MLM Success Rate: No Barriers to Success If You’re Doing the Right Actions

Recently, I was reviewing a document called “The Abysmal Numbers of MLM” and I just could not agree with the numbers the author presented. 

I wanted a “number’s guy” to analyze the data and determine if what the author shared had any validity. So I requested a meeting with Ian Chandler, a data scientist, to discuss the statistics of network marketing. 

Whenever I read numbers and negative reports on Network Marketing I get fired up because there’s people out there that read this stuff and actually believe it’s true! But the reality is, oftentimes the data is misrepresented or there’s huge generalizations being made. 

You can watch the full interview with Ian here, but what I’d like to do here is highlight the most fascinating part of the discussion. 

In the article, the author claims that less than 1% of people in MLM make a profit, and that 95% or more quit within 10 years. He further stated, “There must be something fundamentally wrong with MLM as a business model.” 

Obviously, I strongly disagree with that statement, so let’s break this down. 

Network Marketing - A $200 Billion per Year Industry

First, the industry as a whole did $200 billion in revenue in 2018.  That’s huge! That’s a lot of money, and the average payout by companies in commissions was 40%. In other words, $80 billion was paid out in commissions in 2018.  That’s a lot of money being paid out in commissions - can you think of any other business that has that much revenue or pays out that much in commission and is labeled “fundamentally wrong?” 

Second, to fully evaluate what the author is trying to say,  “that there is something fundamentally wrong with MLM”, we need to take a look at the standard across all business and even all people. It’s called the Pareto curve, or 80/20 percent rule. The MLM industry isn’t the only place where a smaller percentage of people make most of the money.

For example, if we take the amount of money that people have and plot it on a graph, it will form a  curve. We put the richest guy on the planet first, let’s say it’s Jeff Bezos of Amazon who's currently worth $165 billion dollars, then the second richest guy, say Tim Cook, then maybe Warren Buffett is next, and you put their incomes one after another, on a graph. And if you continued to do this after entering in a hundred or even thousands of incomes, you can see the curve.

Looking at this curve, you can see the 80/20 percent rule: 

 20% of the people own 80% of the wealth. This is also the same principle in employment: 20% of the people do 80% of the work. 

The 80-20 rule applies to many, many many things. In network marketing there's no exception.  So first, the author is pointing fault at the network marketing industry, when in fact most wealth or income is distributed this way in almost every business. Have you ever heard of an entry level employee making more money than the CEO? 

The 80/20 Rule - What Makes MLM Different?

But something really interesting happens between the 80% and the 20%  that is unique to network marketing. 

The majority in network marketing are in the 80% group that isn't making money, until they do particular actions to move them into the 20% category.  Once they start doing those actions, they move out of the 80% group and into the 20% group. 

And for those of you who read my last post, you’ll remember that you generate leads, set appointments, and do presentations. Those are the actions that move you into the 20% group that makes good money. 

When network marketers put  in the time and effort, then they make money, and there is nothing that prevents someone from moving to the high end of the curve in MLM. There literally is no barrier. 

If you have a willing mentor, a plan to follow, and a business opportunity that pays for performance not for participation, the sky is the limit. And so for the 80%, I'd say, “No one is holding you back from becoming the 20%. Do what they do and you can have what they have.”

So, is there something fundamentally wrong with MLM as a business model? To that I say, “No!”  The most productive people in MLM get paid. Do a lot, make a lot. Do very little or nothing, and you’ll make very little or nothing.

And as far as the statement that 95% of network marketers leave the business after 10 years - to that I say, we don’t know the intent of that person, and if they focused on the money-making actions. But, what our data shows is that when people in the industry focus on the money-making activities, they move from the 80% who aren’t making any money, and move into the 20% group. 

And once you transition into that 20%, the upside in network marketing is unparalleled. That's what the numbers prove every single time. 

So if I were to take anything away from this discussion it would be this: There is no shortcut to success in any endeavor you do, but if you're willing to put in the time and effort, you will make it.

To see the in-depth discussion of this article, watch the video at Network Marketing Power.