I've just had an interesting and enlightening chat with the Chief Operating of Officer of a leading IBO support company. He made it clear that they fully support Amway in their decision regarding the temporary suspension of BSM and sponsoring in that market.
The UK Department of Trade & Industry (DTI) has apparently been conducting an investigation into Amway's operations for some time. I'm told that a number of IBO organizations have been fully cooperating with Amway and the DTI in the investigation, providing essentially "open books" about their operations. He commented that the DTI often would look at the data and come to conclusions that pretty much didn't make sense or reflect reality.
Undertaking a little googling I discover perhaps why. Anti-mlm zealot Robert FitzPatrick's Pyramid Scheme Alert organization has been encouraging people to contact the DTI for several years, as has anti-amway critic Scott Larsen and Quixtar critic Eric Janssen on his Quixtar Blog. FitzPatrick in particular promotes himself as an MLM "expert" – however, if you actually do understand how MLM works, then you'd discover that FitzPatrick has little clue at all about the field. Unfortunately, he "talks a good talk". If the DTI has been listening to him, well, no wonder they're confused! I encourage you to read this excellent article by Len Clements about anti-mlm zealots like FitzPatrick. FitzPatrick's cluelessness is addressed in part 2. Larsen on his site promotes a "negative sum game" concept about the Amway/Quixtar business, essentially "proving" that the average IBO can't be profitable. It looks all very impressive – if you ignore the fact his statistics are wrong and he doesn't consider the importance of the "time" axis in a discussion of business profitability.
In any case, the issue in the UK is not about "pyramid schemes" or even tools per se – it's legitimate concerns about something we're all concerned about – IBO Profitibility. Quixtar in North America has for the past year been heavily promoting the First Circle concept – getting IBOs profitable as fast as possible. Various Quixtar corporate blogs are also dedicated to this issue. The DTI apparently has quite strong powers to suspend a companies operations if they feel the need or desire. If this became a legitimate concern for Amway in the UK & Ireland, then temporarily suspending one of the few expenses for IBOs could help prevent this situation arising, and allow time for any issues to be addressed.
Establishing IBO profitability as something reflecting "reality" is a difficult thing to do. For quite some time I happily purchased BSM, including attending seminars, when I was inactive as a business builder. They were an expense, I was not making money – but I was perfectly content to be in this situation. How would that look in the statistics though? An often quoted figure by Amway and Quixtar critics is the "average income" of an "active IBO" – around US$115/mth. It doesn't sound much, except when you realise that by attending some seminars, heck even if I attended just one seminar in the whole year – I'd be considered an "active IBO" and used to calculate those statistics. $115/mth is actually a pretty good income if you're not even trying to make any money! Even just asking someone if they want to buy something – once in a whole year – that's enough to be included in those statistics. They're simply not an accurate reflection of the income of those truly building an Amway or Quixtarbusiness.
FitzPatrick, Larsen and others prefer to ignore this reality – that many people, like myself, choose to buy BSM for it's inherent worth, and we're perfectly happy to spend the money on it, whether we're generating an income from Amway or not, and indeed that many people don't buy BSM at all, but through a quirk end up considered as "active" IBOs. If I was actually spending all the money, and doing all the work necessary to build a business, and the income wasn't coming, would I be upset? Absolutely. But in my experience such situations are rare.
The class action lawsuit in California involving Quixtar revealed that even high-powered lawyers seem to be getting their education of how Amway and Quixtar works from google and reading flawed sources. Some of the misunderstandings in that suit are simply laughable. It was evident to me that they're education came primarily from reading website like those of FitzPatrick and Larsen. It would be my fear that the DTI in the UK has taken the same path, and the comments from the COO above make me suspect they have.
This misunderstanding of the industry as a whole though is effectively our fault. It's our job to educate people, and we've apparently done poorly at that job. It's also undoubtedly true that some IBOs have felt unnecessary pressure to purchase BSM they could not afford or did not want. This does nothing but harm our reputation. The systems in general have in my experience and research tended to do a poor job at promoting and tracking profitability, particularly for new IBOs. While it's reasonable to expect to have to invest some time and money before generating a profitable business, the relatively low expenses of running an IBOship mean such profitability should come quicker than it does. IBO organizations have however tended to focus on generating volume, and thus profitability, primarily through building a network. While this is fine, it does have the effect of taking longer to reach an initial profit. The problem here isn't expenses such as BSM – it's the income side of the equation.
How do you get the income side up? Merchandising, or retailing to non-IBOs. Amway manufactures some tremendous products. Artistry cosmetics are extremely price competitive for their quality. Nutrilite (Nutriway) products are unique in the marketplace and regularly top consumer satisfaction surveys. Products like eSpring and SA8 have been at or near the top in independent consumer tests. These are very marketable products. As was pointed out to me, the ban on sponsoring new Amway IBOs in the UK & Ireland will hopefully have one very positive side effect – IBOs can't show the plan and sponsor people – but they can continue to sell products!
So, Amway UK IBOs, and indeed IBOs around the world – there's your challenge. Get profitable, faster. Get out there and tell the story about our fantastic products. I think you'll be surprised at the results you can achieve.
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