Product Pickup

Who offers it?

CompUSA, Albertson's, Amazon (via Circuit City & Borders), Linens 'n Things, Circuit City, Best Buy, Wal-Mart (limited products), PartsAmerica, HP's Snapfish (via Walgreens), and Sears to name a few.

Oh yes, and your friendly neighborhood WWDB IBO affiliated with Quixtar.

Amazon in particular specifically set out to form product pickup agreements with Borders and Circuit City in order to offer the service, and HP did the same for their Snapfish agreement with Walgreens.

Who takes advantage of it?

According to Forrester Research, who considers the practice a trend for "Advanced multichannel retailers," those using the service are NOT Luddites:
"73% are technology optimists, and they spend 44% more online than the
average consumer . . . In-Store Pickup Users Are Savvy Online Buyers"

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Competence and Profitability

Andrew Carnegie is widely quoted as saying, "The sole purpose of being in business is to make a profit."

Quixtar critics, particularly Scott Larsen and his intellectual "downline" (those bloggers who faithfully parrot duplicate his website claims) are prone to stating that if one were to succeed in building a successful Quixtar-affiliated business, one would do so on the backs of their own organization, with 90%+ of them losing money. Another favorite quote pertains to Quixtar being a "zero-sum game."

I submit that the methodologies that produce this sort of "analysis" relies on either what I call "Magic Math" or the experience of mismanagement, or both.

Now bear in mind, most critics are former IBOs who (having either fallen back to the job world or taken up MLM-hopping) have embarked on an internet publicity campaign against the Quixtar business model, touting their own experiences as IBOs as their credentials. Some of them, such as Passport Oasis Univera Lifesciences advocate Bo Short, made it all the way up to the Diamond level as an IBO.

One can only assume therefore, that these critics-- relying on their own experience as credentials, remember-- when they are speaking of a business structure that is built on the backs of a 90%+ downline who are losing money, they must be describing their own ill-fated efforts.

If that is the case, bearing in mind the quote from Carnegie, these critics are then individuals who either failed themselves in accomplishing the sole purpose of being in business, or failed to teach their dowline to accomplish the same, or both. Did I mention that this is the experience upon which they are touting their credentials to speak?

But before I delve further into the topic of competence, let me outline the Rules of Magic Math:
(Note: This list is not definitive and is subject to change based on the erm, "creativity" of Magic Math practitioners)

Rule #1: Ignore the IGP
Rule #2: Pad the numbers with non-performers (elaborated here)
Rule #3: Compare earnings of part-time IBOs with hourly rates of full-time employees (where assumptions of hours & performance levels are standardized)
Rule #4: Ignore conventional small business statistics (pretend IBO failure is anomalous.)

700 "active IBOs" are in an Emerald group. Among the non-platinums, an annual total of $84,000 in bonuses was distributed, which averages out to $120 each per year, or $10/month. (Scandalous! 700 IBOs in an Emeraldship and they are all only making $10/month??)

Ring in once if you notice a Magic Math rule being used here...


That's right, what's missing here? Why, merely the first of the 10 profits in the compensation plan: The 32% average retail markup, also called the Immediate Gross Profit, or IGP.

To put the scale of this omission in perspective, let's say that these IBOs are actually conventional small business owners with an Executive Business Membership from Costco, which pays back 2% of product purchases with an in-store credit, and they then sell the products at a 32% markup from their independent businesses. What Scott has essentially done is counted only the 2% Costco payback and IGNORED the small business owner's business activity completely! (See why I call it Magic Math? Use it, and the profit dissappears!)

Any system worth it's salt will be teaching an IBO to be their own best RETAIL client along with their 10 other clients (remember the FTC-required 10 Client Rule?) and will be isolating those retail funds into a SEPARATE BANK ACCOUNT (any free personal checking account will do) from which their business is paying the wholesale cost for the products. (Incidentally, this is what the World Wide Group teaches.)

Now, Magic Math Rule #2 is also certainly in play here due to the averaging being employed, as it is literally impossible for one to reach the Emerald level merely having 700 IBOs at 100 PV. Obviously, due to the requirements of the Emerald level, there are 3 Platinums-- interesting that they, being the most profitable of the group have been eliminated from the averaging, but suffice it to say, in this group there is likely a sizable but unknown number of other performers and, per the 80/20 rule, another unknown but likely larger number of non-performers who are doing (and therefore earning) nothing.

Averaging tends to minimize the relationship between performance and reward, but let's assume the worst and say that this really is a group of 696 IBOs (eliminating the 3 Platinums) which are each earning only 100 PV.

100 PV is roughly $280 in wholesale cost, or $369.60 in retail. This produces an IGP of $89.60 per month, making their supposed $10/mo gross profit to be $99.60/mo in actuality! Multiply that by the 696 non-Platinum IBOs, and that becomes an actual gross profit of $831,859.20 between them! Nothing like Magic Math to reduce the actual IBO earnings to nearly a mere 10% of itself! Heh... and Scott wonders why Quixtar Emeralds and above are hesitant to submit their business financials to his Magic Math machine?

I've elaborated already on the principles behind Rule #2 & #3 in my post "Active" IBOs & Their Income, so let me move on to the issue of Competence, which directly deals with Rule #4.

According to the Small Business Administration,

"Over 80 percent of the small businesses surveyed used some kind of credit and had outstanding debt on their books at the end of 1998. The most frequently used kinds of credit were personal and business credit cards, lines of credit, and vehicle loans."
Wow... does that mean that over 80% of American small businesses are not truly profitable? That over 80% of them have operating expenses, overhead, even (*gasp!*) tool, equipment and training costs which are not yet covered by their gross revenue? Say it isn't so! But-- but-- I thought that was unique to lowly Quixtar IBOs?!? Heh...

