Wednesday, June 21, 2017

The 6-4-2 Plan?

Let’s break down the 6-4-2 plan (Re-print)

Basically, it’s a plan to go direct (platinum) and all you need to do is sponsor 6 of these direct groups and you’re a diamond and will retire early and life in luxury right?

Assumptions: 1PV = 2.5BV. 1PV costs about $2.70.

The 6-4-2 plan has the premise that you do 100 PV, and you sponsor 6 frontline who do 100 PV. Your six frontline in turn sponsor 4 (24 IBOs) each who do 100 PV. And each of these 4 IBOs sponsor two IBOs (48 IBOs).

So your direct empire looks like this:

1 platinum Sponsored 6 who sponsored 4 who sponsored 2 6 1300 PV groups Sponsored 4 who sponsored 2 24 300 PV groups Sponsored 2 48 100 PV IBOs

Total 7900 PV. 7900 PV = (1 PV = 2.5 BV) 19750 BV. 19,750 BV @25% = $4937.50 per month. Annualized = $59,250. Add Q12 bonus 69,250 (platinum group yearly income, not counting retail sales profit. Cost of product (approximate) $21,300 per month or $255,960 per year to maintain 7900 PV.

The platinum must pay his 6 1300 PV groups. 6 frontline 1300 PV = 3250 BV = $390 per month, or $4680 per year. $4680 x 6 = 28,080.

The Platinum keeps 69,250 – 28,080 = 41,170 (net, but not including operating and system expenses, but this includes the Q 12 bonus)

Now, the 6 frontline must pay their 4 IBOs who sponsored two. 300 PV = 750 BV = $45 Per month, or $540 per year. Thus the 6 frontline earn $4680 per year but pay out $2160 downline for a net of $2520 per year, or $210 per month.

Ok, and then each of the IBOs who earn $45 per month or $540 per year must pay their downline (2 each) $7.50 per month, or $90 per year x 2 = $15 month or 180 per year. Thus the 300 PV IBO earns $30 per month or $360 per year.

Let’s review:

1 platinum earns $3430 per month, or $41,170 per year 6 1300 PV IBOs earn $210 per month, or $2520 per year 24 300 PV IBOs earn $30 per month, or $360 per year 48 100 PV IBOs earn $7.50 per month, or $90 per year This is before taxes and expenses, but also does not include retail profits, but hey, we teach buy from yourself right?

OK, let’s look at tools expenses. Let’s say only the platinum, the 6 frontline and the 4 each who sponsored others are on tools (Fair assessment?) That would be 31 IBOs out of a group of 79 IBOs on tools or 39% of the group, and remember that all of these IBOs do 100 PV every month.

Tools cost: KATE, Website, standing order, book of the month, open meetings, monthly functions, major functions (some IBOs have to fly to functions), gas, incidentals, babysitters. Let’s estimate these tools and other expenses to be $160 per month (Very conservative IMO). $160 per month = $1920 per year.

Now let’s review the group NET income.

1 platinum $3430 - $160 = $3270 per month, or $39,240 per year 6 frontline (1300 PV) $210 -$160 = $50 per month, or $600 per year 24 (300 PV) $30 - $160 = <$130> per month loss of $1560 per year 48 IBOs earn $7.50 per month or $90 per year.

Group income = $69,250. Group Tools expenses = (31 x $160 = $4960 per month, or $59,520 per year) Group profit = $9,730 for the year.

79 IBOs putting in 10 hours per week = 790 hours per week or 9480 hours per year.

These IBOs on average made a whopping $1.02 per hour for the year collectively. Or………

The Platinum made $78.48 per hour

6 frontline IBOs made $1.15 per hour

24 – 300 PV IBOs lost $3 per hour

48 100 PV IBOs made 17 cents per hour.

Monday, June 19, 2017

Critical Mistakes Made By Amway IBOs?

In professional sports, whether it be football, basketball or baseball, there are many close games. In close games, a critical mistake made will likely cost your team the game. A good example of this would be a football team trying score the winning touchdown but they commit a game changing turnover. Or a baseball pitcher slips and throws a fastball up in the zone and it gets hammered for a home run. Or a basketball player shooting fouls shots but missing in the last minute of the game. A critical mistake nearly assures you of failure.

In my opinion one of the most critical mistakes that many IBOs make is to ignore the bottom line when analyzing their Amway businesses. I recall, in my experience, business building IBOs, sadly, taught by their uplines to ignore losses, or to view losses as investments into their businesses, or that money is really not important, because you keep building the business and the "money will be there", which is not true. Some uplines may teach that the business is really about making friends or being a nicer person. All of these things may be nice side benefits of reading personal development books or attending functions, etc., but when running a business, the most important goal should be to turn a profit. The sole purpose of a business should be to sell a product or service for a profit. Period.

