Critics often get criticized for being negative or not offering solutions so I thought I would take some time to offer a (partial) solution for Amway/Quixtar in North America.
Here are what I see as the biggest issues with Quixtar/Amway in North America (not in any order):
1. Outdated Compensation
2. Poor Reputation
3. Lack of Product Focus
4. High Prices
Now for my solution:
1. Break up Amway – Quixtar (North America) into four new Network Marketing companies:
- XS Energy
- Artistry
- Nutrilite
- Amway
This actually helps solve three of the four major issues, lack of product focus, reputation and compensation. Each product focused company could come out with an updated compensation plan with a focus on balance and the best reward strategy for the product line.
It is should be no secret that the fastest growing companies in Network Marketing over the last five years have been single product or narrow product line focused (such as weight loss). Narrowing the product focus strips away confusion and allows the unique products to shine.
The reputation will be helped by the renewed focus on products and less focus on the "2-5 year plan".
2. Reduce prices and get PV/BV back to a reasonable level ($3 to 1PV is not reasonable).
The PV/BV situation overlaps with compensation but it is also needs to be mentioned with pricing. You can’t drop the prices by 30% and then drop the PV/BV associates with the products by 50% and claim to now magically have competitive pricing.
Just get reasonable here. Mercedes has proven that you don’t have to be the cheapest to be successful, but there is a line where the average consumer will say: "I don’t care how good you say (the product) is, I’m not paying that much for (fill in the blank – Amway Product).
3. Update the compensation plan for the 21st century. Adding $60 million in new bonuses and then making them twice as hard to achieve is not updating the plan. Add some money for the newest growing associate. The IBOAI propaganda is suggesting that Quixtar/Amway now has the best compensation plan in the industry.
Uh, yeah. If I was driving a car from 1959 and claimed that it got better gas mileage than a 2008 hybrid, you would laugh at me. In the same manner, people that understand compensation plans within the industry are laughing at the IBOAI.
Lastly, this breakup would help address the core of the reputation problem by nullifying the power of the IBOAI, who haven’t really represented the newest IBO in decades.
You missed the biggest problem – which is actually the reason the their "reputational" problems.
The "Kigpins" systematically loot their downline (it's called fleecing the flock) via their non-competitive, monopolistic tools and function costs. The promote their "proven systems" (which I don't remember them EVER proving) and lock the downline into a cycle of buying books, tapes, attending functions – pretty much doing everything BUT what they need to do to turn a profit – namely SELLING PRODUCT.
Over half the income at the big pin levels are based on this "system money", and the payout of the system money is hidden in secrecy and subject to change if your upline Kingpin decides they don't like your attitude.
I'll take a corporate J-O-B ANY day of the week. At least there I can SUE if I get treated the way the Kingpins regulalry swindle the pins below them who start getting "too big for their britches". In Quixtar I just have the JAMS Kangaroo Court which will side with the Kinpins EVERY time.
Hey, Ty, so, you have no vested interest in seeing Quixtar criticized, right? Your comments are all objective and for the greater good of the business?
I think that having spent 10 years in Amway/Quixtar I deserve to be able to express my opinion.
Think about what you are saying…
Do you honestly think it is better for me to have a strong Amway/Quixtar business in the U.S. and Canada to compete with?
Right now, Amway/Quixtar in the U.S. is in complete chaos. They aren't competition. No industry leaders are jumping ship to join Quixtar.
Some of this post is opinion, like "it is a good idea to break up Quixtar into several companies", but some of this post is also fact. Feel free to disagree.
Interesting ideas. I’m am not extremely familiar with amway except that it is often cited as being the reason many people have a negative opinion about network marketing.
What I find interesting about Amway compared to other MLM companies is that you never hear about a big distributor leaving their MLM and going to Amway. Why is that?
I think Ty is absolutely right about the Amway compensation plan and product pricing. The poor compensation and pricing issues actually gave rise to the "tool business."
New distributors found it too hard to sell over-priced products and dropped out quickly. Larger distributors found it very hard to continually replace new distributors and were not seeing enough income from the company compensation plan to justify all their effort, so they created the tool business to help both issues. Unfortunately, the corporation realized the tool business also made it possible for them to continually raise prices without adversely affecting their sales, because the only sales made were to self-consuming IBOs.
Can anyone name a distributor from another MLM with a huge group that left their MLM and went to Amway?