Just wait, it gets worse:

According to Tim W. Cohn, business analyst of marketingprinciples.com (see his CV here),

"For every small business success story there are nine failures. At least that is what the statistics tell us. After ten years, only one out of every ten small businesses started is still operating. . . What causes small businesses to fail? . . . [I]n reality there is only one reason: Mismanagement. . . The inability to consistently take the appropriate actions to achieve a desired result, is the most common way mismanagement manifests itself."

. . .

"[R]egardless of whether you are a manufacturer or service company, your business will need to produce a minimum of $80,000 of revenue per employee to cover your operational costs and to produce an after tax profit.
Companies that produce over $150,000 in revenue per employee are considered healthy."

--http://www.marketingprinciples.com/articles.asp?cat=418, emphasis mine.

Let's examine the first statement first. 1 out of 10 succeed? Yikes! Anyone who listens to Brad Duncan via a WWDB CD or Major Function will know that in the Private Franchising model, they have found it consistent among all registered IBOs, that 1/3 will quit, 1/3 will consume and watch, and 1/3 will perform. Sounds better than 1 out 0f 10 to me. The best odds of all, of course, belong to the IBO who understands that principle and is willing to put in the numbers to let the 1/3 rule play out to equal 9 growing legs from among (not 19 but) 20 IBOs earning a bonus check. What about those IBOs who don't? Well, they would fall under that category of those who, according to Mr. Cohn, fail to "consistently take the appropriate actions to achieve a desired result."

Now, to the $80,000 in annual gross revenue per employee-- A business owner doing less than that is following a recipe for disaster. It would be fair to catagorize anything less than that as either mismanagement or non-performance. So how does that figure line up in terms of the Quixtar compensation plan? Where is the line between non-performance and profitability?

There are no employees, but there is a couple or single IBO which consists of a single business unit. Let's assume that business unit is the "employee."

Let's also assume that this business unit is doing a 300 PV first circle-- being loyal to their business with personal use, following the FTC required 10 Client rule, and isolating their 32% IGP in a separate account per WWDB teaching (not to mention good tax & accounting practices.)

$25,600 of that $80,000 would the IGP (no Magic Math used here!) leaving $54,400 in actual annual business volume (19,428 PV), or 1619 PV monthly. Hmm... Now, haven't I heard somewhere a number mysteriously similar to 1619 PV?
Oh that's right... WWDB teaches on tapes and in Nuts & Bolts meetings that the profit from the first 1500 PV of your volume will need to be reinvested in order to make your business grow.

So a 300 PV first circle and a total group volume of about 1500 makes you a performer (...and say, isn't that just about what the volume would be for a WWDB Eagle?)

Imagine that! Those worthless "scam" tapes are actually teaching business principles that line up with the advice from a business analysis website ranked in the top 1% of all website traffic by Alexa?

But notice that, per Tim Cohn, it takes nearly twice that $80,000 per employee (or 1,500 PV IBO) to be considered a healthy business. For the sake of simplicity and erring on the side of conservatism, let's say 2500 PV. (Say, doesn't WWDB Estimate the volume of a Double Eagle at around 2500? Amazing how that works!)

So back to our IBO business unit: Using the first 2 steps of the "Me/6/3" hypothetical business model in WWDB's FTC reviewed WSA4400 form, we'll assume that they have 6 registered IBOs, whom they are teaching to duplicate themselves in fulfilling Andrew Carnegie's advice-- each of the six also doing roughly a 300 PV circle, or the remaining 2,200 PV.

At 2,500 PV, our business unit has an IGP from their 300 PV at $268.80. Their bonus check for 7,000 BV makes a $1,260 differential, from which they must pay their 6 IBOs (2200* 2.8 * 6%= 369.60 or /6= 61.60 each) leaving them with $890.40 in bonuses plus their $268.80 IGP, or a monthly gross profit of $1,159/month.

Assuming Scott Larsen's figure of $3,000 average annual operating expense via a Tools System is accurate, that makes a $250/month operating expense, leaving a $909/month net profit. For a mere 2,500 pin. That looks fairly healthy to me!

This is not counting meals, hotel, or travel expenses, but as the H&R Block commercials have diligently reminded us this tax season, these and other things can legally be offset according to the tax laws (consult your accountant or tax preparer.)

But what about our "poor" 6 IBOs at 300 PV? Didn't I say that the claim of downline losing money was due to Magic Math or mismanagement? Let's break down their financials:

Each of the 6 downline IBO business units would have the same $268.80 IGP as our 2,500 pin, plus their $61.60 bonus, with a monthly gross profit of $330.40. Subtract that by Scott Larsen's $250 opex figure and we have a $80.40 net profit, or $964.80/year. That's not a lot, but at least it's a profit.

However, remember that 300 PV is only the first circle. They aren't yet really performers, they're simply being what futurist Alvin Toffler referred to as a "Prosumer"-- a consumer who produces income via their purchases. Like that Executive Business Membership from Costco that I referred to, with the 2% in-store credit kickback-- oh, except that membership has a catch-- a $2,100 minimum monthly purchase or $25,200 annual purchase, and they cap off the reward at $500 a year.

Which makes each of those "poor" 6 IBOs nearly a 200% winner over the best membership that Costco can offer.

Hmm... strange, but this doesn't resemble anything near the frightful figures you'll see on the critic sites. Have I said already that these individuals are touting their former IBO experience as their credentials? Which brings me back to my original conclusion:

Either their numbers are a product of their own mismanagement experiences, or they are lying using Magic Math to make their point.

