Amway critics just love to quote various government mandated statistics that Amway publishes. For example, for some years now Amway in North America has published the statistic, based on a 2005 survey, that the average “active” IBO makes $115/mth. $115/mth doesn’t exactly sound like it will lead you to the land of your dreams does it?
So, of course, Amway critics cite that as “proof” that it’s a bad business opportunity and most people make little or no money. Indeed they’ll often go on to mention “expenses” and claim it means most IBOs lose money.
Well, there’s a saying you’ve probably heard – lies, damn lies, and statistics.
I love statistics. Used properly they can tell you a lot. Used improperly they can mislead you badly. In a former career I used to do statistical analysis, and my curiosity was peaked one day when I read a newspaper article that claimed that (in the state I lived) “in half of all fatal accidents where the driver tested postive to marijuana, the driver was not wearing a seat belt” . The article went on to theorise about careless behaviour brought on by the drug use.
At the time I happened to be working in alcohol & other drug research with regard to road safety, and I had the entire accident statistics database sitting on my computer. I also knew it was a rather odd statistic, since authorities almost never did blood tests for marijuana in fatal accidents.
So I looked it up.
There were exactly two fatal accidents recorded where the driver tested positive to marijuana. One of them (half!) wasn’t wearing a seat belt.
Lies, damn lies, and statistics.
The article was 100% truthful in it’s reporting of the statistics, but what they reported told you almost nothing at all.
The same with the Amway average monthly income statistics. Average is only a useful statistic if you’ve got a group that is of decent size and fairly “homogeneous”, that is, they’re much the same. The Amway statistic includes all “active” IBOs, which is defined as –
An “active” IBO is one who attempted to make a retail sale, or presented the Amway Global IBO Compensation Plan, or received bonus money, or attended a company or IBO meeting during the year.
That’s it. If you ask your brother, once, in a whole year, if he wants to buy a can of XS … and he says no! … you’re active! $115/mth is a pretty good income for that, isn’t it? Or how about if you and your spouse are both in to health and each buy Nutrilite Double X and Omega 3 …. you’ll have bought more than 100 points of products, and qualify for a 3% rebate! Congratulations, you’re now “active”. Amway critics think it’s scandolous that you only earn $115/mth for doing your shopping!
Of course, that’s not what’s going on at all is it?
Lies, damn lies, and statistics.
The reality is that the group the “average” is calculated from includes all sorts of people. It includes people that joined Amway 50 years ago and have built global empires. It includes people that joined a few weeks ago and went to one meeting. It includes people who just joined to shop and get member pricing. The average tells you nothing at all, and anyone who pretends it does is either ignorant or actively trying to mislead you.
But just for the heck of it, I thought I’d do the same …. so let’s have some fun with numbers!
First, let’s try to see who this group is. Based on the definition of “active”, the toughest criteria is that they actually earned a bonus, right? So, being cautious …
- The average income of IBOs who earned a bonus was (at least) $115/mth
A couple of years ago in a lawsuit against Quixtar in California, it was revealed that –
- 12.9% of IBOs receive a bonus on downline volume
In other words, anyone else receiving a bonus did so purely as a rebate on their own purchases (including for retail sale). The same source indicates that –
- only 50% of IBOs place an order in the first 3 months after joining
Virtually none of the rest ever order or renew. So that 12.9% must come out of the 50% of IBOs who at least place an order. That means that for roughly 74% of IBOs any bonus earned is purely a rebate on their own shopping.
74%! Clearly that’s a pretty large majority – so in other words, this “active” group earning $115/mth is primarily made up of people simply shopping for themselves! $115/mth just for shopping … pretty good huh?
But let’s continue …. Amway used to publish some statistics internally called “The Platinum Index”, and a leaked 2004 Platinum Index revealed that –
- The average monthly purchase per IBO was $104
Putting this altogether –
- The “average” IBO is simply a “wholesale shopper”
- The “average” IBO purchases $104 a month
- The “average” IBO gets $115 a month in bonus
Clearly, we can conclude from this that –
Amway IBOs get all their products free plus extra cash!
