When you’re considering starting a new business, either online or offline, there are a variety of different options for you to choose from. One type of business that you may have heard a little bit about is what is known as MLM marketing.
If you’re confused about what exactly MLM marketing is, it’s completely understandable. The business structure can often be very challenging even to begin to comprehend, let alone master.
Because of the confusion that often surrounds MLMs companies, I’ve decided to create this article to help you learn more about what is MLM marketing per se. More importantly, whether MLM opportunities may be a reliable and viable option for your future business needs.
What Does MLM Stand for?
According to Investopedia, MLM is defined as “a strategy some direct sales companies use to encourage existing distributors to recruit new distributors who are paid a percentage of their recruits’ sales.”
This definition does a good job of adequately laying out what an ideal MLM should be. MLMs may also be called network marketing or direct sales. Unfortunately, some MLM opportunities are also known to be what is referred to as pyramid schemes.
It’s important to understand that MLMs and pyramid schemes are two completely different things. However, due to the number of MLMs that have turned out to be pyramid schemes, the two terms are often used interchangeably in recent years.
Before we go too far down the rabbit hole into what a pyramid scheme looks like, let’s first talk about just a few MLMs that have been able to survive the test of time.
A Few MLM Companies You May Have Heard of
While numerous MLM companies close their doors every year, some have been able to stand the test of time. Some of the top MLM companies you may have heard of include:
While these companies are some of the biggest in the MLM direct selling space, they are far from the only ones out there. There are thousands of different MLM companies worldwide, with new ones always springing up.
Many new MLM companies often find themselves being investigated or accused of being pyramid schemes. This is understandable as when you look at the way many legitimate MLM companies with those associated with them, the shape of a pyramid often quickly comes to mind.
However, for the purposes of this article, the important thing isn’t whether MLM marketing is a pyramid scheme, but instead whether you can make money with MLM marketing or if you’d be better off looking for other business opportunities.
Can You Make Money with MLM Marketing?
With all the thousands of different MLM companies that exist around the world, you’d assume that people must be making money for people to continue signing up for the opportunities many of these companies typically offer. Sadly, this is often very far from the case, and that’s not just my opinion.
One paper published on the FTC’s website in 2011 states that 99% of people who joined MLMs lost money. It went on to further state that of 350 MLM companies analyzed, the majority of commissions were paid to a very tiny percentage of people who the author referred to as TOPPs (top-of-the-pyramid promoters.) Yet again, you see terminology mentioning “pyramid” when talking about MLM companies in general.
This doesn’t necessarily mean that you can’t make money working with an MLM company. It’s just vital that you realize the odds are certainly not in your favor going in the door.
How You Make Money with MLM Marketing
When you start thinking about running your own business, you probably think that you will earn money on selling products or services.
When it comes to MLM marketing, you can still make money selling products or services. Yet, often the only way to earn more than a few dollars is by convincing other people to join the same MLM you’re working with.
Often, the other people that the company recommends you pitch this opportunity to include your friends and family members. This poses a significant problem as it can potentially ruin friendships and alienate individuals from family members.
To make matters worse, many MLM companies require you to purchase a certain amount of their products to continue earning any revenue. On top of product purchase requirements, most MLM companies also require an upfront investment to join that may range from less than $100 to several thousand dollars.
This combination of upfront investment and required product purchases leaves many people investing thousands of dollars before finally giving up without earning any significant income.
As you can see above, there are several issues with MLM marketing. Moreover, thanks to modern technology, being able to recruit people to an MLM opportunity may be more challenging than ever before.
How the Internet Has Made MLM Success More Difficult
When you talk to most people who have been involved in MLM marketing in the past, they’ll tell you that it’s never been easy to recruit people for the opportunity. However, many will also tell you that the Internet has made recruitment more challenging than ever before.
Some MLM companies do offer very high-quality products. Companies like Tupperware offer traditionally only available products by speaking with someone who was a member of the MLM.
In the past, the exclusivity of only being able to purchase products from members of the MLM made it much easier to sign up for other people for the same opportunity.
