It’s a common claim among critics of multilevel marketing and Amway that “most people lose money”, some even go so far as to give specific figures. Jon Taylor of Consumer Awareness Institute claims loss rates exceeding 99.9%. Robert FitzPatrick of Pyramid Scheme Alert essentially just repeats Taylor’s analysis and claims the “loss rate” exceeds 99%. Former Amway Emerald Eric Scheibeler claimed that a UK court case (BERR vs Amway UK) found a 99.7% “loss rate for investors” and this was reported in a news article and is currently included in the wikipedia article on Multilevel Marketing. The truth is that no such finding was made. Prolific Amway critics like Joecool, Shyam Sundar, and David Brear repeat these myths, and unfortunately so do members of the media.
Is there any truth to these accusations?
An example of a Jon Taylor & Robert FitzPatrick analysis
Robert FitzPatrick and Jon Taylor come up with their figure by analyzing various companies Income Disclosure Statements. Using the averages and number of distributors qualifying at a particular level (a frequency distribution), they work out the total income each level earned and use this to calculate the average income of the “bottom 1%”. Taking their Nu Skin example, using 1998 average income data, they calculated that –
The mean average payment to the bottom 99% of Nuskin distributors was $7.43 per week
and go on to add “before expenses and taxes are deducted – resulting in a significant loss.”
Mathematically their calculations are roughly correct (though averaging from a frequency distribution doesn’t give the exact mean). Statistically however, their analysis is completely bogus. Why?
There’s several flaws. First, when calculating statistics like “mean” or “average”, a measure of central tendency, you need to consider differences between groups included in your sample. For example, when statisticians calculate and present average heights, it’s typically broken down by age and sex. It simply makes no sense to average the heights of, say, 5 year old girls and 30 year old men together. You can do it and get a figure, but what does it tell you? Pretty much the only thing it tells you is you need a better statistician! This however is exactly what Taylor and FitzPatrick do. They pile together people who have been registered for a few months and mix them together with people who have been actively building a business for 30 years and more! They include people working 30 hours a week and people working one hour a week. They include people with a goal to generate a full time income with people whose goal is to buy some products cheaply. It simply makes no sense. The only thing it tells you is need a better statistician!
Still, that’s possibly not the worst thing they do. Jon Taylor claims to have a PhD in Applied Psychology. I too have qualifications in Psychology (and postgrad in Sociology) and I can assure readers that you do not get these qualification without quite extensive training in statistics. Here’s one of the things you’ll typically be taught about statistics like “mean” or “average” –
The important disadvantage of mean is that it is sensitive to extreme values/outliers, especially when the sample size is small. Therefore, it is not an appropriate measure of central tendency for skewed distributions.
What is a skewed distribution? It’s helpful first to look at what’s called a “normal distribution”. Here’s a graph of a sample of men’s heights.
You’ll note how the graph peaks in the middle and tails off to either side in roughly symmetrical fashion. The more symmetrical it is in this “bell curve”, the more useful a statistic like “mean” is in describing the population or sample you’re interested in.
Now let’s take a look at another distribution.
You’ll note this distribution is very heavily skewed to the left, then a bump, then a tail to the right.
Remember what I said above about “skewed distributions” and “mean”? It is not an appropriate measure.
But that’s exactly what Taylor and FitzPatrick have done. The second graph above is a graph of the actual data they used to calculate that “The mean average payment to the bottom 99% of Nuskin distributors was $7.43 per week”.
So what is that big group on the left? It’s Nu Skin distributors that earned no bonus at all. According to the 1998 Nu Skin income disclosure statement, fully 86% of distributors earned no bonuses at all. That’s no surprise. This is what it says on Nu Skins’ 2004 income disclosure (I was unable to find a copy of the 1998 one Taylor & FitzPatrick quote) –
As with any other sales opportunity, the compensation earned by distributors varies significantly. The cost to become a distributor is very low. People become distributors for various reasons. Many people become distributors simply to enjoy the Company’s products at wholesale prices. Some join the business to improve their skills or to experience the management of their own business. Others become distributors but for various reasons never purchase products from the Company. Consequently, many distributors never qualify to receive commissions.
The FTC, in their Business Opportunity Rule – Revised Notice For Proposed Rulemaking note comments from, for example Shaklee –
85% of individuals who sign up with Shaklee do so as “wholesale buyers” rather than distributors
Primerica, Quixtar, Melaleuca and others all reported similar statistics to the FTC. Quite simply these people are not operating a business, and their predictable lack of income from not operating a business should obviously not be used in determining whether it’s possible to earn an income through the business. It’s as absurd as judging whether a particular medicine works by including all the people who didn’t take the medicine! It might tell you something, like the pill is too big so people don’t want to take it, but it won’t tell you whether the medicine itself worked or not.
The obsession that anti-mlm zealots have with the low income of people who don’t actually try to make money makes you wonder if their disappointment with MLM comes from the fact it’s not some kind of “get rich quick scheme” and requires work to succeed, just like any other business. It seems they wanted fast riches and were disappointed.
