As I said in yesterday's post, the appointment of Bob Dickinson is a fantastic move for YTB and they are to be congratulated for landing such a big fish! I have to admit, it was puzzling to me for a while and then I began to wonder if YTB may have had an "AHA" moment.
While many people with YTB are crowing about the success of YTB over the past 12 months, I really see it not so much as success, but finally doing the right things to get out of the trouble they placed themselves in in the first place. Here are some of the" accomplishments" I have heard from the YTB crowd:
- Being listed on the OTC stocks and off of the Pink Sheets (you were placed on the Pink Sheets for irregular accounting practices and failure to file SEC paperwork)
- Selling a record number of cruise certificates with Carnival (adfter being summarily fired by Royal Caribbean)
- Purchasing a travel agency in Canada (after realizing that TICO required a physical presence)
- Attempt at a purchase of Hickory Travel Systems (after realizing that IATA endorsement was important)
- Focus on training in travel (only when pressure was felt from the industry that training was essential)
- Partnership with a "big" Chinese Tour Operator (and we all know how that ended)
- Statement that IATA was a card mill and a competitor (resulting in denial of the IATA endorsement--is anyone surprised?)
- $414 Million in sales (or $3160 per RTA)
- Record commissions paid (if you call less than $200 per year a record)
So where does YTB go from here? I think nthat finally, YTB may be seeing the light-MLM and Travel is a Bad Mix. How ironic. Back on October 12, Kim Sorensen said the following in Travel Weekly:
Sorensen said that YTB was a "networking company, but we also put major emphasis on the travel side. ...We want to legitimize the concept with our production." On the other hand, he said, YTB makes no pretense of competing with "high-touch, high-service" travel agents; it is after the consumer who is comfortable booking on the Internet.Well, since October, it seems that a lot of his "legitimizing has not panned out as well as he would have liked. Even their own counsel quit or was fired, blew a whistle, was re-hired, and then disappeared again. So obviously there was work to be done.
Back on November 5th, Arnie Weissmann said in Travel Weekly:
Whether or not the debate on both sides is ever stripped of its good-vs.-evil trappings, it may, if history is an indicator, play out something like this: Since successful MLMs don't remain MLMs forever (adding a new foundation level to the pyramid becomes increasingly difficult), they very often continue in their industry but drop the pyramid model.Have we reached that point? I believe we may be very close. For the first time in the history of YTB, they have brought someone with travel industry experience into the ranks of their management and Board. There have been a number of relatively high profile scams perpetuated by the untrained RTAs most recently in Tennessee a few days ago. Just maybe there is something about being legitimate and selling travel, rather than renting websites. Maybe with each new scam that YTB needs to deal with, they are taking those two steps backward on the road to legitimacy.
Maybe Arnie Weissmann is correct. Is YTB dropping the pyramid model? If they do, it will be a brilliant move on their part and will almost garner them industry-wide respect and that elusive terms--legitimacy!
As I think about this, they have had a pyramid structure for years and made a very few people very wealthy. The lion's share of their income comes from the people paying $49 a month. This is a $6.9 million dollar income stream per month! Granted, most of that goes out to the pyramid, but if that pyramid is halted, that is a tremendous income for a legitimate host agency. And we are not even talking commissions and overrides.
So now if YTB halts the pyramid, what happens? Well, there are 131,000 people paying YTB a lot of money. As has been proven time and time again, most of these folks are not serious and are not earning any money, but there is a very small faction that are serious. Let's say that faction is 10%. Well, if YTB eliminates the pyramid, the Reps fall away--they were not paying anything so nothing lost. And eventually, after some serious capitalization benefiting YTB, 117,000 RTAs will also quit the program--how many months they will continue to pay on the hopes of riches is undetermined. That leaves YTB with a 13,000 RTAs that are serious about selling travel. Are they producing like a TTA? Probably not, but that at least know they can. Notch up the training a little bit and VOILA--the largest host agency in the nation earning top tier commissions. Legitimacy=MISSION ACCOMPLISHED.
Some may say this is totally improbable, but remember, YTB's Board answers to shareholders--period. They have no loyalty or allegiance to any Rep or RTA. They need to provide results for their shareholders. How did YTB get to the travel numbers they claim to have? On the backs of the 10% of the RTAs that are producing. The remainder are dead weight in terms of travel commissions, but a cash cow in terms of revenue. Reps? Biggest liability out there in terms of financials.
