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.