FitzPatrick & Taylor don’t stop with their bogus analyses there though. In part 2 I’ll look at the other side of the profit equation – expenses.
Revenue/IBO is too low.
On Amway brochure is written that half ibos are not Active( how Can they verify it? IMO they tried to recruit at least once).
However if you compare revenue/ibos (Like 4k$ of gross income in a year from active IBOs (2k/y Total) )you Can easly find that most of them are loosing money to compensate Diamonds-Plat. income. Easy! It isnt an accurate statistic but is simple and good enough.
So….pleeeeeese. i did stats in my Engineering studies…but u dont need them to see how bad It is.
And dont tell me that all is earning because this mean that Amway is loosing money each year.
Sorry is soooo worse. They wrote that average gross income from active distributors is Like 200$… But revenue was 8.8 bilions. Do math. xD
No sensible math can be done with those two figures alone.
Well, I did my stats in … stats studies. How do they discover if “half IBOs are not active”, they asked them. The company does a survey every few years, and the results are reasonably consistent. I’m a registered IBO, and for quite some years now if the company had asked me if I’d tried to recruit someone at least once in the past year, the answer would be no.
Your comment about IBOs “losing money” to compensate Diamond-Platinum income doesn’t make a lot of sense, but I suspect it’s because you’ve fallen for the bane of many smart people who find folly with statistics – you’ve made some false assumptions, primarily, you seem to think that if I buy a can of XS from Amway that I want (love the stuff), that it’s somehow a “loss”. It’s not. It’s not even a business expense. I, and millions of other people, exchange money for Amway products because we want them and like them and think they’re good value. If you refuse to accept that fact, well … you’ll come up with all sorts of false conclusions.
the questions I ask myself, but if I promote a business where 99% or 99.8% loses money as they should call me leader or con man? how do you work in an immoral system like that already knowing that fregherai people and you will sell smears of expensive products that are useless and inefficient? You do not think people should stop with a law that promotes these scams people of nml?
you didn’t read the article, did you? :/
Okay, so none of this discussion has established exactly what percentage of Amway distributors are turning a profit. Here’s the obvious question(s)… Let’s take all the Amway distributors with a valid IBO number that are registered and “active” in the eyes of Amway. Then let’s remove the ones who don’t sell any products and have just joined Amway to get a discount on products they use regularly (similar to a buying club of some sort, which is a perfectly valid reason for joining). Now we’re left with the active IBOs who sell or try to actively sell Amway products as well as recruit others into the business. What percentage of them show a profit. I’m sure it’s greater than 1%, but OI
Sorry, my sentence cut off..
Now we’re left with the active IBOs who sell or try to actively sell Amway products as well as recruit others into the business. What percentage of them show a profit. I’m sure it’s greater than 1%, but is there anyway to determine that?
Distributors are not required to report retail sales or expenses, so there’s no real way to calculate who is making a profit. Recently however a situation arose where an independent body asked IBOs if they’d made a loss. More on that in part two!
Okay, so where’s part 2? I don’t see it on the website.
In my head 🙂
Sorry for the delay, had some family issues to deal with
I love you guys for putting JC in his place. He is such a joke. I was on his blog recently and he claimed that there are no new diamonds emerging from the scene. He says all the diamonds are the same old diamonds and they’ll just in to make money off of you.
I just laughed hysterically at him because he is still stuck in the 1990s thinking he knows what’s up.
I just saw new diamonds qualify this year and kick some major ass. And the cool part is they are helping us reform our way of showing the plan and prospecting people, because let’s face it~ times have changed. I won’t mention the names of the diamonds because I know JC is gonna use the info I have, research it and twist everything around. So it’s best to protect their names for now.
But I give you guys props for putting him in his place. He will always change subjects when people call him out on his lies and deceptive and manipulating blogs.
Can you guys answer me this? Does he make money off of his anti-Amway blogs?
Make sure you’re using the kind without corn syrup. Incorporate some strength training in your exercise regime, especially workout that will increase the muscle tones and decrease body fat.
I am still confused about the Amway products because at the open market the products are available at affordable price while Amway is having the more costly than the others then why distributor takes Amway?
Suggest me!!
While Amway products are sometimes more expensive up front, they usually provide better value, either through concentration (which means they cost less per use) or quality and efficacy (they do the job better).
I don’t know about the other products (because I’ve long stopped using them) but there is NO substitute for Silicone Glaze, which I use around the home. (I think my husband uses Turtlewax on the car, when he uses anything, that is.) It’s the only product I can use on my bathroom mirror without land up with streaks. I tried other car polishes (all of which cost NZ$40-50 against Silicone Glaze’s price of $20 for approximately the same amount of product) but they don’t measure up. Silicone Glaze is the only reason I have any interest in Amway now.
