Many people in the world are taken in by Multi Level Marketing (MLM) schemes through the sales pitch, and the promise of big income and financial freedom by referring potential candidates to become their down line.
However, here are some questions most people like you and me would ponder over when it comes to MLM:
- Is it really such a lucrative income opportunity?
- Can you really make it a home based business eventually?
- Are these legitimate work at home jobs?
- Is it really that easy?
- Is it a scam?
Here’s my answer:
No, it is not easy to succeed in an MLM Business.
For one, most MLMs are usually legitimate opportunities where they pay out people regularly and on time, such as Global Domains International which would be why they have existed for a really long time. I have seen many people that have indeed made money and profited from a MLM business, but most people would eventually lose their money and give up.
A study has shown that 99% of the participants of a MLM take home less than $10 commission a week, before any expenses.
Many people thinking they could eventually work from home and earn a full time income. Eventually, most of them will fail. Here is why most people get into a MLM business in the first place, then eventually quit or fail in my opinion:
1. People are sucked in by the pitch
When they see a particular website, or when approached by the friend, all you hear is the good stuff. You see and are told about people winning sports cars, people taking dream vacations and living their life, and so many other things. You would be crazy if you would miss out on such a good opportunity!
They make you feel exclusive, and that you are making a big change with your life, using inspiration quotes. You would think, “I definitely want to start making a difference in my life, and I could start with this!“
Rippln is an example that took the world by storm in 2013. Their ‘exclusivity’ meant that you needed an invite to get in and be part of the ‘inner circle’. See how they use examples to tell you that you should join this before everyone does it and you will earn a lot? They really make you feel like you are wanted and are invited.
They tell you that all you need to do is refer 5 people, and the 5 people will refer another 5 people, and so on and forth. Look at the massive wealth by just referring 5 people!
Must be easy to just invite 5 people right? Maybe when you hit 100 people in your network, you get a BIG $1000 cash bonus! Hit 500 people and you get a car!
Does all these sound familiar to you?
2. What are you selling?
Once you have signed up, bought their plans and their products they have to sell you, You must be thinking I should probably get to work by selling my product!
Wait…what are you selling? What is your main way of making money? Is it by selling the product or are you inviting people to join you, and showing them the dream that someone else has already shown you. Are you asking people to sign up and buying the plans to sign up and asking them to refer more people?
Some companies are like that. Using Rippln as an example again, it is a company that initially launched in April 2013 and their core aim was to get as many people into the network as possible. All they released was a few videos, with no products, and telling you to invite as many friends in as possible and watching how your actions influence the world.
A lot of people bought the hype, referring everyone including people from their social networks in. The only problem is, Rippln did not even launch any product at all and their compensation plan was just based on how many people you get into your down line.
3. Training and support
After signing up for the relevant packages, what kind of training and support do you receive? Does the person who referred you provide any help if you need? How about the company itself?
- Did you receive an audio CD or DVD?
- Any online E-books you received?
- Watching a video on an experienced person giving you instructions?
Usually most of the time, you receive close to no support from anyone. All you receive are someproducts that are designed to help you get started and start referring people in. You could be wondering, ‘So where do I start? Whom do I approach? Do I make a website to promote online?’
How are you going to do all of those? What happens if you hit a big hurdle, would the person who referred you help you when you are in trouble?
If you receive minimal support, how are you going to continue?
4. Damage your relationship with friends and families
Many people who join a MLM business think about the passive income they would make after they refer people in. You would immediately think of who are the potential people you can invite. They are usually your friends, families, business partners, colleagues, and so on.
Imagine telling the people around you about this amazing opportunity you discovered. You keep sharing your MLM business on your social media and promoting your business. After awhile, how would they think of you? They may even find you annoying and may even begin to shun you after awhile.
How about the ones that eventually join you in the business? What if it turns out to be a scam and does not pay at all? I am very sure that your relationship with your friend or family relationship will definitely be strained or even be lost.
Are you willing to take the risk?
5. Laziness and Procrastination
Thinking of all the hurdles, you may begin to have second thoughts about what you are doing. Eventually, you would procrastinate and become lazy, leaving things for tomorrow. The only thing is, tomorrow never comes. There is no motivation besides the money that is shown to you.
This is when eventually people quit for good and may even think this was a scam from the beginning.
How successful are people when it comes to MLM anyway? A study was conducted by Jon M. Taylor, an expert who has over 30 years of experience in home businesses, researched 20 years on over 500 MLM companies. He presented his
discovery in his e-book which showed that:
- Within 1 Year, a minimum of 50% of the people dropped out and left.
- Within 5 Years, a minimum of 90% of the people left the company.
- Within 10 Years, only those near or at the top remain, meaning at least 95% of the people have dropped out.
This result is not surprising, considering all the hurdles when you are involved in an MLM type business.
