A quick mythbuster … Amway is not 100% debt free

I’ve seen it claimed in numerous places over the years, including in Amway approved BSM, that Amway is “a 100% debt free company“.

I’ve always been curious if this was something that was actually true. Debt is not always a bad thing, and there can be very sensible business reasons to use properly managed debt instead of cash reserves or other methods to fund expansion or other new developments, not to mention simple day to day operations.

Well, it’s not true. In response to a tweet earlier today, Amway’s official twitter account responded

Hi, Wes, and thanks! In fact, Amway is not 100% debt free (no company of our size is) but we are proud to be so financially stable!

I think it quite possibly was true at some stage and has simply been repeated ever since. Time to stop! Stating myths as fact just gives our critics ammunition.

Amway sales grow 9.5% to $9.2 billion

I posted yesterday on Amway North America’s stunning retention rate. Today it’s been followed up by the announcement of Amway’s global sales for 2010 – $9.2billion! Amway said

“… growth was fueled by strong 2010 results in China, the company’s largest market, as well as healthy gains in India, Korea, North America and Latin America.

Nutrilite, which has been the world’s largest nutritional brand for some years, chalked up nearly $4 billion of the sales, confirming Amway as a true “wellness company”. While specific figures aren’t provided, it’s good to see the North American marketing growing again. As I noted yesterday it’s already been reported that growth in that market was around 5%. Not surprisingly, alas, even after that information was released I’ve seen two separate Amway critics claiming Amway sales in North American was continuing to slide! (speaking of critics, I’ve come across some new information which further confirms the dishonesty of one well known Amway critic on the internet – more on that soon!)

But back to focusing on the good news, let’s put this figure in perspective. Sales increased by $800 million. That increase in sales is more than the total 2009 sales of all but the top 16 direct selling companies in the world. It’s more for example than the total reported 2009 sales of MonaVie ($785 million) and in the middle of a recession! It also puts Amway closer to direct selling leader Avon, who registered 6% growth and $10.9 billion in sales for the year.

Amway North America – a stunning new statistic!

We’re still awaiting Amway’s official sales data from 2010 but already some info has leaked out in various press interviews and elsewere. In the recent USA Today article on Amway, Amway North American managing director Steve Lieberman was quoted as saying North American sales were up about 5% – the most significant growth in that market for many years. Over on Amway Talk it was reported that Sandy Spielmaker, Vice-President of Sales, announced at a conference that global sales were over $9 billion – putting global growth at over 6%, excellent in the current economic climate!

Tonight though I came across a figure that is in my opinion far, far, far more impressive. A few years ago when Team and Quixtar were busy suing each other, some internal Quixtar statistics (Amway North America was then operating as Quixtar) revealed that the overall renewal rate for North American IBOs was 56.9% – ie well over half of all IBOs renewed every year. This compared favourably with DSA (Direct Selling Association) statistics of an industry average of 56%.

What was not so good was the Quixtar statistic that only 30.5% of first year IBOs renewed. Seven out of ten IBOs that were sponsored did not renew. That figure isn’t at all surprising when taken with the statistic that half of them never even ordered a product after joining! Clearly there was a lot of energy going in to sponsoring people that was not actually leading to any results, apart from perhaps a bunch of people who felt overly pressured to join something they didn’t really want to join in the first place, or whom were never properly trained and helped to get their business started.

I’ve always thought that was a terrible inefficiency in this business model, and a great place where improvements could be made.

Well, tonight I was surfing around and I discovered a press release from Bersin & Associates, a research firm focused on enterprise learning and talent management and acquistion. A few days ago they announced the 2011 Learning Leaders Winners, recognizing organizations that “drove significant business improvement with innovative and effective approaches to employee learning and talent management”.

Amway was one of the winners, for –

… its blended sales training program designed to improve early success of newly hired independent business owners. The program resulted in a 76% retention rate in its first year – 46% higher than previous rates.

A 76% first year retention rate! That’s a better than 150% improvement and an absolutely stunning statistic.

Well done Amway! This bodes extremely well for the future, and I look forward to seeing the lessons learned implemented in other markets!

And now a word from the experts …

While tabloid journalism seems to be the name of the game with Jayne O’Donnell and USA Today, there are actually bonafide experts on topics like multilevel marketing that also regularly publish articles. One example is Direct Selling News, a trade journal focused on the direct selling and network marketing industry. This month they have published an article that provides a nice, intelligent rejoinder to USA Today’s piece. I suggest you give it a read!

Special Report: Amway – returning to it’s powerful brand

A response to USA Today and their sins of omission

The media rarely fails to surprise me in their ignorance and sheer laziness when reporting on the topic of multilevel marketing, and alas,  USA Today is no exception. Today they published an article Many in multilevel marketing sales find it hard to earn much that was somewhat critical of MLM, and attacked two companies in particular – Amway and Fortune Hi-Tech Marketing. It’s so full of poor journalism, errors, misconceptions, and downright deceit I don’t quite know where to start in response.

(note: I’ve focused only on Amway here and not covered the article’s discussion of Fortune Hi-Tech Marketing as I know little of how they operate)

A good place is probably the various sins of omission, perhaps most obvious with a glance at a calendar. Why do I say this? Well, the journalist, Jayne O’Donnell, cites three former Amway distributors in the piece – husband and wife Jim & Lori Wittlich and Jack Tucker. The Wittlich’s report they were with Amway for two years, ending in 2000. Tucker says he was a distributor until “the late 90’s“.

USA Today has clearly has missed the fact that it’s currently the year 2011! More than a decade has passed since these folk were involved with Amway. Can you imagine someone writing a story on say, General Motors, and talking to customers and employees from more than a decade ago to get a picture of the company? Why wouldn’t you interview current or recent distributors? Are they that hard to find? The only reasons I can think of do not reflect well on either Ms O’Donnell nor USA Today.

Yet that’s one of the lesser sins of omission. Continue reading