In either case, why would anyone listen to them?

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Retail Marketing Audience Shrinking

Retailers are losing their traditional television audiences to cable, their radio listeners to satellite services and newspaper readers to the Internet. So Vestcom, a company that makes price labels that adorn shelves nationwide is developing a different way to reach shoppers: video monitors attached to store shelves.

"You’re in the store. You’re making a decision and they have the last chance to try to influence you to buy their product," said Tim McKenzie, executive vice president and director of sales and marketing at Vestcom, which produces shelf tags for thousands of stores including Kroger Co., Target Corp. and Walgreen Co.

"It is where the industry is going in terms of trying to redirect advertising dollars to what they call the last three feet of the marketing plan," he said.
. . .
"Consumers are spontaneous and if you can catch their attention, that’s going to increase the chance that they will look at your product," said Jack Taylor, a professor of retailing at Birmingham-Southern College in Alabama.

Interesting the lengths marketers have to go to these days. It's like they're literally finding ways to make the products jump up and down, crying out, "Me! ME! Pick me! I'm the best!" as you pass by them on the shelves. The article also mentions that Vestcom last year introduced static colored tags-- these, as well as the video monitors, are essentially an attempt at shelf-side education of products.

No wonder, then, that futurists like Bill Gates, Frank Feather talk about the "high-touch" that future consumers demand and why economist Paul Zane Pilzer predicts that the future belongs to those who can serve in the role of product educators (a function of high-touch). Combine that with loyalty incentives and a range of no-, low-, and high-tech product ordering and delivery options to fit your client, and you've got a winning combination.

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IBM: Quixtar Most Innovative Client

IBM Honors Its Most Innovative System i Clients

Winners Deliver Breakthrough Designs in Data Warehousing, High Availability, IT Simplification and Education on the System i Platform

MINNEAPOLIS, MN -- (MARKET WIRE) -- 03/27/2006 -- COMMON -- IBM and COMMON announced the five winners of its annual IT Innovation Awards at the COMMON conference in Minneapolis where thousands of System i users gathered today.

The second annual System i Innovation Awards showcased the achievements of clients who use IBM's "all-in-one," open System i platform to deliver IT innovation. The 2006 award winners were: Elie Tahari, Quixtar, Inc., Transworld Entertainment, Bank of America National Association, Canada Branch and Moraine Valley College.

"System i clients consistently strive to be innovative. It is that spirit at the core of the System i platform -- driving business value and efficiency while delivering outstanding availability and automation," said Mark Shearer, IBM System i general manager. "We are pleased to recognize the outstanding achievements of our clients who have found new and exciting ways to build upon the System i's innovative technology to deliver even greater value to their customers."
. . .
-- Quixtar, Inc., a leading online retailer of health and beauty products, developed a high-availability back-up system that enabled it to achieve high availability for its business applications while meeting customer demand. Quixtar consolidated its environment onto two System i 570s located five miles apart that use Lakeview MIMIX for object and data replication between the systems. Quixtar also relies on IBM WebSphere MQ to relocate inquiries from its Web site so they can be processed by the backup system during peak hours, eliminating downtime. The company received the Innovation Award in the Business Resiliency category.
. . .
"We introduced the System i Innovation Awards one year ago to recognize, showcase and share best practices among the System i community," said Beverly Russell, COMMON board president. "This year we were impressed by the more than 50 nominations we received and the innovation that was executed on the System i platform by all of the nominees and finalists."

The winners and finalists, honored this evening at an awards ceremony hosted by Mark Shearer, IBM System i general manager, and Beverly Russell, COMMON board president, were chosen by a panel of 25 judges that included IT-industry leaders, analysts, and IBM and COMMON executives. Current IBM System i customers could be nominated by an IBM Business Partner, IBM employee or themselves. Winners represent the United States, Canada and New Zealand.


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This I beheld, or dreamed it in a dream: —
There spread a cloud of dust along a plain;
And underneath the cloud, or in it, raged
A furious battle, and men yelled, and swords
Shocked upon swords and shields. A prince’s banner
Wavered, then staggered backward, hemmed by foes.

A craven hung along the battle’s edge,
And thought, “Had I a sword of keener steel —
That blue blade that the king’s son bears, — but this
Blunt thing!” — he snapt and flung it from his hand,
And lowering crept away and left the field.

Then came the king’s son, wounded, sore bestead,
And weaponless, and saw the broken sword,
Hilt-buried in the dry and trodden sand,
And ran and snatched it, and with battle-shout
Lifted afresh, he hewed his enemy down,
And saved a great cause that heroic day.

--Edward Rowland Sill

Which are you: The craven, or the prince?

Another IBO Blogger

A blog I hadn't noticed before, which has apparently been around for some time, but is self-admittedly not frequent in posting. (Understandable.)

Top Achievers in the Quixtar Business

"This Quixtar related blog wishes to analyze and develop an honest perspective on Leadership as it applies to the top achievers in the Quixtar business. This is the quest of an IBO who wants a totally unbaised, objective, fair, relevant, non-agenda oriented, grass roots level, spontaneous expression of voices of tens of thousands of IBOs who are pursuing the Quixtar Business for their own objectives."

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How Bo Short Once Was Lost (But Now He's Found.)

"What's Good For The Goose...?"

If Robert "Bo" Short could be said to be known for one thing, it would probably be the "problem" he set out to fix when he, formerly a Quixtar Diamond, left Quixtar to form his own direct sales company, Passport.
The problem, as Bo saw it (and as he eagerly broadcast on Dateline NBC) was that there was "another business" offered through the Quixtar Diamonds' Lines Of Sponsorship (LOS) - the sales of instructional & motivational products and services.

