The following is Part II of an interview that I did in October of 2004.

In Part One of my interview with Fred Johnston, he gave us an overview of Direct Sales. In Part Two, of the three part series, Mr. Johnston discusses the Amway/Quixtar Motivational Systems in detail.

Fred Johnston continues:

The Amway Motivational Organizations were created by Dexter Yager. Initially, what Dexter did was do meetings, record them on this new device called a cassette tape, then go home, make copies on this wonderful hi tech device, and give them to his top leaders in the organizations. Then, they would listen to these tapes, make copies and pass them on. This system created personal growth and real sales volume at a VERY low overhead. The results are impressive — the largest Direct Sales organization in the world (when initially Dexter could not hold a Diamondship — this system solved that and it grew from there).

Here is what went wrong. This ‘system’ developed into a tape of the week, videos, weekly meetings, seminars, and conventions — all these mediums used to create the tapes that are then passed on at a cost of several thousand a year to NEW distributors. And, adding to the problem the upline was and is making a fortune off the 99% failure rate of these systems! This is NOT just a Quixtar problem, this is a Direct Sales industry problem. It’s important to understand that Direct Sales will NOT change the number of people that are successful, but it can give those without the means to start a traditional business (or that don’t want to invest a lot of capital) the means to start their own business.

This entire motivational concept that was a non-profit center, turned into the MAIN profit center for those that were charismatic enough to become speakers. This has grown into an industry of it’s own the last
20 years and infiltrates nearly every Direct Sales company.

I’m VERY anti profit systems — but this AMO system is and was genius! Dexter built and held the biggest Direct Sales organization in the world. And, nothing has rocked that success for over 20 years, even the
added abuses (because enough success is still created with these systems). He has been on an upward trend (with a few bumps) ever since. Furthermore, just about every major Direct Sales company has tried to model this system either in part or in whole!

Sadly, this type of model (where money is made from NON-retailable products and services) is a pyramid scam. And, as mentioned the success rate is very low — less than 1%. This practice of selling and profiting from tools (selling the dream) has dominated Direct Sales for the last ten years.

What exactly went wrong? The business model no longer focuses on sales. But, those companies that have build product lines in line with consumers have done well (regardless of motivational organizations). I have to give the industry some credit. If Amway would have stomped out this problem 15-20 years ago, there would not be near the options in contracting companies.

In Part Three, Mr. Johnston will give us specific answers to the following questions:

What can we all do if we have a passion in Direct Sales? How can you build a Quixtar or ANY direct sales business without being caught up in the motivation, training and tool scams?

You can contact Mr. Johnston directly at: freddmf@makingtherun.com