You get cash in the form of a wire transfer to your bank account with Lyoness as well. The “loyalty cash” that I am referring to is the money that accumulates into units that create those $650 payouts.
What the merchants are participating in is simply a Loyalty program in which Lyoness provides their members a group of merchants to shop at. And while shopping at these Loyalty Partners (merchants), lyoness members (shoppers) get the benefit of cashback of 1-2% and other benefits. At the end of the day, what’s in it for them? Well, it comes down to being part of a loyalty program that would perhaps drive in more customers, which equal more profit.
Why merchants would participate? It’s because they now can be part of a shopping community where members are driven to shop at their stores from the incentives that Lyoness has provided to their member, ie cashback. The merchants only give up their negotiated percentage when Lyoness members shop at their stores. They only give a percentage of their Profits! If a non-Lyoness shopper shops, they don’t pay Lyoness.
As for the inability to locate many merchants right now in America is because of the Phase that they are in. They are in Phase 2 or 3 at this moment. The search you are reffering to is part of the ‘Offline Merchant’ portion of the Lyoness Program. That is the portion that they are currently working on right now.
Before I go further into this, I’d like to take a step back to explain what Lyoness is…it is a shopping community where it gives members an opportunity to shop how they’ve always shopped and get a cashback of 1-2% from participating Loyalty Partners (merchants)
As a member, everyone has the capability to earn cashback, make a residual income by recommending the Loyalty program to others, and an opportunity to accumulate money into their accounting position to create an ‘accounting unit’. The purpose of creating an accounting unit is something that Lyoness has created to give you more money to continue to shop, via accounting program.
Accounting units can be created one of two ways. Either created from shopping, or making a down payment for future shopping.
What you have to understand is that we don’t make on money on someone’s down payment. Because your down payment for future shopping still retains its’ value when their units have been placed in the accounting program, one may use that down payment in the future if that person wants out of the system.
How you get paid is not a matter of how many people you have to sign up. In the accounting program, once you have an ‘accounting unit’ (au), you have opened your accounting program. It is there where your au will collect other au’s behind it, whether it be from shopping or from down payments. These au’s may come from the people you recommend or from the person that brought you in.
As for the numbers portion of it, I can tell you that in about 2 months time, I was able to make my $3000 back. I’m not sure if that is something that everyone wants to know and it’s more on the business side of it. Anyone interested in the numbers, please email me, and I will be more than glad to show you the numbers. I hope this was helpful. vihlydc@gmail.com
From reading this and other forums, I find it very interesting how any mention of Lyoness results in new members signing up to post what, essentially, is very similar burble. I get the feeling the longer this thread remains alive, more happy campers will continue to arrive.
DocV88, I’m glad you got your money back. I believe you. You’re participating now and not four or five years down the line. My point is, despite all talk of accounting units and binary matrices, unless there’s some monster income coming from somewhere the system is unsustainable.
This is I’m sure true in the short-term, but what happens to the money you’ve got sitting in your Lyoness account when the scheme reaches saturation?
I’m not stupid. I’ve been working in business for twenty years and in management for ten of those years. All obfuscatory mumbo-jumbo aside, nobody has successfully answered the question I keep on asking. I’m not asking “how does it work for you, the participant?”, I’m asking “what external revenue stream generates enough income for Lyoness to offer returns of between 36% and 900%?” or in other words, again:
Where does the money come from?
[quote=“jjimm, post:84, topic:611746”]
From reading this and other forums, I find it very interesting how any mention of Lyoness results in new members signing up to post what, essentially, is very similar burble. I get the feeling the longer this thread remains alive, more happy campers will continue to arrive.
DocV88, I’m glad you got your money back. I believe you. You’re participating now and not four or five years down the line. My point is, despite all talk of accounting units and binary matrices, unless there’s some monster income coming from somewhere the system is unsustainable. This is I’m sure true in the short-term, but what happens to the money you’ve got sitting in your Lyoness account when the scheme reaches saturation?
I’m not stupid. I’ve been working in business for twenty years and in management for ten of those years. All obfuscatory mumbo-jumbo aside, nobody has successfully answered the question I keep on asking. I’m not asking “how does it work for you, the participant?”, I’m asking “what external revenue stream generates enough income for Lyoness to offer returns of between 36% and 900%?” or in other words, again:
Where does the money come from?[/QUOTE
The answer is simple…it comes from the loyalty merchants. Lyoness collects from merchant’s negotiated discount everytime a member comes to shop at their store. For example…if loyalty merchant A has negotiated a discount of 10% to Lyoness…it means that everytime a member shops at their store, say spends $100 at merchant A. Merchant A will then give $10, which is the negotiated 10% of the purchase amount, to Lyoness. Lyoness will keep 1% of the purchase amount and allocate the remaining funds back to the members in various benefits, via cashback, friendship bonus, and accounting units.
