We have already determined that the MLM crowd does not like Robert FitzPatrick because he speaks opposite of what they have been told. That alone does not make his opinions and arguments invalid.Last week, FitzPatrick released an interesting analysis on, you guessed it, travel and MLM. As with this blog, FitzPatrick has focused on YTB. As I have said numerous times, it is not YTB in particular, but the MLM model. YTB just bears the brunt of the force due to their size, their braggadocio, their publicly available information, and most likely their exaggerated claims,
As with Peter Stilphin, I completely agree with his assessment. But, here we have a professional that is NOT in the travel industry who is a world wide expert on network marketing and he offers an opinion that is, shall we say less than glowing. Some of the key points Mr. FitzPatrick presents include:
The key issues then are these:Pretty much right on the money I would say!
- If the real business is about recruiting, the travel industry has been invaded by a fake travel business.
- If the scheme is an endless chain, nearly all consumers who join the scheme will lose money and the public has been misled by a fake "business opportunity."
- If whatever "travel" revenue the company generates is coming from the agents themselves, then the scheme is merely disguised as a "direct selling" business. It is in reality a pyramid scheme, using travel services, sign-up and website fees as the means for laundering pyramid money transfers.
The answers to most of these questions are clear and verifiable. According to YTB's filings with the SEC, 73% of all its revenue came from the $500 up front and $50 monthly fees. Another 10% came from selling the "agents" marketing materials and courses.
Only 14.5% of YTB's revenue came from commission on travel services that were sold.
Do the agents "sell" travel services to real customers or just buy from themselves? YTB does not disclose this. However, the SEC filings reveal that the mean average commission payment to YTB reps from travel services was only $44 a year. This tiny average payment would make sales to anyone other than themselves or immediate family unprofitable. Much anecdotal evidence also exists that YTB "agents" are in fact just consumers "buying for and from themselves".
Is YTB a viable business opportunity for consumers?
YTB also answers this question with numbers posted on its website, however, as with other MLMs, the data may not be clear to the average consumer. A little analysis reveals the following devastating facts:
- 0.37% of the total number of reps (1 in 300) got over 70% of the total commissions.
- The top 4% (4.037) of the Reps received 96% (95.66) of all Commissions
- The bottom 81% of the chain got no commissions at all.
- The bottom 96% (95.57) received a mean average commission of $13.91 per year or $0.27 cents per week.
When this data is merged with the information that YTB submitted to the SEC in its latest annual report for 2007, it reveals that only 14% of all commissions paid to the reps came from selling travel. All the rest came from enrolling other "agents." The mean average payment to all the sales reps was $310, but only $44 of this came from travel services sales. All the rest came from recruiting. And 96% of all commissions were transferred straight to the tiny group of promoters at the top of the YTB pyramid.
In summary, almost no YTB reps earned any money from selling services and nearly all the commissions that were paid for travel sales were transferred to the top based on YTB's pyramid pay formula - a money trap for consumers.
E-mail sent from Kate and John to Robert FitzPatrick:
ReplyDelete“Pst…Robert, here’s what I’ve been writing about YTB and my take on it.
Can you regurgitate it on your site and then I’ll link back to it to prove we’re right?”
I like how the blog referes to Fitzpatrick as an expert.
ReplyDeleteWhat makes him an expert? Oh that's right he hates MLM completely, so he must be an expert. REad this for more on this zealot...
http://marketwaveinc.com/articles/zealots01.asp
Fitzpatrick has been investigating MLM's for years, long before John F and any of the rest of us TTA's had even realized what the heck an MLM was. And even if John F. did put a "bug in Robert's ear" it doesn't mean that Robert's interpretation or investigation is wrong!! MLM'ers continue to dispute because they don't want this cash cow (if indeed they are part of the upper echelon) to go away. Who wouldn't want to be setting back collectin' a check. You're probably collectin' from the govt too!! Oh, but that's another whole story in itself!! Pathetic.
ReplyDeleteSo with that said, Robert Fitzpatrick is an expert in that, it doesn't take rocket science to break down "how a pyramid scheme works". They all work the exact same way and it's out there for anyone to investigate.
Highly opinionated zealot does not equal expert.