All the people taking the time to post long paragraphs here should be out showing the plan. Why aren’t you?
Industry stats are not secret: about 1-2% of IBOs make more money than they “invest” in MLM. Even many diamonds have quit Amway, started another MLM or gone back to their jobs.
Don’t do what I did. Be smart. Get out now.
You mean the completely made up “industry stats”? Tell me, how much does the average IBO “invest”?
This business is my main source of income, yet, I am still building it part-time. Don’t have a problem with spending some time here. And what’s your role in all of this? Did you come here to “warn” us not to build the business your way? Don’t worry about us. 😀
BTW: I chose to be one of those who make more money than they invest. And that’s a decision anybody can make. It’s up to you.
Hy. I’ll make it short. Amway has a sound business plan. The problem is most people don’t follow it. Greed gets in the way. People try to take shortcuts. Get rich quick without a lot of effort. Why did you quit? Most people do! Even some Diamonds. The fault is not the plan.
Speaking of Diamonds who are no longer IBO’s: Visit, “Who Moved Their Cheese” for more information. Many are there. Some sold their businesses. (Find out why.) Some were terminated, justly, for a variety of reasons. (A few are now in jail.) A few more may have been unjustly terminated. (You’ll have to make up you own mind.) Many seem to have resigned in protest of decisions the Corporation has made.
Most IBO’s don’t re-qualify for their “Pin”. That is not a fault of “The Plan”. Those that have taught their organizations how to build solid, profitable businesses thrive. Ones that are “one-legged” don’t. You can usually tell which businesses are solid. They are “Founders” this or that. SP75 will be one in a few more months. He knows how to build a solid, profitable business. “Hy” didn’t know how.
There are no short-cuts to success. It takes plenty of hard work. Perhaps Hy should do some research and find a new organization to become associated with. We all have a choice. Who do you wish to be associated with? If you don’t like your upline, you have some thinking to do. Then, ask questions. Quitting is an option but perhaps not the best one.
I can find one good reason to quit: the work is my idea of sheer hell. Mary Henderson obviously felt that way at least once when she said (in her secretary’s hearing) that she’d gone as far as she wanted. She was “sick of all the bloody hard work”. Those are the words the secretary reported her as saying. She wouldn’t have told us if we’d still been in the business, of course.
Tom and Mary are Triple Diamonds with six Diamond legs. That certainly required a lot of hard work. Maybe that is where she is comfortable at. I wonder what Tom’s feeling are. They obviously treated their business as such; not as a passing interest. Hell is having to do what you don’t want to do. Quitting is of course the proper thing to do under that circumstance.
I did it because my husband wanted to. It’s only natural for you to expect your spouse/partner to support you. To be honest, I feel quite proud of myself. While I didn’t quite “quake in my boots” when I knew I had to pick up that damned phone (I hate using the phone) or go out on one of those awful “beauty breaks”, I certainly had a queasy feeling in the stomach. But I still did it!
Tony and Mary Henderson is I think who Laraine is referring to.
Thanks for your open and honest reply. Your loyalty to your husband is commendable. It is important, though, to follow your passion. Yours is being a fiction author. Be the best you can be at whatever you choose to do.
Through this website (TTAA) I learned about Chuck Holmes and am very impressed with what he writes (almost every day) on his website. Perhaps you might find it to your advantage to bookmark it.
Thanks, Howard. I’ll look up Mr Holmes when I have a chance. I’m afraid my own web site is sadly neglected these days. I got out of the habit when coerced into to becoming caregiver to an elderly in-law for the second time. Not a job to be recommended. I’ve seen it wreck many a marriage.
Probably worth noting that the Henderson’s were (are!) a bit of an exceptional couple, building to Diamond in 10 months (!!!!!) and Double Diamond in just a couple of years or something? They must have worked incredibly hard to do so.
It helped that Tony has an incredible “gift of the gab”. Whenever he “showed the plan” you could count on his performance being different from the last one. I watched him so many times it could have become downright boring, but never did. Being able to talk in front of an audience without reading from a paper (and doing it without any ums and ers) is a huge talent. I’ve had to sit through speeches from people who’ve had plenty of experience yet still pepper every sentence with an um or an er—or more likely several.
When people get started in the business with a “system” group, many times the system is promoted so heavily, that the basics of getting started are ignored. Before most people attend a major function, how many of them have 1. Defined their Dream: What do they want to achieve through the business, and is it specific material things or subjective things like more time with family or early retirement from their job? 2. Defined their profitability level: How much do they want to make and how soon do they want to make it? Also, how much will be set aside specifically for business expenses? (If your profitability doesn’t cover your expenses, you’re not profitable enough.) 3. Their commitment level: How much time are they willing to invest to achieve the results they want? 4. Their market: How many people have ever (or currently have) a prospect list of 150 to 250 quality people (with addresses and phone numbers) that they could contact TODAY for a meeting? 5. Actually working the business: How many meetings have you set up for your first month in the business? Are they Opportunity Meetings or are they going to start with a Product Expo? If it’s less than 10 meetings and if they have less than 150 names on their list, they are setting themselves up for failure. And If they haven’t done any of the other basics either, they are not ready to start their business, so they don’t have any business going to a major function.