My Final Thought
To be honest, I have also been sucked in by the world of MLM a couple of times. I remember when Rippln was launched last year and I immediately joined as it was free. All you needed was to invite more people and see your influence on the world, which made it really fun! Best of all, you could potentially make money from it!
After one of my cousin told me about the bad reputation of one of the owner of Rippln, I became very suspicious. I quit shortly after doing some personal research as well, and I told the people I referred to stop as well. It was lucky I stopped really early, as eventually Rippln released many products and up sells and told you to buy everything if you want to succeed. All you see now of Rippln is a blank webpage, which is now re-branded under a new name and everything else before on the website was gone.
That was one of my MLM stories last year. I am really interested to hear your stories (Post them in the comments below!) about your experience with MLMs too.
Whats Next?
The reasons I listed out in this page are the reasons why I would never want to step back into the MLM world again. There is so much uncertainty and problems involved, which makes it very risky.
If you are interested in making money and starting a home based business, there are other methods such as affiliate marketing. So what do you do as an affiliate marketer?
- Find a niche, and a passion that you enjoy sharing.
- Create a blog, and promote your passion, selling products related to it.
- Get paid for promoting and selling companies products!
It is a real business that does not involve referring people in to join you and building a down line, and not asking your referrals to refer more people. It is about learning how to set up your own online business and become your own boss.
I recommend Wealthy Affiliate as a resource to most people to get started with their online business. They are an educational website that teaches you how to make money with your website.
Do you remember this saying below?
‘Offer a man a fish and he won’t be hungry for a day, but teaching a man how to fish and he won’t be hungry for life.’
They offer a lot of benefits when you sign up for FREE (No credit card details needed):
- 2 Free websites to start your blog.
- Tons of live support from the community, and even from the owners of the website.
- Abundant of training resources, with over 500 training modules.
- Teaches you how to start even if you are totally new to this with a step-by-step training.
- and more!
Check Out My #1 Recommended Money Making Program
So, would you prefer something risky like an MLM business where a lot of people have failed, or would you choose something that is more stable and start learning how to make money?
The choice is yours.
Any MLM stories you would like to share? Or do you have any questions? Leave your comments below!
I agree with you. They work for the top. Personally I find this a horrible method to make money. I dislike everything that says it gets you money and you don’t have to lift a finger. I mean, I would believe it if at least they would teach you some magic! 🙂
laura
Hi Laura,
MLMs usually present all the good sides and how you make money so easily. Most are quite true but really require some work at least. But the main thing is to be cautious when someone tell you about a new MLM business that could make you money.
Hi Terence,
On my Opinion MLM is one of those Get-rich-quick schemes and 95% of the time they do not work out.
In the same time I can’t agree more about Wealthy Affiliate, as it is a place where to learn how to earn money on-line for people like me and you.
Hi Maksim,
Thanks for your comment. MLMs are usually very hard for an average person to start out, thus the high failure rate due to some of the factors I pointed out in my article.
Actually, before I started Affiliate Marketing, I had taken interest in MLM. I attended few of their talks and it woke me to some realities in life. Many people might reject their philosophies but for me, they have a point. I tried to “convert” myself but it didn’t feel like my cup of tea in approaching people that way. Backed with their ideas, I found myself in internet marketing and I feel more comfortable knowing that I am creating an income with new skills and leveraging technology to do so.
Hi Cathy,
Glad you found something more to your liking in the end. For me, I find internet marketing more comfortable too as I feel like I am not just trying to sell a product/referring someone, but the process of learning how to do it too.
Hi,
I don’t know if you have heard of this MLM company called Feeder Matrix. They say that all you need is to recruit 4 people under you and you will make $100,000. I have joined it and then I found out that it is illegal in the country I lived. So I quit immediately.
It is good to tell people to be aware of these scams.
Cheers,
MisterWailor
Hi MisterWailor,
Glad to see that you have quit it after finding out it is illegal. I really doubt it would be so easy to just get $100,000 and there are a lot of up sells you have to buy as well too. Thanks for sharing your story!
I have no experience with MLM, but I agree that it’s a big problem for people’s relationship…
I feel really uncomfortable if someone keeps on convincing me to join them.
Thanks for sharing!
Hi Sylvia,
It may be a good thing that you have not been introduced any MLMs really. But yes, it can really strain a friendship easily because money is involved.
I also did MLM before I found affiliate marketing. The biggest difference between the two is the stress levels. With MLM my success really was dependent on a down-line. I was constantly building and rebuilding. I spent hours on the phone trying to motivate people. It was exhausting.
I love that with affiliate marketing, I get to follow my passion and make money in an easy and relaxed way. 🙂
Hi Wendy,
I agree with you on the stress level, as it really takes more work trying to recruit people in your down line. Affiliate marketing is more of ‘you’ and learning how to do it!