That makes more sense than anything else yet written, so thank you very much.
intertile predicts us asking, “how can a system pay 36% savings that is taking on average 7% discount from the retail shops?” and then goes on to say “The answer is easy to draw on paper, but impossible for me describe in a forum. It is done with there [sic] accounting software.”
That doesn’t wash and it looks completely suspcious.
How does a 7% average discount (if we can believe that figure) - which has already had 1% of the total removed to benefit Lyoness, 1-2% given to the customer, and the rest divided up within the Lyoness [del]pyramid[/del] matrix - deliver returns of a) 36% and b) 900%? It really shouldn’t be rocket science to explain. Where does the money come from?
As a consumer:
If you spend $10,000, and the merchant pays $500 to Lyoness, and Lyoness pays $450 back to you, there’s no money left to pay you $3,600 later. They require a continuous flow of new members and merchants paying hundreds or thousands to join just to sustain the model.
As a merchant:
You shop at my store, spending a thousand dollars a year. I sign up with Lyoness by giving them $3,780. You continue shopping at my store, still spending a thousand dollars a year, but I have to send $50 of that to Lyoness. The more of my customers sign up with Lyoness, the more I lose!
But wait! I’ll get a whole bunch of new customers, right? If my competitors join, people will keep shopping where they’ve always shopped and I get no new customers to make up for the losses. If my competitors don’t join, Lyoness has no new flow of merchants and the whole thing folds up like a house of cards. Either way, the merchants lose.
You’d think a company would insist on some sort of exclusivity deal where Lyoness wouldn’t try to recruit a rival business, right?
I’m glad you understand a lot better.
[quote=“Gary “Wombat” Robson, post:87, topic:611746”]
As a consumer:
If you spend $10,000, and the merchant pays $500 to Lyoness, and Lyoness pays $450 back to you, there’s no money left to pay you $3,600 later. They require a continuous flow of new members and merchants paying hundreds or thousands to join just to sustain the model.
As a merchant:
You shop at my store, spending a thousand dollars a year. I sign up with Lyoness by giving them $3,780. You continue shopping at my store, still spending a thousand dollars a year, but I have to send $50 of that to Lyoness. The more of my customers sign up with Lyoness, the more I lose!
But wait! I’ll get a whole bunch of new customers, right? If my competitors join, people will keep shopping where they’ve always shopped and I get no new customers to make up for the losses. If my competitors don’t join, Lyoness has no new flow of merchants and the whole thing folds up like a house of cards. Either way, the merchants lose.
[/QUOTE]
I believe your numbers on how the money is allocated when the Merchant pays Lyoness is off. If a consumer were to purchase $10,000 worth and by your numbers…if the merchant paid Lyoness $500, that means that the merchant negotiated with Lyoness 5%.
From this amount of $500, Lyoness will keep 1% of the purchase amount of $50. This goes toward admin fees etc. Of the $450 left, not everything is given up front to the member. 1-2% would be cash back, 1% would be allocated for a friendship bonus…and the rest of that would go into the accounting unit where it would then enter an accounting program.
I’m not sure where you got the $3600 from.
As for the merchant portion. I think it would be great from a business owner perspective because you only give a percentage of your PROFIT from Lyoness members. How many business members would pay upfront advertising cost not knowing if they would get that back in return? I would give a percentage of my profit anyway rather than pay for an expense I’m not sure if a return would be coming back. If a consumer that is a Lyoness member spends a $1000 at my store a year and it’s only when he spends in my store…I’d be more than glad to pay the percentage I agreed upon with Lyoness because if I wasn’t a loyalty partner, I’d probably not have a lyoness member come shop at my store.
Yes, this is how Lyoness wants to build Loyalty with not only consumers but with merchants as well. They will take up to 50% of the niche market.
intertile: “I as a retail partner, invested $3000 to be a premium member, and $780 in software and equipent to be able to scan cards.”
The average discount offered is supposedly 7%. How many retailers are working on such a % markup that their profit exceeds 7% (presumably by enough that giving away 7% is compensated by increased volumes).
You’re also glossing over the huge rates of return spoken about in this and other threads. I guess I’ll repeat myself: how can subdividing 7% between Lyoness, the customer, and all the other participants, offer returns of a) 36% and b) 900%?
