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.