The System Part II

Usually when other sites criticize the system they speculate, or make accusations without proof. Well, there will be none of that here! My wife and I have lived it; and we can prove it!

Considering the fact that I was 11 when much of this stuff was going on, I was oblivious to it. The first time I ever heard the word "Amway®" was when I saw the Amway® Sales & Marketing Plan. I suspect the same is true for many others. Not only did I not know a thing about Amway®, I had no idea that so much of the income was coming from the system for many of Amway®'s top distributors.

Much of my realization of what was wrong began when I submitted a document that I had written to be approved by Amway®’s legal department. This document, called "The Bookwork", was a 100+ page document detailing many of our business and prospecting methods. My upline had been producing a similar tool also called The Bookwork for years. Their version consisted of a one inch binder with some Xeroxed copies, dividers, and some black construction paper covered with plastic that no one ever figured out the use for. They sold thousands and thousands of these, and undoubtedly had a cost on them well under five dollars each. Yet, they continued to sell them to the masses for twenty dollars each. By the way, the purpose of this notebook was to have a place to put your Distributor Order Forms (DOF’s) or invoices (this was my upline's equivalent to Amway®'s SA-1). It bothered me to see them charge so much for it. In an effort to correct the situation, I first attempted to question the upline as to why were they selling such a poor product at such a high price. I was given the usual responses like, "What are you worried about? I built my business to Diamond with that tool--it should be good enough for you." "If there was a better way, that is the way we would be doing it! After you go Diamond, you can change it"; or "Instead of trying to re-invent the wheel, why don't you spend more time developing your business?" Here is a typical response from my upline Crown, Kenny Stewart. Click here for audio.

It didn't take too long before I decided to make my own Bookwork that would have twenty dollars worth of information in it. It took about a year to develop, and included a 130+ page document that I wrote with information on banking, taxation, administration, ordering, and many of the procedures my upline had taught me during the previous seven years. My cost on each one was right at twenty dollars. However, cost was not my concern; I wanted a tool to be available to my organization that would actually be useful.

My upline eventually got word of what I was doing, and they were less than excited. While it was not a surprise that they were upset, I could have never imagined just how upset they would be. First, my upline Diamond told me that I didn't have the right to make my own tool because the upline had already produced one like it. Later, another Diamond (who serves on the ADA Board), told me I had to get it approved by my Upline Executive Diamond. When I finally called Amway®, I found out that I had every right to produce a tool, but I would need to get the content reviewed by Amway® if it was distributed to prospects or if it dealt with any prospecting methods. So, I sent it in.

Months later, I received the document back from Amway®. They had highlighted all of the tools and procedures that were opposed to the rules set forth for distributors by the Amway® Corporation. I sent the document on white paper, and it returned to me on yellow (highlighted) paper. I sent them 136 pages, they sent me a 22 page letter outlining all of the procedures in my document that they claimed were in violation of the Amway® rules of conduct.

To use a phrase from my upline, I was dumbfounded by Amway®'s review of my Bookwork! How could I be in a business for so many years and not be aware of some of the basic rules of conduct? The answer is simple. First, I got into business with a good friend, whom I respected. The people I met in my upline were courteous as well. No one in my upline had given me any reason not to trust them. Furthermore, at the age of 18, my critical mind had yet to develop. Because I trusted my upline, there was no reason to question. So, when my upline told me not to contact Amway® when I had questions, I believed them.

Unfortunately, I wasn't recording my conversations and voice mails during this time, but here is my recollection of the reasons I was given not to talk to Amway®, except when placing my order for products. One was that Amway® couldn't understand my business as well as my upline did. By working with me and my downline, the upline would gain a keen insight to my business that Amway® wouldn't have. Another was that Amway® wasn't going to come to Texas and show any plans for me. I was told that Amway® would always supply the technically correct answer, but it wouldn't always be the best one for my business. Besides, is some guy up in Michigan, who has never met you, going to be able to give you information on how to build your business by looking at his computer screen? Consequently, when my upline told me to show the plan using the Profiles of Success, that was all I needed to hear.

Additionally, I was a product of my environment. The tools promoted other tools. Now, some will acknowledge that this may have been the policy many years ago, but things are different now. Here are some excerpts from a recent Book of the Month, American Victory--The Real Story of Today's Amway® by Shad Helmstetter, Ph.D.

(excerpt from rule 1) Imagine walking up to the president of any large successful corporation and saying, "Excuse me, would you loan me all of your experience? Would you mind spending hours and hours teaching me and training me and telling me all of your secrets so I can be successful just like you?" He would probably look at you strangely, shake his head, and walk away--or call security to escort you out. Meanwhile, your Amway® leaders are lining up to help you. And they're a whole lot bigger and more successful than most of those company presidents will ever be. The tools give you the knowledge. Without it, you cannot succeed.

(excerpt from rule 2) The distributors that excel most naturally are always the distributors who have made a habit of using tools. They read something from a recommended book some time each day. They listen to tapes as a way of life. They don't even have to question whether they will use a tool that day. The habit is automatic. Why would they even consider not gaining knowledge or motivation that day? That would be like not eating or not breathing.

(excerpt from rule 3) If you ever think twice about whether or not to invest in a tool, ask yourself this: "What am I worth?" If your answer is that you're worth a lot, then go ahead--acquire the tool and put it to use. If, on the other hand, you ask yourself the question, "What am I worth?" and your answer is that you're not worth the investment, them immediately acquire the tool. You need it more than anyone.

