Wednesday, December 19, 2007

About Sponsoring, Sales and Adverse Publicity

Some very interesting and revealing information can be found in Amway Asia Pacific's 1999 Annual Report (link as at the end of this post). We've posted two paragrapghs of particular interest and although 8 years old, it's still very relevant to the business today.

"Our results are impacted by the actions of a relatively small number of distributors. Under the Sales Plan, our distributor leaders grow their businesses by developing lines of sponsorship through bringing others into their organizations. While these distributor organizations are large and complex, there are relatively few lines of sponsorship and distributor leaders. The distributor leaders often form organizations independent of Amway Asia Pacific that motivate and train the members of their lines of sponsorship. These distributor leaders significantly influence their organizations through motivational rallies and seminars; these activities positively impact our sales. Although, one of Amway Asia Pacific's primary business goals is to maintain strong and effective relationships with the distributor leadership, there can be no assurance that such relationships will be maintained. Amway Asia Pacific's sales could also decline if we lose a significant distributor leader and would decline if a large number of other distributors in an organization left as well.

"Our sales are affected by sponsoring levels; many factors, adverse publicity in particular, impacts sponsoring. Adverse publicity may result from certain distributor activities. In particular, some distributor leaders, through their own independent organizations, distribute motivational audio and video tapes and written material without our prior review and approval. Negative publicity may arise from the sales of such materials. While our prior review and approval is required in certain instances under the Sales Plan, we cannot closely monitor our distributors as we would our employees. We do communicate with distributor leaders and attempt to enforce the Sales Plan and the Amway Code of Ethics and Rules of Conduct to avoid circumstances leading to negative publicity. If necessary, we terminate distributors who violate our rules. It is possible that negative publicity will adversely affect our results."

So on one hand Amway says that there a few leaders and lines of sponsorship and then goes on to say that adverse publicity arises particularly from these distributor leaders. What a lame excuse them for them to then say that they cannot "closely monitor" the leaders....heck, they just said that there is only a few of them didn't they? This is a duplicatable business is it not? How hard could it be then to properly enforce it's own Sales Plan, Code of Ethics and Rules of Conduct to these very few leaders of the AMO's? At which, the teachings will then naturally flow through their organisations.

The newbie IBO doesn't make up his own Amway selling spiel and techniques, he's learn't it from his sponsor, who learn't it from his sponsor and so on and so on.....all the way til it reaches the person at the top of the pyramid. If the leaders are sprouting crap then so is the newbie IBO. So Amway, stop the leaders of the AMO's sprouting crap and your problem is solved. Your adverse publicity which you say adversely affects your sales and sponsoring (so true) won't be such a big pain the ass for you.

But hang on a minute......the only problem is that you need the AMO's as much as they need you, quite a symbiotic relationship it's become. So should you enforce your rules and then terminate these leaders for any violations, then poof! there goes a mighty chunk of your sales revenue. And as evident by the TEAM resignations/terminations in the USA and more recently in the UK, a large percentage of distributors would follow their leaders and leave as well. With only a few AMO's in Australia, it's not hard to see what would happen to the Australian Amway business should any of the leaders here leave or be terminated is it?

So your very much stuck between a rock and a hard place......on the one hand, you can clamp down on any offending AMO leaders and organisations who are breaking your own rules and possibly the government's fair trading laws, but then the Australian Amway business gets smashed to a pulp. On the other hand, carry on, keep reaping in the profits and take no real action (like you have done for the last 25 years since the "Directly Speaking" tapes) against the AMO's who will churn IBO's in and out for you, and profiting from it regardless too. It's all about the money isn't the expense of the average joe who does not know any better. And you need the average joe, trouble for you is that the great majority of Aussies has access to the internet and to wealth of information contained therein. And yes, as you said yourselves, "adverse publicity impacts sponsoring", but the AMO's who you have entrusted with the training, sponsoring and motivation for the Amway business, is the root cause why you have adverse publicity and such a bad reputation worldwide.

So Fix it!....before the ACCC does a DBERR in the UK and fixes it for you.


The quote used for the previous post (Saturation a Risk) also came from this same document.

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