Sorry Jeffrey, but I disagree vehemently. First of all any decent system is about “the basics of getting started”, your statement seems straight contradictory to me. Secondly you seem to have the whole purpose of major functions mixed up, especially for new people. One of the prime reasons for having them is to help people decide whether doing all the other stuff is worth doing! Why would you put in the time and effort doing all that if you didn’t actually believe it was worth doing and the results were achievable by people like you? In my opinion major functions are a significant part of the research process. Heck, that’s one of the reasons why there’s a satisfaction guarantee – if you decide it wasn’t worth it and it’s not for you, then you can get your money back. How many other industries offer that? Or even other companies in the networking industry?
I’d add that I didn’t have a list of 150 to 250 quality people, nor did I have, or set up, 10 meetings in my first month. Yet I built a successful and profitable Amway business.
People start a business to make money. It takes work to do so. Some will work our “system” and some won’t. In our business it is up to us to help those who really want to to do so. We hope that more than 1% (one out of a hundred) of those we sponsor are profitable. That is where mentorship becomes important.
Note. Those who have joined my group far exceed joecool’s 1% profitability theory. And that includes those who have left for whatever reason.
Jeffrey, I suppose making a list of 150 people to contact is possible. Did you do that? Have any in you group done that? I haven’t had that happen nor do I know of anybody that has. 150 “quality” people?
To my way of thinking, you have a prospect make a list so that you can get those people off the list as quickly as possible. Then they are free to really start building their business. A few on the list may join. That is good! Their real business begins when they learn how to “qualify” people they meet as truly “looking” or not. (There is your “quality”.)
Amway is a simple business to build. However, nobody should promise that it will be easy. For most people meeting others and taking a genuine interest in them is not natural. It takes practice. And, perseverance.
Never,never quit. Help them define their dream and then stick with them to achieve it.
If all you do is find them, feed them, and forget them, you are doing them a disservice. Stop! Just buy the products and start working on changing your attitude.
My friends, if you choose to share this business with somebody, you are assuming the responsibility to stick with them and help them. Remember, this is a people helping people business.
Being “retired” from a traditional job, I have time to do research during the day. Here is some info from an email (prior to 2007) to an IBOAI board member. (In my own words) it contained some stats Amway had compiled. Based upon an average of 1,000 IBO’s, 687 did’t sponsor anybody. Another 234 sponsored at least one but didn’t receive any bonus from downline. (It seems that they and their downline didn’t generate 100PV.)
129 received a bonus because they had downline volume. (What about IBO’s that “did their 100PV” but didn’t sponsor any other IBO’s?) It wasn’t stated if the downline contributed any “significant” volume.
Also, it was not stated whether these statistics were on first year IBO’s or on all IBO’s. Was this a one month snap-shot? If one assumes it was and was for all IBO’s that month, then 12.9% of all IBO’s received a bonus.
I can’t speak for others but, for my group, this seems like a reasonable figure. Their fact that 68.7% of IBO’s hadn’t sponsor anybody leads me to believe the stats are for all IBO’s at that moment in time. This 69% figure would then include brand new IBO’s that hadn’t tried their hand at sponsoring yet.
No stats were provide as to whether IBO’s made or lost money. How would Amway know? That is a private matter! However, most traditional businesses don’t make a true profit until several years after starting. In fact, most traditional businesses go out of business within the first five years.
If you are interested: I had one that took five years for me to recoup my original investment. I then chose to sell it.
Amway is different, isn’t it? We get in with a small, refundable investment. We chose how much time and effort we are willing to dedicate to building our Amway business. We have access to mentors. (How many traditional businesses will mentor a “competitor”?) Amway is a people helping people business.
How is Amway different? In the book “There’s Gotta Be a Catch” (way back in the eighties when we were Amway distributors) I couldn’t find one person who hadn’t built the Amway business by working likely a galley slave the moment they finished work at their paying job. At the same time we were being told all we needed to build a successful businesss was to give our upline 2-3 hours a week. Yeah, right!
“back in the 80s” is when people like Jim & Nancy Dornan realised you need to properly systemitise your business approach, like franchising had done, if you wanted to build a sustainable ongoing business income without having to “work like a galley slave”. Michael Gerber in his book “The E-myth” talks about the same thing. Today with internet ordering and direct fulfillment it’s an entirely different game. I had people in Australia ordering products month in, month out for 15 years after I left the country!