As we established in a previous post, the ability of an individual to assemble a large, multilayered organization of volunteers is a highly valued skill in every significant aspect of life-- business, politics, religion, etc... By the nature of the Quixtar compensation plan, a Diamond must develop and execute that very skill in the process of qualifying for the Diamond level.

Since the qualification for a Diamond is to have mentored 6 individuals to the point of each simultaneously distributing 7500 points of volume (roughly $21,000 worth of products) monthly, this is not only a leadership skill, but a marketing skill as well, because the qualifying Diamond AND the 6 "legs" or individual business groups are each qualified strictly by the measure of the 7500 points of product volume sales.
As I expressed in that post, imagine the potential if these individuals (Diamonds), having developed the skill of assembling large organizations of volunteer entrepreneurs, actually introduced products and services into the organization. Well, technically, that's the whole point of the Quixtar business model, isn't it? Except the products and services from the supplier Quixtar actually came first, else there would have been no reason to create an organization.

So there's a Diamond, there's an organization built by the Diamond, and there's a Supplier (Quixtar) with a range of a couple million plus products & services.

Or more simply: Leader, Organization, Supplier "A", Products & Services "A"

Now, the part that Bo Short seems to have objected to is that Leader, having already established Organization to distribute Products & Services "A" from Supplier "A", goes on to introduce Products & Services "B" from Supplier "B", being instructional and motivational products and services from a supplier in which Leader has ownership.

Assuming that purchase of Products and Services "B" from Supplier "B" is optional, and that Organization is aware of their optional nature (as is the case if the BSMAA has been read and signed) then I must respectfully disagree on principle with Bo Short's objection.

I do not see which part is objectionable...

  • Is it the introduction of a new Products & Services "B" from new Supplier "B" which is different than the primary Products "A" and suppliers "A" that Organization originally contracted to distribute?
  • Or is it that Leader has ownership in Supplier from which Organization gets Products & Services?

I cannot object to either, based on Free Market principles. While Organization consists of independent entrepreneurs, they are also essentially a subscriber base or consumer base which Leader has established. Isn't it then the right and discretion of Leader to be able to introduce additional Products & Services or additional Suppliers? Isn't it an object of entrepreneurship to "see a need and fill it?"

Of course, I would advocate very firmly for transparency and ethical practices in this process. And let it not be forgotten that the whole purpose of offering such products is to ultimately enhance the opportunity for even the newest IBO. I would also advocate strongly for giving the IBO/consumer as many choices as possible (including the option to also profit from Products & Services "B"). And after all, isn't it ultimately the consumer which determines which Products & Services, or which Suppliers will succeed? Isn't the vote made with the dollars of the consumer?

(An ideal situation would be for the IBO/consumer to have multiple choices even within a particular Product & Service line from a particular Supplier, as is exemplified very honorably by the WWDB system, which offers choices such as retail vs. wholesale pricing on Tools (CDs/DVDs/Literature), competitive book prices in comparison to Partner Store Barnes & Noble, pricing of services by tiers of service levels to fit a range of budgets, and value bundles of Products & Services-- such as offering eoffice, a my.biz website, and benefits like free guest tickets to major functions, all together with wholesale pricing on tools, via Premier Membership.)

So anyway, at the point of Leader Bo Short quitting Quixtar to form Passport and organize distributors (Organization), it seems he was essentially saying "No!" to the concept of offering a greater range of Products & Services, and Suppliers, to Organization. Again, I must respectfully disagree with Mr. Short's decision at that time-- I heartily endorse the Free Market principle of giving your consumer base (Organization) the widest range of choices as possible and let them determine what will fail or succeed.

But Bo Short, apparently then lost on a key concept of the Free Market, felt otherwise.

What is quite clear, however, is that Bo Short did NOT object to the concept of Leader having ownership in a Supplier through which Products & Services are distributed to Organization, as evidenced by his founding of the Passport company. Based on Free Market principles, I cannot slight Mr. Short in this... After all, he has demonstrated his leadership skills by developing his Organization, and I heartily applaud his entrepreneurial spirit by introducing Products & Services through a Supplier in which he has ownership. He saw a need and filled it. He deserves the fruits of his labor.

I am quite pleased to discover though, that Mr. Short has once again found himself in regards to the other key Free Market principles.

You see, Bo Short (Leader) having already established Organization (Passport distributors) to distribute Products & Services "A" (Passport's Product & Service offerings) from Supplier "A" (Passport company), went on to introduce Products & Services "B" from Supplier "B", being Oasis Lifesciences Product & Service offerings from Oasis/Univera).
Not only were Products & Services "B" and Supplier "B" NOT the Products & Services or Supplier that Leader's Organization originally contracted to distribute, but the entire compensation plan the Organization was operating under was dissolved in favor of the compensation plan from the new Supplier "B". Wow-- that's a pretty dramatic development.

But again, I must heartily uphold the Passport leadership's right to do so under Free Market principles, and I find it fairly reassuring for the distributors' sakes that the new Oasis/Univera supplier at least gave them the diversity of another couple hundred product options. And I find it quite honorable of them to still make the original Passport products available for personal and customer use, as well as giving a significant price break to distributors.

