At the recent North American Diamond Club, Amway announced a proposal for significant changes to the basic compensation plan in Amway’s oldest market. Probably the most obvious change is the removal of the 3% and 6% bonus brackets, combined with halving the group volume requirements for 9% down to 300PV.
Replacing the 3% and 6% bonus levels will be a tiered “rewards” system offering discount coupons on Amway purchases the following month. For generating 100-149PV IBOs will earn a $10 discount, for 150-199PV $20 and for 200-299PV, $30. This program is similar to one introduced in Amway Europe a couple of years ago, where IBOs receive a 10€ discount coupon to use the following month. Unlike North America, however, the 3% and 6% bonuses remain (albeit at the higher volume levels of 200 and 600 points).
The rational behind the proposed changes is that the majority of people at the 3% level never build an Amway business much beyond that level. They are primarily purchasing products for their own consumption and (perhaps) earning a little from retail sales, or maybe just checking things out for a few months and then deciding it’s not for them. The average bonus payout at this level is $13, so the new coupon program will actually be a better deal for most IBOs at this level.
IBOs reaching 300PV will however have a significant increase in bonus income. Amway expects the changes will not only double the number of IBOs who reach the 9% level, but also double their bonus earnings, from around $41 to $81.
In addition Amway is –
- broadening the scope of the Fast Track bonus program, which offers additional cash bonuses from $50 to $1000
- simplifying qualification for first time Gold Producers and Platinums.
- Enhancing the Growth Incentive Program
Overall I think these are positive changes to the compensation plan. It should significantly improve profitability for active IBOs (not to mention significantly affect the “average income” statistic).
My only concern is that there is now a 700 point gap between the first (9%) and second (12%) bonus bracket. I can envisage scenarios where an IBO builds to 9% and then a downline reaches 300PV soon after, but before the first IBO reaches 12%. Depending on the structure of the IBOs network, this may have a significant negative effect on the first IBOs bonus, since there’s no longer a differential, ie there’s no profit margin.
The changes have the approval of the IBOAI, but still have to go through final steps to get input from IBOs as a whole.
So what do you think, Amway IBOs? Tell your thoughts below.
40 thoughts on “Amway North America proposes biggest changes to compensation plan in 25 years”
I think every compensation plan should be designed with the little guy intended. Close to 95% of the people in our industry, if not more, are part-timers. If we can help them make money and be profitable, you will see a higher retention rate and more profitability for top earners as well. Just my two cents.
these changes seem good for most around 90% then why its apposed is it opposed by top 3% earners or 90% who are about to benifit
I believe every North American ABO was invited to give input, not just the top 3%
Every company should review their compensation plan from time to time. I understand most people fear change more than anything else, but change can be good.
I’ve always believed that compensation plans should be designed for the little guy, the part-timer. If the part-timer (which is most people in any company) can’t make money they usually won’t stick around long.
Look at any top earner’s organization and close to 95% of it is part-timers.
If I was king for the day (which I’m not) I would reevaluate the commission payout from 1500 PV and below and see what I could do to maximize commissions in those levels. That would benefit MOST people in the company, which in return would also help the Platinums, Diamonds and other top earners.
Just my two cents. What do you think?
100% agree, unfortunately when they canvassed the field, it rejected these proposed changes.
Thanks for sharing your insights and opinion. I referenced it on my blog too. Thanks again.
Are they still offering the Q-12 bonuses? what are the bonuses now?
Guess too much resistance. Not gonna happen.
Really? Another big plug for it in the May ABN. I can’t think of any decent arguments for holding on to 3%, do you know of any?
The Founders created the Association to protect IBOs from having the compensation plan changed without Board approval. The Board speaks for the voting members. The voting members just had their June meeting. Amway’s proposal was voted down.
If it ain’t broke, don’t fix it.
If it ain’t broke, don’t fix it? I don’t know if the Comp Plan is necessarily broken, though it could be improved. I don’t wait until my house is falling apart before thinking about doing some maintenance and some upgrades. I’ve heard the benefits for the change. Now I’d like to know the reasons given by those who chose to vote it down.
Apart from what I mentioned in the article (perhaps too large a gap from 9% to 12%) I like the proposal. Like Bridgett I’d be interested in knowing the counter arguments
seems a good change. an abo thinking like a customer is happy with retail margin he saves. an abo who thinks like cutomer cum referer is happy with 10 20 30 dollar redemption. an abo who thinks like a small business man is happy with 300pv 9%. an abo who wants to do big business to go pltnm emerald diamond can help many.