Finally, if you look at the number of MLMs that are popping up these days./ There is not a day that goes by (it seems) when there is not a new "get rich in travel" scheme in my email box. This only erodes the allure of YTB as a MLM company, so it might make sense to get out of that market right now. The reps that made money will be happy and can move onto the next industry, those that did not, may not have paid anything so no loss there. YTB can claim that the RTAs that made no money failed themselves (and they will claim that), and the ones that did, (small by a percentage and large by numbers) will continue on selling travel (not recruiting) in a large host agency model.
The beginning to the end is near and as I believe that YTB is beginning to see that indeed, MLM and Travel is A Bad Mix!
And for the record...as I have said from the outset, if I prove to be correct in this hypothesis, it will be a good thing and most (if not all) of the animosity will go away.
ReplyDeleteI can't speak for everyone, but many that I have spoken with have indicated that they agree with me that if YTB were to drop the recruiting and the BS claims they would be a welcomed addition to the travel industry.
And then we can move the topic of this blog onto something else!
Let me start by saying that I disagree with you but you did finally, along with yesterday put together an honest, well thought out, non inflamatory post. Now with that said I don't think it will happen, The statement that was made that you quoted simply isn't true. I look at AVON as the biggest example. That is still, today MLM. It has been around something like 60 years?
ReplyDeleteYTB's goal as a company is to sell travel, period. If the REPS can recruit a million RTAs to sell more travel, then YTB will be successful. I don't think MLM and travel is a bad mix at all, it enables the company to sell its product with limited overhead. That is why MLM is beneficial. That is why it is taught at top business schools in the country (Harvard MBA program has a concentration in MLM). It truly is the way to do business. You probably recall the big attempt to disallow franchises back in the day. This is the exact same thing. MLM gives people (regular people) the opportunity of some type of business ownership similar to a franchsie but without the huge expense of a franchise.
Without the big bucks in national advertising, I can reach the 150 homes in my neighborhood and sell travel to them enabling YTB to "reach" 150 more customers. Well if a million people in this country do that, then YTB can reach 150 million customers WITHOUT ever advertising. Now, 150 travel customers may not be bank breaking income for a traditional TA, but as something on the side, it is more than adequate for me and I am sure for many people. I am quite positive (from my team alone) that even less than 150 customers is just fine for 50 bucks a month. That is why MLM and travel and in fact MLM and any type of product DO IMO MIX, and Mix quite well
Since I cannot provide it...please provide a link to Harvards MLM curriculum. It does NOT exist and this is a myth spewed forth by MLM all the time--along with Seligman's PhD from Oxford.
ReplyDeleteHonestly, have you sold 150 of your neighbors travel? Have you sold two of your neighbors travel?
I agree that the potential is there, but with that potential comes risk--risk of more scams, risk of less legitimacy, risk of more suppliers pulling the plug, risk of competitionin the pyramid market, and it goes on.
I think at this point YTB is looking to minimize the risk. They saw what their stock could do at 60 cents a share and I bet those that hold it are not looking to have it happen again. Screw the reps--they paid nothign. Screw the non producing RTAs they are failing thyemselves and then concentrate on the few that are seriosu
I have signed on a few people as REPS because they didn't have 450. They worked to sign up a few RTAs and then became RTAs themselves.
ReplyDeleteIn the last week I have added 4 REPS that haven't become RTAs yet.
I think I know where the Harvard MLM thing comes from. It seems that every year (semester) Harvard business school along with may others have business symposiums. Each semester that I have seen, there have been speakers, presenters, teachers if you will, from the industry sharing the model with the MBA students. So, although not part of the curiculum, it has been "taught" at Harvard Business School. Someone at some point shared that they presented to some students and like a game of telephone it just kept going.
ReplyDeleteBy the way, I was a business major in undergrad in the NE and visited Harvard on several occassions and had the opportunity personally in 1998 and 1999 to attened "classes" on campus about MLM.
"YTB's goal as a company is to sell travel, period."
ReplyDeleteWhen their financial report shows them selling more travel than anything else, then I will agree with this statement. Until then, I don't see a factual basis for your statement.
Avon is different because it is a product. You don't have to have knowledge of what goes in the product to sell it. Avon sells itself.
