The 15 Biggest Lies About Multi-Level Marketing Companies You Need to Stop Believing
You’ve probably seen some of your friends advertising MLM products on Facebook or texting you out of the blue asking if you’d be interested in a “unique business opportunity.” But are these MLM businesses legit, or are they pyramid schemes? And most importantly – is anyone getting rich from them?
Multi-level marketing, also known as direct selling or network marketing, has become a popular way for people to make extra money on the side. Amway is one of the oldest and most successful MLM businesses – but they also have several lawsuits pending and plenty of unhappy former sales reps.
There’s a lot of information out there about MLM companies, but not everything is accurate. Ahead, discover the biggest lies about multi-level marketing companies you need to stop believing.
Lie #1: You’ll get rich working for an MLM
Time for the hard truth: you CAN get rich working for an MLM. But you probably won’t.
The company you’re thinking of joining probably has multiple success stories to share with prospective sellers. But one consumer advocate found that somewhere between 90-99% of all distributors involved with network marketing only make a few hundred dollars per year.
Next: This is what they don’t tell you about the products you’re selling.
Lie #2: The products are unique and exclusive
Think about the categories for MLMs: Apparel, skin care, essential oils, health supplements, cleaning products, candles, etc. Now think about the items you can purchase from Amazon.
It’s true that the specific brands might be exclusive to the direct sales company. But when it comes right down to it, you can find shakes, supplements, leggings, and mascara elsewhere. And it’s probably easier and cheaper to buy.
Next: Is it illegal? Maybe.
Lie #3: It’s not a pyramid scheme
Defining a pyramid scheme can be tricky. When the money you make is based upon recruiting new people rather than selling products, that’s considered a pyramid scheme – which is illegal.
Anyone involved in MLMs knows that adding more people to your “downline,” the people who work under you, is the fastest and easiest way to make money. But if you are also making money by selling quality products, then the MLM is not considered a pyramid scheme.
Next: This is what most consultants tell you about direct selling.
Lie #4: Network marketing is the way of the future
Contrary to what your direct selling friends might tell you, network marketing is an old concept that’s not practical or scalable. Remember door to door salesmen? They were essentially doing the same thing as your friends who ask you to buy nail wraps on Facebook.
Direct selling forces people to change their buying habits, limit their choices, and often pay more for products they didn’t necessarily want to buy in the first place. That’s why network marketing will never eclipse traditional retail.
Next: It’s not as easy to do this as they say it is.
Lie #5: It’s easy to find people to sell to – just ask your friends and family!
Your friends and family may love you, but when you ask them to part with their hard-earned money, don’t be surprised if those relationships become strained. Even if you’re peddling an amazing product that you stand behind 100%, it can be difficult to convince your friends to buy it, especially multiple times.
Next: Most people believe this incorrect thing about entrepreneurship.
Lie #6: Getting involved in an MLM is a great way to own your own business
Let’s be clear: selling products for an MLM and owning your own business aren’t even close to the same thing. Yes, you’ll be responsible for yourself. But that doesn’t make you an entrepreneur.
When you work in direct sales, you use existing products and marketing to promote a product you had no say in developing or manufacturing. And the profits? You’re only getting a tiny fraction of those. Most of that money is being filtered straight to the top of the pyramid.
Next: Everyone underestimates this one thing.
Lie #7: You can work on your MLM business part-time on the side
Well, of course you can do it on the side – but don’t expect to make a jaw-dropping salary that way. If your main goal is making money and eventually quitting your traditional 9 to 5, then you’ll have to put in a lot of time and effort.
It’s a mistake to underestimate how difficult that is when you’re also juggling another job, family, friends, and household obligations, too.
Next: Here’s who’s really involved in MLM companies.
Lie #8: Anyone can get involved with direct selling
Sales are sales, whether you’re doing it over the phone or hosting a party. Certain personalities are better suited to sales than others. The most successful salespeople involved with MLM companies are personable, approachable, driven, and outgoing. They strike up conversations with anyone and constantly nurture relationships with their customers.
Introverts can certainly join MLM companies. But they probably won’t rise through the ranks as quickly.
Next: This money fact is very important.
Lie #9: After the initial investment, it’s all profit
This is so untrue. Read the fine print and you’ll find that most direct sales companies require you to continue purchasing a minimum amount of products every month to remain active. Unable to sell those products? Too bad. You’re usually not able to return unsold merchandise to the company.
Your profits are dependent upon your ability to sell the products that you’re expected to buy.
Next: Are they loved or hated?
Lie #10: Buyers and sellers love MLMs
Network marketing is often described as “cult-like” thanks to the extreme enthusiasm that sales consultants express for their jobs and the products they’re selling. Some of them may genuinely love what they’re doing — but others hate it.
There are multiple lawsuits pending against a host of different MLM companies. Allegations range from false promises to fraud, intentionally deceptive marketing, and pyramid schemes. Before you sign up, do some research and be sure the company isn’t involved in litigation that could affect you later.
Next: Not even this is enough to entice people to purchase.
Lie #11: It’s easy to sell product at parties
Yes, people like attending parties. One thing they don’t like? Spending money.
One popular way for MLM consultants to sell products is by hosting parties either at their own home or someone else’s. Guests are lured there with promises of free wine, appetizers, and socialization. Getting people to show up for the parties is only half the battle. Converting partygoers into loyal customers is a lot harder than it sounds.
Next: This group has the most exposure to MLMs.
Lie #12: All different types of people participate in direct sales
While anyone can get involved with network marketing, there are certain groups who are more likely to sign up. Direct Selling Association research estimates that 74% of the people working in direct sales are women. Reps specifically target stay at home moms, college students, military wives, and retirees. Nearly half of the people surveyed were either 35-44 or 45-54.
Next: This is what everyone gets wrong.
Lie #13: You’re destined to succeed with an MLM
Actually, you’re much more likely to fail.
Two different academic studies had the same findings: 99% of all MLM distributors will lose money by participating. Meanwhile, 84% of all profits get sent to the top 1% of the distributor chain.
Next: Not everyone has these bad intentions.
Lie #14: People who speak badly of MLMs are just haters
Some of them might be. But a lot of anti-MLM sentiment comes from former consultants who feel cheated by the companies they used to sell for. Many of these people lost their savings and wasted time promoting products that just wouldn’t sell.
Want to hear the truth? Talk to current and former reps to get the whole story. Also, use a bit of common sense — if everyone participating in direct sales was a millionaire, you’d know it.
Next: Not everything about direct sales companies is bad.
Lie #15: All MLMs are evil
There are lots of deceptive practices and shady dealings in the MLM world. That does not mean, however, that you should definitely steer clear.
If you are realistic about your budget for inventory and time commitment, direct selling can be a great way to earn extra cash or even launch a full-time career. It may be statistically unlikely, but there are sellers who are earning six-figure salaries and taking free vacations every month. If you go in with both eyes open, it’s possible you could be one of them (just don’t count on it).