For many IBOs, their businesses consist of listening to standing orders, attending functions and meetings, but not focused on selling products and earning a net profit. And for most IBOs, nobody can blame them as upline may give them bad advice and because the Amway business is person to person selling, it is so inefficient that many groups end up teaching IBOs to simply buy their own volume and get others to join the business. For groups who operate primarily in this manner, you are probably running an illegal pyramid business because new and existing IBOs can profit only by continuing to add more downline IBOs in the hope that they too, will buy their own volume and sponsor others.

When you look carefully at the business plan, whether it is 6-4-2, 9-4-2 or some other variation, the majority of these business building IBOs will have low volume and likely to earn only about $10 a month. But to earn that $10 a month, you are likely to have to spend $300 on products, and if you are on standing order, voicemail and functions, then you likely spend anywhere from $150 to $250 monthly (or more) to participate in the teaching system. Thus these IBO's bottom line is a net loss! It is only when you are able to sponsor many downline that your losses will get smaller and you will only profit when you have a sizable downline. That means your bottom line is a loss. And while Amway defenders will argue that Walmart doesn't even give you $10 a month, you can certainly get more products from Walmart for $300 than you can get from Amway for the same price. Walmart will match any advertised price on a product that they and a competitor may carry. Also, Walmart's advertising reaching millions of people, which is much more effective than person to person. While Amway runs some ads now days, they do not directly drive customers to IBOs. The vast majority of IBO business is still to themselves and their downline, and not to non IBO customers.

I challenge IBOs to look objectively at their bottom lines. It is likely a net loss. If it is, ask your upline how long this is expected to last. Set hard goals and if you are doing what is advised by upline and results do not improve, you may have to ask yourself what will change to make your business profitable? Basically, if you aren't adding active downlines and customers regularly, you aren't going anywhere and are likely to be running your business at a loss month after month after month. It won't take long before you realize that you have lost thousands if not tens of thousands of dollars. Uplines often say insanity is doing the same thing over and over and expecting different results.

As a former IBO with a 4000 PV business with eagle parameters, I was not making a net profit. I saw my bottom line and although doing and achieving what my upline advised, there was little to no money. I decided the effort, time and money invested wasn't worth it. Plus my upline started to interfere in my personal life. I saw my bottom line and wasn't satisfied, and I left Amway. I later discovered the lies my upline had fed me to keep me in the business and to keep me buying tools. It is why I started blogging. For now, my bottom line is to get the truth out about the tools scam run by upline. That is Joecool's bottom line.

Friday, June 16, 2017

Friends For Life In Amway?

I read on another blog recently written by an IBO, that your real friends would not walk away or cease to be your friends because of involvement in Amway. I do not believe your good friends would abandon anyone because of their involvement in Amway. However, they might avoid you for a while if you are always talking about Amway, or bugging them to join Amway. They might also feel that it is the IBO who has deserted the friendship in order to attend the endless number of Amway meetings and conventions.

As a former IBO myself, I know that I sacrificed many birthday parties and backyard barbeques. Our upline told us that these minor sacrifices would pay us back a hundredfold in the future. Looking back, not a single IBO crossline or my sponsor, ever got any significant payout from Amway. I believe that some IBO's relationships with friends and family may suffer, but not because of their involvement in Amway per say, but because the IBO is putting the relatiionships on hold while they pursue their Amway dream. It's almost like a friend who leaves home to attend an out of town college. Eventually they come home and your friendship is still there.

As an IBO, I remember our upline telling us that we needed to separate ourselves at times, to avoid negative. I believe this is still true today, based on what I see coming from current IBOs. IBOs might call it "association", where they think they are "hanging out" with successful people, but the reality is that the masses of IBOs are broke dreamers hanging out with each other.

Ironically, our upline taught us that we as IBOs were all friends for life. I recall a high level WWDB leader commenting that an IBO who "quits" is leaving their friendship, therefore the remaining group is not responsible for the failed relationship between current and former IBOs. When an IBO says friends for life, what they really mean for most is that you are friends for life as long as you never quit Amway. This is one of the reasons why Amway has been compared to a cult.

Shortly after leaving the Amway business, my dad passed away. Not a single person upline or crossline called or visited to pay their respects or to express their sympathy. Friends for life indeed.

Thursday, June 15, 2017

Mind Your Own Business?