However, given Mr. Short's original objection, and then observing this development, which he is "thrilled about," I find myself quite puzzled on what this whole exercise has been all about. I don't see a significant difference in business practices-- Bo Short has simply returned to some of the same Free Market principles which many Quixtar Diamonds also follow. I congratulate him on this. But that leaves me wondering-- exactly what was at the root of his original objection? Let me restate the situation again to see if I can understand:

  • Quixtar Diamonds (Leader) establish Organization through which Products & Services "A" are made available via Supplier "A". Leader also introduces Products & Services "B" to Organization, via Supplier "B", in which Leader has ownership.
(Bo Short doesn't profit from Products & Services "B" and objects.)
  • Bo Short (Leader) establishes Organization, through which Products & Services "A" are made available via Supplier "A", in which Leader has ownership. Leader also introduces Products & Services "B" to Organization, via Supplier "B".

(Bo Short profits both from Products & Services "A" and "B" and doesn't object.)

Ohhh... so that is what sets them apart.

Now, the purpose of this illustration is not to criticize Bo Short, the Passport team (including my esteemed occasional reader/commenter and Passport President, Ty Tribble) or the Oasis/Univera Lifesciences opportunity. Rather, I have affirmed the right and merit of each party in pursuing Free Market principles. However, I encourage them to affirm the right and merit of Quixtar-affiliated IBOs and organizations doing the same as themselves.

I'm simply putting into perspective their criticisms of Quixtar IBOs in relation to their own actions. Since the same Free Market principles are in play in each case-- their objections therefore lacking in substance-- their own interests should be quite apparent.

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IBO Blogger update

The "Instant Franchise" blogger Michael has changed his focus and his address. His new blog is http://www.businessopportunityworld.com/. (I'm changing my link accordingly)

Looks good so far, best of luck with it!

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The Flawed Logic of Tool Sales Criticism

"There's no real money in Quixtar, just an elite group of 'kingpins' making all their money from IBOs with tool sales."

I've just paraphrased one of the most common criticisms you'll see leveled by internet sites critical of the opportunity side of the internet shopping portal Quixtar.com.

Given a reasonable application of logic, at least two flaws should quickly be apparent in this criticism.

1) How did these "kingpins" initially become so supposedly influental if the business model doesn't allow anyone to make any "real" money? What, were these happless IBOs so impressed with the would-be kingpin's collection of, say, monopoly money perhaps, that the IBOs sold all they had to purchase their tapes of how to acquire large quantities of monopoly money themselves?

Of course I'm fighting a losing battle with that line of questioning, as Quixtar critics are loathe to admit the prospect of actually making money utilizing a company which pays hundreds of millions in bonus money annually, because the subsequent examination of those earnings threaten to reveal the (*gasp!*) inherent relationship between effort and return.

So let's set aside those apparently inconsequential few hundred million dollars of annual bonus money (closing our eyes and repeating the shrill "$115 gross per year!" mantra) and pretend, as the critics do, that there is actually no money to be made.

If the critics are to be believed then, all it takes to succeed in the "dark underbelly" of the Quixtar business, regardless of your actual product sales volume, is to create your own system of how to be successful and Automagically! you make hundreds of thousands of dollars a year on tapes and function sales.

Uhhh... only one problem with that-- Who ya gonna sell them to? Just how did these non-money-making "kingpins" get so successful at selling tools?

"Well," the critic may reply, "first they created this vast, multi-layered organization of followers. Then," whispers the critic, pausing for dramatic effect, "they sell tapes to them!" (queue climactic music here: Dun-Dun-DUNN!!)

Wait-- you're telling me these people succeeded in creating a vast multi-layered organization of loyal volunteers consisting of thousands of families? That's amazing!

"Yes!" cries the critic breathlessly, "Then they sell tapes to them!" (repeat climactic music here: Dun-Dun-DUN!!! Overlay sound of woman screaming for extra dramatic effect.)

Wait, wait.. please tell me-- how did they manage to succeed in creating this vast multi-layered organization of loyal volunteers consisting of thousands of families?

". . ."


"Um, well," mumbles the critic, "I guess that's what the tapes are about-- how they did that."


So let me get this straight-- no ability to build a vast multi-layered organization of aspiring entrepreneurial families in the thousands means no one to sell tapes to? But with the ability to build that kind of organization, their people are willing to buy their tapes... Shocker.

You've stumbled onto a big mystery there, critic-- what would compell people belonging to a vast organization to buy tapes from the founders of that organization-- about how to build a vast organization? Hmmm...

Gas Station Employee: I'm picking up your sarcasm.
Richard Hayden: Well, I should hope so, because I'm laying it on pretty thick.
-- Tommy Boy

Just taking alone the ability to organize large volunteer organizations of people, this is a highly valued skill-- not only in business but in religious and political circles as well. Take for example, the money paid to the founders of Hotmail when Microsoft purchased the free email service.Gee, Beav! Microsoft certainly could have written their own web-based email system. But what they really wanted was the Hotmail subscriber base-- the large volunteer organization of people. For their ability to organize that subscriber base, the Hotmail founders were paid some $400 Million.

And golly gee whillikers, Wally, imagine the potential if someone actually introduced products and services through those people... wouldn't that really be giving them the business?


2) Is there something morally or ethically wrong, for a person who has succeeded in a particular accomplishment, to make money from information that reveals details about their accomplishment?

Recognize any of these names?

Steven R. Covey - Carleton Sheets - Oprah Winfrey - John C. Maxwell - Bill Clinton - Lance Armstrong - Bill Phillips - Richard Nixon - Hugh Hewitt - Oliver North - Malcom Gladwell - Jimmy Carter - Frank Feather - Robert Kyosaki - Hillary Clinton - Dale Carnegie - Victor Frankl - Suze Orman - Glenn Reynolds - Benjamin Franklin - Peter Lynch - Harry S. Dent - Helen Keller - Bruce Berman - Anthony Robbins - Martha Stewart - Donald Trump - Darren Rowse

What do all of these people have in common? This is just a small selection of people who have all published information about their experiences, accomplishments, or expertise. And got paid for it. Heck, even Donald Trump's Apprentices are doing it. And even if the accomplishment is dubious (think John Wayne Bobbitt or William Hung) often the biggest question about the event is who gets to buy the book/recording/movie rights to the story. Even lowly bloggers are getting lucrative book deals these days.

