Despite the continuing insistence by distributors that "anyone who wants to go direct will," statistics from Amway's own documents show otherwise. In all discussions of how successful people can become, an individual's background is usually a non-issue. When you factor in a person's innate ability (or talent) for relating to people or being a salesman, do the statistics for that person change significantly? What about the fact that a person may already know a large number of people, the perfect "names list" for building the Amway business. And what if the person does not know many people? Yes, distributors claim that a person can use the tools to learn new skills, but how does this affect the person's chances for success in the business?
In the overnight pack, prospects are given a piece of literature called the SA-4400. The SA-4400 outlines the specific numbers behind Amway's sales and marketing plan. By disclosing the different incomes made by distributors at various levels in the Amway business, the average person should be able to estimate his own income and chances for success... provided he actually reads the "fine print."
In actuality, most distributors imply that those numbers can be all but ignored. The usual saying is "Those are just the legal numbers. I know people who are making much more [money]," (actual quote) or "Those are just the FTC numbers, don't worry about them." With all the positive information they have been quickly bombarded with (from a plan or even a meeting), most prospects never sit down to fully analyze what is right in front of them. If they do realize what the numbers actually say, most people won't question anything at all- they are convinced by the distributor that Amway is the way to have more free time and make more money.
According to the 1997 statistics:
(which apply to North American distributors ONLY and CAN NOT be applied to ALL distributors world-wide):
|1) 41% of all distributors are considered active|
|2) 2% of all active distributors, who sponsored other people, qualified for the Direct-level Distributor bonus**|
|3) 1.7% of all Direct-level Distributors qualified for the highest Diamond Direct award bonus|
|**Note: The SA-4400 states "The survey and company records show that approximately 3% of all "active" distributors who sponsor others and approximately 2% of all "active" distributors met Direct Distributor qualification requirements during the survey period."|
What do these mean, specifically?
1. First, what is an "active distributor?" Amway defines an active distributor as: "one who attempted to make a retail sale, or presented the Sales and Marketing Plan, or received bonus money, or attended a company or distributor meeting in [a given] month." Therefore, out of all the possible distributors in the entire Amway business, only 41% meet these criteria as being "active." This also means that 59% of all distributors are NOT active.
Ask yourself if you want to be involved with a business where over half of all the people aren't doing anything to increase their business.
2. A "Direct-level distributor" is a distributor who also meets criteria established by Amway, including the fact that the distributor has reached at least 7500PV and has sponsored other people. Therefore, only 2% of all the active distributors meet these criteria. That translates into 2% of 41% of ALL distributors which equals 2x41 divided by 100 or 0.82%. This means that out of ALL distributors, only 0.82% qualify as a Direct-level distributor. This also means that 99.18% of ALL distributors do not qualify as a Direct-level distributor. Why are all these people not Direct distributors? Are they lazy, lost their dream, or quitters, as well?
Again, ask yourself, would you want to be involved in a company where 99.18% of all the people who start building the business are not successful at it?
3. A "Diamond Direct distributor" is a distributor who meets the criteria established for the Diamond level, including the fact that he has sponsored 6 people who have reached the Direct Distributor level AND he himself qualifies for a leadership bonus. This level is considered one of the top, most successful levels in the Amway business. Out of all the Direct distributors in the business, only 1.7% qualify for the Diamond level. This means that out of ALL distributors, 1.7% of 0.82% are Diamond distributors. Therefore, 1.7x0.82 divided by 100, or 0.01394% of ALL distributors are Diamond distributors. This also means that 99.98606% (or 99.986% or 99.99%) of ALL distributors are NOT Diamond distributors. Continuing the same reasoning, does this statistic mean that 99.99% of ALL distributors are lazy, have lost their dream, or have quit building the business before reaching the Diamond level?
It has been claimed by some critics that since Amway does not release the number of distributors who actually received leadership bonuses (and therefore, the number of people who qualify as Diamonds distributors), there is no way of calculating the number of Diamond distributors. But, when deciding if the Amway business is a business worth pursuing, you do not need to know the number of people who are Diamonds, but the statistics for achieving that level.
Again, do you want to be involved with a business where virtually all the people who start to build the business do not reach the top levels?.
If you did the math and applied the percentages to the average number of people who attend a Free Enterprise function, what would those numbers look like?
|Active||41% of 100%||14,350|
|Direct distributors||2% of 41%||287|
|Diamond Distributors||1.7% of 2% of 41%||5|
|Therefore, the statistics would show that for 35,000 distributors at a Free Enterprise function, there are 5 potential Diamond Distributors (not including any Diamonds giving speeches).|
If you were to go to any of the meetings, you would probably hear the chant, "I'm going diamond, how 'bout you?". Everyone is chanting this, but in reality, 99.99% of those people will not "go diamond;" in fact, 99.18% of those people won't even "go direct." Will you be one of those people that does manage to "go diamond?" Yes, there is a chance that with enough hard work and determination, you could be the next Diamond Distributor. But, chances are more likely that you'll not become a Diamond.
