If any of your friends participate in multi-level marketing, also known as MLMs, then chances are they’ve bragged about all the money they’re making. Maybe you’ve seen Instagram posts where they’re holding up stacks of hundred-dollar bills or taking a poll on whether they should go for the Mercedes or BMW for the car bonus from their company.
Don’t believe everything you see on the internet. While it’s certainly possible to make money from multi-level marketing, the vast majority of people who participate in this type of selling are not retiring at the age of 30 because they became overnight millionaires. In fact, most people involved with MLMs make very little money or even lose money on all the inventory they need to buy.
Can you make tons of money with MLMs?
You know those crazy stories you hear about MLM sellers making six-figure salaries and jet-setting all over the world? That’s so rare. The truth is you’re much more likely to make a tiny amount of money with direct selling on the side than you are to make a full-time career out of it.
And it’s not for lack of trying. The MLM industry is currently $36 billion huge, with people from all backgrounds and with all different experience levels participating. Thanks to this phenomenon, Jon M. Taylor, Ph.D. conducted a research study of the compensation plans of over 400 various MLM companies and presented his findings in his e-book, The Case (For And) Against Multi-Level Marketing.
This is what he found:
- Half of all MLM participants quit within the first year
- A shocking 90% of all representatives left the company within five years
- After ten years, only those very few sellers at the top of the pyramid (1-2%) were still with the company
What is the earning potential in an MLM?
To hear the salesperson pitch it, your earning potential with an MLM is “limitless” and bound only by your commitment to the cause. But in reality, it costs money to make money, even with an MLM. Simply investing in a starter kit of whatever you’re selling and then devoting an hour per week to marketing won’t earn you those coveted six-figure salaries.
One Inc.com article found that the average MLM sales rep makes about $2,400 per year selling products. So… not exactly enough to quit your day job, if you have one, but a nice boost to your income if you’re willing to work hard. That same article also profiled a mom earning $300,000 per year working her MLM game. Those stories are inspiring – it’s just important to remember that they’re not typical.
You’re more likely to fail than succeed
The statistics don’t lie. Only about one to two percent of independent consultants working for MLM companies make huge salaries that you hear about in the testimonials. If everyone was making hundreds of thousands of dollars through direct sales, wouldn’t more people be doing it? Remember, if something sounds too good to be true, it usually is.
The fastest way to make money with an MLM is this
If you’re intent on making money with direct sales, there are a few things to keep in mind. First, you need to treat the opportunity like a real business and devote your time accordingly. It’s easy to get lazy about selling because you’re promoting someone else’s product, not hustling for something you created. That means you need to choose something you actually like selling and believe in.
Direct sales success is all about selling. Certain people are more suited to sales than others – that’s just a fact. But even if you’re not naturally outgoing, you can still succeed with an MLM. Find the right product, the right customer base, and never give up. Who knows, maybe you’ll become one of the few people who find smashing success with direct sales. Just don’t be too discouraged – or surprised – when you don’t.