Thanks.
(I can’t work out if these posters are in denial, or are Lyoness marketing drones working from a PR sheet.)
Haha I like that PR sheet…in the accounting program, in which one accounting unit starts in their account program (AC 1). It is there where the accounting unit collects other accounting units where the goal of it is to collect enough accounting units behind it. It is only when there are enough units behind that, it will pay out. Once that same accounting unit gets paid out in AC1, there are a total of 5 accounting programs where they same way they pay out is the same but the commissions are paid out more.
Perhaps it’s a fairly straightforward loyalty programme with a lot of financial mumbo-jumbo mixed in to try and distinguish it from similar programmes in order to attract members.
If payoff relies in any way on buy-ins/setup fees/subscriptions (whether by individuals or new merchants), then it is unquestionably a pyramid scheme. Full stop. Similarly, if there is any need to rely on income from other users’ activities, then it is a basic MLM/pyramid scheme and unsustainable in the short term. Full stop.
If it’s not a scam, the primary influx of money is through merchant fees. The primary benefit/reward to an individual must come from a combination of discounts on merchandise and ‘cash’ back.
A merchant recognizes the opportunity to increase its customer base. It agrees with Lyoness to a 5 percent rate.
An individual shops for items with the merchant. On every purchase, the individual receives a 1 percent ‘cash back’ benefit.
There is now 4 percent of the purchase price left to divvy out.
Lyoness retains 1 percent for overhead (vig?) for itself.
There is now 3 percent of the purchase price left to divvy out.
In a perfect world, the *entire *3 percent goes to the original individual.
That is, of the total purchase price, the individual received 4 percent back (over time) and Lyoness received 1 percent.
To keep things simple and best-case, assume the entire 4 percent goes to the individual immediately (note that Lyoness could actually be an investment bank, and by sitting on people’s 3 percent post-cash back they are earning a return large enough to pay fantastic rates. But that’s a bit of a stretch).
As a loyalty programme, it’s simply a matter of comparing the cost to join versus average savings. It can sound wildly ‘profitable’ if purchase discounts are considered the same as cash and thought of as a return on investment.
Let’s say it costs $1 to join, and an individual receives a programme-exclusive 4 percent discount/return in benefits (see above) on their purchases.
On day 1, the person spends $25 with the merchant.
The merchant gets a bill for $1.25. (For simplicities sake, this $1.25 is still within the merchant’s profit margin and allows him to keep operating.)
Lyoness keeps $.25 for itself.
Lyoness pays the individual $1.
The individual has now broken even.
On day 2, the process repeats—the individual spends $25 again, and eventually receives another dollar from Lyoness.
By considering discounts as gain, the individual now claims that he earned a 100 percent return on his investment (incidentally, he gives the extra dollar to the bellman). Further, if the original price contains a member-exclusive discount (above and beyond the 5 percent participation fee sent to Lyoness), then by this way of counting investment returns that too can get added in.
Over time, the individual keeps ‘earning’ his discount, and keeps increasing his original ‘return’ on his investment—hence fantastic sounding returns without the need to resort to a continual influx of cash. Lyoness’ programme and intricacies are handwaving to get people to lock in funds with them, buy their membership, etc.; they’re just accounting woo to obfuscate a mundane transaction and put steps/layers between their receipt of the merchant fee and their payout to members.
Or it could be actual cash and insane profits above and beyond the discounts. How? See my earlier post. The answer is simple: volume.
Think of it this way…any business owner spends money on advertising…for 3K (and the minimum buy in is $250) they get their business listed w/in the online theatre and they have the opportunity to reward and cultivate new customers with the SME program…handing out FREE cards for shoppers to use…Yes, lyoness is making a lot of money through the business sign-ups! - the fact that the card will be of use globally is very unique. I work in the merchants services industry, once they certify w/a processor or tandem their product w/a terminal manufacturer - lights out!
I have run into less than a dozen business owners whom successfully calculated their merchant statement and accounted for the fees correctly…tell me how that accepted operation is transparent?..LOL
This thread is just hilarious.
Intertile in particular is describing, in his own words, a MLM operation to a T, but can’t see that’s what he has brought into.
I’d never heard of Lyoness before this thread (Looks like Australia isn’t a target yet. Thankfully).