This is no longer the case for many MLM companies, thanks to the Internet. For example, you can now purchase quite a few Tupperware products without ever speaking to a member of the MLM by merely finding the company’s listings on Amazon, as shown in the image below.
Since many products are now available online without ever having to join MLM in the first place, many people do not see the advantage of having to invest in the significant upfront costs associated with many MLM opportunities. In short, the exclusivity that once helped MLM members thrive is no longer present for many companies as it was in the past.
The Final Issue with MLM Business Opportunities
When you think about starting a business, most people ultimately want to be working for themselves. This means that ultimately you are responsible for your own success or failure. When it comes to MLM marketing, this isn’t necessarily the case.
As mentioned above, you typically make money from most MLM opportunities by selling products and recruiting other people to sign up for the MLM opportunity. With many MLM companies, you earn more money when the people you sign up go on to sign up additional members in what is frequently called your “downline.”
While this sounds great at first, problems often arise when you start recruiting people who are nowhere near as motivated as you may be with the success of their businesses. Ultimately, this means that you really have no control over your own success in the long run.
While you will find yourself constantly checking in on your team to see if you can do anything to help them recruit people, their initiative, efforts, and success will ultimately determine whether you are successful with your business. Regardless of how hard you may work to try and manage your team, it is up to them to recruit others so you can further build your downline and find success over time.
Essentially, you become more of a regional manager with many MLM companies than a business owner.
My Final Thoughts on MLM Marketing
While some MLM companies may have a legitimate opportunity associated with them, a staggering statistic shows that 99% of people signing up for them will lose money.
Furthermore, many MLM companies now offer their previously exclusive products for sale online makes this business opportunity more challenging than ever before, in my opinion.
For these reasons, I cannot personally recommend signing up for any MLM business opportunity. Thanks to modern technology, there are more opportunities than ever before for you to be able to create your own profitable online business.
So, What’s Better Than Joining an MLM Company?
If you want to create your own business opportunity and determine your own success, there are far better ways than MLM marketing.
One such opportunity that exists online is through affiliate marketing. With affiliate marketing, you determine your own success by creating content online that helps people find information to solve their problems in a variety of different ways.
If you’d like to learn more about how you can get started with affiliate marketing today, take a moment to check out my top recommended resource. Once there, you can learn more about affiliate marketing and how to start your own online business that can generate an amazing full-time income and beyond.
Best of all, you control the amount of success you can achieve through your own hard work and dedication, rather than having to rely on the success of others.
Some MLMs are pyramid schemes and should be outlawed. Some prey on desperate people looking for quick ways to make money by exploiting them with ridiculous costs of membership fees upfront to take their profits.
I know some are legit, but they’re just too much for me to handle. MLMs are a dated, antiquated, and defunct business model with people who have no interest in what you’re selling.
As you said, there a few MLM opportunities that are legit but most of them I find are more a get-rich-quick scheme run by unscrupulous people preying on vulnerable people.
Personally, you are better off with affiliate marketing! Thanks for your insightful input!
In short, an MLM business consists of a person belonging to a network of salespeople selling the company’s products to consumers, who, in turn, when they try the product, also become representatives. This could also work the other way around.
But I have experienced the negative side of this model, so I’m eager to try the alternative you present at the end of your post. Thank you!
I had a bad experience with an MLM business many years ago. Since then, I have stayed clear of MLM opportunities. I rather opt for affiliate marketing instead.
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I couldn’t agree more with your thoughts on MLM. I am associated with one in the UK, but, not active with it, because, you are effectively a self employed rep working on a commission only basis, which is alright if you are okay with that model.
What is offputting, is that when one goes to the trainings, which are hosted by the so called top leaders in the company, in the one I am with, the vast majority of these trainings are held by ‘leaders’ who have jobs.
So it doesn’t lend itself well to the concept that MLM will set you free.
Plus trying to find or attract your board of 6 is no mean feat in itself, which is why the vast majority end up losing money.