Doug G,
You are wrong. The idea that high prices drove the "Kingpins" is absolutely false. I was in Amway in 1980 and throughout the early 80's many of their products WERE price competitive.
The Kingpins started the tools out of practical necessity, according to Bill Britt, because people were getting out of the business as fast as they were getting in.
Unfortunately, the Kingpins soon realized there was more money in tools than Amway – and thus a scam was born.
Throughout the late 1980's most of the pins including Britt, Crowe, Miller, Renfrow, etc ALL claimed the tool business operated at either breakeven or a loss – and was done exlcusively as a serive because their leaders cared about them.
THEY WERE LYING THROUGH THEIR TEETH. They were making MOUNTAINS of cash off of the tool business.
IMO the ONLY reason they EVER disclosed the tool income if because the Internet FORCED them to – their dirty little secret was exposed and they had no choice but to them backpedal and justify their MAIN form of income – tool and function money.
THIS is the core of the business' reputational problems. Quixtar shoudl be SHUT DOWN – because they never dealt with this scam.
JimZ,
Did you even read ALL of what I wrote?
Here, check it out again – "The poor compensation AND pricing issues actually gave rise to the "tool business."
Please note, pricing issues was the SECOND and subordinate reason I gave for the tool business. It seems to me like you read the word "pricing" and decided everything after that had to be wrong.
I even went on to explain that people were dropping out too fast and WHY they dropped out so fast. Did you not read that either? Because you essentially duplicated what I said (in my third paragraph) in your second paragraph.
I can't believe you had the nerve to tell me I was wrong and then said almost exactly what I said but with less details.
Did Bill Britt explain to you why people were leaving as fast as they were getting in? Here's a clue – They weren't making an money. Poor compensation and high prices strike again. Amway has a poor reputation because so few people ever made any money doing it.
No one would care one iota about the tool guys making a ton of cash if the tools actually helped the people who used them to make money. If half the people who tried Amway made money, they wouldn't have the reputation they currently do. If the products were a good value, people would continue to buy them even after they stopped working their Amway business…but they don't. The whole issue with kingpins making big money from the tool business is blown way out of proportion.
Ty – I've had the exact same thoughts about what would make Quixtar better. I know that there have been other companies in the industry that have had the courage to change and adapt. One that comes to mind is HTN (Health Through Nutrition). They developed what they thought was a great product (coral calcium water) and started a new company (Xooma) with an updated commpensation plan. Quixtar could do the same thing in any of the categories that you've listed. I've always thought that Ocean Essentials alone could be a great company.
Good post. I agree with what you wrote. I think specialization could work for the better.
One really important thing (IMO), is to lower the amount you need to spend to get a bonus. If the PV were 1:1, and the bracket were lowered to say 50 PV to earn a bonus, then IBOs could truly just buy some stuff they normally would and earn a bonus.
It would help retention and increase overall volume.
Under today's system, there'a no way I could spend $300 a month on consumables and to boot, I could get more stuff if I spent that $300 at Costco.
Doug,
I did read your entire post. Although you did talk about attrition, in the third paragraph you started the discussion saying “New distributors found it too hard to sell over-priced products and dropped out quickly”. I interpreted this as meaning you believe that high prices were the driver of the tool business.
My apologies if I failed to credit you with causes I then also articulated. Also, I could have been a lot more diplomatic than starting off our conversation with “you are wrong”.
At the end of the day, I think our point of view diverges in three areas:
(1) I don’t think high prices drove their actions, I think greed drove it. You may be right – I just don’t agree (but could be wrong). When I first got in the business in 1980 many of the products were competitively priced and as long as you explained the concentration of the product you could easily prove it actually cost less per use and was higher quality than competitor products.
(2) I also disagree with the idea that Amway’s poor reputation is a result of people not making money. Here again, either one of us could be right on this one. I think people are more put off by the inflated claims and deceptive recruiting practices that are a direct byproduct of “the system” of business tools. Also, since someone “plugged into the system” will typically spend $3,000-$6,000 each year on tools, it’s a lot tougher to get to breakeven and even profitability.