ReplyDeletePlus, "they all work the exact same way" is a pathetic statement showing your ignorance. Remember Mary Kay, Avon, tupperware, herbalife, YTB, Amway, Excel, Keller Williams realty, Monavie, pampered chef, are all MLM companies. They all dont' work the same way.
The way I see it the people at the top getting the checks don't want their minions to realize they are being ripped off. They don't want the gravy train to stop.
ReplyDeleteThat's why they keep deflecting, refuting, arguing and keep hanging around here. They don't want the truth to come out about what scum they are sucking the down line to make a buck. And, the downline is either too dumb or to naive to get it.
You can't dispute the fact that all mlms, no matter what the product, have a lot in common. The majority of the members make nothing and are told they have only themselves to blame. The mlm members will defend themselves and the mlm that they are in to the death if needed. MLMs make people believe that they are the path to wealth, independence and freedom. Sadly for the majority it doesn't end up that way. The similiarities between a cult and an mlm are alarming.
ReplyDelete"Plus, "they all work the exact same way" is a pathetic statement showing your ignorance. Remember Mary Kay, Avon, tupperware, herbalife, YTB, Amway, Excel, Keller Williams realty, Monavie, pampered chef, are all MLM companies. They all dont' work the same way."
ReplyDeleteI don't know about all of the above, but I can guess that Mary Kay, Avon, Tupperware, and Keller Williams are making more than, let's just say, 75% of their income off the product rather than from building down-line?
Back to YTB - what I still wonder about is how is YTB sending consumers to the RTAs' websites so that the websites can sell more travel? No one has answered this or even attempted to. If YTB was interested in selling travel, it certainly would be interested in driving customers to the websites, no? I mean, you don't set up a site and hope people find it....
We in our B&M's that also have websites are constantly marketing ourselves, but thoseof use with legitimate Hosts/Consortia get assistance from them in driving customers to the websites.... So, what IS YTB doing for you in that respect? All I hear about is how you should be giving your business card to ever person you run across...... anyone?
CTA in MD
I don't know why everyone has their panties in a bunch about the fact that the bulk of YTB's revenue comes from selling websites, and not from the sale of travel. This is a comment from one of John's earlier posts:
ReplyDelete"Here's how the comp plan works. In this example, the Rep has sponsored only one person into their Power Team, and the Power Team has grown to 100 RTAs. Commissions and bonuses are paid through the 6th level Dream Team as follows:
$50 direct sale commission for the personally sponsored RTA
$5,000 in Power Team bonuses for all RTAs in the Power team
$2,500 -- 50% match to sponsor
$16,000 for 16 leadership bonuses
$10,000 Dream Bonus
$3,000 1st level Dream Team commission
$1,500 -- 50% match to that person's sponsor
$2,000 2nd level DT commission
$1,000 -- 50% match to that person's sponsor
$1,000 3rd level DT commission
$500 -- 50% match to that person's sponsor
$500 4th level DT commission
$250 -- 50% match to that person's sponsor
$500 5th level DT commission
$250 -- 50% match to that person's sponsor
$500 6th level DT commission
$250 -- 50% match to that person's sponsor
Grand total paid out in commissions and bonuses from the sale of websites: $44,800
Total revenue from 100 RTAs: $44,995
Percentage of revenue paid out in sales commissions and bonuses from the sale of websites: 99.56661%
Percentage of revenue retained by YTB from the sale of websites: 0.0043339%
Therefore, for every 100 people that buy a website, YTB nets only $195 ($1.95 pp), because everybody is on somebody's First Team, Power Team, and Dream Team (levels 1 through 6)!
This proves that YTB makes virtually no money from the sale of websites. Nearly all the money received from the sale of websites is contributed back into the marketing budget via commissions, bonuses, and matches. They have no choice but to sell travel in order to survive. Therefore, they must have as many websites out there as they can. The more websites, the more travel sales. The more travel sales, the more retainable profit for YTB. That's stated right in the 10k."
I've checked the numbers against the comp plan, and they are accurate. So far, no one has disputed this breakdown.