That’s it! That’s the big changes…please! I was an IBO back in the early 90’s. Back then they were talking about Amway being a $30 Billion company by now. What happened? With the advent of the internet and the willingness of established companies as well as new companies to continually make better comp plans with bigger payouts and bonuses Amway continues to stay in 1960s. Amway needs to move forward to 22nd century innovation and compensation. If not for global markets it’s game, set, match for Amway North America. The older Amway generation is gone opening the door wide open for newer, younger creative IBOs that can make Amway a $100 Billion company that changes and adapts to the demands of product, technology and distribution. If Amway ever changes their comp plan in a worthwhile way then multitudes of people will line up for this opportunity unlike ever before. Seems only time will tell. Just my opinion.
Brian, you appear to have missed the news but there’s been two major global financial crises since the early 90s, and many of the companies that were “going to be” $30 billion companies by now don’t even exist. Amway on the other hand is now a $12 billion dollar company, and unlike many of the mega-billion internet companies is actually profitable. Could they have done some things differently? Of course, there’s lots of things I wish they’d done, and I think they missed a real opportunity at the end of the 90s and early 00s with e-commerce. Today though, take out Avon, and Amway’s sales are nearly as great as the third, fourth, and fifth biggest direct selling companies combined. It’s doing very well.
As for bigger payouts etc, yeah, I see lots of companies claiming that. Then I sit an analyse their plans and discover they’re either (a) lying or at best misleading or (b) a clearly unsustainable model and more often than not (c) out of business a few years later.
Also, quick question – what do you think of the Fast Track program?
Well in India they have done away with 3% for some time now … and 6% starts at 300 [PPV / GPV].. In fact, from Feb 2014, they have started the feature of giving cash back of 10% [minus tax of 14% so effective 8.6%] on the products purchased.. And in April 2014, they have started giving free products for PV brackets [100-150PV, etc …] as well as introduced Nutrilite program for doing 150PV in Nutrilite only for 6 months out of the 9 months [Apr – Dec 2014] and the IBO would get 4000 INR [DAP] of products … such steps are positive I think for the Indian business where the Silver is still set at 10K PV… Just my 2 cents!
IT WAS MY UNDERSTANDING THAT THE
BOARD APPROVED THE PROCESS NOT THE PROPOSAL.
Board members presented enthusiastically on the proposed changes at Diamond Club, so it’s a bit more than that Pete.
Pete attended Diamond Club. I trust his word. There is no spin with him.
Amway made the video available for all IBOs to view. If I recall correctly both Bob Andrews and Jody Victor spoke about the changes.
When asked, Jody Victor referred me to Rule 10.2.
Full section –
10. Modification of the IBO Contract
Amway may modify the IBO Contract in accordance with the following procedures.
10.1. Any changes to Rule 11 require mutual agreement of the IBOAI and Amway. For all other Rules, final decision making authority on amendments to the IBO Contract rests with Amway. Amway will, prior to final action, submit to the IBOAI Board for discussion, evaluation, and recommendation all changes in the IBO Contract that materially affect IBOs.
10.2. Amway will notify IBOs of the proposed changes subject to Rule 10.1 by making them available to review by logging on to http://www.amway.com and solicit comments from IBOs concerning the proposed changes. Amway and the IBOAI Board will consider any comments submitted during the 30 days following such notice. The proposed changes shall become effective 15 days after the end of the comment period, unless Amway makes further modifications, after consultation with the IBOAI Board (and agreement in the case of Rule 11). Amway shall provide notice of any such further modifications on http://www.amway.com 15 days prior to the effective date of such further modifications. These time periods may be shortened when it is necessary for a particular change to comply with a new law or other government mandate, to protect IBOs from serious financial harm, or to protect the integrity of the Plan. Rule changes have prospective effect only.
10.3. Prior to the effective date of any proposed Rule change, any IBO who is unwilling to accept a Rule change can, if he or she wishes, provide notice of his/her intent to resign from the Amway business on the effective date of the Rule change. Unless the proposed Rule change is withdrawn, the IBO’s resignation will become effective, and Amway will refund a pro rata share of the IBO’s registration or renewal fee for that year. The resigning IBO may sell his or her IB in accordance with Rule 6.8. In addition, the resigning IBO can return any unused, marketable products pursuant to Rule 4.10.
