MLM/Network Marketing??? Why do so few make a profit in this industry?

Question

Is it effort or design?

All pay plans require a substantial amount of recruits/customers to make a significant amount of income.

Occasionally some new recruits are so talented and aggressive they do build a modest downline network below them. They are anomalies because mathematics require that the system can only support a small number of financial winners. If a thousand downliners are needed for a distributor to earn a respectable profit from this system, those thousand will need one million more to similarly support them and that one million will, accordingly, need one billion!

So many participants justify the failures as lack of effort. Mathematics show that if "efforts" were maximized the business would collapse through exponential growth.

Does this not show failure by design?

Answer 1

MLM's are looked upon as scams because you recruit to make money and also said there pyramids. On one hand this can be true but on the other hand, if your moving product and the "FEE" (if you will) includes product to sell then its a good business. The only reason they say recruit is for residual income. Meaning you can stop working and have others make money for you. You would be paid a certain percentage of what they earn. If you look at it, major retailors are MLMs as well. They get paid if you sell. The managers get bonuses for what the store brings in and having staff.

  I sell candles. And it to is called MLM. I do not treat is as a scam because I can earn money on my own. Yes I have 3 people under me. I don't worry if they sell because its there business. I am there to help if they want or need it. If people want to join under me great, I'll be there if they need me but I wont go looking for people to join.

You can choose to do the same thing if you wish. Remember it will be your business and no one can tell you how to run it.

I hope this helps. Sorry for the Rant.

Good Luck!

Answer 2

Some sources state that the average income for MLM participants joining to actually earn income is around $13K/year, with the median income at around $2500/year.  While there are some who want to turn MLM into their "sole source of income", most are simply in it to make some extra money, to take a vacation, pay for a home renovation, or pay some bills.  

A great many participants simply join to purchase the products at wholesale prices with no intention of recruiting anyone below them (the thought being, if I like MLM product X, and I purchase $100/year for my own use and the wholesale price is 1/2 of the MSRP, it makes financian sense to "sign up as a distributor" and receive a 50% discount on all future purchases of MLM product X.

Critics of MLM will often combine the income of the people who want to sell with the people who just want to purchase at a discount (which lowers the average annual income).  Is this average innacurate, no, but it does not reflect the income of people who are actively pursuing the opportunity and trying to earn some money.

Answer 3

Your question can be answered with a simple fact. 95% of the wealth in this nation is controlled by 5% of the people. It has nothing to do with the design of a pyramid, mathematics or exponential growth patterns. It has to do with the mindset of our society, the cancer that has spread across this nation called a job.

I do not know which companies you have based your facts on but if any are designed so as a downline of 1000 or more is needed to make a substancial income they are destined for failure.

I have found that research on the part of the potential rep must be done to evaluate the companies foundation, principles and compensation plan before joining a team.

I was fortunate to have found the perfect company, that is structured to never be publicly traded, is 100% debt free, has the highest rating by Dunn & Bradstreet, is ranked by Forbes as one of the top 25 fastest growing companies on the planet and is getting ready to break Microsoft's record of reaching 1 billion in sales. And guess what, there is nothing to sell!

Answer 4

The one thing you're not taking into account is the marketing system.  I know if I had to do things the old way like many MLM's do, doing door to door sales, in home demo parties, cold calls, carrying inventory,etc etc I would not thrive.  Gas prices are too high, packaging changes and then my inventory is not worth as much, people hate door to door salesmen and telephone solicitors....no thanks.  If you have a great marketing system, you have a great chance at success.

The second thing, equally important, is the training and "on going support".  Most provide training but not many provide ongoing support!  There's nothing worse than being trained and then thrown to the wolves.

Lastly, if you don't have a great "team" that helps each other instead of trying to cut each others throat, you're doomed for the 3rd time over.

All of these thing are only some of the major reasons why people fail at MLM's.  There's lots more but I know more about what makes a goo MLM work and that's in my profile if you're interested.