Timotheus Update: This post was originally published on 4 February 2022 on this website – Passive Online Revenue. Due to rebranding and consolidation of the two sites, the post is now on this website – https://timotheuslee.com/business/can-you-make-money-with-mlm-multi-level-marketing/
Hi everyone! One of my students asked me – Can You Make Money with MLM (Multi Level Marketing)? Having had my fair share of experience with MLM, I shared with her my thoughts on this way of earning an income.
After that discussion, I thought it would be good to do a video about this. I thought that it would help many of other my students, mentees, and viewers, too.
So today, I will discuss with you about MLM, how they work, and most importantly, can you earn money from it?
Watch: Can You Make Money with MLM (Multi Level Marketing)?
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Or if you prefer to read, continue from here.
My Experience with MLM (Multi Level Marketing)
I first heard about MLM back in the 80s. People were talking about this ‘new’ way of making money. I attended a few free talks where MLMs talked about their products, and mostly about how it can be a business opportunity.
Really? A business opportunity?
The younger me back then might have been naïve and gullible. But, after years of experience with MLM, and doing research about it, I learned that there is no business opportunity with MLMs. Or, at least not the true definition of the phrase – business opportunity.
One of the MLMs I joined was Young Living. I shared my true experience with this MLM in another blog post. If you like to read about it, click the image below.
They sell you on the idea that you can start a business with the products they have. Again no, you really are not starting a business.
For example, you are not a franchisee. You do not have a share in the company. Your name is definitely not on the MLM business register as owner.
They talk about making a lot of money. That a lot of their members make a lot of money.
Is this true? I will discuss this further in this video. For now, let’s discuss what MLM is.
What is MLM?
MLM is the acronym for Multi Level Marketing. Some businesses choose this form of doing business. The business usually has products or services to sell. Usually, the selling is done by participants called distributors.
Based on my experience, a person learns about an MLM business through a contact, or by attending a free talk. When convinced to give the MLM a try, the person joins the MLM business.
And usually, to join, there are certain criteria. It usually is the requirement to buy the company’s products or services. The common sales pitch to convince them to buy is such as – After all, if you are going to sell something, you have to try it yourself, right?
After the said person joins, he or she can start selling the products. But that is not what most MLM wants. They want more people like you to join.
So, they get the person who just joined to start recruiting more people to join. Of course, if they like, they can simply sell the products to consumers.
One of the ways they get people to join is to price the products higher when sold at retail. The person who joined, who is now also called a distributor, can buy the same products at big discounts.
Who doesn’t like discounts, right?
So, when people want to buy the product, the distributor uses the big discount as bait, and gets them to join, too. The funny thing is many MLM companies proudly declare that their products are cheaper than similar products in the market because they do not spend money on marketing or advertising.
And that is how they can afford to give such big discounts for their members. BUT, in the first place, why are the prices of the products so high at retail?
Besides the big discounted price for the products, the distributor can get commission from the company, too. Remember the people they were encouraged to introduce to the MLM business?
When these people join, they become the distributor’s downline. So, any product purchased by any of the distributor’s downline will result in a commission for the distributor.
And when any of the distributor’s downline signs up people, those people become the 2nd layer of downline for the distributor. And he or she also gets commission when this 2nd layer buys a product.
And it goes on and on. Different MLM have different levels.
Sounds like a pyramid scheme, right?
Back in 2018, I wrote another blog post about what MLM is all about. It is a little more detailed than this blog post. So, if you are interested to find out more about MLM, click on the image below:
How Do You Earn with MLM?
When you join an MLM as a distributor, there is no salary paid. You earn commissions. They call it a compensation plan.
First, you must qualify to earn the commission. Every MLM business has different qualifying terms. Most of the time it is required for the distributor to at least buy the products to start earning a commission.
The commission is earned when a product is sold by the distributor or by one of the downlines. Again, how much commission differs at each MLM business.
Then there is the ranking of distributors. As you rise up the ranks, you get to earn higher commissions. But, to rise up each rank is not easy. There are requirements, and usually they are quite hard to achieve.
So, as you can see, with commissions from downline and higher commissions from higher rankings, the more people you recruit to join the MLM business, the higher the possibility of higher commissions.
That is why they literally push distributors to continually recruit more and more people to join the MLM business. And seriously, you will find yourself ending up as a recruiter rather than a business owner.
Can You Make Money with MLM?
To me, I find you can’t really make money with MLM. And there is a study by the Federal Trade Commission that agrees with me.
As you can see in this FTC report, the study reported that at least 99% of people who join MLM companies lose money.
Here are more reports on whether you can earn money with MLM:
Even a high level ‘Emerald’ Amway member, Eric Scheibeler, said that:
“UK Justice Norris found in 2008 that out of an IBO [Independent Business Owners] population of 33,000, ‘only about 90 made sufficient incomes to cover the costs of actively building their business.’ That’s a 99.7 percent loss rate for investors.” – Eric Scheibeler, high level “Emerald” member, Amway
Newsweek reported that based on Mona Vie’s own 2007 income disclosure statement “fewer than 1 percent qualified for commissions and of those, only 10 percent made more than $100 a week.”
#makemoney #mlm #multilevelmarketing
And research professor, Roland Whitsell, said:
“You’d be hard-pressed to find anyone making over $1.50 an hour, the primary product is opportunity. The strongest, most powerful motivational force today is false hope.”
Can You Make Money with MLM (Multi Level Marketing)?
Timotheus Final Word
for Passive Online Revenue
To be honest, I did not make any money with the MLM businesses that I tried. And the main reason is that I found myself doing more recruiting than actually running a business. And I did not like that.
It is only the few individuals at the uppermost level of the MLM pyramid that makes an obscene amount of money. And these are the people that the MLM company will focus on. They will quote these cases to convince people to join their organization, telling them that if these people can, so can they.
The reality is it will never happen.
While many MLM companies are generating billions of dollars in annual revenue, and hundreds of millions of dollars in annual profit, 90% or more of their participants are operating at a loss.
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Do you have any questions about today’s topic? That is – Can You Make Money with MLM (Multi Level Marketing)? Let me know in the comments below. I will be most happy to answer, and help you.
I will continue to publish new blog posts about making money online. And will do my best to upload blog posts about business and digital marketing, too.
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I wish you immense wealth and success!
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