Probably the last major “unresolved” issue in the public arena with regards Amway is the “tools” or Business Support Materials (BSM), and in particular controversy over profits earned from BSM by “higher pins”. If you spend even a small amount of time on the internet researching Amway you’ll find many claims that “the real money” in the Amway business isn’t in promoting Amway products, but in promoting BSM, and some claim that Diamonds and above typically earn in excess of 90% of their income from their BSM side businesses. In the last few days, following the release of Amway’s 2008 sales data I’ve even seen quite a few comments on newspaper websites and other sites claiming the majority of Amway’s $8.2billion in sales was not from sale of Amway products, but from the sale of “motivational materials”.
So let’s clear that one up first. Except for a few minor exceptions, Amway’s sales data includes virtually no sale of motivational materials. The controversy over profiting from the sale of motivational materials is primarily one surrounding third parties, typically Amway business owners rather than Amway itself. And that’s where things start to become not so simple. In this first post I’d like to try and clarify what is meant by “tool profit”. Tools are things promoted as useful for building or supporting an Amway business. Amway Europe’s BSM policy from 2007 says the following –
The definition of Business Support Materials (‘BSMs’) is intended to be interpreted broadly and includes, by way of example: printed materials, audio-video and multimedia productions, internet-based products and services, extra Amway recognition and award systems, meetings and other events, and other materials or equipment used to support information or sale of Amway product or services, as well as coupons, vouchers, tickets or standing order/subscription programs relating to any of the foregoing.
This is indeed “broad”. A pen I use to show the plan or write out a receipt is “other materials or equipment used to support information or sale of Amway product or services”. I use the computer I’m typing on to support my business – it’s BSM. I use an Internet Service Provider to provide me with Internet Access, and I use that access to support my Amway business. My ISP is thus “selling”, and I assume profiting, from selling me Business Support Materials.
It’s not this BSM that has been the source of controversy however. It’s BSM that has been produced by Amway IBOs, or companies owned and/or operated by Amway IBOs, and promoted and sold through the Amway network – from IBO to IBO. This is typically tapes and CDs, books, seminar tickets, and internet and telephony (voicemail) services.
The major controversy is the claim that “high-level” IBOs (normally Diamonds and above, though some claim Platinums and/or Emeralds and above) typically make far more from the “side business” of promoting BSM to their Amway organisations than they do from promoting Amway products. Whether there’s any truth to this or not I’ll discuss in a future post, for the moment I just want to define what we are talking about.
It seems to me that when discussing “tool profit”, there are actually three different types of income under discussion and that they really need to be considered separately, particularly when looking at the ethics of the situation. The areas are –
- Income earned through the production of BSM and reselling at a markup to Amway business owners
- Income earned by an IBO by reselling BSM at a markup through their Amway networks
- Income earned through speaking fees
It’s my opinion that many of the myths around BSM income have occurred through a failure of folk to consider these three different aspects to it. For example, from my research it would appear that income #1 is where the largest BSM related incomes may be generated, but that income tends to be limited to a small number of people – yet it is often assumed that all (or most) Diamonds and above are earning it.
I’ll talk more about these three areas in part II.
Update: Part II – Do Diamonds make most of their money from selling tools?