(excerpts from rule 4) The books, the cassette tapes, the videos, and the other materials you have available to you right now can change your entire life. If you use them in the right way, they will also change the lives of the people around you--especially your family. That's not a simple hope or wish for you; it's a fact.

(excerpt from rule 5) If you respect yourself, then you must certainly respect your own future. After all, your future is you, and who you will be, soon. The knowledge contained in those books and tapes and materials is knowledge that will become a part of you. Since the tools become a part of you, if you care about yourself, you'll care about the tools.

(excerpts from rule 6) Professionals surround themselves with the equipment they need to be successful: Successful astronauts have complicated control panels and the best equipment available. Successful chemists have the best equipped laboratories money can buy. Successful marketers have endless focus groups and the best research consultants. Successful accountants use the best computer programs available. And successful Amway® Distributors have the best, state-of-the-art, business development tools the industry has to offer...The tools you use in any business should require some investment on your part. It takes $10,000 to $20,000 annual tuition to attend many universities these days, and most professionals add thousands of dollars to their investment in ongoing training. Whatever your investment in your business tools is, consider yourself fortunate. By any comparison, you're coming out ahead. Anyone who doesn't recognize that you're getting a lot for putting in very little, has never had to pay for going through medical school.

WHAT TO DO: Get out the tool list and take a new look. Check off every new tool you'd like to have if someone gave it to you. Then divide the list into two categories: tools to get right now, and tools to get next.

(excerpts from Chapter 6--THE IMPORTANCE OF SEMINARS AND FUNCTIONS) WHAT TO DO: 1. Make the commitment. Start seeing seminars and functions as essential steps in your Amway® business career. 2. Take every function or seminar seriously. They may be fun, but their lasting benefits are important and serious. 3. Never make excuses about why you can't attend. Spend the same amount of time working on your plan to get there. 4. Get out your planner and schedule every available event during the next twelve months. Then go.

It's a never ending cycle; the system promotes the system. Still skeptical? Listen to some recent messages that were sent out via voice mail promoting the tools.

Just a footnote, the quotes from these two Emerald ladies are intended to demonstrate the cycle, and are not intended to denegrate them in any way. Along with myself, they were taught from day one the importance of the system. However, they are not the architects of the system, rather, they are well-intentioned individuals repeating what they have been taught and believe (they are two of the nicest ladies you would ever meet.) Also, about 2 years ago, I stopped passing out many of these messages to my downline. So my upline went around me and started giving them directly to my group. I'm sure by now you can see the emphasis that is put on tools by my upline. This brings us to the next question, Why was I taught policies that were contrary to Amway®'s rules of conduct? Once again, it is my speculation that the primary reason so much emphasis is put on tools by the highest pins is because the tools are the primary source of income of these pins.

There are probably Amway® organizations out there without systems. Certainly, the majority of Amway® has them. The system is not owned or operated by Amway®. It is owned and operated by Amway® distributors. There are many systems out there. The main one that we deal with is "Internet Services Corporation" run by Dexter Yager and his family. Within that umbrella, there are countless other tool manufacturing and distributing companies. In addition, there are many systems outside of the Yager organization.

When you, as a prospect, first look at the Amway® Sales and Marketing Plan you are shown a simple set of numbers that goes something like this: You become a distributor; you find six people who want to become distributors; they each find four people, and they in turn each find two. To an Amway® distributor, the numbers 6-4-2 are common ones. (Some organizations use 9-4-2.) All of these 79 people, or households, purchase 100 points, or 200 dollars, worth of products and services each month. This creates a volume of products and services from which all bonuses flow. Assuming all of these people buy a couple hundred dollars of stuff each month, you will have a volume of a Direct Distributor. Click here for audio by Diamond Shelli Hellinghausen, "We've GOT to get people disciplined doing weekly orders-and-ya know-I don't know how many of y'all got your greensheet and looked at how few people in your organization actually do like a hundred PV-It's pretty shocking..."

When you help three people become a Direct, you are an Emerald. Help six, and you’re a Diamond. You may be told that a Direct makes $2000 a month, an Emerald makes a minimum of $60,000 a year, and a Diamond makes $115,000 a year. I have made less than that as an Emerald from Amway®.

You have probably been shown a book called the Profiles of Success. As you may have read, the Profiles of Success is not approved by Amway® for use with new prospects. This fact doesn't stop the large distributors from selling them for around $30.00 and promoting their use with new prospects. Anyway, this book is made up of Diamonds in the Amway® business, and depicts absolutely incredible lifestyles. There are also a series of Diamond lifestyle videos available. The point is, after watching and reading this information it becomes obvious that these people are making a bit more than $115,000 a year! Many of them have single pieces of jewelry that look to be more expensive than that.

The lifestyles of these Diamonds include mansions, Ferraris, Lamborghinis, huge diamonds, airplanes, custom motor coaches, etc. In addition it is said that these people pay cash for almost everything, and have no boss, no job and are full-time moms and dads. They have full-time nannies and maids also. This obviously represents more than a $115,000 yearly income. Why doesn’t Amway® publicize the incredible incomes of Amway® distributors? Why are they so concerned about Diamond lifestyles being represented?

It is my opinion that Amway® doesn’t want Diamond lifestyles portrayed because they know a large portion of many of these lifestyles is coming from non-Amway® income. This income is created by methods which are not spelled out in the Amway® Sales and Marketing Plan. You won’t see this plan until you go Emerald and beyond. It is coming from the system. Ironically, the system is touted as the only way to all of these riches. Click here for audio by Diamond Ron Rummel.