So when FitzPatrick says that "96% of the commissions were transferred to the tiny group of promoters at the top of the YTB pyramid", there is some truth to the fact that most of the revenue is paid out, as illustrated above, but it doesn't go the a "tiny group" at the top, because it only pays up through eight generations. Most people joining YTB these days are much farther removed from the people that have been in the business for three or more years, so it's difficult (and would be inaccurate) to conceptualize YTB as a pyramid in the negative sense that this blog and FitzPatrick would have a reader believe. They insinuate that YTB and all other MLM's are 'illegal' pyramids, which YTB is not -- illegal pyramids are, well,... illegal. Every business organization and government is a pyramid. An illegal pyramid is one where lazy people put money in a pool, do no work, don't want to do any work, and expect an exponential return on their "investment". MLM, as with any other business, industry, or marketing method requires effort to be successful The rate of income is commensurate with one's drive, determination, desire, dedication, and effort. Why don't Kate and John understand that to get paid, one has to work? Does Kate go to her office every day and refuse to answer the phone? Does John not tell anyone he is a travel agent? Of course not, because their livelihood depends largely on their personality and getting word out that they can offer something of value. And if they're serious about selling travel, they are giving their business cards to everyone they run across. Exactly the same for any business owner, or commissioned salesperson. Now, whether you think YTB offers something of value is a dispute that will not resolve, just as is charging a $30 - $100 'service fee' for an airline ticket.
Don't be a dream stealer John!
ReplyDeleteThere are some people out there that need hope for a better tomorrow.
They need to know that if they invest with YTB and work real hard, that they have a 1 in 25 chance at making money. (That is if we don't count the investment that is required...meaning that most of the people that are in the top 4% still loose money, or are working for less money than a McDonald's employee.)
You have no right to steal peoples dreams!!!!!
Only Coach can do that!!!!
All this negative press just proves that you are all scared of YTB!
ReplyDeleteYTB is going to be the biggest travel business in the world, and all of you are going to look pretty stupid.
If you were smart, you would join us!
We are going to make more people millionaires than any other business in history!
CTA: YTB does nothing to drive traffic to the individual RTA's websites. Many have blogs and websites with links to their booking engine. Most rely on word of mouth.
ReplyDeleteThe majority of Mary Kay, Avon, MonaVie, etc.'s customers are their distributors. In order to get paid, one must be on 'auto-ship', which is a predetermined minimum amount of product sent to your house every month, whether or not you want it or need it. Not so with YTB. Many MLMers are realizing that if they put as much effort into selling travel as they do the lotions and potions, they could easily make more than what it costs to be in this business. Remember that if you help 6 people get their own websites, yours is free.
If YTB could drive consumers to a website to book travel, they wouldn't need RTAs. They would be just another Expedia, Orbitz, or Travelocity. It would spend millions on media advertising. They have chosen a differnt route, and has helped thousands of people in the process. They had more $100,000 earners in 2007 than any other MLM.
This comment is particularly amusing to me:
ReplyDeletelike how the blog referes to Fitzpatrick as an expert.
What makes him an expert? Oh that's right he hates MLM completely, so he must be an expert. REad this for more on this zealot...
http://marketwaveinc.com/articles/zealots01.asp
If someone that has been recognized by many more than me--including the national media in two countries, has written books on the subject (not YTB but MLM in general), issued countless papers and so forth is a zealot because he does not go along with your scheme.
But the link provided is absolute proof that Fitzpatrick is wrong...
Let me quote from the link's source and his background...
Co-Owner and Vice President of Market Research of Zenza Life Sciences, LLC
October 2005 - Present
A health, nutrition and personal care based network marketing company.
Co-Founder and CEO of Epic Network International, LLC.
May 2004 - June, 2005.
A health & nutrition based network marketing company.
Resigned for ethical reasons.
So your expert seems to have founded two MLM companies...sitting squarely on the top of the pyramid. Making tons of money no doubt. Does it surprise anyone that he left the one company he founded for "ethical reasons" What the hell does that mean? Was he unethical, or was he unable (as CEO) to control the unethical behavior of his people?
I like the graphic today John
ReplyDelete"They need to know that if they invest with YTB and work real hard, that they have a 1 in 25 chance at making money."
ReplyDeleteActually, if they work real hard, they have a 95% chance of making a lot of money. Do you think the ones "at the top" don't work hard? How does their work ethic compare to the other 96% (using your figures)? Do you get paid more the harder you work, or are you a corporate drone with limited income potential? Will you ever make more than your boss?