The thing to remember about ANY business opportunity, is that you are starting a real business that will require lots of work in order to thrive. There are no short cuts.
Bart
Hi Bart,
I agree with you on this one. Any business including MLMs require hard work and really isn’t easy cash. However, with enough persistance and hard work, any business will pay eventually. There are really no shortcuts in life.
Terence, great job. Keep up the great work and you will not need a JOB.
Continued success, I know you can do it.
Hi Ken,
Thanks for your kind words! That is evetually my goal in life for sure.
Great post with excellent and much needed information! There are some good legal MLM’s out there like Amway, Meleluca, Avon, 5Linx and others that have decent compensation plans and great products! However MLM is not for everyone as it does take a certain type of personality to be able to stick through all the no’s, attend all the meetings and lead a team of people but many people out there have been doing it successfully for many years. The programs you talk about in this post seem more like scams, ponzi or pyramid schemes that use the MLM structure so as they say you can’t throw the baby out with the bath water just because there are many rotten apples out there. I am currently an Amway rep and although I do not promote or attend any of the meetings I really liked their products so I keep renewing every year for the discount and to service the few customers I do have. I am also a rep for 5Linx and although I do not promote this either I keep my membership because when I do get my own house I can save and make money from my own bills. For me being a part of these companies is a way for me to ensure that everything I do on a daily basis from laundry to paying bills to being online will generate income for me. Keep up the good work though people need to know about the scammers out there that just want to take your hard earned money.
-Michelle K.
Hi Michelle,
Thanks for sharing your story. I am very sure that there are legit programs out there like the ones you are in. My article basically stress on the point of thinking twice before starting out in MLMs, especially if you are new. It is not easy to start out in MLMs too. But yes, i also want to address the ponzi and pyramid schemes too, and avoiding those scams as well.
Basically, just be vigilant if you decide to get into MLMs. As for me, it is something I definitely would not enter again as my personality does not suit it well too.
I really appreciate this article. I too have joined a couple of MLM’s in the past, but only ones with an actual product I believed in. I never made any money recruiting people. I never wanted to be the person everyone runs from. 🙂 The problems I see are the one that promise easy money. I don’t believe there is any such thing. I want to work hard, then have something to show for it. Good luck to you!
Hi Amanda,
Thanks for your comment! For me too, I wouldn’t want to be the person everyone runs from too. You would need to do your research to see if a MLM company has potential and make sure they have a core product that can sell, and avoid potential pyramid schemes and ponzi schemes too.
Very good points and useful advice, thank you!
Hi foxssd,
Glad to be of use! Share it with your friends if you wish! 😀
I have been sucked in by the initial hype of these schemes a few times as well. The problem for me was when I finally found out what I was selling, I didn’t feel good about telling people to buy it. I started to realize that if you do not know what you are doing before they want your money, it is wise to head the other way.
Hi Josh,
I think many of us have been sucked in because of the promise of easy money. I also do not feel good myself telling someone to buy a product that I am not even sure of myself really!
I think MLM is a great way to make money, although I will admit I worked pretty hard to get where I’m at. MLM isn’t for everyone. Wealthy Affiliate is very similar to MLM I’d go as far to say they are a MLM company. I do like your advice here but I think a lot of it is because of misinformation. I can see where it can ruin relationship and families but that is because of the individual not because of the company. I’ve introduced this to 10 of my friends and 8 of them love doing it and the other two just like the product. It has been very lucrative for My family and friends.
Hi Justin,
Thanks for your comment! I agree that MLM isn’t for everyone, and it is great that it is working out for you! I wouldn’t say Wealthy Affiliate is a MLM, as you don’t benefit from your down line referring other people.
And the point of misinformation seems quite true too, as some individuals introduce the business in a wrong way that seem to ‘deceive’ the people they want to invite. This might turn out sour in the future if there was any complications, especially if it is a scam company like I stated in my article.
I joined an MLM just recently but mainly because of their products. I don’t really sell it to people but use it for my family. Yea I don’t make money from it but I rather that than seem like a hungry wolf O_O
Great post by the way, most people gets into MLM for the money.
Hi McKing,
Well, it seems that MLM you joined have something substantial! If you are using the products only, then it is fine as you join for different reasons. But yes I agree that most people go into MLM just for the ‘quick cash’ which doesn’t really happen.
What a great bit of information you have shared here. I remember my 1st mlm like 20 years ago. we all remember the Amway days. Oh how extravagant they made it sound, and that was just the beginning. Many more copy cat MLM companies have adopted this form of marketing also. I have never heard of one person who has actually had any form of success using MLM as the vehicle to achieve success!!
Thank You
Jason
Hi Jason,
Wow that was really a long time back. There are definitely people who succeed at MLMs, which are mostly at the top of the pyramid which means you have to be one of the pioneer people to actually do it, to actually have a better chance of succeeding.