If you are not familiar with the world of Amway®, you are probably wondering what the big deal is about that. Let me explain. Upon entering the world of Amway® you are told of the importance of the system. You need to buy two cassette tapes every week. Click here for audio by Crown Kenny Stewart. These are called the Standing Order Tape (SOT) and Go Getter Tape (GG). They are six dollars each. There is also sales tax and handling, bringing this first purchase to about $54.00 a month for my particular organization.

There is also a Book of the Month (BOM) that sells at around $10.00 a month.

There are various other "tools" that you are told are crucial to your success. Various videos, cassettes, brochures, books, and you name it. There is an endless supply of new tools. Click here for audio by Diamond Ron Rummel. You are told that if you don’t order extra tools above the SOT and GG you are not serious. It is a conservative estimate that a distributor will spend another hundred dollars or more each month on additional tools.

There is also an open meeting that you have to attend at least once a month. This will cost you $8.00 a couple. We will be kind and not add the cost for babysitters and coffee afterwards. You are told to go to coffee after the meeting to have what they call "the meeting after the meeting." This is where you build relationships.Click here for audio by Diamond Ron Rummel "...Any open meetings that are happening any training sessions anything that's going on right now that your upline Direct is promoting you need to be a part of it...".

There is also a monthly Rally for eight months out of the year. This will cost $40.00 per couple to attend. You guessed it- meeting after the meeting, but only if you’re committed. Click here for audio by Crown Kenny Stewart, "It's extremely important that you always have rally tickets available that you can sell to your people...".

Four months out of the year there are "Major Functions". These are weekends that are motivational with a splash of information. Three of them are "packages" that will cost you about $600.00 a couple. This includes hotel, meeting fees and some banquet meals. In addition, most people have to drive cross-country or fly to these functions. The locations vary from Dallas to Denver to St. Louis to Orlando and everywhere in between. Click here for audio by Crown Kenny Stewart, "...obviously everybody needs to be at dream weekend...". The meetings go from 9 a.m. to 2 a.m. or even later (earlier?) One of the major functions is not a package but a ticketed function. This function is held in Indianapolis, Memphis or other locations. The charge is around $200-$240 per couple. You pay for your own hotel, meals, transportation, etc. Click here for audio by Diamond Mike Collinsworth. In the proceeding audio clip, Mike explains that you need to be at a "Family Reunion" function in Denver in order to buy tickets for the Free Enterprise function in Atlanta. In addition, Mike says (as the Diamonds usually do) that the function will probably sell out. Furthermore, you are encouraged to have extra tickets on hand to sell to all the new people whom you are going to sponsor into the Amway® business. If you have an extra five to ten tickets when it comes time for Free Enterprise function, do you suppose you could sell them back if you haven't been able to talk anyone into going with you? Sorry Charlie- you are stuck with them. They won't buy them back. The last Free Enterprise function for our organization (Childers) was held in Atlanta at the Georgia Dome which seats about 75,000 people. There were about 25-35,000 people there. Does that sound like a sell-out risk?

You are told that you should show the plan "five and six nights a week," if you want to succeed.

You are also told to "get out of town." You should travel on the weekends to build your Amway® business. You are told that if you’re not putting 50,000 miles a year on your car you’re not serious about being a successful distributor. Click here for audio by Diamond Ron Rummel. At every monthly Rally there is a contest to see who drove the farthest to get there. It is not uncommon to see someone drive 500-1000 miles one way, and this is recognized and highly praised.

This is a conservative estimate of all money spent outside of Amway® products and services. In other words, this money goes into the system.

I had the pleasure of seeing and hearing Rich DeVos in Fort Worth Texas in 1994. He was promoting his book and video series, Compassionate Capitalism. Lest you get the wrong idea, all proceeds went to charity. It was here that I heard part of his story about starting the Amway® business. His father had never attained financial success of any kind, but he was a hard worker. Rich wanted this business to be something that anyone could do. Anyone could buy a starter kit for a hundred bucks or so and have the right to go out and work hard to succeed. This was apparently a central part of the philosophy behind Amway®. One of the things that has disturbed me is the apparent shift toward larger costs involved in being an Amway® distributor. In my opinion, It seems to have gone from a business for anyone to something only for those who can afford it.

The above estimate does not include a babysitting figure. Many Amway® distributors will tell you their babysitters are getting rich! I think the most conservative figure is the transportation. If you are buying plane tickets and gas it would be easy to spend 10-20 thousand dollars in a year. Click here for audio by Crown Kenny Stewart, "...I think right now is the most important time ever to make sure that you have a library in your trunk of story tapes".

In addition there are promotions, Men's and Women's retreats, Attitude Sessions, Product Fairs, Directs retreats, Artistic Color functions and social activities. Some you have to qualify for by sponsoring a new person or showing the plan a certain amount of times each month. Most of them you just have to show up for. They all cost money. Click here for audio by Diamond Rick Maxwell, "...I wanna "employ" (I think he means implore) you-those of you in the Texas area that are getting this message-those of you in outlying areas-uhh-Chicago-Cleveland-plug into your regional rally-get there make the most of it-this is a critical, critical month for you and for your people-I'll tell you what-functions are just the key..."

You may be asking yourself, why would someone spend all that money? Please remember the Profiles of Success and the incredible lifestyles represented. People are willing to do a lot to have a chance to get out from under the mountains of debt and stressful lives they live. For many, this may seem like the only chance to escape. Click here for audio by Diamond Marc Hellinghausen.