According to the logic of Quixtar critics, none of these people behaved ethically or morally in doing so! (Granted, some of them may have acted unethically/immorally in other aspects, but that's unrelated to them getting published.)

By some obscure, twisted leap of reasoning, these critics infer that the rules for the rest of the world should not apply to individuals who happen to be affiliated with the Quixtar internet portal. On the other hand, it's perfectly ethical and reasonable to publish information detailing how money is made through internet portals like Yahoo, eBay and Amazon-- am I missing something here?

To take their disingenuity one step further, some post information regarding free conference call training sessions by career MLM trainers like Jeffery Combs, Todd Falcone and Dani Johnson, giving the appearence of contrast between a free conference call and the "expensive" Quixtar-related tools systems-- without bothering to mention that these individuals also sell sets of CDs & videos, and charge hundreds to thousands of dollars for seminars and personal coaching-- I thought these critics objected to that sort of thing?

Now, some may take this second point as some sort of admission that the purpose of systems such as World Wide Dream Builders is to make money selling tools. It would take thickheaded obstinence or a flagrant lack of intellectual honesty to ignore my first point, sarcasm notwithstanding, and pretend that this is what I am saying, or to state in the face of multi-million dollar bonus payment statistics, that there is no money to be made utilizing the Quixtar internet portal.

In my last post, I established that, as Quixtar Emerald and above income levels are the real-world equivelent of corporate upper management to executive income levels, it is not reasonable to expect to attain an executive-level income without executive-level performance and leadership. I also established that to excel in any endeaver, there are foundational principles that must be applied. The methodology for applying those principles can be standardized into a system.

Systems designed to help one take advantage of the methodology needed to excel in a particular business model are not a new phenomenon. Quixtar critics, however, expect you do be dumb enough to believe that they are.

Or in the case of some, they expect you to be dumb enough to swallow that line and yet turn around and subscribe to their business model and system.

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When I was first introduced to Private Franchising, I really had no interest in the business itself. I made the effort of seeing the business plan and listening to some tapes specifically as a pre-calculated token gesture of "giving it a fair shot" before I turned my would-be sponsor down. Only one problem-- the leadership of World Wide simply made too much sense, and their values, their principles, their family lives, and yes, even their lifestyle, was everything I had wanted in life-- but never knew existed all together in one package, or that it could happen on purpose. I became associated with World Wide Group because I wanted the mentoring and leadership they offered... It just so happened that I had to register into this crazy business model to take advantage of it. (Over time, obviously, that has changed for me, or I wouldn't be here.)

To be completely candid, my lack of interest in the business model was grounded in my weakness in dealing with people, which specifically stemmed from my lack of self esteem. (I had been on an entertainment-related career path which, assuming I could have broken in, would have allowed me to take advantage of a talent which comes fairly easy to me, is an enjoyable escape, is technically possible to succeed in without a particular degree or certification, and best of all, I believed would not require me to develop strong people skills.)

Nevertheless, after having been exposed to the World Wide system for only a short time, I began to wonder if perhaps I might be capable of seeing success with the business model. I decided to attempt to share the business model with an acquaintance, a co-worker of mine at the manufacturing plant I was then working at.
This co-worker and I had established a routine of asking "What's new?" to each other at the beginning of the work week. So I resolved to expose Private Franchising to this co-worker for my "What's new?" that week.

I did so well explaining myself that my co-worker thought I was talking about a new party drug I had discovered! That may say more about his mindset at the time than my business and communication skills (not to mention my poor abilities for screening prospects) but a true story nonetheless.

Obviously not everyone coming into this industry is in as great a need for personal development as I was 10 years ago. (Frankly, it would be hard to find many as pathetic as I was.) Those who can make it on their own, or feel they can, bravo. More power to you!

But look, let's be real here: If one aspires to an income level of a Emerald or Diamond or above, they are aspiring to the equivalent of a corporate upper-management to executive level income and responsibility (albeit with a fraction of the time commitment level.)
That being the case, one with such aspirations needs to get honest and ask themselves: Am I leading and performing at an upper-management or executive level?

Unless the answer can be a resounding and unequivocal YES (and have fruit to show for it) then one needs to either re-adjust their expectations or re-adjust their performance. Or, I suppose, take the easy road and blame their lack of performance on some exterior circumstance or person.

I'm here because I evaluated my performance, my attitude, my knowledge and told myself, Look, if you're not going to position yourself to get mentored into an executive mindset and performance level, you're just dreaming, pal. You're just tilting at windmills. (Hence the Cervantes reference in this blog's title-- the wordplay with my supplier's name was just serendipitous.)

So how does one raise up to an executive level of performance? Do executives, for example, go bargain-basement hunting on eBay or tape-swap sites for 5-year old information on their industry? Hey, if this was the 70's, leading on 5-yr old data might have worked for just about any industry. Heck, it might have even got you through in the 90's when people were just starting to use that "InterWeb thing."
Welcome to the 21st century, people.