ReplyDeleteSee this is what's wrong with MLM and travel. You guys are not interested in the travel industry or business at all. Where is your knowledge of the industry? Where is your training? Do you know what an open jaw is? What countries require VISA's. Consumers don't know that information. It's up to Travel Agents to know it and pass it along.
You are recruiting your down line ie reps. The vast majority have no interest in learning the business. And the vast majority don't make any money. The reps do sell travel and want to learn the business end up moving to another host that offers a better commission split, support and legitimacy. Read Anita's column in one of the trades. She mentioned how her agency has fielded calls from reps wanting to join and get out of YTB.
With the current business model of recruiting it is not a good mix. You are doing a disservice to the consumer and to yourselves. You could make a lot more money with a legit host IF you truly want to learn the business, grow and learn.
John, in your post you noted, "Some may say this is totally improbable, but remember, YTB's Board answers to shareholders--period. They have no loyalty or allegiance to any Rep or RTA."
ReplyDeleteUnfortunately, this is also a problem. Remember that the Tomer's still have a controlling interest in YTB. They have not sold enough stock to dip below 50% control.
So, the Board answers to the Tomer's. Now, if they decide that they have made enough money off the MLM aspect and can see it getting harder to build that next base level, then maybe they want to go for making the company legitimate. Who knows? The Cubs could win the World Series too!
I think Tomer and the rest of the gang will fold the tent and go on to the next big thing. Their history in business proves it. They are not in anything for the long haul. Take the money and run.
ReplyDelete"I think Tomer and the rest of the gang will fold the tent and go on to the next big thing. Their history in business proves it. They are not in anything for the long haul. Take the money and run."
ReplyDeleteWhere does that come from??? Tomer has only been in one other business -- A.L. Williams, which became Primerica, which is now part of Citigroup. If what you say is true, please provide the names of the companies/businesses that "Tomer and the rest of the gang" were involved in.
You guys are all very ignorant.
ReplyDeleteAvon doesn't require knowledge? But travel does? I would say they both do.
The Tomers aren't in anything for the long haul?
The other son is still with the other company making 10s of millions. They haven't LEFT anything.
The company's goal is to sell travel. 226 mil in 2006, 414 mil in 2007, who knows what in 2008...a billion? perhaps. So, to get there they build the sales force to reach more people. Why is that a big deal.
I do agree that the RTAs should have more knowledge of what they are selling, and YTB has been taking steps to get there.
But, it seems that the fundamental difference is simply the MLM model for anything. That earlier statement about AVON proves it.
What about Mary Kay, you think the sales reps don't need to know about their product. I would say that for skin care and cosmetics it would be important to understand chemistry and skin reactions in order to be successful. Guess what? MAry KAY is MLM and has been around for decades as well.
YTB does a lot of "talking out of both sides of their mouth." While on one had they say they don't want to compete with travel professionals, on the other hand they have been doing everything possible to go legit. You can bet that a guy like Bob Dickinson didn't come cheap.
ReplyDeleteThe only way that any of the travel mlms will be able to survive in the long run is to change their concentration to travel rather than the mlm model. Too many consumers have been ripped off. Maybe the states and the FTC were willing to turn a blind eye when it was just tta's pitching a fit, but when too many consumers have been robbed by this model, then the crap will hit the fan. With their being no regulation by the mlms as to who joins or what training they receive, this was bound to happen.
A well written blog post today! But I wonder if John wrote it, or if it was a "guest poster"? Penny Cruz? Or Mimi Rogers maybe?
ReplyDeleteThe consumers haven't been robbed by the model, but rather from crappy people. It has happened in YTB and throughout the history of travel agents. There are simply lousy people in the world.
ReplyDeleteWe are not talking out of both sides of our mouths. It is true that our main competition is the travelocity's of the world and generally not the TTA. But, if the TTAs had their way they would convince the vendors to not pay comissions to us. Remember your crusade when Travelocity and the like were emerging on the scene. So, to avoid another RCL, YTB needs to make sure that the RTAs know what they are doing, not to compete with TTAs but to not lose vendors.
YTB has taken the steps and this appointment validates the model within the vendors' community, IMO.
In addition, I believe that in time, RCL will come back, maybe not crawling like some say, but when YTB reaches 1 million RTAs, that is when they will need us.
Bob DIckinson;s compensation is fully available to the public. And 30k in stock along with a salary of 30k may not be cheap but in corporate america that is like passing gas from a money standpoint.