Some of you may be saying "big deal", so they spend ten-twenty grand a year. There are many businesses where annual expenses are more than that. Here is the problem as I see it. The system is portrayed as the only hope of accomplishing this wealth and freedom that is constantly spotlighted. There is no way to explain how much that point is drilled in. You are told when your group is ordering 50+ SOTs & GGs each week you will be a Direct (that’s 400+tapes a month!). You are told when you are consistently bringing 50 or more people to functions you'll be a Direct. You are told never to focus on your Business Volume or PV; just count your tapes and function attendance, and the PV will follow. You are told the system will make you a better person, Christian, parent. You are told that you must attend all functions that are promoted by your upline. Click here for audio by Diamond Ron Rummel. You must listen to at least one tape a day. You are told that tapes are like oxygen and without them you’ll die (in the business of course.) This is a constant message that is reinforced on every tape and from every speaker. Click here for audio by Diamond Ron Rummel.

It is my belief that a large portion of the Diamond’s income is in the form of profit from the system. Sort of a twisted catch 22 which goes like this: If you want to be like me (successful) you need to commit to the system. Click here for audio by Diamond Ron Rummel. Meanwhile a lot of money is made because so many do commit to the system.

Occasionally, a smart distributor will notice that there are 15,000 people in the room and ask the tough question, "If we all paid $2-300 each to be here, is there any profit left over?" First, let me give you the honest and correct answer. Yes, there is almost always a profit left over. I have never seen a major function in 6 years that hasn’t had a profit. In fact there is a lot of money left over. The Emeralds and Diamonds split it up. As an Emerald I usually get 2-3 thousand dollars from a weekend function. Emeralds are not privy to how much the Diamond bonuses are, but we have all been told many times, the real money is at Diamond. The structure from which we split up the pot is very organized. As an Emerald, I receive about $10 per person. I’m guessing the Diamond bonus would be $20-50 per person. That’s the simple answer; we’ll get more detailed later!

Now, let me tell you the answer I have been taught by my upline to that question. "Well George, occasionally there is some money left over. We put that money into a pool, and then when there are functions that aren’t as successful as this one is, that expense is covered." This is a lie unless the pool is a swimming pool or maybe a motor coach. Another version of that is to tell George that many functions lose money. Not true. Recently, a couple of Diamonds had a meeting in Dallas. Each of these Diamonds spoke at this meeting. We heard later that the meeting lost money. Now we did the math, and we know what the facility costs to rent. The only reason there may have been a "technical loss" was because each of the speakers was paid $6000.00. These were the very people who put the meeting on. Seems more like creative accounting rather than a loss.

In the six years I have been running Rallies, I have seen a Rally lose money only one time. The following month that Rally joined up with another Rally, so that would never happen again. Functions don’t lose money.

So you may be asking, how could so many seemingly nice, Christian people be involved in something so deceitful? My opinion is that only a few are (deceitful that is!). Most of the people are just so busy not thinking, as they have been repeatedly taught in the system, that they haven’t realized it yet. To get a better understanding, please read the "So You Want to Be Your Own Boss?" section later.

In my opinion, the way people get sucked in is actually amazing. The tapes are full of these wonderful people who know exactly how to say all the right things. If you don’t believe me, ask an Amway® distributor to let you listen to some. They can make grown men cry. Better wait until you’ve read the entire site, though! Since the tapes are made at functions, guess what the speakers are talking about? Functions. So you keep hearing about these incredible life-changing functions. Then your upline starts working on you; "George and Mary, you’ve got to go to the function, it will change your life". The new distributor will probably say they don’t have the time or money. Here is a list of common comebacks Amway® distributors are taught:

Click here for audio by Emerald Phyllis Speck, "...If you're already broke- you may hear something at the function that will totally change your life..." You get the idea. Again, it is our belief that what’s so insidious is the Diamonds make a significant part of their income from the system. They are the ones teaching us to "promote, promote, promote." In stark contrast, Amway® products are rarely promoted with such zeal.

To be fair, attending a major function or even a rally can be a very moving experience. This is no accident. The Diamonds who run these functions know very well the formula to "touch" masses of people. If you haven’t been to one, it is easy to say, "I wouldn’t be sucked into that." I was, and many people are. Remember, most of the people in attendance at these functions are totally unaware of the profit motive. In fact, most of the people there are truly good, honest people. This only adds to the atmosphere.

Back to our example of George and Mary: We left off with George and Mary "plugging into the system." Let’s say George and Mary reach a level that few Distributors reach, Direct Distributor. This means that their organization is producing 7500 points each month in volume. The Sales and Marketing Plan assumes everyone does 100 points. So, for this example George and Mary have an organization made up of 75 households, which is no small task.

First, they have now earned the right to attend guess what, ANOTHER MAJOR FUNCTION! It’s called Go Diamond Weekend. It is another motivational weekend that will set them back well over a thousand dollars. In addition, they have now earned the right to come earlier to the functions and work the various positions that are required to put on a large convention. Remember, they paid their way in like everyone else but now they may, for example, drive a transportation van all weekend. This is one way the Diamonds keep the cost of these functions down and the profit up. They tell people over and over that it is an honor to serve their upline.

