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August 22, 2003
Messages From Upline
By QBlog in
Last couple of days I've been thinking back to the beginning, when my wife first became an IBO. A flood of emotions, questions, thoughts and ideas still swirl through my mind when I reflect on that period of our lives. I started pulling up old emails I sent to our upline trying to find answers to the many questions I had about the business. My dissatisfaction with the answers became the motivation (in part) for this site. Below I've posted one of several email exchanges I received from our upline. This particular email is a response in which my original questions are included. Some of the references are without proper context but you can get the general idea. My Questions are in bold and the upline's answers and comments are unbolded. This email was dated August 28, 2002.
Dear QBlog,Now, I should mention a couple of things.There may even be more questions than the one's you've posed. Probably, if you see the business plan a few times and hang with the group, you will get most of the rest of them answered.
Q- This brings me to the "who cares" statement. I do care. Why do I care? Well,because of the perception issue. If ISC (InterNET Services Corporation) comprises 70% of a Diamond's income then is Quixtar really what's being sold?
A -The compensation plan shows that, at Diamond, the income is $250K+ per annum from Quixtar. To have that represent only 30% of a Diamond's, income and the remaining 583333 of his 833333 under the table income come from the sale of 194444 tapes during the year (assuming the Diamond makes 50% of the $6 per tape) certainly makes the sale of tapes look good. I don't think there is such income from tapes to the Diamond.
Q - Or what if ISC's profit margins outpace Quixtar's? Is the real money in motivational materials or selling products? What is the markup on the TOOLS being sold? Is it 100% or 5000%?
Would it make any difference to someone if the markup was 5000%? My point is that you don't know, I don't know and nobody knows so none of these questions can be definitely answered.
A - I know that in 1968, I bought a Nightinggale/Conant tape series of 10 tapes called "Lead the Field." at a cost of $95. The information was invaluable to me. Shortly hereafter, I enrolled in graduate training in Periodontics and embarked on a career that has prospered me as best it could, given my position of selling services for dollars. The mark up in me was tremendously higher than the markup on the tapes. The wisdom contained therein was worth it, whatever the cost. The series is still available. I never thought to ask about the markup for fear I might miss the information and wisdom by being parsimonious.
Q - YOU SAID: "Since much, if not all, of the sales price of the tapes, seminars, etc., are expensable, they don't appear on the profit line anyway."
Here is my ignorance again but how is a tape expensable? When was the last time Warner Bros. or Vivendi wrote off a tape sale as an expense? These may be "TOOLS" but they are sold by ISC as a product. I don't understand how ISC could enter tape sales as an expense. Again, I am ignorant in this area. Please clarify if possible.
A - The tapes are not expensable to ISC, the cost of making them is. The tapes produce revenue, some of that is profit, but I suspect, only a reasonable amount, since they are being distributed through Diamonds to their organizations for the purpose of growing their people, both in internal and external wealth. As the people grow, the diamond, emerald, platinum, and all of us prosper.
Spend some time with the tapes, books and attend the functions. You will see the value (different from cost) of the system developed by Dexter and ISC.
Q- Could one of you take some time to show me exactly how Quixtar makes the money to pay it's IBOs? I know there is literature showing how this is done but I don't understand it. I would need some time to ask questions regarding this because I basically will not understand any "jargon" and will need clear examples.
I basically don't see how if I buy socks from Quixtar for $5 and it costs them $4.50 to make them and then they send my upline 26% of the $5 how they make any money? I know they are not spending on advertising but in this scenario they are losing $.80 on each sale.
A - The scenario is 40% to manufacturer, 30% to Middleman, 30% to store. Socks that cost $4.50 to manufacture will generally retail at $11.25. The store will buy them at wholesale for $7.87 from the middleman and run their operation as well as make a profit on the remaining $3.38. At Quixtar, an IBO will see the $11.25 as retail cost, be charged $8.50, get $6.00 in business volume, and get a bonus check of (at the 25% bonus level) $1.50.
Given the example of socks (only an example) the IBO buys for less than wholesale at $7.00 rather than 7.87. However, unless you want to buy socks from the manufacturer in carloads, you are not going to get anywhere near the $4.50 manufacturer's cost anywhere.
Remember, profit is what makes the free world go round.
Have a great day.
- Upline Guy
1. That upline really was a nice guy. I don't have anything negative to say about him. He genuinely believed in the system and loved building his business.
2. This particular series of emails and phone calls resulted in a Voicecom (AmVox) notice from C. L. Foster (the QBiz Head Honcho) about the tools. I didn't hear the message but my wife said he sounded like he was making fun of me for asking about tools. He said that nobody makes much money off of tape sales and anyone who thought otherwise was misguided. I'm paraphrasing from secondhand knowledge but that's the gist of what was implied.
That's all for now.
Hi there, what I would like to share is that in any organisation, there are different departments run by different department heads that bring of them certain values and personal styles. In network marketing, the same applies. There are so many organisations within eg. Quixtar and that is when as a distributor, you have to be aware. Because if you are going to spend the next couple of years building the business, it is important that you work with people who share the same values and vision. But having said this, bear in mind that the group you start out with may share the same vision at the onset, but after some time, you may see the vision changing too! Simply because, money is the root of all evil. As your other leaders start to escalate the levels, they will be chasing for points and sales too and if he is overcome by that eagerness, that's when he starts pressing for pvs and sales.
Ultimately, it is still up to YOU how you want to run the business. Be reminded in network marketing , YOU are running YOUR OWN BUSINESSS. It is FREE ENTERPRISE so no one should make you do what you don't want to do and you should not also circum to any pressure.
Likewise with training tools, there are some leaders who specialise in the production of such tools for side income and in some organisations you are compelled to subscribe. Again, in Free Enterprise, you can choose not to subscribe but if you are already in the organisation, you may be subjected to some peer pressure or scrutiny by your upline. If you can live with that, and i don't see any reason why you can't, you need not subscribe to those tools.
A good network organisation should be one that can give equal opportunities to all regardless of race, education background and financial background.
Again, how you want to benefit from the entire business opportunity should lie in your own hands and not in someone elses tapes and what nots.
Hope my contribution helps to clear things up a little.
Go Diamond! I am still taking my first steps with Amway.
Posted by: elaine lim | November 10, 2003 3:26 AM