Back in 2009 I wrote a post Let’s Talk About Tools Part I, beginning a conversation about an area that has been of some controversy in the Amway world – the promotion and sale of Business Support Materials or BSM. After a mere 5 year break I’m finally here to talk about Part II – Do Diamonds make most of their money from selling tools?
Just today I saw a claim from an MLM critic that (in 2004) “the best of the best (Diamonds) were earning $250k/yr, but only $60,000 from sales/downline sales.”
He was claiming that while Amway Diamonds and above were making more than $250,000/yr, only about $60,000 of that was from the sale of Amway products through their network – the rest from the sale of “tools” – books, CDs, and seminar tickets. It’s not an unusual claim. Amway critic “Joecool” regularly makes similar claims, and former IBO Scott Johnson (aka Tex) is absolutely obsessed with the idea, commenting about “Stop the Amway Tool Scam” on virtually any news article or website that mentions Amway.
So is there any truth to this claim? As I point out in Part I, successful Amway IBOs can and do earn money from (1) the production and resale of training products and services to Amway organisations (2) the sale and distribution of tools through ones own downline and (3) by selling their services as professional speakers.
So how much do they make?
Several years ago I and a number of other Amway bloggers were invited to participate in a panel discussion with Amway staff. One of the invitees was the tool-profit obsessed Scott Johnson, so I decided to see if I could get some hard data and information about how much Diamonds made from BSM sales. I emailed all the various “support organisations” I could find contact information for, including Britt WorldWide (BWW), eFinity, INA, Network 21, Yager Internet Services and others to see if they would share some information. Unfortunately only one of them was willing. For confidentiality reasons I won’t name them, but they’re a very significant and large group.
For this company, qualified Amway Platinums and above could earn a monthly volume rebate on the BSM purchased by their Amway organisation. CDs for example sold for a retail price of $7. However, just like with Amway, there was an increasing discount (paid as a rebate) for larger volumes, as follows –
A similar rebate scale works for tickets to seminars. For example, qualified Emeralds and above earned the following rebates on tickets to major Weekend Seminars –
The schedule works like the bonus brackers of Amway, so a Diamond earing at the “WES 250″ bracket would most likely be “paying out” of their bonus to at least a couple of Emeralds. A Founders Platinum with a volume rebate of 75 cents might be paying out 50 or even 75 cents of that to another downline Platinum.
In addition this organisation pays speakers to present at major functions. Airfaires, hotels, and a per diem for expenses are paid, along with a speakers fee. This fee averages about $3250.
Now, just like with Amway, there are huge differences between organisations. A Diamond can have 6 platinums all in the US, or thousands of platinums spread around the world. So there can be huge differences in their Amway income, and huge differences in the volume of BSM materials they move through their organisation. But how does the BSM income compare to Amway income?
Well, in 2007 the average North American Emerald earned around $70,000 from Amway.
The average North American Emerald in this organisation in 2007 earned around $7,000 from BSM rebates and speakers fees combined.
The average Emerald had “system” or “tool” income of around 10% of their Amway income.
In 2007 the average North American Diamond earned around $155,000 from Amway.
The average North American Diamond in this organisation in 2007 earned around $23,000 from BSM rebates and speakers fees combined.
The average Diamond had “system” or “tool” income of around 15% of their Amway income.
Now, this data is now 7+ years old and it’s important to note a few things. First of all, different BSM companies calculate their rebate systems in different ways. I’m told for example that in the past some BSM companies paid their rebates not based on volume, but based on the pin level they had achieved. So someone who had qualified Diamond received the Diamond rebate level - even if their volumes had dropped and they were no longer qualifying as an Amway Diamond.
Different groups also have different numbers of CDs and meetings they encouraged their groups to attend. I’ve heard of groups that encouraged the members to buy as many as 10 CDs a week. Others are 4 or 5 a month. Obviously if you’re selling a lot more CDs then you’re making a lot more money from this income source. Similarly some speakers are far more in demand (or have far more personal desire) to be on the speaking circuit, and this earn more from that income source. There are also other differences in how the profits (if any) of the production companies are used and/or distributed.
So yes, some Diamonds, in some organisations may earn more from their BSM related activites than from Amway. But this is unusual, not the norm!
Furthermore, in 2007/2008 Amway implemented a whole new accreditation system for companies that supplied BSM to Amway IBOs. As part of this Amway required the companies to allow an independent marketing firm to study their compensation plans for fairness and Amway’s approval. Many changes had to be made – including moving from an “pin level” based rebate to a volume rebate. On top of that, Amway also drastically increased a range of bonuses. In 2007 the average Diamond earned around $155,000. In 2014 the figure is over $600,000.
In the past, cases of Amway Diamonds and above earning more from “tools” and “the system” than from Amway occurred but were not common. In 2014 it’s virtually non-existent.
No, in general Diamonds do not make more money from tools than from Amway.