To be fair, these statistics are a more specific version of the statistics of the MLM business itself- there are a few top distributors at the highest success level, while there are many, many more distributors who are not successful. These statistics only reflect the 1997 North American distributor population and will change over time. Also, keep in mind that these are only statistics on paper. Of course, Amway itself has developed these statistics. This is a corporation who has done almost 40 years of social study and application of MLM principles. A corporation whose statistics about contacting people vs. showing the plan vs. sponsoring people can be statistically proven with almost every distributor. Are Amway's statistics reliable? Ask them. After 40 years, they should have this business down to a science.
There have been numerous mathematical models which show how MLM business will grow so large, that within a number of years, the number of people in the business will exceed the population of the planet. Of course, the MLM companies are quick to point out that this kind of saturation is only theoretical- no MLM company has yet to do this in reality. Rather than proving or disproving these studies, I will argue the point of "information saturation."
According to statistics in Amway, for every person you contact you will have X people who want to see the plan and then Y people who will become sponsored. (I don't know if the corporation itself has created these statistics or if the distributors have). To continue to build the business, you must also find people who are not in the "59% of distributors are inactive" group.
Now, per month: The statistics show that to sponsor 1 or 2 people who actively build the business, you have to sponsor at least 2 to 4 people. To sponsor 2 to 4 people, you have to show the plan to at least 15 people (this is called a go-getter). To show the plan to 15 people, you have to contact many, many more. How many more?
According to Diamond Distributors, (on average) for every 40 people you talk to:
Therefore, to get 10 people to sit down and see the plan, you have to talk to an average of 40 people. To get 15 people to see the plan, you would have to talk to at least 60 people. Remember, though, that this is PER MONTH. To get new people sponsored, you must continuously find new people to contact. And every new person you sponsor into the business must, in turn, repeat these numbers.
If you are the only person in a given geographic area who is contacting people, those numbers may not seem so bad. However, when you add in the fact that there are an unknown number of other distributors in the area, the number of people contacted in a given area increases. Add to this the "word-of-mouth" statement that claims "one person will tell 2 people something good that has happened, but will tell 10 people about something bad." This means that for every person who has seen the Amway plan, but did not become a distributor, he could have told anywhere from 2 to 10 people about the experience. If he did become a distributor himself, he would then go through his own names list. Adding to this is the fact that Amway itself has been around for almost 40 years. This means that for those 40 years: rumors, stories, gossip, and facts have been told from person to person. Therefore as more people are sponsored into the Amway business and more time passes, more people will have heard about the Amway opportunity. How many people is that? Calculating the spread of information about one company (or in this case, a business opportunity) over the population of the Earth, for over 40 years is left to social scientists. Suffice to say, there is a very high probability that almost any given person has heard some piece of information about the Amway Corporation- whether it be good, bad, or neutral. And with new sources of information, such as the Internet, becoming more accessible, the chances of people learning about Amway dramatically increase.
The conclusion, therefore, is: The typical distributor is no longer approaching people with a novel, unique way of making money. Rather, he is trying to overcome the person's beliefs and objections about the Amway business.
Ask yourself if you want to be involved with a business which has negative public opinion, whether justified or not. (Why is it that distributors don't walk up to people and say "Hey, want to build an Amway business"? By now, they HAVE to use the "curiosity approach" to get people to see the plan.)
When showing the sales & marketing plan, many distributors tell new prospects that in 3-12 months, working 8-10 hours a week, you can make about $2,100 a month (the Direct distributor level). Also working that same 8-10 hours a week, you can build an income of $72,000-$150,000 in the next 2-5 years (most likely, the Diamond level). How accurate is this in reality? (Let me start by saying that in an 1982 interview on the TV program "60 Minutes", Amway co-founder Rich DeVos would not comment on whether the "work 8-10 a week and make $2,000 a month" claimed by distributors was realistic. Additionally, I have heard that, in the January 1998 issue of the Amagram, the Corporation "... informed distributors that they are [underestimating] the amount of time it takes to build the business and to refrain from [making those statements].")
First, the numbers shown in the plan (again, found in the SA-4400) are estimates based on Amway's own model of sponsoring. Their model states that to be a Direct, you should sponsor 6 people who sponsor 4 people who sponsor 2 people. Upon closer reading, only 1 in 45 people (or 2.22%) of all Directs have actually built their business according to this model. And as such, only 2.22% will receive bonuses described in the SA-4400. How does this relate to the amount of time it takes to build a business to the Direct level? There is no specific relation, but if the numbers shown in the SA-4400 only apply to 2.22% of all distributors, then does working the 8-10 hours a week (claimed by distributors) apply to the other 97.78% of prospects? Keep in mind, though, that the SA-4400 makes NO mention of the amount of time it will take a distributor to reach any level in the business.