One of the things I heard as an IBO, and still witness today, is IBOs telling prospects that their income is none of your business. That you can refer to the compensation plan and see that you are compensated for volume. That your effort will yield different results than their efforts. All I can say is what a load of baloney. If you are researching the Amway business opportunity and the person contacting you won't disclose financial details of their business, red flags should pop up all over the place. Sure if your potential sponsor is new, they may not have much to share, but are they willing to share or claim that it's a trade secret?

Remember that your sponsor will receive a financial benefit from your purchases and/or sales for the life of his/hers and your business. Volume that you move, plus your downline volume will be a part of your sponsor's and upline's volume. For that kind of reward, you'd think that people would be open to sharing. Now I'm not suggesting you ask to see the sponsor's personal job income, but surely, you'd want to know what kind of time, effort and expenses you might expect, along with the kind of expected results that your potential sponsor may be experiencing so you can decide whether it's worth the investment of time and money, especially if you will be encouraged to purchase training from the upline.

If your potential sponsor has a downline, and has been around for a month or more, wouldn't you want to know what their results and expenses are? It's perfectly reasonable to ask and expect a response. Since Amway leaders often talk about duplicating, wouldn't you want to know what you would be duplicating? I wouldn't want to put in 12 hours a week plus a few hundred in expenses if the likely result would be a net loss. Now I understand that a new business might not prosper right away but what are the indicators that a profit is coming? If you have trouble selling and sponsoring downline, you will more than likely never make a net profit. If you are selling and sponsoring, but still not profiting, then what? Are the tools and training expenses eating up all your profits?

It is my conclusion that uplines and potential sponsors don't share this information because it would not be attractive to prospects. Most IBOs run at a loss, especially if they have tools and training expenses and they might be putting in a tremendous effort. We know that some diamonds have financial difficulty. We also know that some, possibly many diamonds make more money from the tools and training than from Amway. I believe that the Amway opportunity is a far cry from how it's presented with the mansions and sports cars. I believe the reality is a sad one. If you are told by your potential sponsor that their business income and/or results are none of your business, you should pack up your bags and run!

Tuesday, June 13, 2017

Most Amway IBOs "Do Nothing"?

I see and hear this quite frequently, that most IBOs do nothing and quit. Quite often, it's some Amway apologist using this as a defense as to why the average earnings of an IBO is so low. Even if many IBOs "do nothing", they are still registered IBOs, and therefore count if you are measuring an "average". What Amway apologists like to do it exclude those who achieve nothing, but at the same time, count the high achievers in the average, thus giving a false impression of what the earnings are for a rank and file IBO. A better way in my opinion, would be to exclude the lowest and highest earners. That will give a more accurate idea of what someone can expect to earn in Amway.

But let's look at the term "do nothing". I cannot accept that most people do absolutely nothing. They were open enough to talk to someone about a business. They were motivated enough to be looking for something. They were motivated enough to (likely) attend a presentation and they were motivated enough to spend money on a starter kit. I would add that in many cases, groups such as BWW, WWDB or Network 21 for example, will add on somem charges to that starter kit, which may include some tools or possibly a ticket to the next function. If you actually visit the Amway website, you will see that actual enrollment costs less than $100. With the motivational groups tacking on fees, startup kits might cost several hundreds of dollars. That being the case, I can't accept that people did all of the above, paid to join and then let the starter kit sit there collecting dust.

It would be my educated theory that many people "achieve nothing". but they don't "do nothing". A more likely scenario in my opinion, is that people sign up, and they do contact others, try to sell the business or some products, but because of past IBO behavior, they encounter the term scam or pyramid, and an extremely low rate of people open to joining Amway. Knowing that you cant "go diamond" without sponsoring, many or possibly most IBOs try to get others to join. Because a lot of Amway products are not competitively priced and because of previous reputation issues, it is a very tough sell for new people. In my opinion, this is why Amway is growing faster in foreign countries, because IBOs have not yet damaged the name of Amway. Keeping this is mind, it is my guess that the real life average income is about $100 a month, not the $200+ that Amway recently reported, as they conveniently excluded over 50% of the IBO sales force.

If people are saying that all these folks "did nothing", ask them how they could possibly know if someone "did nothing". The answer is that they don't know. In my time as an IBO, I saw people come and go, some doing little, some doing a lot, but I never saw a single person sign up and not even open the starter kit or at least try to prospect and/or sell. I believe the Amway system is simply flawed and the low achievement levels of IBOs in general is a product of that flawed system. You're welcome to try and prove me wrong (but you can't).

Monday, June 12, 2017

Buy From Yourself And Get Others To Do The Same?