To me it looks like if you go in purely as a consumer, you can probably benefit from a 1-2% cashback along the way, and leave it at that. Nice, but not earthshattering, and certainly not a money spinner. And sounds like there are a couple of other loyalty plans that already do that anyway. However it sounds like Amway (which I had a brief flirtation with a few years ago:( ), where the hard sell is used so you don’t stay as ‘just a consumer’ .
The people I feel sorry for are Intertile, (presuming he is as described and not a Lyoness corporate flunky) who has plugged four grand into the ‘system’, and now needs to recruit people to try and make that money back. All the while handing over 5% of his sales in cash back to Lyoness.
Just as a an aside to DocV888, if the system is as described, the retailers are most certainly not only paying part of their profit to Lyoness. If the retailer is paying 7% of the price of the item back to Lyoness, that’s 7% of Gross Revenue, a vastly different thing to the Profit on a given item. I don’t have a lot of specific knowledge to the margins retailers operate on, but anecdotally I understand that margins are pretty thin, such that 7% of Gross would be major impost, and your average SME retailer would need significant uptick in volumes to compensate for that Lyoness margin.
This reminds me of the Amway offshoot that began several years ago. It was called QUIXTAR.
And like Amway, you were supposed to “buy in.” That fee was actually for a package of different Amway products.
When you go to the first meeting, you get the speaker with the dry mark board, and he draws the picture of “You” in a circle. After signing up five friends, there are five circles coming off your circle.
And so on, and so on.
So, not only do you get to alienate your entire family and all your friends, if you DO get five people to sign up, then you get to NAG those five people to find five more people EACH.
Here’s the deal: the MLM strategy is to convince you that you can retire with five gorgeous homes, take vacations ten times a year, go on cruises, drive expensive cars…blah blah blah… if you spend X number minutes a day working on recruitment.
The products “sell themselves.”
QUIXTAR had a website, and your recruits and their recruits could do ALLLLLLLLL their shopping, and they use YOUR SECRET CODE, so your percentage comes off the top, whoopie.
I checked, and at that time, the No-Name-Brand products on their website were selling for MORE than the name brand stuff at drugstore.com.
BUT SUPPOSEDLY you could actually save tons and tons of money even if you didn’t recruit all your neighbors and overseas relatives and the people you meet in line at the supermarket, just by doing all your shopping via QUIXTAR.
So, wow, cool, neat-o, if the sales thing really grates on you, don’t even bother with it, just save with QUIXTAR!
Oh, wait…there’s one more thing…
You need to sign up for the sales seminar. Depending how far away it is, you’ll have to lay out a few bucks. But there will be a special rate at the hotel. And it’s usually at some resort place, so there will be fun things to do after the seminar.
There are also some study materials you need to have.
And our area has monthly potlucks, where the members all get together and discuss their goals and help each other work on their sales techniques.
Oh, and DON’T WORRY about the expenses of these seminars! Hey, those are TAX DEDUCTIBLE!
What they DON’T tell you is that you cannot opt out of the seminars and the training materials. And if you aren’t bringing in your people, then you need some supplemental training, which we JUST SO HAPPEN to have, and we’ll sell it to you AT COST. Because WE have been in this business for X number of years, and we have PROVEN SUCCESSFUL sales techniques! You follow our program to the LETTER, you cannot lose! We’re signed up with the big guys, IBM, Microsoft, GE…
(hint: that means they bought a computer that was an IBM, it had Microsoft Windows on it, and the lamp next to the computer has a GE light bulb in it.)
(insert eyeroll)
As for tax deduction, well, one slight technicality. You can only deduct these expenses up to the point of what you have earned in the business.
BUT SEE! Once you get your five friends, and THEY get five friends, and THOSE guys get five more friends, well, you’ll be getting your percentages from THEM…and you’ll also be offering the same seminar registrations and study materials!
The money isn’t in the sales of the products. The money is in the seminars and the tapes and the books and the classes.
And you will be submerged in EVERYTHING 24/7, trying DESPERATELY to find people, because you HAVE to find some way to pay for the damned seminars. You will drive all your family and friends away, because all your conversations will center on “How would you like to save money?”
~VOW
As a business owner, or for any Lyoness Member for that matter, one can recommend a card to a person to the Lyoness program. As a benefit, you get to collect a percent (0.5%) of people’s purchase through the Lyoness Merchants. So as a business owner, one has the opportunity to collect from their customers on when they not only shop at their own store but when their customers shop else where within the Lyoness shopping community.
We are nothing more than a Shopping Community with unique benefits for the members so that it gives them more incentive to continue to shop at the merchants. What Lyoness is attempting to do is create a win-win situation for both the consumer and retailers.