The New Plan

The main theme of my site is to point out the mathematically assured profitability problems of the 100PV business model. and its negative sum game possibilities. Because of the low sales volume per distributor (55-65PV) and the typical $1,000-$3,000 yearly overhead costs it is easy for distributors to spend more on average than they earn on average. The only way to make money on average is to increase their low sales volume per distributor. The only way to increase sales per distributor is to have more sales to non-distributor customers. Here is my New Plan to make AmQuix a positive sum game and a much better opportunity for all.

"You have opened my eyes to many facts that you completely spelled out for me. Including the break down of the 6-4-2 plan, and how if you do not incorporate a large percentage, and focus on a large percentage, on retail. You will only remain in the red unless you sponsor and teach many others how to go in the red too." IBO Site Visitor

Business Fundamentals:

Based upon the maximum performance bonus of 25% of BV, and no retail sales markup, each distributor would need at least four times in BV of what the distributor spends on the business to have someone rcoup in basic 25% bonus.   Assume the average yearly expenses of an active IBO are $3,000. This means the IBO would need at least 12,000 BV (3000/25%) per year to generate enough performance bonuses to pay for the businesses expenses. Each IBO would need 1000 BV/month, or 500PV/month to break even on average with $3,00/year in expenses. $2,400 in expenses would imply 800BV/month or 400PV/month to break even.  An IBO doing 1,000 BV per month will however not qualify for the 25% bonus level and would not actually break even.. The sales would generate for the group however that level of income.  

IBOs need non-distributor sales (members and clients) to avoid the losing money on average (the negative sum game). Sales to non-distributors are also needed to meet the FTC requirements to avoid being classified as a pyramid scheme. The main problem today is that there is no active enforcement of the retail sales rule. With no active enforcement of the rules there is an easy temptation to just network the business. It only makes sense to have an enforced retail sales rule, which requires a much greater level of retail sales before a performance bonus is paid. This will provide IBOs with the incentive to focus on building profitable sales businesses and not an illegal pyramided buying club.

With the advent of the Quixtar "Member" status their is little possibility of earning the Amway suggested retail markup anymore. If the prices included the suggested retail markup they would be very uncompetitive.

Changes are needed to reward the IBO for the time and effort needed to attract plain customers (members and clients). These customers are the ones who will provide the gross profit so that more IBOs can be profitable. A new IBO would have little incentive to recruit a member when that member will pay him only 3% of BV. It is no wonder most groups focused on recruiting IBOs when the profit to an IBO is so low.

In order to encourage sales to non-distributors I would modify the business structure in the following ways to encourage a more profitable mix of retailing and networking.

The New Plan

  1. There would be two types of compensation for non-platinum IBOs:
    1. A retailing commission, from members and clients, amounting to 20% BV. This would be paid to the recruiting IBO regardless of total IBO volume. This BV and PV would be termed Retail-BV/PV (Rbv and Rpv). Every 5 Rbv and Rpv adds one point to the personal BV and PV (Pbv and Ppv).
    2. The networking performance bonus starts at 3% requires 100 Ppv (personal + downline ) and requires at least 300Rpv to members and clients.

     

  2. There would be two types of IBOs. A "Sales IBO" or ISB (Independent Sales Business) and the more advanced "Broker" ISBB (Independent Sales Business-Broker).
    1. An ISB is allowed to prospect and sign up members and clients only. To qualify as an ISB the prospect must first be a member for three months and pass a Quixtar administered exam.
    2. The qualifying ISB above will earn $120/month from their 300 RPV of member/client volume. Additionally the 160Ppv at 3% yields $9/month for a total compensation of $129/month. The IBO in today's plan with 3-100PV recruits would earn only $30/month.

    3. A Broker, ISBB, is allowed to convert members to ISBs as well as sign up members and clients. To qualify as a Broker (ISBB), one must first be an ISB, and secondly have maintained a minimum of 300Rpv in sales for three months to personally sponsored members and clients. The ISB must pass a more detailed Quixtar administered Broker's IBO exam and always maintain 300Rpv to members and clients.

    The ISBB with the structure above would have 640 Ppv from the four downline ISBs and 160Ppv from his own business. This totals 800 PV and 1600 BV. This ISBB would get a performance bonus of $108 and a retail commission of $120 for a total of $228/month. A 800PV IBO with seven 100PV recruits would earn only $102/month with today's plan.

  3. The networking performance bonus is calculated on the personal PV and BV (Ppv and Pbv) just like today with today's bonus schedule. The Ppv and Pbv of each IBO is calculated by adding the portion from personal consumption and the portion due to retailing. The portion due to retailing is 1/5th of the retailed Rpv and Rbv.. For calculating bonuses, the total Ppv and Pbv is combined in the line of sponsorship just like the current sales and marketing plan. The power now is that each qualifying ISBB will have 160Ppv in the plan rather than 100PV with the old plan. With the New Plan the ISB only needs 40Ppv to get to the 3% bonus instead of 100PV.
  4. In all cases qualifying ISBs will earn more at any given point level than they did in the old plan. The additional revenue will come from introducing members and clients to the shopping benefits of Quixtar and not from recruiting more money losing distributors to the scheme. This plan will quickly determine if the Quixtar concept is a competitive way to distribute goods and services or if the AmQuix plan is nothing more than a pyramided buying club.