You expect an executive-level income with a Wal-Mart consumer mentality?
Oh gee, I have to buy CD's? (Tax deductible business expenses, by the way, and good for getting across the info to your prospects and downline that you're already going to screw up enough with help the first hundred times anyway, never mind trying it all on your own.) Oh gee, I have to travel to a function? CEO's from leading industries pay thousands, hundreds of thousands, even millions of dollars on a regular basis for industry intelligence, marketing strategy, and leadership mentoring provided by the likes of John C. Maxwell & Frank Feather (both of whom have spoken at WWDB major functions for no extra charge, incidentally)... Yet you're trying to tell me a dusty cassette tape from the 80's on eBay is going to cut it? Please.

So back to my question-- if one is not currently on track for an executive level of performance, how does one get there? Every endeavor has a specific set of fundamental practices that one must engage in, if one wants to succeed or excel in that endeavor. The specifics vary, but the underlying principles are the same.
Whether the endeavor is ballroom dancing, practicing medicine, creating comic books, developing web applications, playing football, private franchising, or Olympic speed skating, here are a few fundamental principles that apply:

- Knowledge: you must gain and/or be in the process of obtaining knowledge of the field
- Personal belief: you must have and/or be developing a confidence in your own ability to perform and excel in that field
- Practice: you must be continually doing the actions that define your field, developing and honing your skills
- Discipline: you must be persistent and consistent in all of the above
- Accountability: Performance that is measured and reported increases more consistently than performance which is not.
- Mentorship/coaching: You cannot become greater than your current self by employing the same knowledge, perspective, and practices as you have previously used and expect to get a different result. Mentorship helps you exceed what can be accomplished on your own.
- Communication: Mentoring, accountability, and knowledge gaining are impossible without it.

For business in general, the methodology by which these principles are employed may vary, but the principles themselves do not. Methodology which has been standardized is called a system. The classic example of a system in Public Franchising is Hamburger University for McDonald's. In Private Franchising under the WWDB system, the methodology by which these fundamental principles are employed are called the CORE steps. Below are the steps and the principles applied therein:

1- Show The Plan (expose the business model, share the dream - practice, discipline, knowledge, personal belief)
2- Personal Use (develop product knowledge & business loyalty - practice, discipline, knowledge, personal belief)
3- Retail Clients (establish a "store" worth duplicating - practice, discipline, personal belief)
4- read books (develop leadership, business knowledge, self-esteem, people skills, etc. - discipline, knowledge, personal belief)
5- listen to CD's (general and industry-specific business knowledge & technique - personal belief, discipline, knowledge, mentorship)
6- attend functions (general and industry-specific business knowledge, leadership & technique - mentorship, personal belief, knowledge)
7- be teachable (mentorship, knowledge)
8- be accountable (accountability, mentorship, personal belief)
9- CommuniKate unified messaging - (communication, mentorship, accountability)

A common criticism heard about the CORE steps is that they are specifically designed to profit those in the mentorship role. (Such allegations have been made in comments on this blog.) The implication is that a required cost or investment for these steps is unethical or unnecessary. Another assertion is that, aside from the question of profits from a tool system, is that these systems just don't work. But most tellingly, the same underlying principles, even much of the methodology, is encouraged by the affiliations of some of the same critics:

1. I will work my Oasis Business ______ hours per week. (STP/Retail/Be Accountable)
2. I can invest $______ in my business per month or reinvest ________% back into my business monthly. (*gasp!* it costs money to run a business?? there's overhead?? expenses?? reinvestment?? Outrageous! Unethical! Heh...)
3. I will gift ______ people per day until I have 20 solid Customers/Associates on 100 BV Convenience Plan. (STP/Retail)
4. I will utilize the Oasis Marketing Tools in my business weekly. - Ageless Living Magazine - Product Brochures - Ageless Success Program (ASP) - DVDs - CDs (Heh... these are free, right??) (Books/CDs)
5. I will attend and leverage all Team and Corporate Events weekly. - Conference Calls - Local ASP - Regional Events - Fly Ins - National Convention (free too?) (Functions/CommuniKate/Be teachable)
6. I will contact my sponsor _________________ to keep in touch and keep my sponsor updated on my progress. (Oasis leadership recommends talking with your sponsor several times a week.) (CommuniKate/Be Accountable/Be teachable)
7. I have personally enrolled in the Convenience Plan (I will become a product of the product and I will continually expand my product usage.) I will order 100 to 200 BV personally each month. (Personal Use)
8. I will add 3-Way calling to my home & cellular plans. (CommuniKate)
9. I have set up my web site with my sponsor. (Retail)
10. I will listen to the compensation plan overview. (CDs/Functions)

(source: http://www.oasisoffice.com/_Library/librdoc/ASPbook.pdf - my comments in italics, CORE equivalent in bold.)

It's apparent then, that the real issue with such criticism is NOT whether such methodology works, or whether it does/should cost to employ it, but a preference on which vehicle the methodology is being employed. That's a debate out of scope for this blog, but suffice it to say that obviously, one who has a vested interest on the success of a particular vehicle is going to downplay the same methodologies when applied to another vehicle.

So we've established that executive mindset and performance is required for executive results; that in order to excel in an endeavor, a consistent set of principles must be applied; than in the endeavor of Private Franchising, those principles are applied via a methodology called CORE; that even competing business models apply the same principles via similar methodologies; and that there is an investment of time, money and effort is required.

So be willing to pay the price. But since all of those are precious commodities, be smart... take advantage of the experience of those who have gone before and found the best known methods of applying the principles that lead to success in your endeavor.

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Church of the Customer Blog

Great blog about word of mouth, customer evangelism and citizen marketers.