As an IBO, our group was often told that selling products were not that important. Just buy from yourself and get others to do the same. When prospecting, you ask if someone likes selling and if they say no, you say "great, this business is perfect for you". Or if someone says they like selling, you say "great, this business is perfect for your". Keep in mind that a business exists to sell a product or service for a profit. I believe Amway folks forget about this fact.

People naturally do not like selling stuff to people, thus the adaptation to being your own best customer or buying from your own store. While it's fine to support your own business, it is not true that a McDonald's owner would never eat at a Burger King or other sill claims. Do you believe that a McDonald's owner would only eat food sold at his own restaurant? I guarantee you that isn't true. I know someone who owns a very popular pizza franchise and she says she never eats at her own restaurant because she's sick of eating pizza. You make money selling pizza so you can have other options.

Another things that Amway IBOs are probably not aware of is that buying from yourself and getting others to do the same without real sales to actual customers is running a illegal pyramid scheme. Another MLM company Herbalife, was investigated by the FTC and while they were not shut down, they were fined and had to change their operations because the FTC found that they lacked sales to legitimate customers. Herbalife is now forced to track retail sales with a compliance monitor watching their moves. There are stories of Herbalifers trying to fudge sales and Herbalife higher ups encouraging people to sign up as preferred customers instead of business builders. That suggests to me that Herbalife is basically admitting they are a sham. If they had legitimate demand, they would run a campaign to recruit more business builders who would in turn, sell products to customers who want their products.

So Amway IBOs, are a majority of your PV sales to yourself or to customers? Are your customers your family anf friends who are somewhat reluctantly buying products from you, if at all? If you are just buying and using your own products, you are actually not entitled to an Amway performance bonus. On the bright side, it seems that Amway just ignores this requirement and pays bonuses anyway. But without legitimate demand, sales and revenues dry up when the markets begin to get saturated. Amway's sales hit a peak at 11.8 billion in 2014 and has gone into a downward spiral since. In 2016, Amway sales dropped 7% to 8.8 billion which was preceded by a dounble digit drop in 2015.

With sales and revenues down, that can only mean there are less sales and volume, therefore there are less Platinums and diamonds that can be supported. But Amway prospects will never know because once you earn diamond recognition, Amway never updates it. Once a diamond, always a diamond, if you will. Thus the leaders that are Bing worshipped on stage might not even be diamonds anymore.

In the end, I write this post to give you food for thought. Too many prospects and IBOs are not aware of these issues but they certainly should be,




Friday, June 9, 2017

The Obvious About Amway?

It is my feeling that most IBOs and prospects are likely nice people, motivated to want more out of life, and willing to do some work. Sadly for most, their experience in Amway is making nothing or losing money, likely because of the tools and functions that are promoted by the upline. I applaud IBOs and prospects for being willing to do something to make more money for their families, but all too many IBOs and prospects simply miss the obvious red flags and get sucked into a system where they cannot win.
I was an IBO at one time. I had ambitions and dreams, many of which I accomplished after leaving Amway.

Let me explain. If you buy some lottery tickets, you do so hoping to win but you know realistically that your chances of of winning the big jackpot or some significant prize is slim to none. While Amway isn't a game of chance, your chance of success is very slim. We know that many IBOs sign up and do nothing. We know that many IBOs may try but end up quitting very soon after starting. We know that few IBOs ever last more than a few years. Knowing that, you can assess that long term sustainable success in Amway is difficult at best.

But it's obvious to those in the know when you see the "plan". If you see one person become a platinum with 78 downline (in the common 6-4-2 plan), and you know that many do nothing or do a little and quit, then you know that you need to have maybe 200 IBOs go thru your business to become a platinum, and who knows how hard it will be to maintain that level. My former sponsor was a platinum but never hit Q12 and often fell below 7500 PV. Last I heard, he was 2500 PV after nearly 20 years in the business. Factoring in tools and business expenses, I believe the net losses of my former sponsor is staggering. And my former sponsor was able to personally sponsor over 100 downline.

The next obvious thing that IBOs and prospects miss is the functions. If you've been around or attended functions, you'll likely see an audience of thousands with one or a couple of speakers. That will probably never change. And if you can assess that situation, you can see that only 1 in thousands will ever reach thet coveted diamond level. And out of those who reach the level, there's a good chance that they cannot maintain the level for the reasons I have outlined above.

While Amway apologists claim that many people sign up to get products and to make a few dollars a month, I think that is total BS. Have any of you ever seen a presentation where your option was a buyers club membership or where you make a $100 a month? I saw yachts and mansions and talk about the diamond being financially free (a myth). To those who see thru the deception, the reality is obvious. It's just a matter of whether you see it or not.