In the Sales and Marketing Plan, they would have sponsored 6 people personally. Remember 6-4-2? In real life they may have sponsored 2 or 50, but they have probably dwindled down to one or two legs that are producing. I mention this because it makes a huge difference to your profitability. A Direct with 10 legs could be making $2500 a month or more. A Direct with two legs would be lucky to be making $1500 a month. This is all before expenses, of course. Sticking with our very conservative estimate on expenditures, this couple would have spent around $1000 a month for at least a year or two before going Direct. There are people who have spent twice that amount on shipping costs alone. I know there are always the exceptions who went Direct in 30 days, but I will bet you that most of them don’t re-qualify as Directs. It has been my experience that many people don't re-qualify at their highest pin.

My point is, by the time they go Direct, they have spent some money. They are probably worse off than when they first saw the Amway® Sales and Marketing Plan. I have seen hundreds of people go Direct, many in my own organization, so I know from where I speak.

This is when they first find out there is money in the system. My secret talk came from one of my upline Directs at a Whataburger in Midland, Texas. The gist of the talk was this: "Well, Jeff, you’ve been working very hard to go Direct. (I was 19 at the time, and of course I wholeheartedly agreed!) You’ve put a lot of miles on your car, bought a lot of tools, many of which you gave out and didn’t get back. (Yes, this was all true.) We have a way to help compensate you for all that called "tape breaks". (At this point I was moving about 500 to 750 tapes a month through my organization.) Tapes cost (at that time) $5 a piece. We are going to give you 20 cents per tape as a bonus to help make up for some of the expenses you’ve had." He went on to tell me that Dexter Yager put money in the system to make up for the fact that there wasn’t enough money in the Amway® plan. He told me that this was a secret that you only found out about when you went Direct. I wasn’t to tell anyone. He told me this tape break was not a right but a privilege. This money should not be used to create a lifestyle but to help me give away more tapes and put gas in my car. It was implied that if I were ever not building the business, this "tape break" money would be taken away.

Just so those of you reading this understand, I was to continue to charge my people $5 per tape, but my upline was going to charge me $4.80. As I am writing this, it seems so obvious to me that the "tape break" was wrong. I didn’t see it that way at the time. The people in my upline had been so edified (deified) that I’m sure there wasn’t much they could have told me that I would have questioned. I suppose some of it had to do with the fact that I was 19 years old. But, I was an exception. Most people in Amway® are older. I remember thinking, "all right, I deserve that!"

Well, that’s how it all started. As I would reach a new level they would inform me of new "tape breaks" I qualified for. I have since become an Emerald and broken two Emeralds in depth. I will give you the tape break on a cassette tape up to the level I am privy to:

You may be thinking, what about production costs? Well, since the tapes are made at functions, that would be more accurately described as production profit! Also, Dexter’s corporation, Internet, has a web site where tape duplication services are advertised. You can easily get a tape duplicated from Internet for sixty cents apiece! They further report on their site the ability to duplicate 150,000 tapes per day.

I have had as many as 5000+ tapes a month going through my organization. We’re not talking small money for Emeralds. It is my belief that most Emeralds make approximately half of their income in Amway® from the system.

Remember, there are many other types of tools, including: Christian Standing Order Tape which is a sermon tape from one of my upline Diamonds' churches (Gee, we sell them at my church for $2, but through my upline they will cost you $6.50--yes, that's another weekly tape,) videos (50-100 different ones,) books, pamphlets, white boards and easels for showing the plan, etc. They all have "breaks" associated with them. For those of you who are curious, there is no Muslim, Buddhist, Jewish, or Atheist Standing Order Tape.

I would guess the larger profit per piece is on videos. Again, they are made at functions. They are then sold to distributors for about $17.00 each. People buy them by the dozens. We personally sell hundreds per month.

If you’re thinking, "wow that’s a lot of money from the sale of tapes," you ain’t seen nothin’ yet.

There is also a pot to be split up between Emeralds and Diamonds when it comes to functions. At the monthly Rallies, any Emerald or Diamond who has 25 or more people at any Rally gets a percentage of the profit. As I stated earlier, in my experience there is almost always a profit, or they re-combine Rallies. For example, the Stewart organization may have 20-30 rallies per month all over the country. To "participate" in the profit at any of them you have to have 25 or more people there. It is easy to make $1000.00 per Rally as an Emerald. Does it make more sense now that you are told over and over that you need to bring as many people as possible to the Rally? As a side note, for any of you who have ever attended a Rally, now you know why you fill out a piece of paper telling who your upline Emerald/ Diamond is.

Major functions work a bit differently. Emeralds and Diamonds are paid per person. As an Emerald, I get about $10 per person. I don’t know how much a Diamond gets, but I'll bet it’s a lot more than $10, because that’s the way everything in the system is set up. You get more per person/tape/video/whatever the higher your pin level.

This is a good time to interject some major differences between the Amway® Sales and Marketing plan, and the system "plan". In Amway®, as a new distributor let’s say I buy a box of Double X vitamins that cost about $37.00. I make a bonus from those vitamins, let’s say for our example $1.50. My sponsor would make maybe $3.00. My Direct would make the most from the sale, around $9.00. My Diamond would make the least, about 35 cents.

Now let’s look at a tape from the system. As a new distributor I buy a tape for $6.00. I make nothing; my sponsor makes nothing. My Direct makes 30 cents. My Emerald makes about a dollar and my Diamonds surely make more than that, let’s say $2.00. Does this seem backwards to you? Amway® set up their structure the way they did because the Directs are the ones helping you build your business. Therefore, they deserve the most bonus. When you go Direct, they make much less from your volume on the Amway® side. Because the masses of distributors don’t even know there is a profit structure in the system, they don’t have any say in how it’s split up.