Yeah, I think I saw something like that on the back of a dollar bill (without the jet). Must be evil.
ReplyDeleteAll this negative press just proves that you are all scared of YTB! YTB is going to be the biggest travel business in the world, and all of you are going to look pretty stupid.
ReplyDeleteHave another glass of kool-aid. Who do you work for Dr. Evil (one milllllllion dollars) YTB has a LONNNNNNNG WAY to go before competing with the big boys. Right now they are not even a dent. As for us being scared..funny. Disgusted..yes, annoyed..yes, scared..far from it.
Milton---you make one good point. With Mary Kay or Avon there is a mark up on the product that is significant. My ex was involved in Longerberger Baskets and I know all about the mark up---that is not the case in travel. At $3.60 a ticket, how many airline tickets do you need to sell to make "a lot" of money? Say you want to make $50,000--that is almost 14K tickets--that is 40 per day, 5 per working hour.
ReplyDeleteBut you say they drive business to the website via word of mouth. And that if YTB wanted to be like Orbie and Expedia (which they claim they do)they woudl not have RTAs.
Read the RTA agreement...all of the client info processed through the website---deals and steals and any bookings is the property of ---you got it YTB. Not the RTAs.
So maybe they are aiming for the Expedia and Orbitz market. Maybe once there is a critical mass of clients in YTB's database from 138,000 RTAs they cut the RTAs loose and say thanks for the info.
You see, with any legitimate travel agent, one of their most prozed possession is their client list. I know for each IC that I have, I have to ask permission to market to their clients and if I get it I sign an agreement that they will only be marketed to on the ICs behalf and with their permission and that when the agreement ends, that all data will be purged.
Hmmm.
"I don't know why everyone has their panties in a bunch about the fact that the bulk of YTB's revenue comes from selling websites, and not from the sale of travel."
ReplyDeleteBECAUSE Milton, YTB RTA's are promoting themselves as travel agents AND are using "travel like an insider" to recruit. Go to any craigslist in the US and look at the travel and vacations section. Nothing but ads from YTB promoting travel like a pro and free travel. Calling themselves travel agents. That's why we are upset. You ARE NOT TRAVEL AGENTS!!! NOR SHOULD YOU GET THE PERKS OR DISCOUNTS GIVEN TO TRAVEL AGENTS! Quit making false claims to recruit!!!!
“All this negative press just proves that you are all scared of YTB!
ReplyDeleteYTB is going to be the biggest travel business in the world, and all of you are going to look pretty stupid.
If you were smart, you would join us!
We are going to make more people millionaires than any other business in history!”
Really??
This is classic mlm brainwashing at it's best! We keep hearing about this new crop of millionaires, but interestingly enough no one has seen it yet?
Scared? No. Disgusted? Yes.
YTB is not a travel company. It's a mlm.
Recycled drivel from another "expert".
ReplyDeleteLike the community activists who hate Walmart.
Walmart - such a terrible company.
"They pick on the poor people and pay them low wages and inadequate health insurance."
As if someone makes these people apply for the jobs and work there.
Walmart just kept doing their thing.
Did not listen to the so-called experts.
And TTAs who think they are pychologists.
I will let you know a secret.
I have magical powers that help me keep (79%) of the people that have joined my team in the past 4 years.
We meet each month at an undisclosed location to further the cult.
It is amazing how I have been able to win over the minds of professionals from CPAs to bank managers to mortgage brokers and real estate agents.
And they keep paying that huge $49.95 even though, down deep, they do not want to.
Even convince them to call this a business so they file tax returns and save thousands on their taxes.
It is truly amazing.
It is those magical powers that I possess that keep them paying their $49.95.
It is a mystical thing.
LOL.
YTB and TRAVEL: A Great Mix!
"This is classic mlm brainwashing at it's best!"
ReplyDeleteThanks, Kate, for validating my last post.
If only you knew my secrets of how I enter the minds of these professionals.
But, if you did, I would have to kill you.
Pyschology 101, 102 and 103.
All in one setting.
YTB and TRAVEL: A Great Mix!
Mixed Up, you are deflecting again.
ReplyDeleteAre you equating YTB with Walmart? I guess the 'low wages' and 'poor health insurance' is common to both companies but otherwise Walmart has YTB beaten hands down.
