Why I Don’t Do Network Marketing or MLM

This post originally appeared on the Richdad.com forums and on my Blogger blog, but my blog over there was shut down due to inactivity.

So here is the reason I will never get involved in another MLM business again. The post is slightly modified from its original version. Some of the references in the post may be a bit off because I originally made this post about 3 years ago.

There has always been a mountain of discussion around the net about MLM and the pros and cons of this type of business. After being involved in 2 MLM businesses several years apart and having both turn out not to be what I had expected, I wanted to share several thoughts and observations.

I want to start off by saying that I believe you can make some serious money building an MLM business. I was making $4,000 a month for awhile in the last business I was in and was working with people every week that were bringing in checks anywhere from $10k to $100k per month. However, these people are very few and far between. Every MLMer or MLM prospect needs to understand this. The odds are very much against you, but that isn’t what you are led to believe.

Even though you can make serious money from MLM, I would be hard pressed to recommend anyone start an MLM business. Why? Because there is the hype and myth of MLM, and then there is the reality.

As you are being recruited into an MLM business you will be spoon-fed all of the myths of MLM without any of the reality. Some of the myths are, you can earn a residual income, you don’t have to sell, you can market on the internet, you own your own business, you only have to work at this part time, etc.

The reality is:

MLM Is Not Residual
For some of the top dogs this isn’t true, but until you reach a level in the neighborhood of $25k a month or so, residual income isn’t happening. You can have a thriving business as I did and in a matter of a month or two be making absolutely nothing. I wouldn’t call this residual income at all.

I was involved in a large and expensive radio advertising campaign and when everyone in my group decided to get out of it at the same time, my bonus checks went from $2,500 to $1,500 to ZERO in two months. And that’s where it’s been for the last 6 months or so.

Even some of the top leaders in my company that have huge downlines have to continue to work extremely hard to collect all of their bonuses. There were so many outs in our compensation plan you could never take a break and just collect your residual income. Unless you continued working like a maniac, you you weren’t going to get paid. True residual income lets you do the work once and get paid many times over.

You Don’t Really Own Your Own Business
This was the biggest reality check for me. About the time I joined my last MLM business (it was EcoQuest International already! (Oh, I might get in trouble for that.)) I had been studying search engine optimization and other net marketing strategies for a few months and wanted to promote my new business on the internet.

The EcoQuest ethics dept had plenty to say about that. We were not allowed to use the company’s name, product names, trademarks, pictures, my own pics of my purifier, etc., in any kind of marketing whatsoever unless you were pre-approved to do so, which was nearly impossible. I know all of this first hand because I broke nearly all the rules in my attempts to gather leads for retail and recruiting purposes.

So here I was with my “own” business, but I couldn’t market or distribute the products as I wanted using the skills and knowledge I had acquired. I couldn’t do what I would do in nearly any other business. I essentially had a boss telling me how I had to run my business.

I had a business, but I couldn’t tell anyone on the internet what I was doing unless they contacted me first. How was I supposed to do that? This fact alone made me waste an incredible amount of time with people that had no interest at all in EcoQuest or air purification. I’ll go further into the net marketing aspect a little later.

Most People Are Not Qualified For An MLM Career
I’m sure that’s going to shake some people up, but its true. Every MLM you join will want you to recruit your friends and family. Depending who you are and your socioeconomic status this could be very good or a disaster. It’s a disaster for most people and is probably the biggest reason people quit their mlm business
Here’s a big reality check, if you started your own corporation manufacturing widgets, how many of your friends and family would you ask to join you? Probably next to none because they aren’t qualified for the widget industry, so why would you ask these same friends and family to join you in a sales and recruiting career?

I just finished reading an incredible book about marketing called, Your Marketing Sucks by Mark Stevens and he says that the one of the reasons corporations do so badly at marketing is because they either hire salespeople who can’t sell, or they force people who are not salespeople, to become salespeople.

As an example, some companies force a few of their engineers to meet with customers and try to sell their products. Companies think that because engineers develop the products, they can tell their clients all about the cool things they do. Corporations have forgotten one thing in this scenario, 99% of engineers don’t have social skills, that’s why they got into engineering, so they could hide in the dark dungeons of a test lab and create cool stuff like cruise missles, NOT SELL!

The same goes for your MLM business. MLM is recruiting and selling, period. So, why would you want to recruit someone that claims they have a dream but are afraid to sell. And why would you recruit someone who can’t use the telephone properly?

Occasionally, on a very rare basis, all of the hype training and motivational sales meetings will work on someone and this will tend to perpetuate more meetings and training because it worked for one rare individual, and then the cycle repeats itself.

There are only a very, very few people who do really well at MLM. You will go through thousands of people to find maybe just one person who is well suited for MLM. Many times MLM business turn into counseling businesses because of all the people issues you have to deal with. I don’t have time for that! I expect people to do what they say they’re going to do because I’m a businessperson, not a counselor!

