Multi Level Marketing (MLM)
Is MLM (multi level marketing or network marketing) a great opportunity or not?
Multi Level Marketing
Why do some people dislike Network Marketing, multi level Marketing / MLM with a passion? (Short Answer = It saves time!)
Do the MLM Math!
Your MLM “up line” will assure you ANYONE and everyone can make a “fortune” if they “apply themselves and work hard”. But do the math…
To get to the “double-diamond”, or equivalent (every MLM has its own wording), you need to have a full book of down line operators.
Now say you get 3, each down-line gets three, and in turn this works down.: Your individual team will have 6561 down from you. Assuming 1 in 10 people join your ‘team’. That’s 65,610 people ‘pitched’. They all have to have customers, say 10… that’s 656,100 in your ‘division’. Assuming your multi level marketing/network has only 1000 globally on your level, excluding your uplines.. That requires 656,100,000… one tenth of every man AND woman AND child on the planet. (If you start with 4, this becomes 1,719,926,784 – almost one in 5). Of course, that proportion of people, is unrealistic and the “double-diamond dream” is not achievable, but only a dream.
Multi Level Marketing (MLM), Network Marketing and Pyramid Selling
MLM zealots have been around for generations… convincing and always pressuring sincere hard workers to their cause…
Intuitively, we sense MLM has flaws, but feverish supporters commonly shout down any argument that conflicts with their argument. What is most offensive, of course, is their insistence, and inability to accept ‘no’ as an end to the discussion. Amway, Golden Products, Juice Plus, Ausway, Nu-Skin, the list goes on and on, and on…
The majority of people that get involved with MLM, don’t think through simple arithmetic and misunderstand the achievability of the illusion of building a huge down line. Most multi level marketing agents recruited are not successful, regardless of how much help you, or the company you represent, gives them.
Those multi level marketing individuals that do make a go of it, would probably have had much more successful businesses if they had directed their energies into traditional, efficient business models.
Most end up quitting within a 2 to 6 months time frame. This means recruit, recruit, recruit with very little chance of long term gain. Even recruiting 30+ people per month retains a handful by year’s end, but there are so many more reasons to stay very far away from any Network Marketing / multi level Marketing – MLM business:
Most MLM participants fail because:
- Very High Attrition Rates – If Members are not making money in a reasonable amount of time, they quit. The average MLM business has a drop out rate of 80-95%+ per year.
- Friends and Family are obliged target prospects – Some deny the need but the implication is always there… insinuating players are not dedicated, or committed, if they are ‘ashamed ‘ to involve those they know best… Friends and family should never be seen as financial targets – that’s how you lose friends and family.
- Verbal Marketing Support with Independent Contractor Protection – The Company passes information down lien verbally, and down liners are independent contractors… so if you make claims you believe are true, and a buyer catches these out as untrue, the Company just says you made it up or misunderstood and they never said such a thing.
- Hype driven Business Training – With a 1960’s don’t be negative, just sell, sell, sell attitude.
- Pie-in-the Sky Compensation Plan – If you are required to have generations of people in your down line before you see any real money for your efforts, but there simply are not enough people in the universe to be down lines for the number of aspiring participants that exist…. evidence the Company generates money form those that fail, not succeed.
- Over Priced or Under Performing Products – Products are priced high and claimed to be ‘better’ when they really are not.
- MLM can arguably be described as Pyramid Selling in disguise – Even the most complex channel management structures in business are rarely longer than 5 levels from producer to consumer… MLM dangles extended commission overrides.
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True income expectations of MLMs
The Times: “Government investigations revealed only 10% of Amway’s agents in Britain make any profit”. In 2008, of 33,000, only about 90 made sufficient incomes to cover the costs – 99.7 percent loss rate for investors.
Newsweek: “Fewer than 1 percent qualified for commissions and of those, only 10 percent made more than $100 a week.”
Business Students Focus on Ethics: “In the USA, the average annual income from MLM for 90% MLM members is no more than US $5,000, which is far from being a sufficient means of making a living (San Lian Life Weekly 1998)“
USA Today: “While earning potential varies, the median annual income for those in direct sales is $2,400. Documents of a MLM reveal that 30% of its representatives make no money and that 54% of the remaining 70% only make $93 a month.” “It can be very difficult, if not impossible, for most individuals to make a lot of money through the direct sale of products to consumers.”
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