I had an email overnight from a student who was wondering why I have no courses on MLM, as he was looking at getting involved with one.
Here’s what I replied:
“I’ve yet to come across anyone who makes long-term income from an MLM - and I’ve studied the marketplace for 40 years.
Almost every company in that time has suddenly ceased trading - or been involved in Court battles, which is never good for recruitment, even when they win.
Speaking as a long time journalist, the press loves to "expose” this marketplace, simply because it’s so easy - when you get so many people, with no knowledge or training in business procedures, it only takes one “bad apple” to make a good story - and bad people, however well-intentioned, are very easy to find.
MLM promoters start by selling to friends and family - and such people are shocked if they hear bad things, however tiny, about a company - and it reflects poorly on you.
Often, too, they buy to “help you get started”, so such sales are easy.
Selling to strangers, even more so with so many others also selling the same product range, is substantially harder.“
I then referred him to an article in my current monthly (free) newsletter, at Tetmo.com:
So, can you make money in MLM?
But odds are that you won’t.
MLM stands for multi-level marketing, also known as network marketing, pyramid selling or referral marketing.
It’s a marketing strategy chosen by some companies to sell their products and services.
Basically, the non-salaried "distributors” and “consultants” sell the company’s products, while the earnings are paid upward in a commission system.
Each MLM company creates its own compensation plan, but they all have this in common: Participants are paid for sales they make and sales their recruits make.
In theory, it sounds great.
Recruit a few distributors, who each recruit a few distributors, who each recruit a few distributors, and soon you’re earning money on tens or even hundreds of distributors.
And it’s a BIG BUT…
Times have changed and there’s no longer many opportunities for the little guy in multi-level marketing.
Studies by independent consumer watchdog agencies have demonstrated time and again that between 990 and 999 of every 1,000 participants in MLMs lose money, as reported in the book, “Amway Forever: The Amazing Story of a Global Business Phenomenon.”
But according to reports from the Federal Trade Commission website, it’s not that bad - only 99.25% of MLM participants make little to no profit, with the largest proportion of participants operating at a net loss.
Which begs the question:
How are these companies able to stay in business?
First, they sell their distributors the story that they can make it to the top and lead the rich life.
To ‘prove’ this, they showcase the tiny number of distributors at the top of the pyramid who are making money.
They also downplay the expenses and time involved to make any real money, as well as the fact that new distributors are likely to alienate friends with their newfound zeal for the company’s line of products and opportunity.
Second, they churn and burn distributors at a crazy rate.
Once a distributor has purchased the required “starter pack” and “training” and “extras,” and also put in many hours trying to 'make this thing work,’ they give up.
And I can’t really blame them.
And, worse, it often makes them believe that working from home is impossible.
Which begs the question:
Who is making money in MLM?
Three groups of people:
Those who start the MLM companies,
their friends who are the very first ones to join and thus be at the top of the pyramid, and a third group…
- …the shovel sellers.
Being a MLM coach can be quite lucrative.
You can work with anyone in any company and help them to build their business, for a fee.
You can create and sell courses on how to recruit and motivate a downline.
And you can sell books, audio sets and so forth on having the 'right motivation’ and tactics to succeed in a big way.
Products like these are gobbled up by aspiring MLM distributors, and sometimes even purchased in bulk by companies for training their downlines.
If you’re thinking of getting into MLM, you might want to forgo joining a company and instead sell the tools that help new distributors to succeed in their new opportunity.