Wednesday, July 16, 2008

YTB Versus Other Travel Companies- Which Is the Scam?

Since I've been gone for the past couple of months on our wedding and honeymoon, I got a disturbingly large amount of phone calls and e-mails from another travel company's reps trying to recruit me into their business. Starting about a year ago, I had one rep try on more than one occasion to get me to leave by comparing YTB to their travel company (let's call it "TC"), mainly the start-up fee.

I think the deluge of TC folks bombarding me with their pitches began in large part to YTB's 2007 Income Disclosure statement.

The constant flood of sales pitches over the past few months gives me no choice but to "clarify" a few things for those who may fall prey to the "TC" is better that YTB trap.

First, I want to begin by making a blanket statement for all of the other Travel Company reps out there- don't waste your time calling or e-mailing me. I am not interested in joining your company- YTB is the only travel company for me.

Now, onto the real stuff of the YTB versus TC debate...

The YTB Income Disclosure Statement
Here's what one TC Rep said:

According to the 2007 Income Disclosure Statement at YTB, only 4% will ever get to their power team. In addition, less than 1/3 of 1% will ever make it into coach's corner. There is over 246,000 reps of which 95% an average of $90.32 in yearly income

Okay, now the first OBVIOUS question to pose to the suave TC salesperson is this: "Could you please send me a copy of TC's 2007 Income Disclosure Statement". If the answer is anything but, "sure here you go" then you need to take everything they say after that point with a grain of salt.

The truth of the matter is that YTB's statistics are fairly representative of network marketing companies in general...95% make little to no money at all. I seriously doubt that TC's statistics are any better.

Let me give you a real world example- I have at least 23 Reps whom I contacted after they joined as a Rep who said that they were "just looking". 23- in just MY organization, who are nothing but "tire kickers". Multiply that by the Tens of Thousands of active Reps (i.e, non-tire kickers) and you start to see why it is that such a large percentage never make any money...THEY DON'T WORK THE BUSINESS AT ALL!

Now, if you think that people who just sign up to "look around" because it's free should be compensated by YTB, then you need to head on over to Cuba and hang with the Communist crowd! In this capitalist society, you get paid for the value you bring to the marketplace- you don't work, you don't get paid. Ask your friendly TC rep if they are just handing out checks to those who don't work the business at all, I'll bet my life they will say no.

Therefore, common sense dictates that taking the amount of commissions paid by YTB in 2007 and dividing it by the number of Reps is completely ridiculous. In reality, you have just about the same percentage of success in most any legitimate company. Your success depends in large part on YOU.

Marketing Techniques
One of the things that really struck me about one particular company, is that it has become very apparent how they are marketing the business... encouraging their reps to contact current YTB reps and try to get them to leave YTB for their company. Hmmm... Questionable tactic at best. I have never once contacted someone who did not contact me first for more information, and I never once enouraged someone to leave their company to come to YTB...but that's just me.

The Price To Join
Another favorite of TC Reps is to show how much "cheaper" TC is to join. Now, if we are comparing prices on something- anything, doesn't it make sense to make sure that you are comparing apples to apples?

For example, if you are looking to buy a car- do you just look at the price? Geez, I hope not! You look at features...what car gives you the most bang for your buck? what car has the features you want?

Now, let's look at YTB. For $449.00 you get an on-line travel booking engine, the ability to book travel directly with vendors, a YTB Flowers site, a YTB Cars site, a YTB Outdoors site, a YTB golf site, and a marketing site, complete with a back office for both travel and marketing. (assuming you sign up as a Rep and an RTA). Then your monthly web-hosting fee for your travel booking engine is $49.95 per month (which is refunded if you sell 6 travel stores). As an RTA you receive 60% of the commission earned by YTB on the sale of travel.

Now, from what I understand about TC:

When you join at their "low, low rate" (which varies from $49 to $99 depending on what day of the week it is and a $49.95 monthly fee) you don't get any credentials, don't have the ability to work with travel vendors directly, and you only get a 20% commission on travel booked through you. Okay, so with the base package you pay the same monthly fee, but your products are limited (because you can't book directly through vendors) AND you get 40% LESS of the commission on all travel booked through you! If you plan to book a lot of travel on your site, the joke's on you, because while you saved $300 on the initial fee, how much commission will you lose over the next few years because you only get a 20% commission?!?

Now, if you want a sharp looking website- you'll add another $9.95 for that. Do you want to market the TC opportunity? Well, it's gonna cost you-another $19.95 a month. So, now you are paying almost $80 per month for a fraction of what YTB offers (remember, YTB has numerous product websites- YTB Flowers, YTB Cars, YTB Golf, Honeymoon Wishes, YTB Romance etc. which all come with your $449 start-up fee).

It doesn't take an accountant to figure out that after just a year, TC is actually MORE expensive than YTB for less features.

I could go through an even more thorough analysis of the differences between YTB and other travel companies(YTB is #26 on Travel Weekly's 2008 Power List (up from #36 last year), YTB is a member of the Direct Selling Association, etc, etc.) but I will leave the due diligence up to you!