Nothing is approved. No one approved anything. And I think Amway and the IBO Leadership want to be very upfront and transparent about that, and that they value input from IBOs at all levels.
I just re-watched the video. Amway and IBO Leadership wants to make those things very clear by:
1) The written message in the beginning emphasizing that IBOs will have input regarding this proposed change (which is happening right now until May 16)
2) The VP of Sales’ intro saying, “Knowing how vital this information is to everyone, we want to share the exact same information with you as they heard it.”
3) Bob Andrews saying right from the beginning, “Today begins a discussion. I think that’s important that we frame that correctly…So this is discussion about a proposal that we’re going to have, is not a discussion in hours, or in days, or in weeks. It’s a discussion that will go on for months. And we’ll talk about it. And we’ll talk about it. And we will learn to understand it.”
To clarify, the proposal is not yet approved. The procedure (Rule 10) is what it is; and will be followed. If approved, it will go into effect next (fiscal) year.
I’m not sure why any clarification is necessary, considering I say “proposed” change all throughout the article and explicitly state it has yet to go to IBOs for input?
ibofightback, the clarification was for me–I wrote that “nothing is approved.” I was referring to the proposed change, but used the word, “nothing.”
Yeah, I’m not quite sure what the discussion is about. Rereading my article I suspect when I said “The changes have the approval of the IBOAI” some have interpreted this as meaning I’m saying the IBOAI get to officially agree to or deny proposed rule changes, which isn’t so. I merely meant the proposed changes have their approval in that they like and generally agree with them, which is clearly the case if one watches and listens to the talks at Diamond Club. I approve of the changes too, doesn’t mean I get any more say than anyone else!
There’s no fuss. There has not been 3% or 6% in Hong Kong for decades. No problems have arisen.
There was discussion of doing this in Australia a few years back, but the diamond council poo-poo’ed it.
I believe there was a combination of fear of the unknown, and self-serving reasons for them taking the axe to it – but none the less, the business still thrives locally.
I am excited by the proposed moves in the US. I hope it will re-ignite the discussion here.
I think it is a positive step, but I also know Amway and the IBOAI well enough that they might possibly do some tweaking after watching it for a year or so. I wouldn’t be surprised to see the 12% bonus bracket be dropped to 800 PV.
I think your on the right track… that would be a drawback(the PV gap) but since your sponsoring builders you should bridge the gap. With 2 builders. Also the added fast track bonus will supplement yours and there income. My strategy has always been 300 personal (150 use and 150 retail) of course you can do more or less if you like. That will be even more effective now.
Ohh and the discount looks like it would be the same or more than the check you would have gotten anyway.
Getting rid of the 100PV bonus has been talked about ever since I’ve been an Amway IBO. I am glad that it’s finally being formally discussed. I think doing this will restore a part of the Amway business that has been lost for quite a long while, which is, that you have to do more than just personally use the products in order to get a bonus. Yes, a committed IBO (or couple, or family) can personally use 300 PV, but most semi-committed IBOs do just over 100 PV. And when you think about the roots of Amway, with the Nutrilite company, in order to get a bonus, you had to have five people consuming Double X before you got to tap in to the Performance Bonuses. In other words, you couldn’t rely just on your own personal use. So I think this proposed change will more clearly define the builders from the non-builders, and reward them fairly.
Having said all that…I’m not exactly sure if we should be discussing this in public. The video from Diamond Club and the PDFs about this, say: “For IBO use only. Not for use with prospects.”
Sometimes it is best to say nothing.
Patience is a virtue.
Well, this site is owned by a company not affiliated with Amway, not by an IBO, and it is not a prospecting site. It comments on news and issues about Amway, this is clearly a major issue. That aside, and not really related to this site, but shouldn’t anyone looking at joining Amway North America today be made aware what they’re considering joining is proposed to change quite significantly?
If your “site is owned by a company not affiliated with Amway, not by an IBO” why are you afraid that Amway will terminate your business, as you stated in another article, If you publish anything their lawyers might object to?
I’m not sure which particular article you’re talking about but (a) things change (b) after following Amway for more than a decade I have a good idea what stuff their lawyers are particularly concerned about, and why, and what they’re not concerned about
Wasn’t it formally discussed a few years ago to raise 3% to 150PV in North America? In many markets (Europe for example) it’s 200PV. In the UK the scale starts at 6% and 600PV.
I think it might even motivate some of the distributors to do a little more retailing, which is always a good thing.