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!

10 thoughts on “Amway North America – a stunning new statistic!”

  1. Recruiting will make you money. Retention will make you rich. In most companies people sponsor someone and then quickly move on to the find the next person. The real relationship begins AFTER you sponsor someone. One of the best ways to increase retention is to (1) get your new person using the products and (2) help them earn a check as quickly as possible. Even getting an extra five to ten percent of your team members retained each year can have a significant impact in your business. Just my two cents.

  2. I was in Amway from 1986-2001. They were my first company in this industry. I will spare you the details of why I left but much of it was due to the “Training systems” that were sucking all the distributors profits. They would make a bonus check on selling products on one side and then spending their profits on training and tools that were being pushed on them. If I am correct, Amway finally put a stop to this. My hats off to them for taking a stand and making the needed changes in their policy regarding training and tools. Now their distributors can keep the money they make and re-invest in their businesses as they see fit. I am not surprised to see that they are once again on the upswing. They have proven that even an old dog (No disrespect) can learn some new tricks! The new companies should take notice and learn from Amways changes in policy to head off any future problems.

  3. The training looks to be a success.

    But it appears that this high retention rate was not the retention rate of Amway’s entire North American market. It was only for the ones who participated in this specific training.

    Here is a statement from the press release today:

    “The efforts of Amway and Allen proved to be a success. The average productivity of *the new business owners who received the training* was 27 percent higher than *the matched control groups,* and renewal rates were significantly higher than previous overall first year renewal rates.”

    In other words, the results of IBO participants in this particular training evaluated against a “matched control group” that did not receive the training.

    It is also interesting that the training for the IBOs who participated focused on selling product to customers as quickly as possible. (Distributors for decades have been taught that the goal is to get new people to a seminar or convention as soon as possible.)

    ”The Amway learning team conducted an extensive analysis to understand the realities of the new business owner experience,” said Josh Bersin, president. “Once it identified the big derailer for new owners — not landing that first sale early on — the company was laser-focused on the skills and information absolutely necessary to help achieve early success.”

    The training seems to follow Amway’s statements that they are interested in the profitability of all new distributors. Ideally, all north American IBOs will soon get this same training.

  4. Great News and very True, this is very cool. Those of us who stuck with it went through some tough changes, it takes a while to turn the giant Amway Aircraft Carrier around, but it has completely changed course. The changes took a few years but they all where to clean things up. Products rock and are sell able, systems is streamlined and simple online for Global results, and the elephant in the room that people try to bring up crap on with talk about with tools has been eliminated. Now what people. No more excuses it is time to grow which is exactly what is happening today and the new numbers are just the beginning. More is coming too. AMWAY IS BACK and cooler than ever!

  5. Just to clarify, as some professionals who write press releases are sometimes mathematically challenged…

    A 76% renewal rate from a 30% renewal rate, is not “46% higher.”

    It’s 46 percentage points higher.

    46/30 = 1.65

    It is a 165% increase

    (like you said, “That’s a better than 150% improvement.”)

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