From my first MLM post to till now, my perspective toward MLM has completely changed. Reading a number of MLM blogs, books and analyzing income plans made me a more critical thinker.
The below chart shows us the MLM Success Rate, which is widely ignored by the whole industry.
Even a gambler has more chance to become rich compared to an MLM top leader. In our Job Vs MLM post, we saw that the average Herbalife USA distributor earns 5 times lesser than the least paid job in the USA.
Whereas, DSA (Direct Selling Association) and MLM portals promote network marketing without proper statistics.
Most MLM companies share their annual turnover, But there is a difference between GDP and GDP per capita. We always consider GDP per capita to judge prosperity, not GDP. The same goes for MLM as well, where most individuals lose their money in buying overpriced MLM products, behind the dream of becoming rich from it.
You can read this post in Hindi as well:
Network Marketing Success Rate
Before jumping down to the success rate, let us take a look at history to create a base.
Network Marketing started in the decade 1920s. California Vitamin Company (Now Nutrilite) and California Perfume Company (Now Avon Products) are pioneers of the MLM.
In the year 1959 Amway (American Way) started and is the revenue-wise leading company of this industry.
With the growth of direct selling, ponzi and pyramid schemes came into existence which spread faster as they seem more lucrative than genuine MLM companies.
Don’t be surprised, but MLM is a legal business model in most countries including the US, India, EU and many other regions.
Statistics are Ignored
As I said earlier, DSA, MLM portals, leaders, companies and MLM-related books always favor MLM ignoring the real stats.
Statistics are widely used in most businesses. Statistics are vital to understanding growth, market and making predictions. But most MLM favoring authority never use statistics, cause they reveal the dark reality of it.
Even the book The Business of the 21st Century written by Robert Kiyosaki does not consist a single piece of real data that makes me believe that MLM is actually the business of the 21st century.
Maybe Kiyosaki’s aim was only to make money out of over-motivated people in the MLM industry.
For this post, we will rely on proper research based on facts and figure to understand the success rate of MLM.
The Case (for and) against Multi-level Marketing
The Case (for and) against Multi-level Marketing is an ebook written by Jon M Taylor (MBA, Ph.D.).
Jon M Taylor joined the network marketing industry around 1994 and he was one of the top 1% earners of his MLM company.
But being one of the top 1% earners, Jon was losing 1200$ monthly. Jon was investing his own money in campaigns for sales and to recruit new people in the downline.
Jon’s campaigns were successful, but he never earned the amount which he was promised. Hence he started his research on MLM.
You may be wondering, Why I am considering only Jon M Taylor’s Research?
There are plenty of reasons, which you will understand ahead.
When Jon was confused about does only his MLM company pays so less? he started the investigation.
Jon found that the situation was the same in all companies around him. He was shocked and continued his research.
After Investigating 350 MLM Companies for 15 years, he published his ebook over the internet.
Jon M Taylor’s book got an identity when the USA government agency FTC (Federal Trade Commission) promoted his ebook on their official site.
Jon also challenged the president of the 60 most prominent MLM companies of that time to prove him wrong, but the challenge remained unmet cause most of the presidents never dared to reply to Jon.
99.6% Got Failure
Jon M Taylor proved that 99.6% of people in network marketing lose their money in buying overpriced products.
In the 7th chapter of his eBook, Jon revealed that 99.12% to 99.97% lose their money, on average 99.6% are losers.
The remaining less than 0.4% of successful people in MLM are at the top of the pyramid, i.e. 4 in 1000.
Of those profiting people, either most had joined the company in the initial days or have straight connections with company management. Therefore the chance of success of an average distributor gets near about 0.1%.
Jon compared the success rates of MLM to other professions.
Even illegal money-circulating pyramid schemes have a better success rate than legal products-based MLM called network marketing.
|Income Source||Success Rate|
|Legitimate Direct Selling||80%|
|Illegal Pyramid Schemes||10%|
Jon M Taylor has used words like Incentivized Purchases, TOPPs (Top of a Pyramid of Participants), Stockpiling, Top-Weighted Schemes, and Sympathy Buyers to explain the dark reality of network marketing.
Personally, I recommend everyone to read Jon M Taylor’s research on MLM. You can download Jon M Taylor’s book PDF by clicking on the just below the button.
Who Gets Success in Network Marketing?
Network Marketing has a very low success rate. Still few people get success in it and become part of the 0.4% success club in every MLM company.
Generally, they are the people who are at the top of the pyramid. Most of them joined the plan in the initial days of the company.
MLM companies give good earnings to only those people, who have large downlines. And peoples who are masters in recruiting new people have more chances to get success.
Recruiting active people in the downline is the principle of success.
He is a successful network marketer, because of his presenting skills in front of thousands of people.
Why Network Marketing?
Books like The Business of the 21st century give many reasons to do MLM. Such books don’t have proper stats, But qualitative points in these books are not false.
A person engaged in MLM learns various things, like
- Communication Skills
- Leadership Quality
- Convincing Power
- Dreaming Big
- And other interpersonal skills
Sometimes failing makes a person better. Even India’s most popular motivational speaker Sandeep Maheshwari is an ex-network marketer.
But at last, it’s all about selecting the right profession. Spending money and precious time in an Industry with such a low success rate and revolving around controversies may affect someone’s career adversely.
Why Not Network Marketing?
MLM Success Rate driven by Jon M Taylor is enough to say no to MLM.
When any person joins any MLM company, firstly they force their family and friends to join in the downline or to purchase their overpriced products.
The Sympathy Buyers term is used by Jon M Taylor for those family members and friends who buy MLM products when their loved ones force them.
In most cases, innocent people waste their time and money who actually never know the reality of network marketing.
Everyone is not an entrepreneur who is also willing to become one among the top 0.4% of people in any MLM company.
Moreover, there are lots of new skills and professions available to become a better person in life.
If someone has a passion in any field, then following that passion is the best option. Otherwise other business or skills-based jobs pay much higher than a typical MLM.
I hope this post on Network Marketing Success Rate is beneficial for you. Many of you are new to the MLM industry and working with faith to get success in it. Maybe you do not like this post, but I recommend again reading Jon M Taylor’s book, to understand what’s wrong with MLM Industry.