Another difference: in Amway®, if a distributor passes you, i.e. goes Emerald before you do; it doesn’t effect your Amway® bonus in a major way. In the system, if I get passed up, I just lost a lot of money. For example, if I am an Emerald and I sponsor three Direct legs and one of those legs goes Diamond, then they pass me up. I no longer receive any system money from that leg. If I am an Emerald with three Diamond legs, I am out of luck for system money. You can probably see in the system how some people may have the tendency not to continue to help someone who is passing them. This same phenomenon doesn’t exist on the Amway® side.

Another difference, in Amway® when I qualify at a certain pin level, I receive the bonus for that pin. In the system, all I have to do is qualify one time at a pin level and I am in forever at that system bonus level. Revelation: many Emeralds and Diamonds in my line of sponsorship do not re-qualify at their pin level. They still receive the system money for the highest pin they have achieved.

That brings us to speaker’s fees. Here is the speaker fee schedule to the best of my knowledge: (I know they are correct up to Diamond as I have handed over checks to Diamonds for speaking fees while running Rallies and Attitude Sessions. The rest comes from a Diamond who mistakenly left the speaker fee schedule in plain sight).

This fee is per speaking engagement! Many "talks" take only a few hours. Just to reinforce the point, if I went Diamond in 1990 and never re-qualified, I would still make $6000.00 per engagement. There are many opportunities for Diamonds and above to speak per year. So, when you hear speakers say they could be anywhere and they chose to be with you, or they are there out of the goodness of their hearts, or they are there instead of at their daughter’s wedding because they believe in keeping their word, it may seem a bit more clear now!

There are also "Open Meetings" where the Sales and Marketing plan is shown at a hotel or meeting room. There are anywhere from 50 to 1000+ people in attendance. They pay four to five dollars per person to get in. This presentation usually takes an hour to an hour and a half. There are about one to two hundred of these meetings in the Stewart organization each month. In the entire Yager organization, there are thousands. I’m sure there are also thousands outside of the Yager organization. Here is our Open Meeting speaker’s fee schedule:

The "door" is defined as any money left over after the room is paid for. It is common to make $500-1000 and more for Emeralds and Diamonds. That’s cash in your hand that evening. Someone in charge of running the meeting, usually an Emerald, will secretly slip you an envelope after you are finished. A Diamond speaker would also be a much bigger draw; therefore they make more money. So the next time you hear a speaker say, "I could be at home tonight with my family, but I’ve chosen to be here with you," maybe it will be a bit clearer as to why!

The point will be made in the "So you Want to Be Your Own Boss?" section, but I’ll mention it here. If you are not doing what you are told, you are not permitted to do these speaking engagements. See, if you are an Amway® distributor, I just helped you make a lot of extra money when you go Direct and beyond!

Moving onto tapes. Currently, I am selling around 4000 tapes a month through my organization, along with many other tools from the system. The retail cost collectively to my distributor organization is about $50,000+ per month. This earns me about $2000.00+ per month in "tape breaks". Although it is certainly a guess on my part, I think it is easy to see that my Diamonds are easily making at least $10,000 per month from my groups' tools alone. Remember, my group is just one of many other groups within their group.

To sum up what I see wrong--if there is nothing wrong with the profits made from the system, why doesn’t the upline want anyone to know about it? When the Sales and Marketing plan is shown, why is nothing mentioned about the system income when it is a large source of income for the larger pins? The huge lifestyle is portrayed without the full explanation of how it is made. I think it is because if the average person knew the upline was making a fortune from the system, there would be two major repercussions. 1) The upline would no longer be able to promote the system so heavily. 2) The distributors wouldn’t participate so blindly or fervently in the system. Click here for audio by Sapphire John Davis, "All it takes is all you got." (That's the problem!)

Solutions

Now that the problem has been defined, here are what I believe to be some solutions. First, I think it important to acknowledge that the system has its merits. I believe that the use of the system--to a point--facilitates the building of an Amway® organization. I am not suggesting we throw the baby out with the bathwater and do away with the system altogether. I would also like to say that we do not see ourselves coming from a "holier than thou" perspective where we are the only voice of purity in a sea of corruption. Our motives are primarily pragmatic; by making some basic changes, Amway® could go a long way in improving this business opportunity for everyone.

Probably the most damaging thing of all, in our opinion, is the secrecy that surrounds the system. Why not make the profit structure of the system as well known as profit structure of the Amway® Sales & Marketing Plan? There are several ways to do accomplish this; probably the simplest would be to allow Amway® to handle the system-related items. Currently, Amway® handles thousands of products and services. Why not add some tools to that list?

Every organization has a source for tools. For example, the organization we are apart of gets the majority of its tools and functions from three sources. They are Internet Services Corporation, Gemstone, and Convention Planning (CPI.) Amway® could purchase these items directly from these vendors, put them in a separate catalog and sell them to the entire world of Amway®. A fair price for tapes would be $3.50 with 3.50 Business Volume attached, which would mean that everyone would be able to profit on the tape; and most important of all--it would not be a secret! By the way, it's not too complex to implement either. If Amway® can put together an appliance catalog, I think they could handle a BSM Catalog. With respect to the functions, if Amway® can handle booking travel arrangements on several major airlines, cruise lines, and hotels to distributors through their "Getaways" program--it's probably safe to say they could handle the functions as well.

