MLM or multi-level marketing is a way of selling through a network marketing organization. A large percentage of adults looking to start a side income have already tried their hands on MLM. The main question that still bothers the newcomers is, will they be able to make money with MLM?
Before we move forward, let us have a look at some of the statistics on MLM.
- An overwhelming majority (close to 98%) of people joining multi level marketing lose money.
- Between 90 to 95% of the MLM distributors only make $200 dollars of commission each year.
- Around 25% of the participants make money from MLM.
- Less than 1% of the individuals joining the MLM program make more than $100,000 of salary.
- Despite an increase of 79% in direct sales during the last ten years, MLM participants continue to lose money.
- 95% of the MLM business plans fail.
Most of the research studies suggest that yes you can make money with an MLM program but it is very difficult. Here’s a list of top 100 MLM companies in case you are interested.
Success and Failure with MLM
Around 44% of the participants taking part in MLM drop out in less than a year of joining the program. Here is the breakout of the dropouts for the MLM program.
- Around 50% of the MLM representatives leave the program during the first year.
- An estimated 90% of the representatives leave it during the first five years.
- After 10 years, those who remained working with an MLM program are near or on top, the rest 95% of representatives have dropped out.
When we compare the MLM numbers with small business success rates, SMEs have a better chance of getting successful. About 20% of the small businesses fail during the first year of operations and 50% last five years or longer. Still, one-third of small businesses make it past 10 years.
Poor success rates and difficult criteria are the reason MLM businesses do not get SBA loans and have no access to other sources of small business funding and assistance.
Investing in MLM
MLM, unlike some of the other online business ideas, needs you to invest money. In the past, you had to initially invest $25,000 or more including internet, photos, products, incentives, giveaways, advertising, travel, and computer supplies.
Thanks to technology, you do not need to invest a lot of money. The use of the internet has made it available at an affordable rate and you can make calls through it. Similarly, online marketing has reduced the need for you to physically travel to the market.
The research found that around 66% of the MLM participants invested less than $1000. This investment covered inventory, materials, and training that they are given by an MLM organization. Around 24% spent between $1,000 and $5000 with an MLM organization. 11% of the participants invested more than $5,000 and the rest did not remember the money they invested in MLM. A handful of the MLM participants invested more than $50,000.
Can You Really Make Money in an MLM?
In short, yes, one can make money in MLM. Still, you need to keep in mind the number of individuals making money is a very small percentage. It is not easy to find a lot of MLM success stories where the participants made a lot of money. Since the above-discussed statistics point to the fact that most of the MLM participants fail to make any money with a high dropout ratio.
Not All MLMs Are the Same
After reading all this if you still think you need to join MLM, then you need to do your research. Browse through the companies and products to see if they are legit. Study the products that you are promoting carefully and the systems supporting them.
You can find many single-level marketing companies that sell products without recruiting, offering a higher potential for generating more income. This method allows for more compensation without involving downlines or recruitment tactics. MLM companies focus on products and develop compensation plans around product sales.
In MLM, research is one of the core components. Never rely on word of mouth and always find more information on MLM companies that interest you. Many participants do not perform any research on companies or products. Instead, they only rely on the information they get from the sponsor. Do not make this mistake, always get the details, and read the fine print before you join an MLM organization to succeed.