My suggestion for a new improved Quixtar plan

It is hard to tell if the corporation is in bed with the king pins or not.  On one hand they benefit from the misinformation and income misrepresentations made by the lines of sponsorship.  On the other hand they have to take the heat for all of the IBOAI king pin's follies.  It is possible the corporation wants to reform the business to Rich DeVos's original idea.     It is possible that the corporation does not have the will or the courage to separate themselves from the system cancer that has taken over the business.      Rich DeVos faced the same decision in early 1980's and bowed to the pressure.   

One of the main themes of my site was 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 overhead costs it is easy for distributors to spend a lot 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.

If you check all the line-of-sponsorship materials you have, you will not find one tape or brochure on how to run a profitable Quixtar business.   Unlike any normal business, there is no effort to maximize sales and minimize expenses, so that net profit is maximized.  In fact what I have seen, the king pins stress minimizing sales and maximizing expenses, which will maximize losses.    No doubt the vast majority of Quixtar distributors are losing money on their taxes.    The naive distributors place they faith in false prophets and do exactly what they are told; spend money on the system and just recruit more people to buy the upline's systems.   

Here is my New Plan to make Amway/Quixtar a positive sum game and a much better opportunity for all.

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 break even on average. 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 $3,000/year in expenses. $2,400 in expenses would imply 800BV/month or 400PV/month to break even.

IBOs need non-distributor sales (members and clients) to avoid 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.

I see the business needing two reforms.   The first reform is to the compensation plan that clearly shoves retailing into the background.  The second reform is in the abusive motivational tools systems. 

With the advent of the Quixtar "Member" status their is little possibility of earning the Amway suggested retail markup anymore. When the prices include the suggested retail markup they are very uncompetitive.   One only needs to buy about $60 of product at suggested retail to breakeven with the cost of being a Quixtar member, so the incentive to retail is further reduced.   

Changes are needed to reward the distributor 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 distributors can be profitable. A new distributor 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 distributors when the profit to a distributor 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.

1. There would be two types of compensation for non-platinum distributors:
1. A retailing commission, from members and clients, amounting to 20% BV. This would be paid to the recruiting distributor regardless of total distributor 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 distributors. A "Sales IBO" or ISB (Independent Sales Business) and the more advanced "Broker" (ISBB).
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.



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 distributor in today's plan with 3-100PV recruits would earn only $30/month.

2. 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 distributor 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 distributor 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 distributor 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.

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 Amway/Quixtar plan is nothing more than a pyramided buying club.

4. 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, and methods on how to run a profitable business. 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:

• The New Plan forces the IB to do first things first. The potential IB is given time during the three month member period to use the products and services without the distraction or upline pressure to do recruiting. In the end the IB will be better informed about the products and truly add value when showing others the products.

• The exam to qualify for the ISB status forces the IB to learn about and prove their knowledge of the Amway product line and Quixtar WEB site. This ensures a minimum product knowledge and a better reputation for Amway/Quixtar. A big problem I see for Amway/Quixtar is that they have no minimum standards or training for their independent sales representatives. It is literally a free-for-all damaging the Amway/Quixtar reputations in the process.

• Only those IBs who have learned to make retail sales and who continuously prove it with the 300PV monthly retail sales are allowed to sponsor others and "reproduce" the business. Until an IB can prove to do the business properly for himself, the IB is not allowed to advance or profit from the networking aspects. By taking the ISBB exam each ISB will know the proper and sanctioned way to reproduce the business. The ISB will know what he is allowed to say and what he is not allowed to say. This ensures a minimum business knowledge for recruiting and a better overall reputation for Quixtar. If I were Quixtar I would be embarrassed by that lack of knowledge and bad information many distributors give out.

• The New Plan ensures a high enough gross profit for a qualifying ISB, earning a minimum of $129/month, to breakeven in most cases, despite paying for the system costs of tapes and seminars. A qualifying ISB earning $129/month by having 400(PV+Rpv) in total sales, is a far cry from $48/month he would earn as 400PV distributor in today's system at 6%. The BSM rules ensure that IB system expenditures increase only when the IB is advancing in profitability.

• The new plan ensures that the sponsor has a financial interest in moving a member to an ISB. A member is worth 20% of BV to his sponsor versus possibly 3% as an ISB. This gives the sponsor an incentive to encourage only serious prospects, who can be worth more to them later, to step out and spend money on more BSMs.

• The retails sales rule is easily and automatically enforced using data Quixtar already has.

Streamlining the Tape Systems

With the advent of the IPOD and the other portable .mp3 players along with the easy download of audio files from the internet, there is no reason why the costs of this part of the system could not be drastically reduced.  It is pretty clear that the tools business forms its own pyramid scheme, and is also one of the major sources of expenses that causes the majority of distributors to lose money in the first place.    If the audio files were available for download at a nominal cost say $0.25 to $1.00 per download then the abuses in the systems could be flushed out.   Image a Top 50 tape set all on one CD in .mp3 format for say $2.00 instead of $300!

As a requirement for joining the new Quixtar all distributors would sign a waiver stating that all open meetings are public and can be recorded.   This way distributors can build their own library of motivational and the openness will prevent lines of sponsorship from covering up their tracks when they say something wrong in the open meetings.   If a speaker knows he will be recorded he will be less likely to make false or exaggerated income claims. 

As I come up with other ideas, I will post them on this page.

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