For Some Reason MLM Attracts Lazy People
I made the mistake of personally sponsoring 120 people, and 110 of them were just plain lazy! It could be that there has been so much hype in MLM that people have just been brainwashed into believing that they are going to get something for nothing. Most of those 110 people thought they would get rich from just joining and getting a $35 dealer kit.

I have had people leave messages on my toll free lead capture #’s exclaiming how they were so excited about starting a business they couldn’t stand it, They were motivated, committed, and ready to go. Even though my 3-minute business message explained the opportunity in detail, after 5 minutes of talking with them they would say, “You mean I have to sell something?”

MLM Is Hype
Most of what you hear about MLM is pure hype. In my first MLM venture I was told I could work 2 to 5 hours a week and make $5,000 per month. This was nearly a mantra in Amway and although I was warned that EcoQuest would be hard work, when I was making $4k a month I was devoting nearly my whole life to it.

The top dog in EcoQuest makes about $110,000/month but he IS EcoQuest. He does 200 meetings a year and travels the entire country and several foreign countries. He’s putting in a bit more that 5 hours a week. Every waking moment of his life is dedicated to EcoQuest.

The biggest part of the hype is that you can become wealthy from MLM. You can earn good money but only 1 in 1,000,000 people who actually join an MLM will even approach wealth status. MJ (michaeljohn) has talked a lot about this, look up some of his posts, you need to start an MLM business, not join an MLM business to become wealthy.

Some of the top, top people in MLM don’t even stay with a company that long and many top dogs are no longer involved in MLM at all. They either train other MLMers or they start a lead generation company.
Why do you suppose that is?

Most Lead Capture Pages and Lead Generation Companies Suck!
I know you’ve all seen them, I know you get them in your email every day, and I know you are sick of them. They are those single web pages that give you 3 paragraphs of hype about owning your own business and no information on what type of business you will be starting.

I wasted my time with thousands, yes thousands of people I never should have talked to. I want to give a prospect as much information as I can up front and every reason NOT to join my MLM. The last thing I want is for people to get excited about an opportunity they know nothing about and then have their hopes (and mine) dashed when they figure out they are going to have to work at selling air purifiers and recruiting.
Once I started putting up lead capture pages with more info on them I started getting fewer leads and talking to less people, but my results were the same.

You’ll normally get the same bad results with lead generation companies. Most lead generation on the internet is a scam. Most people are tricked into giving their personal information in the attempt to win a free DVD player or iPod. They then get tons of spam and become a lead for 20 hungry MLMers. They don’t care about your business, they just want their free iPod.

Most MLM Companies Are Net Marketing Neanderthals, My Company Was
I told you I’d get back to this.

If an MLM company doesn’t understand the reality of internet marketing today, they will be dead in 5 years. Everyone in business today knows, or better know, the power of the internet, fortunes are made everyday on the net in every kind of business imaginable. What will the internet look like in 5 years? What will sales be like in 5 years?

More people are shopping on the net everyday, yet for some unknown reason some MLM companies, especially the one I was in, doesn’t see or refuses to see the potential of internet marketing. In EcoQuest’s efforts to keep a level playing field for all of its distributors (so they say) it has forgotten one thing, thousands of people are looking for air purification products and some are specifically looking for EcoQuest products everyday and can’t find them OR they find a competitor and THEY get the sale.

Many people have heard of EcoQuest or the Living Air line of air purification systems and look for them via the internet. For some people, their only tool for finding EcoQuest products will be the net. They won’t get information from any other source.

It is very possible that EcoQuest, or any other MLM company that has this attitude about the net, will eventually begin to fizzle out because their competitors will take advantage of the fact they don’t know how to market on the web.

A little side note about your replicated MLM web site that you pay anywhere from $10 to $50 a month for. In net marketing terms, they are a joke. Search engines consider most MLM web sites as spam because they are replicated 1,000’s of times.

The proper net marketing thing for anyone in an air purification mlm business to do would be to create a site with no less than 150 pages that covers every aspect of indoor air purification, from, pet problems, to mold, to chemical outgassing from construction materials, etc., etc.

That’s what any business should do on the net today, especially an MLM business! (there’s a clue there people) If you have a business, again, any business and you aren’t doing this you are missing a huge opportunity.

Until your MLM company lets you do something like this with your product line they are net marketing Neanderthals!

Many of the big time people in MLM probably built their businesses with recruiting methods that no longer work (dragging people to meetings), yet they are still teaching those methods because they are no longer building their business, they are maintaining them. Their businesses have reached such critical mass that they can tell their troops just about anything and their businesses will still grow.

That’s the problem with many MLM’s and the net. The MLM old timers, with old time methods, run the recruiting and marketing efforts and don’t realize the full potential of the net.