Laraine, the name of the game is education. No matter what you choose to do, you have to really know what you are doing. Before you start, it is a smart idea to learn all about the business you want to operate. You have to learn about the features and benefits of your service/ merchandise. It is a good idea to use your own products before introducing them to others. Knowledge builds confidence; which helps overcome fear. In network marketing knowing the ins and out of the opportunity you want to share is critical to an effective presentation. People are naturally going to be sceptical and ask questions. You need to be prepared. Luck happens when preparation and opportunity meet. Your mindset should be that you are working for you; not your upline. The books that upline recommend are meant to help you build a better you. They are optional. How you spend your time is also optional. After all, you are working for you.
The overall theme of this article and the discussions that followed would be what we consider as average?
As a novice in this business and coming from a family of business individuals in a harsh environment, average can be viewed in many ways. The average i need to do to pay my bills, the average i need to do to get a bonus check, the average i need to do to not get fired from my job, the average i need to eat to stay alive. but all of us really know that average doesn’t get you anywhere. In a corporate setting, you don’t see the average employee. You either see the top performer, or the bottom of the group. the average is wrapped up in a monotomy of his own complacency which leads to the ultimate defeat of his own limitations. In any sport, you don’t see the average players, just the ones who play very well and play very bad! In a classroom, you don’t see the average student.
Now JC here gave us an awesome example of why not to be average because you are blended in the confusion of things and for the most part, eventually you go unoticed. Think of a family or relative you know who just play it safe and is just unresponsive to his aspirations in life. but Isn’t that why you started your business venture, to remove yourself from the monotomy of life? Now, we may discuss tool sales, expenses, loss, gain, and everything in between which is also a factor in business, but at the end of the day the question we should really ask ourselves is with all that we have set into motion, where do we stand?
The truth is a very funny thing, accepting it enables you to embrace the possibilities and reflect on the amount of WORK you need to accomplish to make them come true, denying it makes you indifferent, hostile to the point where you want to silence it by any means necessary. the truth is this, there is no average in life period, either you perform and continuously grow or you are complacent decrease in mental fortitude, emotional intelligence and the capacity to acquire knowledge. You cant do both at the same time. it’s impossible. Now if you fall in this monotomy again while you are building your business, who’se fault is it?????? Amway? Your LOA? your LOS? you downline? your family members? the state/province you reside? the country you live in? Planet earth? God? No, the owness is on you. You decided to remain in the state and not push yourself to change. So if you’re making $202.00/month or whatever it is, its on you. and if you don’t like it, do what needs to be done until you get there and don’t forget that it’s a business, not a past time, not an employment, not the lottery.
Thanks
Well said! God gave us the gift of free will. That makes us totally responsible for all we do and fail to do. To whom much is given, much is expected. What are you going to do with your God-given talents?
We all can choose to be part of the problem or part of the solution. Don’t have the right set of skills? Learn them!
The bottom line is: You can make things happen, watch things happen, or wonder what’s happening. Your choice. Take responsibility for your life, JC.
Pick yourself up! Dust your self off! And, move forward with your life. You can do it!
Using the same logic as JC does I have come to a following conclusion: join Amway, go ONE time to an Amway meeting (so that Amway can consider you to be “active”) and do NOTHING for the rest of your career and you will earn the average income of $202 each month. Isn’t this the best business opportunity??? 😀 😀 😀
If JC can “reduce” the income for long-term IBOs by using the average for a population of distributors presented in the second picture, I can “lift it up” by using the same number for new IBOs who did nothing at all. 😀
After all, an average is an average, isn’t it, JC? And don’t try to blame me that I am manipulating the statistics – it’s YOUR logic, not mine. 😀
Hello.
Amway did not include more than half of their IBOs when calculating their “average” income. It’s Amway’s and your wacko logic that’s being used here. 🙂
When we talk about statistics everybody win and everybody loses using the same numbers. Unfortunately, statisticians have their way with numbers to prove whatever they want to prove.
When talking about the business, we can sometimes be callous. Some will! Some won’t! So what!
Forget about the statistics!
It takes time to build any successful business. Most businesses don’t last more than five years. That doesn’t mean the business was bad in the first place.
Successful business people have to have the skills to run a successful business. First among them is people skills. Most people need to develop their relationship skills. Sadly, most put their egos and the pursuit of money before building solid relationships.
Relationships are built upon trust. That is key in a business such as ours. Can your word be trusted? Do you always display good judgement? Do you make sound, well thought out decisions? Do you put the interest of other before your own? Are you humble?
This skill set sometimes takes a lifetime to develop. Love people and use money. Follow the “Golden Rule”.
Don’t have this skill yet? Better hope you can find a mentor that does! You should be advised to read books like, “How to Win Friends and Influence People”. Associate with people you want to be like. Learn to follow good advise. That may mean you will have to become more humble. You can do it!
JC, can you read??? Amway considers you to be “active” when you: attempt to make a retail sale, or present the Amway IBO Compensation Plan, or received bonus money, or attended an Amway or IBO meeting. This clearly tells you that there are MANY people who in other words do NOTHING at all to grow their business who are included in the statistics.
