What Is Multi-Level Marketing? (MLM)
Multi-level marketing (MLM), also called network marketing or pyramid selling,][4 is a controversial marketing strategy for the sale of products or services where the revenue of the MLM company is derived from a non-salaried workforce selling the company’s products or services. In contrast, the earnings of the participants are derived from a pyramid-shaped or binary compensation commission system. An MLM strategy may be an illegal pyramid scheme.
Multi-level Marketing (MLM) Companies
Multi-level marketing (MLM) companies use a network of independent distributors to sell products directly to people in the community.
Examples that most people think of when they hear about MLM companies include Avon and Mary K Cosmetics.
If you become a distributor for one of these companies, you will profit from selling the product.
But the natural way to make money is by recruiting a network of distributors who also sell the product, called your downline.
You earn commissions on sales made by distributors in your downline. To make money in MLM, you must know how to sell your product and build your downline.
About one in thirteen adults (18+) have participated in at least one multi-level marketing (MLM), sometimes referred to as direct sales or network marketing, during their lifetime, according to the AARP Foundation.
But do these people make money doing multi-level marketing? What’s the actual likelihood of MLM success?
It is possible to make money with MLM; however, we believe it is highly improbable. It is stated in a free e-book, ‘Multi-Level Marketing Unmasked, by Jon Taylor found, that 99.7% of people will lose money in network marketing.
Multi-level marketing (MLM) is mostly about recruiting
Multi-level marketing (MLM) is mostly about recruiting; that’s how most companies teach you to build your business by recruiting everyone you know.
And this is one of the reasons so many aspiring network marketers fail.
So for every 1,000 people who join a network marketing team, three will earn more than they spend.
So if I want to have five successful people in my first down the line, I have to recruit 1,665 new members so that 5 of them will be successful.
MLM may be a system that anyone can do, but it’s also a system where only 1 in 333 people are successful.
Each MLM has its version of paying commission and shares similar characteristics.
To stay active, you have to sell a certain amount per month. This creates a synthetic demand for the products.
Network marketing members are ordering products to remain active.
Members order more than what they personally use or can sell at a retail margin, which causes them to stockpile the products.
MLM Success and Dropout Rates
The AARP Foundation’s study found that 44% of participants dropped out after less than one year of working with an MLM Taylor’s research shows similar numbers and goes into a little more depth on dropout rates:
- A minimum of 50% of MLM representatives drop out in the first year.
- A minimum of 90% of representatives leave within five years.
- By year 10, only those at or near the top have not dropped out—which means at least 95% of representatives have dropped out.
These numbers don’t go well when comparing them to the average failure rates of small businesses.
MLM participants earned less than $100 per year before expenses.
According to the U.S. Small Business Administration, about 20% of small businesses don’t make it past a year, about 50% of the last five years or longer, and about a third make it past ten years.
According to the Washington Post survey, 60% of MLM participants earned less than $100 per year before expenses.
The Post, in their conclusion, found that most participants could earn significantly more money in exchange for a lot less time and money invested if employed in a minimum wage job.
The same study from the Washington Post found that 1/3 of MLM members admitted to borrowing money to fund their MLM side hustle.
Make Money Online
I know many people want to make extra money and go to MLM. I was one of these people. There are many ways to make extra money,
Making money online is an excellent way; with the advance of technology, it has become one of the preferred ways to earn.
This may sound like an impossible dream, but in today’s world, it isn’t. I know quite a few people who are earning good money online from their websites,
There are several ways to make money online; the thought of making money online may sound daunting, but it isn’t.
Of all the ways to make money online, Affiliate marketing is the one I favor most; not only will you be able to earn an active income, but Affiliate marketing also has the potential of becoming a passive income earner.
It is easy to start an affiliate marketing business; it costs very little, and you can start for free sometimes.
Affiliate marketing is an advertising model in which a company compensates third-party publishers to generate traffic or leads to the company’s products and services. The third-party publishers are affiliates, and the commission fee incentivizes them to find ways to promote the company.
And you can learn about affiliate marketing in ten lessons for free, and the good thing is that you will have your business site up and running at the end of these free lessons.
You can then decide if you want to continue, The lessons are presented via video, and you can go at your own pace.
Earning an income through affiliate marketing requires the following:
- Research into products, a consistent engagement with the products and brand networks that you choose to endorse
- Understanding and using search engine optimization and social media marketing is necessary to attract new followers and generate additional income consistently.
As with every business, there are always Pros and Cons, so let us look at these.
Affiliate marketing is ideal for bloggers, coaches, information entrepreneurs, and those who build and maintain their digital properties such as YouTube channels3
. There are many aspects of affiliate marketing that make it a good home business model, including:
- No huge startup costs!
- No selling face-to-face!
- No stock to keep or manage!
- No recruitment is involved!
- No taking of endless surveys!
- No considerable investment involved – (Get started for free)
- And no working for someone else!
- You can operate in any market you wish! – even your hobbies & passions!
- Earn a full-time income & more! No limit to your earning potential!
- No physical products: No need to create a product or service because you are choosing one that already exists.
- You don’t have to stock or ship products.
- Flexibility: You can work anytime and from anywhere as long as you have internet access.
- Supplemental income: Depending on how you market your affiliate programs, there is passive income potential.
- You Can add Affiliate Marketing to your current home business to create an additional income stream, and you can have many income streams.
Cons of Affiliate Marketing
Like any business model, there are drawbacks and challenges to affiliate marketing as well, including:
- Time: It takes a commitment and experimenting over time to generate the amount of traffic needed to generate income.
- Competition: Affiliate marketing is highly competitive. Many affiliates promote the same products and compete for the same traffic and customers.
- Getting approved as an affiliate for popular companies or products can be challenging.
- Lack of ownership: The customers belong to the merchant. You will know how many sales you made of what product, but you’ll have no information about who purchased most cases.
- It takes time and patience to see success; you will not see success overnight.
You can be an affiliate marketer, and remember, you can start for free on one of the best training platforms,
I appreciate your time and look forward to your comments and questions, and please remember to share.
NOTE: This post includes affiliate links, which, if clicked on and a product purchased, I get a small commission (with no increase in cost to you )