     

  5. Regulations on BSM's:
    1. Members are allowed to buy only special BSM's targeted on product knowledge and is limited to $200 in total expenses. This helps minimize their expenditures on the business while building product knowledge first. Members are not allowed to attend functions. These BSMs must be fully refundable in the first 120 days. The resale of opened BSMs at full cost is to be allowed.
    2. ISBs are allowed to purchase only BSMs targeted for selling techniques and strategies. These BSM's are also limited to a $200 package. ISBs can attend functions specifically related to selling.
    3. ISBBs are allowed to purchase any type of BSM and attend functions.

The New Plan has the following benefits:

"Moreover, satisfied customers are a warm market for potential future distributors. If an individual is familiar with a company's products through months or years of personal use, they will be more receptive to selling the product themselves. " The Personal Consumption Dilemma Messages from Webster v. Omnitition MLM Law Library

"You get your product knowledge that way from personal use. From believing in the products from using them. Once you get that down you will have no trouble wanting to share these products with 10 customers. Triple Diamond Ron Puryear Tape: Basics of the Business

"Also, in the 'Know­How Success Course', a training booklet used through 1974, sponsors are taught to test their recruits' knowledge of Amway policy with a quiz, which contains the following two questions (with their respective 'right' answers):" From the FTC report on Amway MLM Law Library

What do you think? Do you like this plan enough to post your name and pin at the bottom of this page endorsing it?

From Quixtar Distributor Relations:

My first reaction is that an IBO under the Larson Plan is working for Quixtar for a straight commission of 20%. They can earn an additional 3% based on undefined group totals and maybe an additional 5% based on some other undefined criteria. The minute I pull back to retire or take some time off, my income drops by a minimum of 70% and possibly more depending on the way the group is structured. Using this model, why would I want to sponsor any downline. The minute I do, I lose my 20%. Plus I can never step back because there isn't any group there. This eliminates the benefits of building a group and stabilizing volume income. You probably think that the only reason someone wants to build a group is to sell them BSMs, but the Plan rewords individuals (handsomely, I might add) for helping their downline groups grow. There have been many attempts over the years to find a "plan" that is like Quixtar, only better, and we're haven't seen one yet.

We're still the biggest and best, in my opinion, but we're always looking over our shoulder just in case. That's my take and I hope it helps, JHF

Hi Jamie,

Maybe I was incomplete in my plan and didn't point out the whole picture clear enough. The plan is exactly the same as today except each IBO needs the 300PV in retail sales to get a bonus.

Unless Quixtar is taking the position that retail sales are not important, or that IBOs don't need to be profitable on average, a 300PV retail sales goal is of prime importance. The business will most likely be a negative sum game until enough retail sales are brought in to cover the normal and customary system costs. I'm sorry but 50PV of retail sales is not jack and at 3% not many will do it. Just like today. Quixtar could easily police the member and client sales to get to the 300PV totals.

The point is that each IBO needs higher retail sales to make everyone on average, who collects a bonus and most likely spends money on the system, profitable. The 20% of PV on member and Client sales generates an incentive to sell it. Now you might think it will be tough to get 300PV in retail sales...But then again, I would hate to see Amway/Quixtar promoted a wholesale buying club, which of course is against the Quixtar rules anyway.

They can still build the same organizations they have now, just add members and clients. What is the issue with that? They will have even more residuals if each gets the retail sales! I would hate to think that you are implying 300PV is not possible since the products might not be competitively priced.

Actually the higher you get the less the 300PV even counts as a percentage of total income. All you have to do is make your 300PV and then network like today. If your retail sales fall off, then yes your income might drop, but hey, get some more customers. You need to add IBOs if personally sponsored people quit as well.

 

Scott

If all IBO's had 300 PV in M/C volume I would be one of the happiest guys in Ada. Doug DeVos would be happier, but that's another story. I feel that our commitment to M/C volume is clear in the way that the IMC model is structured. IMC has only been around for a year and I think it will take time to really click with active IBOs. Since entering the business is inexpensive, most folks after their first exposure decide to try the IBO route, and why not since they might fly with it. Over the next couple of years we'll see renewal patterns develop with inactive IBOs becoming members or dropping from our system. We will do all that we can to keep them in the fold and believe that the programs we have in place will accomplish that. IMC was launched in Japan last month and the response has been tremendous. So, we think that the IMC model is sound and will help IBOs develop non-IBO volume. Insightful leaders (like Greg D.) are always looking at different plan options to see if there might be a "better" way.

There is a ton of history and success with our "Plan" but you have to change with the times and we always do what we can to stay ahead of the curve.

JHF

 (the IMC model is Ibo- Member -Client)

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