"What about Mary Kay, you think the sales reps don't need to know about their product. I would say that for skin care and cosmetics it would be important to understand chemistry and skin reactions in order to be successful."
ReplyDeleteLOL! I have known plenty of Mary Kay reps and they don't know anything about cosmetics and chemistry. Most of them are stay at home Moms who think it's a quick way to make a buck so they don't have to go out of the home and work. Please. Mary Kay reps knowing chemistry that is ridiculous.
As to Tomer's other businesses Primamerica was a sleazy MLM and forced to go legit. Then on to something else. What's next? Funerals? You already have cars and flowers. Might as well get into YTB funeral business.
Well, do you have a problem with those MARY KAY REPS who are stay at home moms making some extra money on the side? SHould the brick and mortar cosmetic stores go on a crusade to put them out of business? Why don't you start that and let your first rant be about the lack of chemical knowledge of their products. Go ahead.
ReplyDeleteSound silly?
Sound familiar?
Primerica is still an MLM. http://www.primerica.com/public/freedom_opportunity.html
ReplyDeleteYou have yet to tell us what other businesses (plural) besides Primerica (which we already know about) Tomer was involved with.
This not an easy time to be in, or get into, the travel biz. It has been reported that as much as 60% of families will not take a vacation this year and that will affect us all. I imagine it will also hurt recruiting efforts as many just do not have an extra 500.00 and 50.00 a month to invest in a website that may, or more likely may not, produce any income. As was stated earlier YTB's Reps cost YTB more than anything else. If HQ takes the 'legitimate' road, and YTB becomes a traditional host agency, (maybe the biggest one if 13,000 producing agents are involved) it becomes way more attractive for a takeover by another industry member. Lots and lots of money for the shareholders. And, face it, the benefit of the shareholders is the number one goal of a publically traded company. Every other facet...employees, reps and rtas come a distant second. We'll see.
ReplyDeleteThere are turbulent times ahead and those that cry 'keep the status quo' may find themselves crying all alone.
In my dealing with PrimAmerica I found them to be far more interested in personal gain than in my financial welfare.A refinance transaction turned into a recruiting session. I ran the other way and dealt with a more traditional lender. Glad I did. Just mho.
ReplyDelete"Well, do you have a problem with those MARY KAY REPS who are stay at home moms making some extra money on the side? SHould the brick and mortar cosmetic stores go on a crusade to put them out of business? Why don't you start that and let your first rant be about the lack of chemical knowledge of their products. Go ahead.
ReplyDeleteSound silly?"
You guys can't read. Following the red bouncing ball. I was responding to the post above ABOUT my comment about travel agents needing training and Avon selling itself because it is a product. Doesn't take a whole lot of knowledge to sell Avon. and their comeback was Mary Kay reps have to know chemistry to sell their products. I don't give a Rats ass about Mary Kay nor do I care if desperate housewives sell it. Do you have a chemistry degree to sell Mary Kay? The products sell themselves.
You can't compare Avon or Mary Kay to selling travel. They are products which don't require a chemistry degree to sell. Travel on the other hand requires geography knowledge, airline terminology, understanding contracts, ARC rules, airline rules such as re-ticketing and cancellation policies, act of God, cruise line responsibility to passengers and a bunch of stuff the typical RTA has NO KNOWLEDGE OF! Do you know what an open jaw is? What are the policies on re-ticketing? What countries require VISAs? If you don't then either shut up or learn it and quit posting your crap about YTB making billions. I don't care. I care about the Industry being full of a bunch of wannabes who have no intent on learning anything and just want to recruit for their down line and make money off of directing people to a website. You are a disgrace to the travel industry and those who have worked hard, trained and earned our certification.
So, Mary Kay REPS would not need knowledge. Excuse me as I kick you off your high horse. So, a lack of knowledge in travel might leave a traveller stranded. But, what if you don't know if chemicals in cosmetics could cause an acute reaction or kill someone. Hmm
ReplyDeleteThe fact that Dickinson is on the Board may very well be the catalyst that keeps RCCL AWAY from YTB. Remember, RCCL and Dickinson have been arch enemies for nearly 30 years. THe RTAs (even at a million of them) likely will not produce enough profitable revenue for RCCL to reconsider. Have you read about the issue with CCL--they have cheapened the product so much and focused on OBR that they are struggling. Thankfully they have their other brands to hold the ship.