All businesses, especially MLM businesses, must evolve as the internet evolves.

In Conclusion
Yes you can make serious money in MLM, and you have a one in one million opportunity to get wealthy. We’re talking about gangster money wealthy here folks. Very, very few people will ever get to a level of $250,000 to $300,000 or more in MLM.

I’ve heard about some people in my business making $25k per month. Then I found out they were spending $15k per month in advertising. Let’s talk about profit. The next time an MLMer shows you their bonus check, ask how much of that is profit.

The more I look at affiliate marketing however, I can see how it really is a better alternative than MLM. I know of several people making much more than $300,000 per year in affiliate marketing. Does anyone really know what to do to get that kind of income in MLM? Can you formulate a specific plan to make that kind of income?

Affiliate marketing is entirely different. You can build a $300,000 income with expenses of only about $1500 per year.

I think I’ll stick with affiliate marketing.

Alan L

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13 Responses to “Why I Don’t Do Network Marketing or MLM”

  1. I live in the MLM mecca, Utah. I think I have been presented just about every opportunity out there. You could throw a rock from my house and probably hit 10 other houses involved in MLM. I think it can be a great opportunity if you market it correctly and you aren’t going after the hype, but rather a job.
    I have, however, affiliated myself with one MLM company because it compliments my other business. For me it is just a side thing that I sell the dog food at retail to my dog training clients and haven’t even tried to recruit anyone. Approaching it like this it has allowed me to add a little side income and never approach anyone on the idea that they will get rick quick.

  2. […] Why I Don’t Do Network Marketing- After 2 MLM ventures I discuss at length why I no longer recommended network marketing as a way to make money. […]

  3. Great post! I just found your page and I’ve read a few articles – you’ve got some really good stuff here. I’m signing up for your RSS feed now, keep it up!

  4. Man you really didn’t do good. I am sad for you. Maybe it was and is your personality and nobody likes you.

  5. Interesting comment Jeff. Did you read this entry? I was making $4,000 per month playing the mlm game. While that isn’t big money, it is more than most mlmers make in their entire careers.

  6. MLM’s are very hard to develop. I give you credit Alan, $4k a month is quite a bit from an MLM. My highest earnings were about $1,800 a month. Even with that $1,800 a month, I found myself spending like crazy trying to help me and my downline. It was a cycle of earn and spend, which left me no profit.

    I think ANYONE considering joining a MLM should read your post. It is very insightful and 100% accurate.

  7. I think your recruiting efforts for your MLM are commendable. Trying to week out those that don’t want to work is a good thing and saves those people a lot of heartbreak and money. MLM is a good opportunity for the right person, but others need to watch out for these people if they are pushing recruiting and “garage qualifying” instead of retailing. Garage qualifying is how many MLM’s get in trouble including the one I was involved with. I lost a lot in terms of my finances, but in the grand picture, what I lost was peanuts compared to others.

    I still believe MLM is a good way to make money if you’re willing to work at it and if you’re a salesperson. Unfortunately, the traditional MLM is just not for me.

  8. I had no idea you were involved in MLM at one point or another…

    Here’s a little story – when I first discovered there were legitimate ways to make money online it was via SFI… and being the headstrong individual that I am, and always being taught to think on my feet, I quickly steered away from the MLM idea because after some testing of the waters I realized that I didn’t want to spend my time working on trying to get other people to work… and I wanted to do MY OWN thing through various avenues..

    I love the points you made though, I think I might use this article as a foundation for a little MLM introduction on my blog – if you don’t mind – of course not!

  9. I’ve seen people clearing debts with the leverage of MLM

    so Two Side of Coin always.

  10. I agree with most what you said. It’s totally true for the old generation of mlm. But I think time has changed a bit. Right now there are online mlm opportunities where you are your own boss like with affiliate marketing, because they’re online mlm companies without any physical products. You can get your leads through your own blog. You can train them through email and with video conferations and your work is not much different then with affiliate marketing.
    This are just my 2 cents.


  11. I agree with Daniel, MLM is a good way to make money, just like affiliate marketing you don’t need any products stored at your own place and you can generate leads from any blog/site.


  12. I never liked the idea of paying them to be allowed to join this business. Then you have all of these meetings and recruiting that had to be done. And the so called “secrecy” was just ridiculous. Don’t get me wrong. This is just me…I have known people that make money doing this stuff.

  13. I have to totally disagree with this post, It depends what infrastructure you build in. I’ve discovered money only circulates around a product people really want and is backed by real science accepted in peer review. If you build a MLM in a venture that gears towards a lot of marketing then surely they invest alot in marketing and not much towards the inner root that circulates the money and that is your product.

    I’ve watched a huge team collapse 2.6 yrs building and rebuilt and having the time of my life..

    Ronnie Branch

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