The Rise & Fall of Amway in the UK and Republic of Ireland
|18 February 2008 (From Jerry Scriven's site)
We joined the business in 1982 and after a slow start for a couple of years the group began to develop considerable momentum. The business peaked in 1994 when there were four Diamonds and over twenty Emeralds in the IBS Organisation in the UK and Republic of Ireland. In one month the organisation broke 75 silvers. People were making money, Emeralds were retiring from work, and it was a really exciting time. In our naivety, we thought that the growth would never stop. Sadly we were wrong and from that point onwards the business went into decline.
What went wrong?
Of course it wasnt just one thing, there were a lot of things that happened around that time that contributed. At first we thought it was something that the IBS Organisation had done, but the downturn was universal, it affected every line of sponsorship in the UK. With the benefit of hindsight its clear what the main cause of the downturn was the 10,000PV plan.
Amway Europe had a new General Manager, Bruce Sharkland. He announced his priority was to produce a New European Plan. This probably made sense from an American perspective which saw Europe as one market roughly the same size as the United States. In reality it was a disaster. The standard of living and what people were willing to pay for household products varied drastically for the UK to Poland. This was before the days of the Euro and so the plan was very complicated with theoretical values for products multiplied by various currency conversion factors to price the products in pounds, marks, francs, pesetas and lire. It was a nightmare to explain. The prospects didnt understand it nor did the people explaining it. (Once again Amway Management telling us how to do something that they had never done or would never do some things do not change). The net result is people stopped showing the plan. The momentum stopped dead.
The goal posts had also been moved. Previously if your group produced 7000PV you reached the 21% level. Now you had to produce 10000PV. The Diamonds in the UK and Ireland were passionately against it but the new general manger for the UK, Dan Shuster, said we had no choice (why do they always bring in a new general manager to break the bad news?). See 1.
Despite reassurances that the effort index would not to be increased, it was. Three months later the PV and BV on the products were reduced. The combined affect of these changes were that a distributor who was at the 21% level one month, was at the 15% level a few months later, based on the same turnover of products. This meant that through no fault of their own, people fell out of Platinum qualification and as a knock-on effect out of Emerald and Diamond qualification. Naturally everyone tried to put a brave face on, but the momentum had now stopped and confidence was destroyed.
Over the years we tried to rebuild the momentum with a combination of hard work and innovation. We tried to engage with Amway management constructively for many years to increase IBO profitability. They listened, they made vague promises and look into it but nothing happened. Often we were told we should be working harder.
Finally, as we felt that we were being fobbed off by Amway UK and Amway Europe management Pat Gregory and I decided we would have to take the matter to Amway Senior Management in Ada Michigan. We compiled a report Saving Amway in Europe (See 2) which we intended to present to the IBOA (Independent Business Owner Association) board. Unfortunately, at the last minute Pat couldnt make it, so I ended up presenting it on my own.
I had a meeting with the International Committee of the IBOA which comprised (IBO Leaders) Don Held, Tim Foley and Kanti Gala and (corporate staff) John Brockman and Paul Cunningham. I explained that I thought that the Amway business in Europe, and in the UK and Ireland in particular, were in danger of collapse due to poor IBO incomes.
I highlighted the stark decline in the business by comparing Amagram recognitions in 1994 (see 3) and 2002 (see 4). I explained that with increased costs, petrol (gas) and phone bills and decreasing incomes, net incomes in real terms had plummeted. I also highlighted the unfairness of the business, where an American IBO was consistently paid more for the same work as a European IBO. I showed comparisons for the sale of Dishdrops (see 5), Glister (see 6), LOC Plus (see 7) Artistry (see 8) and Nutrilite (see 9). The response to this point said with a hint of irony was what did you expect, we are an American company?
The distributors in the committee seemed shocked and generally sympathetic, the corporate staff polite but non-committal. Nonetheless I left Ada thinking I had made my points and was taken seriously. I felt the issue had been raised at the highest level and now something would be done about it.
I was sadly disappointed months later when I got a response from John Brockman which in essence disputed the facts that I had produced and denied the problem. Sadly Ive lost this letter, but you can get a good idea of its content by my response to it (see 10).
Over the years I (and others) continued to lobby at Diamond meetings for more money in the plan. This wasnt just because what IBOs were getting wasnt fair, it was because it would be a better business and it would grow again. The management were in denial. There was no problem; IBOs just needed to work harder. Eventually I was barred from Diamond meetings for being a disruptive influence (true I suppose, if politely drawing attention to awkward issues is disruptive). Could it be that this outspokenness is a contributory factory to over unjustified termination? According to Amways co-ordinator Simon Dobson it was. Finally, Amway is looking seriously into the issue of distributor profitability. I would love to take credit and think that my lobbying finally paid off. I think, however, the credit probably belong to the DTIs attempt to get Amway UK closed down. Their main issue (dont believe Amway red herrings about tools) IBO PROFITABILITY.