ReplyDeleteAs to the "guest blogger" believe what you like, but I have enabled a "posted by" on the entries so you will know if it is me or Kate posting. On that same topic, after reading this for 7 months, one might think someone would know my style of writing and see the difference. You all are capable of thinking for yourselves...right?
"The company's goal is to sell travel. 226 mil in 2006, 414 mil in 2007, who knows what in 2008"
ReplyDeleteWhen you look at the published financials, recruiting income accounts for 73% of all income, travel sales were only 15% of all income, marketing and other materials made up the rest.
When the majority of YTB's income is from selling travel, then I will agree that your goal is to sell travel - until then you are selling memberships and websites.
The difference is that Avon, MaryKay, Tuperware..... have higher revenue streams - signficantly so - from the actual product than they do from recruiting. The money is in the product, not in building a "dowline".
ReplyDeleteYesterday's TT article reveals Dickinson's attitude on MLMs:
ReplyDeletehttp://www.traveltrade.com/news_article.htm?id=1684&p=index.htm
Who cares what Dickinson says? He lost his clout a long time ago. He is an old fart and should stick to his golf game.....
ReplyDeletetake it from someone who truly knows.....Mary Kay is all about recruiting and frontloading products on unsuspecting recruits too. The "package deals" ranging from 600.00 to 4800.00 (probably higher now) that the new recruits are enticed to buy are comparable to the "monthly fees" which are required to have a website in YTB. Who doesn't want to be "a star"!! *eye roll* Sadly, these package deals, if kept by the consultant for a year or more is nonrefundable, then collects dust in the owner's garage or basement or closet. Trust me, Mary Kay is a huge scam too and of course, you MLM'er's will say, "well, apparently the sales consultant didn't try hard enough to sell the product so it's their fault". Well, it's NOT their fault when their recruiter orders their 1800.00 package and orders products which are going to be out of the monthly LOOK catalogue as soon as the consultant receives all of these boxes at home. Then when the new book comes out with new products, of course, anyone who might want to buy a product from the current LOOK book won't have any interest in the "old products", hence the consultant has to put more money into filling the order and not really making any money, because all the while, they are most likely being charged additional interest on the inventory which is stored in their closets. It's such a scam!!
ReplyDeletePink Truth
oh and the anon who posted about the sales reps not having a clue about the chemical reactions etc..you are so right!! These MK ladies all operate on scripts and told to "ONLY" talk to their directors too. God first, family second, career third. And who wants to have a J.O.B. (journey over broke) when they can work from home selling Mary Kay. Just another great flopportunity!!! The mantra's are all the same in all MLM's as John said.
If I were offered what Dickinson was in terms of compensation, I'd say just about anything and try and claim YTB is legitimate or will be. If YTB were to stop the recruiting and the $500 join fee, they would hit the skids faster than a new Sly Stalone movie. Dickinson sold out.
ReplyDeleteOn another note, I read Doug's seemingly endless bog after I posted yesterday. I wonder if he ever shuts up in real life? I see he posted on here again today but of course, he doesn't read this any longer and has moved on.
The "MLM at Harvard" rumor is one of a handful of Baron Munchausen-like tall tales that made the rounds in the early 1900s. First published as an unsubstantiated claim by an over-eager author, the Harvard rumor soon took on a life of its own. Starved for recognition and respect, network marketers by the score circulated this falsehood. Finally, in 1992, Upline? ran a story by founder John Fogg, entitled "The Lies of MLM, " that quickly became one of the journal's most popular, oft-reprinted articles in its history. "MLM taught at Harvard" was one of the first industry canards to fall under mythbuster Fogg's ax.
ReplyDelete"So, Mary Kay REPS would not need knowledge. Excuse me as I kick you off your high horse. So, a lack of knowledge in travel might leave a traveller stranded. But, what if you don't know if chemicals in cosmetics could cause an acute reaction or kill someone. Hmm"
ReplyDeleteWeak argument anon. That's what the FDA is for to approve products that go into cosmetics. And, I can bet the average housewife selling Mary Kay doesn't care. She probably uses the products herself and likes them. So she sells them to make some money and get some free stuff.
Travel agents do more than assist stranded travelers. See, you have NO knowledge of what TTA's do nor do you care.