Affiliate marketing does put you in control of your future and income, IF you can find the relevant programmes ventures to align with. some of which you mention on your blog, which is well laid out
I enjoyed reading your articles
Thank you for sharing your thoughts.
Some MLM products are excellent and genuinely usable, but in a practical sense, it’s not something people would spend heavily on unless it’s a necessary consumption.
The main factor is the price tag because these products aren’t cheap. Think about it, in order to pay the representative; the company need to find revenue and to mark up the retail price AND charging for membership are the best ways to go about this. In the long run, consuming MLM products can be an expensive business.
Well, not all MLMs opportunities are created equally! Some MLMs companies offer affordable products to consumers, think of Avon, for instance, whereas others provide very high-end products.
Where I have an issue the most with MLMs is when the MLM company required their representatives to buy a certain amount of their products! To me, this is utterly no sense.
Thanks for sharing your thoughts about MLM marketing.
Your guide is awesome for me. I know that some MLM companies do offer very high-quality products. Companies like Tupperware offer products that were traditionally only available by speaking with someone who was a member of the MLM.
In the past, the exclusivity of only being able to purchase products from members of the MLM made it much easier to sign up for other people for the same opportunity. Essentially, with many MLM companies, you become more of a regional manager rather than a business owner.
Your guide helped me to understand better MLM Marketing. Thanks for sharing it.
Tupperware is a prime example, as I explained in the post of the loss of the exclusivity factor if you will. Before the internet and Amazon era, the only way to get Tupperware products was by dealing with a Tupperware’s representative or hosting events at your house to get free Tupperware products or great discounts on them!
Personally, instead of going for MLM opportunities, you should opt for affiliate marketing and build your own online business and be solely responsible for your success or failure. By being your own boss, you decide what you are selling, and even you can create your own products and sell them.
Hi Sonia,
Thanks for sharing this information about what MLM marketing really is. I think most people don’t know and just jump into any business opportunities they find.
The MLM mode of operation is simply more cost-efficient and easier to run. However, the recruitment of sales agents revolves primarily around the idea of hitting the jackpot of financial freedom. Simple math will tell you that most people will obviously not make it big through MLM. I also personally cannot recommend signing up for MLM business opportunity.
Nowadays, making money with MLMs opportunities is even harder than in the past because of the internet. People buy online their goods instead of having to deal with a “pushy sale representative” of an MLMs company who understandably wants to sell you as many products as he (or she) can in order to earn a decent commission.
I feel that your time and energy are better spent on affiliate marketing, where you have full control of your success instead of MLMs, where you are at the mercy of your downline to make a living!
I have been sucked into so many MLM companies in my life that I cannot even count them. None of them were scams, but I didn’t make much, if any, on any of them.
I am just not a salesperson, and I am horrible at recruiting others. I find it hard to keep myself motivated – never mind a downline! I really respect those that do make money from an MLM, but they are indeed few and far between.
I think that apart from the founders of the MLM company, nobody else is making money with MLMs opportunities!
Moreover, I don’t like the fact that many MLM companies required that you buy the products! Not only are you not making any money, but you are getting poorer while the owners are getting richer at your expense!
I did MLM for a while with a skincare company. I did okay but just hated feeling like I was spamming friends and family all of the time. It could have been my imagination, but I started to feel like they were avoiding me because they didn’t want to feel bad about not buying my products. Affiliate marketing is WAY better!
Absolutely, if you are looking for being your own boss and in control of your success, affiliate marketing is the answer!
I agree with you about people becoming more of a regional manager than an actual business owner if they actually get to the point where they have many referrals.
In my opinion, most MLM opportunities aren’t worth pursuing. I’d be impressed if an MLM company is offering a way to earn just as much money selling products as you can referring others, with the same amount of effort; If that makes sense.
I totally agree with you. You should steer clear of MLM opportunities at all costs. In my opinion, your time will be better spent on building your own online business instead. Therefore, your online success will solely depend on your efforts, not of others!