When confronted with this information, most distributors will be quick to say that there are two "starting points" for people- the time they "break a kit" and the time they "get serious." How long between those two points? It depends on the person. Some people get into the business and sponsor people that night, while others take months or years to start sponsoring. Spending 8-10 hours per week working to build the business shows that you are "serious" about it, but even so, when exactly does the 2-5 year estimate start? Also, do you count "false starts," a time when someone is serious for a month or two, then does nothing?
How realistic is working 8-10 hours a week for the next 2-5 years to become a Diamond? Obviously, working the less amount of 8 hours will not get you to that level in 2 years. But how much time will? If we assume 8-10 hours a week equals 32-40 hours a month, here is a breakdown: (The numbers I will use are "averages," some meetings may take longer, some may be shorter.)
|Activity||Hours (per month)||Total Hours per month||Averaged total hours per week|
|Show the plan. Figure on at least 15 plans, 1 hour for the plan, 1/2 hour for a follow-up. 15 x 1.5 hours||22.5||22.5||5.625|
|Going to Open Meetings twice a month, at 2 hours a meeting.||4||26.5||6.625|
|Going to a seminar or rally once a month, at 4 hours a meeting.||4||30.5||7.625|
|Tool pickup and product pickup (some groups may not have) and any paperwork. Figure 1/2 hour a week to be conservative.||2||32.5||8.125|
|Already, we are up to the minimum range of 8 hours a week. If we continue...|
|Travel time to and from showing plans and meetings. Figure 1/2 hour for each. 15 plans, 2 opens, 1 seminar/ rally =18.||9||41.5||10.375|
|We have now come to the maximum range of 10 hours a week, but let's continue...|
|Telephone time: setting up meetings, placing orders, advice from upline, advice to downline: at least 1 hour a week (maybe less, maybe more).||4||45.5||11.375|
According to these numbers, a person should expect to spend an average of 11.38 hours a week building the business. Keep in mind that this is a very low-end average, and more hours will probably be required if you want to "build big". Also, keep in mind that this estimate does not include the 4 major functions per year; each taking up one entire weekend (about 72 hours or more).
Can a person realistically become a Direct in 3-12 months? In every group, there is always the "star distributor" who has done it in 1 or 2 months. For every one person who builds that fast, how many don't? If you look over the statistics, 99.16% of distributors have not even reached that level at all! In my opinion, I believe that the 3-12 months is a "reverse statistic." Rather than gauge the length of time it takes a distributor to become a Direct and average those times, I believe a survey was taken of all the Directs about how much time it took them. This number was then averaged to be 3-12 months, and then included into the plan- giving the impression that anyone who worked the 8-10 hours a week, would be a Direct in 3-12 months. Are these numbers then illegal? Not according to the Federal Trade Commission (FTC) since SOMEONE has done it. Are the numbers deceptive or misleading? Possibly. But, when distributors tell you these numbers and then talk about all the Directs they personally know that did it in less than 12 month's time (sometimes less than 3 months), it does change a prospect's impression (which is very difficult to accurately measure).
Distributors are also fond of stating that they are approaching people about a "new" Amway business. This is a business that is different because, "they haven't heard it from me yet." (actual distributor quote)
Exactly how different is this "new" Amway from the "old" Amway? And when exactly was the "old" Amway? Last year? Ten years ago? Twenty years ago? For the sake of this argument, I will compare the new Amway of "now" with the old Amway of twenty years ago. Please note that this table does not include any characteristics of Amway's online "sister company," Quixtar.
|Characteristic||old Amway||new Amway||Do you need to be sponsored into the Amway business?||Yes||Yes|
|Do you have to sponsor people to build a big business?||Yes||Yes|
|Can you order catalog products using an 800 number?||Yes||Yes|
|Can you order warehouse products directly from Amway?||Only if you were a warehouse-authorized distributor (usually only directs).||Yes|
|How do you get most of your products?||You must go through the line of sponsorship/ product pickup at your sponsor's home.||Most items can be shipped from an RDC/ Service Center.|
|What about bonus checks?||Paid down line of sponsorship/ you get a bonus check from your sponsor.||Paid directly from Amway (in most groups).|
|How many different companies' products are available through the catalogs?||More than 1,000.||More than 2,000.|
|Are tools highly encouraged?||Yes||Yes|
|What are the audio tapes about?||Some people tell their story, some people teach.||Some people tell their story, some people teach.|
|What about ARP||Nobody is on it. It won't be invented until the 1990's.||Some groups are on it, some groups are not.|
|Therefore, the difference between the "old" and "new" amounts to little more than Amway taking more control of products and payment of bonus checks to alleviate paperwork difficulties.|
Are these changes significant enough for a distributor to say that he has a "new Amway" for you to look at? The principles have not changed at all! If you want to be successful, you must still talk to people about the business and then sponsor them. Yes, there are no more door-to-door soap salesmen, but keep in mind, that distributors stopped doing that since the 1960's-- over 30 years ago! So, what is the "new" Amway business? Could it be a shift from moving products to moving tools?