And I've known some pretty dumb CPA's, bank managers and yes, even real estate agents. I guess you know them too.
I doubt your retention rate. You can say whatever you want, but I don't believe you. 80% of RTA's fail. 80% lose their money. Are your bank managers offering free lines of credit to those poor people?
posted on 8/27/2007 7:41:01 AM
ReplyDeletecontributed by Bill Alverson
Why is Peter Stilphen such a Grumpy Old Agent?
Why is he obsessed with us and why does he write lies about our company? How can he call us a card mill when we've never issued a card? Why does he say we are an MLM when we are not nor ever have been?
Doesn't he care that by doing this he is attempting to hurt all of us (travel agents)?
I get these questions every now and then with a link to his pathetic blog. I don't think much of the comments because I know the truth and because, well, I'm busy.
I also have three years of email exchanges where he has stated, "I write these things in my blog in jest, and I consider Bill and his wife Kathy my friends.
What Peter failed to realize with his failed attempt to be witty is that a prank stops being funny when it hurts someone. And, when you start messing with Joystar agents and attempt to disrupt their livelihoods, you've crossed the line to a very bad place.
Ironically, at one time Peter and I were in discussions about him joining Joystar's Enterprise program because he was losing so many agents to us. He said he appreciated one of the terms of the agreement protecting the existing relationships a host has with its agents.
His agents would have been happy because they would have access to all of the benefits of Joystar membership including higher commissions, better technology and much more support . He could have been happy knowing he did the right thing. But, because he had been saying bad things about us, he was afraid of losing credibility.
I hate to be the bearer of bad news, Peter, but you have no credibility. Instead of worrying about yourself, you should instead have been worrying about the success of your agents and how your actions, or failure to act, is placing them at a competitive disadvantage. Credibility? Shame on you!
Back to the question at hand.
One delightful Joystar agent recently remarked that maybe it was because of an insane jealously towards me because of Kathy, my wife. If you've met Kathy you would understand the logic. Although Peter has been seen following Kathy around like a puppy at travel industry events, I doubt (this) jealousy is the primary factor driving his fraudulent statements and unethical business practices.
The answer is simple: Peter Stiphen is Joystar's competitor. The fact still remains Joystar has been very disruptive to Peter Stilphen and other lesser-funded, non-innovating, grumpy old agents out there trying to fake it as Host Agencies.
We get up every day and beat him in the business of hosting travel agents.
That is why his agents are leaving him. That is why he resorts to unethical behavior, that is why he is a grumpy old agent, and that folks, is why Peter hates Joystar.
The question I've been hearing lately from our employees, shareholders, agents, supplier partners, technology partners and yes, even some of our competitors is, When is this guy going to shut up?
I doubt Peter will ever shut up. I say this because I think he actually thrives on telling lies and spreading negativity. Add to this, a $29.95/mo. blog subscription and the morphine like high that comes from appointing yourself President of that cockamamie scheme of a host agency association (PATH), and old Peter is in, well, hog heaven.
For all of you Joystar stakeholders who get upset with Peter for being the grumpy old agent he is, we should instead be giving thanks that he and his rinky-dink agency, Americas Host Agency/Coral Sands Travel are our competitors. And, we should continue to welcome with open arms, all of his agents that leave him for Joystar or one of our 70 host agency Enterprise members who offer them a superior value proposition.
Let this rube keep digging his grave.
Let this hog wallow in his self-made quagmire of mediocrity
Side Bar:
Many of you have asked me about Peter's pathetic trade association (PATH).
Stay tuned for information on ill-conceived trade associations and the Antitrust violations including price fixing, unfair competition, restraint of trade and other potential criminal charges all association members may face because of the potential criminal activities of a few very bad eggs.
What's Bill alversons opinion on Peter gor to do with YTB?
ReplyDeleteThats an old article too.
Deflect deflect deflect. Just like the "expert" on FitzPatrick was a link from 2005
ReplyDeleteI agree Bill Alverson's opinion of Peter has absolutely NOTHING to do with the discussion. You guys are attempting to delfect the criticism away from YTB again.