It’s a complete win-win! The distributors who are making the tools won't lose their investment; as far as they are concerned, it will be business as usual. The only difference would be where they shipped the tools. The distributors would win because they would get an increased selection of tools, a cut in the price, and a bonus just like they get on products, not to mention the peace of mind because everything is out in the open. Amway® could also keep better tabs on what exactly is being distributed to the distributors. Somehow, I don't think Shad Helmstetter's book would make the cut. Lastly, it is a more equitable bonus structure; bonuses would be paid under the existing Amway® Sales & Marketing Plan. This is in contrast to the way it is now, where the Directs and above are the only ones profiting from the sale of tools. How long do you suppose the Amway® business would last if it were structured like many of the system businesses?

There are three reasons I can think of that would prevent the above from happening. The first is actually comical. Several years ago, Amway® made a deal with a company named Voice-Tel to provide a voice-messaging network for its distributors to use and sell. Of course, it was decided that no distributor could own a franchise because it would be a "conflict of interest." Therefore, it's possible the above tool example would not be allowed because it would be a "conflict of interest."

Another variable is the timeless paradigm of "if it ain't broke, don't fix it." Despite all the rhetoric, it is our experience that many large distributors only consider something to be a problem when faced with it. This is probably a symptom of living in a culture where it is acceptable to spend more money on medical treatment in the last few days of a person's life than was spent on prevention during the course of that person's entire life. By making you aware of some of our concerns, you can help enact change where you see it necessary.

The only other reason Amway® and the upline wouldn't go for it, in my opinion, is because it would drastically cut the profits of some of the higher pins. Just like in the early 1980's, these distributors with the largest tool businesses always seem to have strong representation on the ADA board. In my opinion, here is how they get there, Click here for audio by Crown Ambassador Dexter Yager. Every election that I can remember, we have been given a list of who the upline was voting for. Furthermore, I have yet to see anyone that we have been recommended to vote for not be elected. Because the change we propose above could not be approved without the support of the ADA Board, the chances aren't too great that it would ever come to pass. However, I am still holding out hope for term limitations in congress.

For the skeptical

Well, the thought has crossed our minds many times. In fact, little over a year ago, we started another business. That is part of the reason we are putting this site up. Because we are not completely dependent on Amway®-related income, we are in a better position to "rock the boat." This is not the case with many of our cross-line brethren, who are very concerned that we are considering letting the secret out of the bag. Our response is always, if there is nothing wrong with what we are doing, why not tell everyone? The typical response is, "They just wouldn't understand." (Unfortunately, they probably would…)

Question: If you are so repulsed by the system money, why do keep accepting it?

First of all, we are not repulsed by money. Remember, the reason for our proposed solution was to make more money for everyone (yes, everyone!) We do not view this as a zero-sum game. Here are some other options we considered: 1) We could go to the upline and talk them into changing things. Tried it for three years--didn’t work. 2) We could simply return the checks to our upline. All that would accomplish would be making the pockets of the upline fatter. 3) We could ask our upline to distribute the system money back to the people who spent it in our group OR charge all of our group our cost on tools. (Our group has been effectively removed from ordering directly from us at this point). There are two reasons we don’t believe this would work. A) We don’t think the upline would actually do it. B) Even if they did do it that would only take care of what we perceive as greed and secrecy in our own little organization. Keep in mind, we generate over $50,000.00 a month in non-Amway® produced sales for our upline.

Here’s a funny anecdote: All new distributors are encouraged to get a board and easel to show the plan on. All of a sudden, Amway® started making white boards and easels just like the ones available through the system business of the upline. I thought that since we were Amway® Distributors and get volume for things we buy through our Amway® business, the upline would want us to buy these items from Amway® (not to mention the fact that they were cheaper for the distributor.) Wrong! Our upline "suggested" it was best to buy them from the upline because we needed to see where the boards and easels were being ordered so we knew who was out showing the plan. Because you could get the same information from Amway®, it is my speculation that the reason was because the upline made more money from the ones they sold outside of Amway®. By the way, whatever happened to Amway®'s rule about distributors not selling items that are similar to items sold by Amway®? (I guess the items are different because the one the upline sells to us costs more!)

Question: If it's such a hopeless situation, why bother trying to change it?

We haven't thrown in the towel just yet. For as long as I can remember, every September I thought the Houston Oilers had a chance to win the Super Bowl; but no matter how good things looked, the Oilers managed to mess it up. This may be the case here; once we have exercised all our options maybe we will decide to "move the franchise". Until then, we plan on informing everyone with this web site and through the media. Click here for audio from 60 minutes. Between my wife and myself, we have been in the Amway® business for about 18 years. This is definitely a subject we are passionate about.

Some words of advice to you: If you are in this business or are considering joining, do some research on the system you are a part of (assuming there is one.) Ask about the profit structure. If your upline tells you it's none of your business--you can decide what to do from there. If they are describing the extravagant lifestyles of the higher pins, its not out of line to ask if the majority of the income comes from Amway® or the system. Your upline and Amway® might be quick to tell you that there is money made from the tools--if you ask. Why can't it be as talked about as openly as the Amway® Sales & Marketing Plan (particularly since, it is our belief that a good portion of the source of the lifestyle being portrayed isn't even mentioned in the plan?)

Amway® has stated that it wants to become the most respected company in the world. It is our opinion they will never reach that goal as long as the system remains as it exists today. Unfortunately, this is just the foundation. There's a whole lot more going on. If you want to know why many people say Amway® is a cult, click here to go to the next section, So You Want To Be Your Own Boss?