Best of Luck!

63 comments:

Jason said...

Thank you for your insight. You definitely have done your due diligence with YTB. Great perspective.

Anonymous said...

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Rick Clifton said...

Interesting! We were in YTB for just under 2 years primarily marketing our YTB business opportunity as well as travel exclusively online. We did quite well but sadly realized that none of our recruits were making any money because they were marketing YTB "door to door"..."hand to hand" in a traditional sense. The other piece that became very apparent to us is that YTB did not necessarily offer competitive prices on travel.
We resigned from YTB July 2008 to pursue other interests.

firemedic227 said...

Good Luck Cliff!!!

Anonymous said...

California calls it a "giant pyramid scam". The clever tactic of creating one group that recruits, and one group that sells travel, doesn't fool anyone except YTB'ers and those who don't know the pyramid scam laws. YTB hired themselves an attorney who told them what they wanted to hear... or maybe the creators of YTB knew they'd get caught all along, but wanted to make a killing until the law caught up. Either way, YTB is most definitely a scam. Always was, always will be. You can't earn for "travel stores" that are nothing more that replicated web sites. If they charged a $5 or $10 per month fee and paid NO ONE on them, you'd have a chance. But then YTB would never have gotten off the ground. "Travel Store" give me a break - it's expedia with your own sign in. Ridiculous.

Anonymous said...

Funny, you post a blog about your owm company under "scam" what kind of marketing is that?
Also, let me refer you to a book" Marketing Warfare, its worth the read!
Last, I think you will find your figures about "TC" way off, try 70% not 20%... that is just one of the things you were misinformed about!
It is important to do yout due diligence about a company before joining, but if you are posting about more than one, do your self a favor and do due diligence on all posted about.
With any company if you are a "Referring" Travel Agent, you are not supposed to contact vendors directly, where as if you are Certified, that is another story.
I wish you the best in your business!!

DDSMarketing said...

Network Marketing is the most fantastic income opportunity for the "regular person". Even though I am not a rep in YTB, I encourage people to seek ther financial freedom. It takes courage to step outside of the "box" and go for it. It's not easy, but so well worth it!!

My best to you and your business.

Rhandell Mitchell said...

I don't think YTB is a scam, however it is hard to make money in YTB if you are not a recruiting machine!
I worked hard at building my business and all of my people quit before they got started because they couldn't make any money booking travel. If you want to see what I'm up to nowadays just google my name

eddie said...

YTB stinks.

David said...

The original poster is clearly defending her company. And she has a right to. However, often times we deceive ourselves when we become emotionally and financially invested in something at which point we will defend our position (in this case the company she represents) to the death. None of us want to be wrong about anything.

One statement really caught me though. The statement was something to the affect, "The reason why YTB is going through these legal challenges is that old-school brick and morder travel agencies don't like the fact that YTB is eating into their business." I scratch my head and say, well, if that is really true, then why isn't Proctor and Gamble or SC Johnson Wax, or some of those types of companies challenging Melaleuca, or Amway, or Shaklee, etc. In fact, none of YTB's competitors have taken legal action against them, that I can see. It's been consumer protection agencies and law enforcement agencies that have taken action against YTB. As of a week ago Friday, the state of Illinois has filed a complaint against YTD to have them shut-down as an illegal pyramid. So if they are offering a service, aka travel, how can they be illegal?

The original poster doesn't appear to have much legal background regarding business, and more specifically network marketing companies. If you research case law, and state statutes regarding network marketing, then you can understand legally what is determined a pyramid, and what is determined a legitimate network marketing company. A good place to look at the state level is Utah. Salt Lake is perhaps the MLM capital in the world. There are more MLMs based out of Salt Lake than anywhere else in the country. ...sort of like a company wanting to incorporate in Delaware.

So why exactly is YTB being challenged? YTB is being challenged because their commissions are based on new enrollees paying the $449 to get a website, and the $50.00 monthly website maintenance fee. Uplines do not get paid on travel that is booked on your website. If YTB paid commissions to uplines based on travel booked on sites owned by distributors, then they would not be challenged in the way that they are. To put it another way, distributors get paid for travel booked on their own site, but they don't get paid on travel booked on sites owned by their downlines. Commissions from the downline come strictly from enrollment fees and from the monthly fee. No service or product is exchanging hands.

A few of you may want to defend this by saying that YTB is not a scam, or is not and may try to prove your position.... However, the law is very clear about how MLMs can structure themselves, and the reality is YTB breaks a few rules. So for YTB to not be an illegal pyramid, either YTB must totally restructure their compensation plan, or there needs to be changes in the laws.

david.kennedy@live.com

Bruce said...

YTB is a scam of the first order.
In the first quarter of this year RTAs paid 8 million dollars to YTB. In return YTB paid the RTAs 1.8 million intravel 'commissions.'
That sure is a great ROI! Foe coach it's great, the RTAs are losing their shirts and are really pleased about it.

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