Now, can you tell me WHY “my wacko logic” should be wrong? If you do, you will understand why YOUR logic is wrong too. Again I say, the logic I used WAS wrong. But it is exactly the same logic YOU use to downgrade this business opportunity.
You are trying to convince people that an average income of $202 is too little for an IBO actively building the business and I used the same logic from the perspective of an inactive IBO. You are saying: if you are going to actively build this business, you will earn only $202 per month. I say (using your logic): you don’t have to do anything except that you will attend one Amway meeting and you will earn $202 per month. Both of these groups of IBOs are included in the statistics published by Amway. And of course, this “logic” is completely wrong. You will earn MUCH MORE than $202 when you are actively building the business and you will earn MUCH LESS (exacly zero) when you do nothing at all. An average cannot be applied as a meaningful statistical value here because you have assymetric probability distribution. It is completely meaningless value here! It tells you exacly NOTHING about the income opportunity. Average (together with standard deviation) are statistical values that are designed to describe some (not all) symmetrical distributions only (Gauss, for example)! If you want to use an average, you can do so for example for IBOs who run their business for 10 hours a week. This is where you get close to a normal/symmetric distribution and THEN AND ONLY THEN you can use the average value and THEN AND ONLY THEN it provides some meaningful information. These are the fundamentals of statistics and everybody who graduated from primary school should know it!
S, you are totally and absolutely correct about the correct use of statistics.
However, I graduated from 8th grade in 1959 and we did not get statistics then. I don’t “remember” getting any until college. Don’t expect everybody to remember what they learned in school. Very few do! Me, included. I seem to keep making the same mistakes over and over again. So much for learning. One must pay attention, first.
Please forgive JC for being “an idiot”. He is a product of his upbringing. Just like you and I are. Remember, garbage in – garbage out.
JC seems to have made some ill conceived decisions in his past. We all have. He now seems to believe that by being a critic he relieves himself of some of his guilty feelings. Instead of kicking himself in the @##, he chooses to kick all things Amway. His posts may or may not be a genuine attempt to help keep others from making the same mistakes he seems to have made.
What about it, JC? Am I hitting close to home?
I think it’s more like you are incapable of properly evaluating a business and return on investment which is why you are an IBO. 🙂
Try going to a loan officer at a bank and showing them the 6-4-2 or whatever version you and try to get a business loan based on that. 🙂 Let me know how that works. 🙂
JC, you didn’t answer my question. How close to home did I get? Instead of answering, you changed the subject and chose to attack.
As to your question. I’ll answer it with one of my own. Why would anyone go to a bank and try to get a business loan to fund their Amway business?
One doesn’t need to buy an inventory to start or sustain an Amway business. One doesn’t need to open a store front. One doesn’t need to buy a nicer car or nicer clothes to impress prospects.
Did you go to a loan officer to try and get a business loan to support your “Amway lifestyle”?
Did you feel compelled to invest in “tools/functions” to help your business grow? From what IBOFB wrote, I suspect so. (Flying to the west coast from Hawaii to attend functions, renting cars, staying in hotels, eating in restaurants, dry cleaning, and more.) Is that what all IBO’s from Hawaii had to do to build an Amway business?
Did you have a mentor with your best interests at heart? If so, did you listen to and follow your mentor’s advice?
As my little old grandma always liked to say, “You made your bed and now you have to sleep in it!” (I messed up a lot!)
Do you believe in Karma? What goes around comes around. You learn from your new experiences as you pay for your old ones.
The greatest good we can do is to serve others. Do for others what we would like others to do for us under the same circumstances.
Remember, Jay and Rich intended the business to be about people helping people. That is what good mentorship is about.
I like how JoeCool has not responded since SP75 laid it all out to him.
SP75, I have a quick question: were you at Achievers this year? 7% is very little, and I’m thinking you were Q12 if your expenses only totaled 7% of your gross earnings from Amway. If you don’t mind me asking, is this figure month-to-month, or annually?
On another website Joecool outlined his expenses. They were much higher than for most IBOs, with his biggest expense being flights from Hawaii to the mainland for conferences. He was also doing things like spending $40/mth on dry cleaning, renting cars at the seminars, and apparently not even sharing hotel room costs. I had a downline in my group who used to spend way more money than necessary for functions, flying when the rest of us took the train, renting nice hotels when the rest of stayed in camping grounds and cheaper locations. Going to nice restaurants when others packed home made meals. etc etc
Surprise! At the end of the year they were like Joecool and quit too, because they weren’t making money.
I am not living in North America, so to answer your question, no, I was not at Achievers. I am, however, in track for a qualification to a leadership training seminar this FY that is organized by our local affiliate. I am currently at a Platinum level, not Q12, but I have 7 qualified month (including this month) since September, so I am confident that I achieve Q12 or at least Founders Platinum this year. But that doesn’t matter – since the very beginning I sell the products and a retail profit covered all of my expenses.