Lies, damn lies, and statistics.
I am an ibo and this is some uninformed information. and the writer that wrote this is doing a job amd not a good ome domt believe everything you hear. as far as how much a diamond make if you were in amway not only would you know that but you would get to hang out with them
Why do you say that? This is a well researched and presented article.
As far as Diamonds go, Diamonds are not financially equal. Each Diamond-ship is structurally different.
How many Diamonds have you gotten to “hang out” with? if they saw you on the street, would they recognize you and address you by name?
FF, The writer of this article is also an IBO. I think you missed the sarcasm in the piece, as he is dissecting one of the myths voiced by Amway critics.
i wold lick know what Eagle, Double Eagle Ultimate Eagle
everyone talking about what the average IBO makes.
what I like to know what average DIRECT makes… also EMERALD, DIAMOND, DBLE DIAMOND, CROWN and so on
Some of this information is now available on Amway Wiki
Bridgett, I checked it all out on the site. It’s pretty informative. Well, I’ll be at the Spotlight on Saturday. I’m thinking about wearing a name tag just to see if I get any comments about blogging. I’m looking forward to the customizable retail websites.
I also just noticed that they posted the webinar (in three parts) they did a couple of weeks ago about all this stuff.
It’s right below the PDFs and PowerPoints.
???
Why wouldn’t you want to go to the quixtar.com website? There are 13 PDFs and 3 PowerPoints that are quite informative.
Also, if you look them over beforehand, then maybe, if you have any questions, you can get them answered in Chi-Town. Just a thought.
I’ll just have to see all the latest changes in Chicago next Saturday.
Regarding the 3% bracket in North America, it *will* be changed, in January. It’s a done deal.
Jeffrey, look at #3 of the “10 to Know to Grow” PDF under Manage My Business>Future Success.
Interesting that we are only one of two markets with a PV that low. Personally, I think it’s hindered retail sales, as it’s very doable to buy 100 PV of product just for personal use.
I think we (North Americans) tend to forget the Rich & Jay needed at least three customers (plus their two boxes) to equal 100 PV back when they sold Double X. There was no way, back then, that one could earn a bonus check without retailing. That’s the not case today, is it?
Jeffrey,
The great majority of people on 100PV probably aren’t profitable now, most of them aren’t even trying to be. They’re simply buying stuff at a discount. By increasing the 3% PV bracket one of two things can happen – (a) they no longer get the bonus, in which case it rolls up to the IBO actually doing the work, increasing their bonus (and profitability) or (b) they go get some customers to make the extra PV, giving immediate extra profit. It decreases the incentive to purchase stuff just to make a bracket.
Note that in most of the world, 3% is 200PV, in some places 250PV, and in some doesn’t exist at all. Only NA and ANZ has it set at 100PV.
YES
I’d be willing to bet that they are either doing a new survey or planning on doing one because it’s kind of silly to use nine year old data. It’s also probably the reason that the company is itching to change the 3% bonus bracket. They’ve already indicated that they’re going to try again to change it, since the survey obviously didn’t give them the results they wanted. It reminds me of the local politicians around here that want a tax increase pushed through and they just keep putting it on the ballot until they wear people down enough to vote yes. How you can make IBOs more profitable by taking money away is beyond me, but we’ll see what happens. Not being negative, just observing.
Verrry interesting!
Also, you note that the figure for average income is from a 2005 survey. I’ve been seeing that same figure for as long as I’ve been in Quixtar/Amway Global (October 2001). Either it has remained constant for 5 years, or they’re using old data. I just pulled out the latest Achieve magazine, and it provides the fine print with this $115 figure and the definition of “active”. It also states, “Based on an independent survey during 2001…” Therefore, the data is from the year 2000. I wonder if they are going to commission a new survey.
The average anti-Amway blogger earns little or no respect using the very same logic you’ve here borrowed from them to earn plenty 🙂
🙂 thanks!