truly just changing your shopping habits and achieving 100 PV or are you buying things to give away, or buying things that accumulate somewhere? Unless IBOs are selling half of their purchases, they are probably overbuying Amway products. I believe it is simply because of upline teaching which creates a defacto 100 PV quota and an artificial demand for Amway products. I challenge you to examine this closely and make your own conclusions.

Buying Prosperity?

  One thing I can credit Amway diamonds with is coming up with the most bat sh@t crazy ideas that sound sensible to IBOs but utter madness to anyone else.  One that I heard about was how you can buy your way to prosperity.  Buy your own Amway products and get others to follow and you’ll soon be on the road to early retirement and residual income.   Why not just buy a diamond business?  Then you get to speak on stage and talk about your "success". Of course the benefits of this might be outweighed by the cost.  

Have you ever seen a store or business prosper when the majority of sales are simply to the business owner and employees?   The answer is no because such a business does not exist, except perhaps in Amway.  It’s amazing that people actually believe that you can get rich buying from yourself.  But it works on the downline so the diamonds perpetuate the storyline.  Buying from yourself seems appealing to those who do not like selling, which is most people.

One thing I saw at a live function was the diamond telling IBOs to ask prospects if they like selling stuff and whether the answer was yes or no, your response would be “great, then this business is perfect for you”.  Of course, actual stories of significant retail sales were rare, and my own experience suggested that sympathetic family and friends comprised most of whatever sales took place and I found myself at times selling items at my cost just so the expenses of moving 100 PV wasn’t all on me.  

The strategy of buying your own stuff seems to work because most people do not like selling stuff and especially not to friends.  But many will give it a run because they are hopeful that Amway will deliver the wealth that upline seemingly promises.  The sad thing about a that dreams of wealth is all you get and there’s very little success to speak of.  From function to function it’s the same old diamonds time and again.  It's pretty rare to see a stream of new diamonds, at least in the US in my opinion, unless I'm mistaken.  Even in Hawaii, I still see Amway venues at times, but they seem to be smaller.

The diamonds might say they want downline success but they don’t.  They just want to keep replacing quitters with new members as long as they can churn in new tools and functions subscribers.  That’s the real game of diamonds and that’s why the emphasis of the tools and functions is recruiting new people into the game. It’s an elaborate scheme that prospects and new IBOs don’t see because they have Amway dreams clouding their thoughts.   If you really break it down, hordes of new diamonds would mean less money from tools and functions for existing diamonds.  It better for a diamond if people join, work hard for a period of time and quit, provided you can continue to replace them.  That's how a diamond maximizes profits.