7% (annually) is not little nor is it too much. It’s just that I do not overspend money. Just using a common sense.
SDM: Just one clarification: “Amway gross income” used for the calculation of percentages below is the income as it is defined in Amway statistics (so that it is comparable), i.e. the income from retail selling and the cost of goods are not included. Just to be sure you understood.
Now that I asked SP75 and he refused to answer, now what? 🙂
So what? What’s the difference if I tell you that my telephone costs $45-$50, a seminar costs less than $20, a weekend seminar (2 times per year) costs about $40, Free Enterprise Celebration (once in a year) costs $85, travelling costs so and so, accomodation costs so and so, etc.??? What is it going to tell you? 7% is still 7%. You don’t have to know anything else to know that I am NOT losing money – and THAT was the point of our discussion, remember?
As I said: NOW you can use the average. Go and find the average income for a F. Platinum. And a simple math will show you roughly what are my costs. Can you accept this? What are you going to do now?
And by the way: YOU are the one who NEVER answers any question, not me.
Yes! When JC is asked a good question he either doesn’t answer it or changes the subject. He seems to think a good defense is a good offense. JC likes to use sarcasm to put down questions he doesn’t like. Kind of shallow, don’t you think?
While we wait for Steve “joecool” Nakamura to reply, lets look at where he is coming from.
His upline Crown Ambassadors, Brad and Julie Duncan lived in Seattle, Washington. They sponsored Double Diamonds, Brad and Julie Wolgamott (now building the business separately), who sponsored Diamonds, Scott and Chris Harimoto in Hawaii. Scott made Diamond in two and a half years (back about 1993 – 20 years ago). While Duncan has five Diamond legs and Wolgomott has four (and they are both still growing). Scott has not and does not appear to be doing much. Scott should have been Steve’s mentor. Did Scott give Steve good council? Did Steve evaluate that advise before he acted on it? One can only surmise.
The average Amway distributor makes 202 dollars according to Amway’s latest figures.
If you read and understand the post you’ll understand that average is a useless statistic for a population like this. Yes, I know Amway publishes it, but they do so because the government says they should. It’s still a worthless statistic. While they exclude “inactive” IBOs, they still include people who may have been buying for themselves, not trying to develop a business, but purchase enough to get a rebate on what they bought. They include people who registered, went to just one Amway related meeting – and decided it wasn’t for them. It includes the guy who, once, in passing, asked his brother if he wants to buy an XS – and his brother said no. It includes Amway businesses that are 53 years old, and Amway businesses that have only just begun.
What’s more, it doesn’t say what you claim. The calculation ignores, for example, any profit from retail sales – which are compulsory with Amway in order to earn a bonus. Perhaps more significantly it ignores yearly bonuses, which are a significant part of the income for Platinums and above. It also, of course, ignores any expenses.
So what does it tell you? Not much.
An average is an average. If Amway did not exclude more than half of their IBO’s, that average would be less than $100 a month. It is what it is.
You want to exclude all of the IBOs that you choose so they average looks better.
If you were to exclude the IBO’s who do nothing and the wholesale buyers as you claim, then most likely any remaining IBO’s would be system IBO’s. If we factored in their expenses, you’re still likely to have a high rate of IBO’s with net losses, possibly as high as 99%.
I know a former direct distributor (WWDB) who is no longer in Amway and he said at that level he was losing money each and every month. He is now the head Pastor of a church in Honolulu. Other former high level pins have confirmed this, including some diamonds.
At 4000 PV and eagle parameters, I was not making money because of system expenses. Why would it be any different for others?
An average is an average and an idiot is an idiot. Do you know how to recognize the idiot? You explain to him all the details, you give him all the information, the diagrams, etc. and the one who screams “but an average is an average!” is the one you are looking for – an idiot.
But what really makes me laugh are those fairy-tales that start like this: “I know one person and he said…”
Now let me tell you my story: I am at a Platinum level and have my monthly expenses at about 7% of my Amway (gross) income. And I AM building the business actively. How about that? This is my personal experience, not an experience of some JC-wish-to-exist former IBO. 😀
@SP75, if you want to see an idiot, look in the mirror. 🙂
Amway publishes the information that they are required to. If they wanted, they could publish it by breaking it up into different groups to include all long term businesses together, newbies together, etc. In the big picture, it’s really not going to make much of a difference. The tenured bigger pins will have a higher average and the newbies will be making nothing or very little, and likely taking losses if they attend functions and buying tools.
Would you care to identify what and how much your expenses are?
JC: Re my expenses: don’t you want an Excel sheet with all the details about my income, taxes, social security, etc.? Who do you think you are? My boss? Forget it. I told you enough. 7%. If I gave you an exact figure, everybody would be able to calculate the things that I consider private. Almost everybody. Not you. 😉 Now you can do your math. I am in qualification for Founders Platinum, so HERE you can use your favorite average value. What was the average income for a Founders Platinum? (hint: see Amway Wiki). Times 7%. But remember! My income can be significantly lower or significantly higher than the average. But at least you can tell with high probability that you are close to the real value because you selected only a group of people with common characteristics/results/activity.