Here is the policy or procedure outlined in my Bookwork:	Here is Amway®'s response:
For example, I wasn’t aware that you couldn’t give or show a Profiles of Success to a prospect. We had been taught to show the plan using a Profiles of Success. The following is Amway®'s response to the mention of this tool:	"...Profiles Of Success (TL-13)...Success Profiles (SS-20)." See #91. Solution: Substitute with authorized materials.
In other words, this tool had not been authorized for use. In fact, it had been reviewed and not approved! Another rule breaker was a support business developed by a Diamond called Artistic Color. Here is Amway®'s response to the mention of Artistic Color:	"...Artistic Color" This term seems to refer to BSM which support your ARTISTRY business. Use of such materials would be contrary to the Rules of Conduct, which prohibit the private production of materials for product information purposes. Further, this term would be considered unacceptable due to it being too close to the ARTISTRY trademark and is likely to have its origins confused as being an Amway® product. This could also be construed as an endorsement by Amway® of these products. Solution: Immediately cease and desist from use of this term and these products. Should you need further clarification on this issue feel free to call Amway®'s Legal Department at (616) 787-8208.
Earlier, I made reference to my upline's version of the SA-1; Essentially, Amway® has a form to write up your orders. However, since day one my upline taught that you should be using their version which is a TL-19. It is essentially the same form. So, in order to teach new people how to complete this form, I filled out a sample TL-19 and scanned it into my document. Here is what Amway® thought of it.	"The illustration of the TL-19 is deceptively similar to Amway® produced literature."
As with Artistic Color, I had been a distributor for over seven years and did not know my upline was violating Amway®'s rules of conduct--Go figure! I was taught that purchasing tools and going to meetings was an investment in my financial future. In the Bookwork, I often referred to this; Amway® doesn't see it that way	"...invest...investment..." Such references to gate prices for meetings and seminars is inappropriate.
From the night I saw the Amway® Sales & Marketing Plan, the importance of tapes, books, and functions was stressed. When I mentioned using tapes, books, and functions to help sponsor prospects, here is what Amway® said:	"Use tapes, books, functions, tools..." This would imply that the use of BSM is non-optional in participation in the Amway® business."
Like many organizations, we have tape packs and books that we are encouraged to sell new distributors to help them with building their businesses. I related this point in my Bookwork. Amway®'s response was:	"QuickSilver Tape Pack (TP-1)." As this material would seem to have sales plan training and prospecting information, it is recommended that this be submitted for review.

From Chapter 4, The Six Rules of Tools: Tool Rule #1	*If you want to succeed in the business, tools are not an option--they are essential.*
From Chapter 4, The Six Rules of Tools: Tool Rule #2	*Use the tools every day. Not now and then. Every day.*
From Chapter 4, The Six Rules of Tools: Tool Rule #3	*Tools aren't a negative expense; tools are a positive investment.*
From Chapter 4, The Six Rules of Tools: Tool Rule #4	*The more you use* the tools, the greater your chances for success.**
From Chapter 4, The Six Rules of Tools: Tool Rule #5	*Treat tools with the greatest respect. Tools give you knowledge. Knowledge is your future.*
From Chapter 4, The Six Rules of Tools: Tool Rule #6	*Tools are the keys that open the doors. Make sure you use all the keys.*


Emeralds, Doug & Randi Milbauer	Emeralds, Ed & Phyllis Speck
Click here for audio by Emerald Randi Milbauer	Click here for audio by Emerald Phyllis Speck,"..If you plug into the system you can predict your success...".

SOT & GG	$648
BOM	$120
Tools	$1200
Open Meetings	$96
Rallies	$320
Major Functions	$2300
Transportation	$5000
Total:	$9684

Distributor	$6.00
Direct	$5.70
Direct with a Direct in your group	$5.60
Sapphire	$5.45
Pearl	$5.40
Emerald	$5.20
Emerald with one Emerald in your group (EM-1)	$5.05
Emerald with two Emeralds in depth in your group (EM-2)	$4.90
EM-3 through EM-10 (this includes 8 different price levels)	???
Diamond	???
Diamond-1 through Diamond-?	???
Executive Diamond	???
Double Diamond	???
Triple Diamond	???
Crown	???
Crown Ambassador	???

Click here for audio	by Diamond Marc Hellinghausen, "...It's more important now than anytime that we promote the system to people-um-tapes are gonna be more important-books are gonna be more important-and certainly functions are gonna be a lot more important than they've been in the past..."
Click here for audio	by Diamond Eve Maxwell, "...If an upline promotes it are you ordering it?...Are you the first one at the rally-are you standing in line at the major function-do you already have your app in for the major function..."
Click here for audio	by Crown Kenny Stewart, "...the way to establish the dream is by promoting the tapes the books and the rallies..."

Direct	$250.00
Ruby	$300.00
Sapphire	$500.00
Pearl	$500.00
Emerald	$1000.00
Diamond	$6000.00
EDC	$9000.00
Double Diamond	$12,000.00
Triple Diamond	$15,000.00
Crown	$18,000.00
Crown Ambassador	$20,000.00

Direct	$200.00
Ruby	$250.00
Sapphire	$250.00
Pearl	$250.00
Emerald	the "door" (I usually averaged $500 per meeting)
Diamond	the "door" (more than an Emerald)

The System Part II

Solutions

For the skeptical

Last modified: July 14, 1998