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Personal Shoppers & Affiliate Marketing

Recently I overheard one co-worker telling another about what she considered to be a unique business model. The concept was web portal of sorts which has a relationship with a variety of well-known e-commerce sites and offers a free personalized shopping service for customers. It is free to customers because the money for providing the service is made from a percentage of every purchase being paid from the respective partner. Some of the Merchant Partners for this portal are Cooking.com, Red Envelope, Baby Universe, Hickory Farms, Blue Nile, Omaha Steaks, Sharper Image, etc.

This co-worker breathlessly described the virtues of this site, shared the web address, and encouraged the other to check it out.

Sound familiar?

Despite what you might be thinking, my co-worker is not an IBO, and the web address does not begin with 'Q'. And my co-worker, like most people, was doing for free what most companies are now paying good money for: word-of-mouth or affiliate advertising.

My co-worker is right in a sense-- the website, PersonalShopper.com, does have some innovative aspects to it. However, most of the innovation has to do with the technology on the backend. The company has secured an arrangement with their various merchant partners to be provided a feed of product and pricing data, which they then use as the database of products against which the preferences of their customers are filtered. The site will also store birthdays and events for which it will send email reminders (for gift shopping, naturally!) The automation is impressive. And I'm sure it's a good money-maker for the company's founder.

Essentially, however, the business model is an affiliate marketer website with a useful, highly personalized value-added service which it uses to incentivize customers to purchase through them (i.e. the customized filter through which it offers product suggestions.)

Interestingly, in my research of Personal Shopper Inc., I discovered that an earlier iteration of the business model (then doing business under the name AvenueMe) included an incentive program in which Members could refer other customers and receive a kickback for the referal purchases in the form of an "in-store" credit. The program appears to be absent on the current website. (Unless the company was able to negotiate a larger percentage than the average 5-7% that the same merchant partners offer in their affilate programs, I'm guessing the margins would be too thin to turn around and offer essentially their own affiliate program.)

It may be understandable why I was intrigued upon overhearing my co-worker's description of the business model. The similarities are obvious-- web portal, affiliate marketing, personalized service, kickbacks from merchant partners. There's a significant advantage, of course, in the margins Quixtar is able to secure with their partners due to the subscriber base they bring to the bargaining table, and consequently the payout percentages merely start in the single-digit range in which most affiliate programs are capped.

As an IBO using the private franchise model, you are providing free (or better!) highly-personalized shopping services for your clients. Granted, it's not automated to the level of the comparison... but smart IBOs can take advantage of many tools in behalf of their clients and prosumers: Ditto Delivery for automated personalized delivery service, using the information collected from a 10x10x10 session to sequentially offer samples of products they've indicated interest in, even collect birthdates of loved ones and use the Shop.com event reminder service (to help in their gift shopping, naturally!) And of course, there's the personalizing of gifts & incentives when loyal clients and prosumers reach their point goals.

And who knows? There's one more highly personalized service they just may want you to provide in time: mentoring them in the pursuit of their own dreams and life goals... No affilate marketer website in the world can provide that.

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Starting Point

(Well, it's a bit late, but here's the snapshot I promised.)


I registered in early 1996 as what's now known as a Prosumer (wholesale customer/small business) with the intention of upgrading to business builder IBO "when I knew enough" (read: when I grew a spine). Understanding the potential of the business to be greater than my intended career track, and understanding that I lacked the experience, the preparation & the maturity to run a business, and since no one else I knew (including instructors at my college) had a track record to prove they possessed what I lacked, and understanding that multiple years in the WWDB system was more economical than one year in college, I quit college, got the best-paying job I felt I could obtain at the time, and plugged myself into the WWDB training/mentoring system.
In the 9+ years that followed, I have increased my job income 250%, travelled to multiple international destinations, increased my knowledge of business, leadership & people skills, and most importantly, courted and married a beautiful, intelligent, ambitious woman who had inadvertantly succeeded in intimidating all of her previous suitors-- I cannot point to any other factors in my life that could be credited for the increase of confidence and wisdom that allowed me to accomplish the above.

Oh yes, and in the last year, I've actually begun business-building activities.

Now, last year's business efforts were, I will admit, quite pathetic. I've shown a whopping 7 business plans prior to this year, and out of that, generated 2 wholesale clients (family to whom I sell at no markup), 2 retail clients, and of course, my own household as a Prosumer.
The return was proportionally pathetic-- My gross income was less than my expenses. Fortunately however, the American tax code favors business owners, and it appears that I will have nearly all of those expenses returned to me in the form of a tax refund (another reason why critics shrieking about the $115/mo gross profits are being misleading.) Counting my tax refund, last year was essentially a wash-- neither profit nor loss.


So for the starting point of this blog, it's practically a clean slate-- last year was a wash, I have yet to sponsor anyone, and have only qualified for bonus checks on personal volume.

Critical readers may be amused by this disclosure, but the irony is that the more pathetic my business is at the starting point, the more dramatic the results will be when I reach my objectives, and the more starkly obvious the correlation between effort and return. Yes, that same dreaded proportional effort-return relationship that the intellectually dishonest are loathe to concede, particularly in regards to this industry.

Given this disclosure, one may fairly question why anyone should listen to me. Obviously, you shouldn't. I have no track record. I am currently operating only on theory. I am only as reliable as your local business college professor (if they had demonstrated knowledge on running a successful business, would they be teaching for a living?)

If, in the course of this project, I demonstrate an ability to create a profitable business, I will have proved the theory in a transparent manner. Further, doing so under the advice of, and utilizing the tools available from the WWDB system will have proved the utility of that system.

Otherwise, until the project is complete, the purpose of this blog is strictly for tracking my own personal accountability to my business, and posting related personal observations.

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