Extra! Extra! Read All About It!
If you’ve been following along with me over the last several weeks, you know that I’ve taken on a HUGE task of answering all of John Frenaye’s questions concerning YTB. John has been unable to find adequate answers to questions he’s posted towards the end of 2007. Yesterday morning I attempted to answer question #10 in his looooong list of questions. That being; How many RTA’s drop out in a month or a year. John has stated that he fears he would NEVER know this answer.
When I answered John’s question yesterday I didn’t answer it correctly as John was able to point out in a comment made directly after I posted. I’ve always tried to admit when I’m wr…wroo…wro (NUTS) I’ve been “inaccurate” in any statements that I happen to make. My purpose is to be open and honest about what I believe to be true, and I also attempt to document as much as I can to help you verify that what I’m talking about to help you form your own opinions and conclusions. It’s never been my intent to mislead anyone in this business, ever.
Yesterday, when I spoke of the “drop out rate” in YTB, I was speaking of Reps, and John correctly stated that he was looking for RTA’s who have dropped out of our program. There are key distinctions between the two positions. A “Rep” in YTB only sells “Travel Agencies” or “Booking Engines”. There is no fee required to become a Rep, and we do have people who sign with YTB as a “Rep ONLY” with our company. Some sign at first as a Rep in hopes that they can sell Travel Agencies to make enough money to eventually upgrade to the RTA position. While this certainly isn’t impossible to do, it is very difficult to sell something that you don’t personally own yourself.
RTA’s on the other hand sell Travel. (Referring Travel Agent) RTA’s are able to purchase a “Booking Engine” similar to Travelocity, Orbitz, and Expedia and sell cruises, air, hotels, cars rentals, tours, and other travel related items at comparable prices of the other highly advertised sites. The cost of owning your own “Booking Engine” is a one time setup fee of $449.95 (US) and a $49.95 (US) monthly maintenance fee for continued licensing, tracking, and marketing of you site through Steels and Deals. There are no long term contracts to speak of and participation with YTB Travel Network is on a month to month basis.
I had mentioned in my last post that when researching I found several sites that have dismal retention rates. If you Google “drop out rate for MLM” you’ll see percentages as high as 97%-98% all over the internet. John and others are counting on YTB following this percentage and that’s exactly why he asked, and precisely why he took me to task in stating RTA’s and not Reps with our company.
YTB is a publically traded company and because we are publically traded we do post financial statements for the public to look at and review. I mentioned in my last post that the answer John is looking for CAN be found in the financial statements filed with the SEC. However, John, like most who oppose our industry and company don’t take the time to actually learn what these financial statements actually mean and what type of information is truly available to make an accurate assessment of our company.
A quick side note: It’s very often thrown up in our faces that YTB is traded on what’s know as Pink Sheets, which is a lower class market and does not have the same requirements as AMEX or NYSE. While this is true, if YTB ever hopes to move to either of these top exchanges it would be in our best interest to have our current financials in order when we submit our application for approval to either of these exchanges.
In these financial statements YTB does provide both Active RTA’s and Site Sales. These numbers can be found in the 2006 Annual Report at the top of page 11, and for the purpose of this exercise we will also be posting numbers from a Quarterly Report which represents numbers for the first 9 months ending September 30, 2007. RTA numbers represent the number of active RTAs paying $49.95 (US) per month to YTB as monthly license fees. The site sales numbers represent the number of online travel store sites sold during each respective period. The number of sales, and the number of recurring monthly license fees paid, each directly impacts YTB’s revenues and expenses. As each new site is sold for $449.95 (US), marketing commissions are paid on that sale. Likewise, each recurring monthly license fee paid results in marketing commissions paid to the IMRs. As the number of active RTAs grows, the amount of our travel commissions revenue grows as well. Correspondingly, travel commissions expense follows suit.
For the purpose of this exercise, the only number not documented and accounted for are the RTA’s as of December 31, 2004. While I do not have an exact number, it is known that we did have approximately 8000 Active RTA’s at this time. (Ronda and I joined January of 2005 and this was the number quoted to us at the time we joined the company.) This is the only number not found on the financial reports provided.
To calculate the Retention (those who do NOT drop out) for 2005, 2006, and 2007 we are taking the active number of RTA’s as of December 31 and adding them to the total number of site sales of the following year. (8000 Active Sites + 22473 of Site Sales = 30473 Total RTA’s were ACTIVE at some point in time during 2005) We then subtract the total number of active RTA’s as of December 31, 2005 (21384 Left) from 30473 who were active during all of 2005, and this gives us the number of people who are no longer active at the end of the year and have “dropped out”. This number 9088 gives us the number of “drop outs” John is asking for, which would average 757 people who drop out per month. (9088/12)
The following chart is the results of the numbers found on the SEC filings.
While other MLM’s are tagged for retention rates of 2%-3%, YTB has an astounding retention rate of 70%-74% over a three year period of time! That’s absolutely ASTOUNDING for traditional business models let alone Network Marketing! Granted, the number of people who do drop out of the business rises year after year, which is due to attrition. (9088 for 2005, 20,635 for 2006, and 44,544 so far in 2007) But to have THIS kind of percentage of people still working the business is just going to blow the lid off what some of the Anti-MLM’ers “think” about our model.
I did e-mail John to let him know that he needed to be sitting down when he read this number, as I didn’t want him to hurt himself. (I know there are people that wished I had not, but if you really look at these numbers, believe me…it still hurts.)
Oh don’t worry, there’s no need to ask “Wadda ya think?” I can promise you there will be a TON of other questions that result from this finding. Like, if they’re not making any money selling travel, why are they still paying the $49.95? That’s stupid! How can you trust numbers that are quoted on “Pink Sheets”. What do you have to do to get out of this thing, are you holding everyone hostage and you’ve got to jump through hoops to quit? (My next question on his list actually.)
I read these guys like a book, and while they have asked for the “facts”, now that the “facts” have been presented that doesn’t support what they thought was true. (Remember the 97% drop out rate everyone thinks.) Something has to be wrong on the other end. They aren’t like me. While I can’t say the word wr…wron…wro…(Ah hell, you know what I mean.) At least I’m man enough to admit that I might have been “mistaken”.
I know it sounds too good to be true, but these are the right numbers documented on SEC filings and we’ve been trying to tell everyone that this company is starting to mature. I’ve been trying to tell everyone that there is a tremendous value in Network Marketing and in YTB. I’ve been trying to tell them that this model DOES work. This COMPANY works and all those who think they can take us by ratting on suppliers, posting on message boards, or starting their own blogs to try to tell explain to us why it not only doesn’t work, but a bad mix, because “it’s a MLM Scam” have never seen a Network Marketing company like this puppy. 70% guys…Seventy Percent.
No matter how you slice it, it still looks pretty incredible.
I posted about the “dumb masses” who don’t have a clue about our company earlier last week that oppose our company and model. They think the “masses” don’t like our company. The “masses” eventually find out the truth. Based on 70%-74% now proven to stay with YTB year after year we are getting a much better picture of what the “masses” actually think.
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Tags: John Frenaye, MLM Myths, Retention Rate, Travel MLM