I can, however, tell you that I have never FLOWN to a seminar or spent $40/mth on dry cleaning, renting cars at the seminars, etc., because I am NOT an idiot. 🙂
So SP75. you might have made $100 and spent $7 on a cd. Thanks. Your answer told me a lot already. 🙂
Joecool, after spending a decade or so writing nearly two thousand anti-amway blog posts, and tens of thousands of anti-amway and anti-mlm comments around the net, you should know it’s mathematically impossible to be in qualification for Founders Platinum and earn only $100. So are you admitting ignorance or admitting dishonesty?
IBOFB: JC only shows his ignorance again. Or, he is an idiot. Otherwise he would know that there is a certain minimum income when he qualifies…
Never mind. I accept the fact that an idiot can think that I earn only $100 when I am in qualification for F. Platinum, even if it is mathematically impossible. I am not going to spend my life trying to convince an idiot that he is wrong. It’s up to you, JC – if you consider yourself an idiot, keep thinking that I earn only $100.
Joe, David, S., do you recall the tale of the three blind men and the elephant?
We all have different experiences with the same subject. In this case, Amway. You are all correct from your different views.
During my 40+ years in the business I have both made and “lost” money. However, I am richer for the experiences.
Amway is different things to different people. And, it is not for everyone. Those that “got in” because they thought they could get “something for nothing” don’t last very long. They are frequently the most vocal complainers.
Discussion is good, as long as we keep it civil.
Hi 😀
We all understand the article. Except for JC. He seems to be the only one blind here. 🙂
I know what you mean but I was taught to call a spade a spade.
JC: You probably haven’t noticed that (the reason for this is stated above, so I am not surprised at all), but Amway DID publish the income statements based on categories. Amway did so for US in the past, and they publish it regularly for Japanese, Eastern and Western Europe markets (see Amway Wiki). And there IS a big difference between these figures and the one for all distributors! How can you be so ignorant???!!!
And one more thing: I always tried to earn more than I spent. That’s why I was selling the products from the very beginning where the most income came from retail selling. And I still do. But you talked about Platinums and Diamonds who lose money. Keep dreaming, maybe you will find another one… 😀
None of this discussion proves that more than 1% of IBO’s in Amway are profitable.
JC, your logic or lack there of is disappointing. How can you expect an IBO “prove that more than 1% of IBO’s in Amway are profitable”?
If you include my cousin that I talked into the business last week and he quit this week, you may be correct in your assumption that less than 1% of people that ever got into Amway have made any money. (That was a hypothetical cousin!)
Perhaps you should set different parameters. That would certainly change the results in our favor.
Perhaps you might challenge Amway to produce some statistics that might possible satisfy your curiosity.
However, I suspect your mind is made up and no amount of facts is going to change it. Are you sincere, or not?
I’m sorry you had a bad experience. From what I have read, that was your fault, not Amway’s!
Being in one’s own business is not for everybody. If one gets in for the wrong reasons and won’t listen to reason, they are doomed to failure. Stop crying over spilled milk. Pick yourself up, dust your self off, and become a better person. You can do it!
JC: I agree that none of this discussion proves that more than 1% of IBO’s in Amway are profitable. Please, accept the fact that none of this discussion also proves that more than 99% of IBO’s in Amway are unprofitable. But it certainly proves that there IS a BIG, BIG FLAW when you say that 99% lose money based on the average income of IBOs. Understand?
I can only share my experiences, but again these are MY experiences. If your experience was that you spent $2,000 per month (or whatever it was) to run your business, I can only tell you that you were doing the business the wrong way and I doubt that your upline taught you to do so. But even if your upline taught you to do so, YOU are the one responsible for YOUR actions. YOU chose to do so and YOU did. Using common sense would tell you that it is wrong to spend more than you earn. This business has one of the LOWEST expenses that I know of and my experience is that you can cover your expenses by simply selling the products. If you were able to lose money here, be glad you didn’t start a traditional business. You would go bancrupt.
At 4000 PV with eagle parameters, you spent more on tools than you made? You must have had a 3500 PV leg and are a fast reader. Get real dude. Anyone who knows anything about the business doesn’t buy this BS. My guess is, and your posts continue to prove this, that you think you’re pretty smart and you don’t listen. I hope your upline found a decent human being to work with.
Me too. 🙂
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Well thought out. Excellent presentation. Looking forward to Part II.
It is now May 29 and I am still waiting. Funny how JC has disappeared! Maybe he had an epiphany.
Actually I blocked him from posting from his work computer. He shouldn’t be stealing their time. 🙂
😀 😀 😀
Says a lot about his honesty and credibility. He must have better things to do with his free, idle, non-productive time; at home. Glad to hear he can’t steal time from his employer to chat with us.
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