ReplyDeleteWell maybe that is not particularly applicable, but this will certainly be appropos
ReplyDeleteBarack Obama hurled himself into an angry confrontation with the President yesterday after Mr Bush compared the Democratic candidate’s promise of talks with rogue states like Iran to the “false comfort of appeasement” towards the Nazis in the 1930s.
“Some seem to believe that we should negotiate with the terrorists and radicals, as if some ingenious argument will persuade them they have been wrong all along,” Mr Bush told the Knesset in Israel. “We have heard this foolish delusion before. As Nazi tanks crossed into Poland in 1939, an American senator declared: ‘Lord, if I could only have talked to Hitler, all this might have been avoided’.”
The recruiting line that I cringe at is "we get paid to travel."
ReplyDeleteREALLY?!! Is someone saying..."take this vacation, and I'll give you money."?
FACT: You are NOT getting paid to travel. You are getting paid to recruit other people into YTB and sell travel.
There is a big difference!
John..."As with Peter Stilphin, I completely agree with his assessment."
ReplyDeleteSo does Alfred E. Newman who once said, "Travel agents are people who act like babies if they're not treated like professionals!"
"If YTB could drive consumers to a website to book travel, they wouldn't need RTAs. They would be just another Expedia, Orbitz, or Travelocity. It would spend millions on media advertising. They have chosen a differnt route, and has helped thousands of people in the process. They had more $100,000 earners in 2007 than any other MLM."
ReplyDeleteHow silly. Most hosts/Consortia have marketing progrmas deisgned to drive consumers to the Agency and/or it's Website. It is not all work-of-mouth. Getting them in thefirst time takes marketing and again, driving them to the website. Servicing them appropriately creates word of mouth. If I go to YTB's main website do I see anything to indicate that there may be an RTA (fake Agent) who can assist me with my vacation? Do I see anything that will help even get to someone's website so that I can book travel? Nope. 99.9% of that page is about recruiting.... If YTB wanted to sell travel, included in the RTA's monthly fees would be a marketing program, part of which would be carried out by YTB. But YTB is not actually interestedin selling travel at all. that's the only conclusion I can come to.
Mr. FitzPatrick said, "It is in reality a pyramid scheme, using travel services, sign-up and website fees as the means for laundering pyramid money transfers."
ReplyDeleteIf YTB is a pyramid money laundering operation, and has been in operation for nearly 8 years, why is it that no federal or state regulators or law enforcement agencies have shut this company down? Or, how about even a case pending in one of the 57 states Mr. Obama has visited? Please furnish us with facts in place of the usual speculative opining comments. I know, I'm probably asking for too much.
OleScorekeeper
Ole---you can use your mouse and go to his site and ask him. He said it. Posting a question for FitzPatrick here is useless.
ReplyDeleteAs to why YTB has not been shut down or have cases pending....if a person is murdered and the person responsible is not caught, does that negate the fact that there was a murder?
John said..."Ole---you can use your mouse and go to his site and ask him. He said it. Posting a question for FitzPatrick here is useless."
ReplyDeleteI wasn't directing my question especially to Mr. FitzPatrick. It was really for the readers of this blog. But, hey..Mr. Fitz, if your amongst us, perhaps you can answer the question.
As to why YTB has not been shut down or have cases pending....if a person is murdered and the person responsible is not caught, does that negate the fact that there was a murder?
Your analogy, of course, assumes a crime has been committed by a known ("responsible") suspect.
Using similar logic..if that same person was not murdered, then there would be no murderer and therefore no crime for law enforcement to persue a suspect for.
My analogy assumes that NO crime has been committed, while your analogy assumes that YTB has been on the run evading state and federal authorities for the last 8 years. Funny thing, I went to their hide-out in Wood River, IL and found the doors wide open and not a FED to be found.
Now who will be the first ninny to say, "It's just a matter of time before the Fed's are on to them".
Many of the anti-YTB zealots have re-evaluated the time YTB has left before they are shut down. I think some are now saying they give us about 4 more years. Funny, when we first opened for business, the naysayers gave us 6 months...then later on, 1 year... and then on to 2 years. And so it goes.
OleScorekeeper
ole-Given your checkered past and time spent making license plates you have about as much credibility as a rock. Then again, a rock probably has more credibility. Now, go away before I drop a house on you.
ReplyDelete