(3) I absolutely disagree that kingpin tool issue is blown out of proportion, and no one would mind if more people were profitable. I think the Kingpin tool “scam” is an incredibly big problem. Consider the following: you can build the business to Diamond, make maybe $80K from Amway/Quixtar while making probably $120K+ from tools. The tool income – the highest percentage of your income – is completely dependent on the “whim” of your upline. If they decide they don’t like your “attitude” (in other words if they wake up on the wrong side of the bed one day and you fall out of favor) then you will immediately be targeted to have your tool business re-routed away from you – along with the income. This is what many of the lawsuits are about. So you can invest an incredible amount of time, years of effort, and one very bad conversation with Bill Britt at a function can result in more than half your income getting wiped out. THAT is a big problem. Also, the tool income “scam” is the foundation of all of the bad business practices that are killing this business. Too many tools, too many “system” events eating up people’s time. Too many false claims like the 6-4-2- plan claim that 10-15 hours a week for two-five years will take you to Diamond. That is a bald-faced LIE. In the 49 year history of Amway/Quixtar NO ONE has gone Diamond in 2-5 yrs working only 10-15hrs a week. You can’t show the 20+ plans per month and attend functions, etc in 10-15hrs a week.
I DO agree that the tool income has enabled Quixtar to avoid staying competitive. I think this is the core of the twisted, dysfunctional, symbiotic relationship that exists between Quixtar and the Kingpins. At the end of the day they feed off of each other. Amway/Quixtar is picking the left pocket of their distributors, Kingpins are picking the right pocket, and the distributors are getting taken advantage of from all sides.
I spent more than 15 years in Amway/Quixtar. I thank God I got out of it – I am amazed at what a mess they have turned this business into and I feel extremely bad for the many terrific people I knew who trusted their uplines – and never even realized how badly they were taken advantage of.
Godspeed, Doug. Sorry for the offense.
I think the reason people didn't make any money is they didn't do any work. They thought they magically should be given an income. If they had actually developed a sales business, they would have made money.
For a more reasoned view, check out this site:
IBOfacts.com
Mij in Jax
Gimme a break, Mij. That's BS. The people complaining are the ones who did make an effort, tried to get sales, tried to sponsor people, and followed their upline recommendations. The people who don't do anything in Amway don't even care because they didn't lose anything.
Since you decided to speak up and are obviously liking the Quixtar/Amway opportunity, why not fill us in on how well you are doing with it?
How long have you been in Amway/Quixtar and what was your last bonus check?
Of course I'm sure you won't give out that information because you think it is too personal/private. The funny thing is no one would buy into a franchise business without looking at how the other stores of that franchise are doing. Yet, most Amway distributors insist on not sharing their income (Schedule C tax returns would be very informative to prospects) information with potential IBOs they are trying to sponsor. Why is that?
Dear Mij in Jax,
While there certainly have been people who didn't do the work, there are also large amounts of people who did do the work and realized that the business was overhyped.
Look at the statistics that are surfacing via lawsuits or governmental actions. The UK government went after Amway/UK and they uncovered an ABYSMAL record of small incomes.
So the Kingpin mantra of "the business works 100% of the time for those who work it" has been pretty thoroughly debunked. In fact, you see Diamond after Diamond who are falling out. You see a big Diamond in Larry Winters organization complaining in a letter to the IBIOA board that his Emeralds are returning to J-O-B's in alarming numbers because they can't make it.
That is the reality, if I want propaganda I will go to IBOfacts
What do I have to do to make $500 to $1000 every single month in Amway or Quixtar?
That right there is the main problem with the business.
Most people join this industry because they want to make an extra $500 to $1000. Every time I get approached by an IBO and I ask that question, you should see the backpedaling that takes place.
Roosevelt Cooper
http://www.web204mlm.com
Roosevelt, you hit the nail on the head!
The Kingpins, in their greed, insist on fattening the bonus for the top pins. They really don't care if this causes attrition in the lower ranks, because their REAL income is in sales of books, tapes and functions, and they need the "new blood" to make up for the dissillusioned "older" IBO's who have toned down on their tool purchases.
I agree that if they could provide a steady $500/$1,000 in an achievable way, their business would grow at a tremendous rate.
When I was in Amway/Quixtar I was very frustrated because anytime I talked to my upline about helping me to build some healthy retail sales (to make the $500) they would discourage it and tell me to focus on "going Diamond". I was consistently fed the mantra of books, tapes and seminars – often to the detriment of spending time actually making any money.
They are so screwed up, and it's disgusting how the big pins prostitute their teams, taking advantage of the trust they have developed, to suck the money out of their pockets to make their tool income.
it is a business for news, sports broacasting and advertising companies
http://www.lafsaadvertiser.com