According to the AARP Foundation, about one in thirteen adults (18 +) took part in at least one in a multi-level marketing (MLM), also referred to as direct sales or network marketing company during their lifetime. How are those people doing multi-level marketing making money? What is the real probability of success at MLM?
Through undertaking extensive study and review of the pay policies of more than 400 MLM businesses, Jon M. Taylor, Ph.D., director of the Customer Knowledge Center, set out to address those concerns. In a 2011 eBook, "The Case (For and) Against Multi-Level Marketing," he summarized his conclusions, which can be viewed on the Federal Trade Commission website.
More recently, the AARP foundation performed a survey analyzing the attitude, perceptions, and perspectives of MLM participants and reported the findings in a paper called "Multi-level Marketing: Analysis, Risks, and Rewards." Moreover, you can always collaborate with a robust MLM software development company to build your business.
So, is it a good time to evaluate the network marketing business in 2020? Let’s find out!
MLM Success and Failure Metrics
A study by the AARP Foundation showed that after less than a year of working with an MLM, 44 percent of participants dropped out. Research by Taylor reveals identical figures and goes a bit further into dropout rates:
- Around 50% of MLMers drop out within the first year.
- Close to 90% MLMers leave within five years.
- It’s only around after 10 years that the top MLMers have not dropped out.
Comparing these figures with the overall loss rates in small companies does not bode well. According to America Small Business Management, about 20 percent of small businesses do not make it past a year, about 50 percent of the last five years or more, and about a third make it past 10 years.
A robust network marketing software developed by a credible MLM software development company can help you in briefly analyzing the success of your business. A reliable network marketing software not only helps you in maximizing the success potential but also goes a long way in ensuring the success of your MLM venture.
How Much Investment Is Involved In MLM?
In addition to marketing a product, Taylor studied the commitment needed to initiate a successful business-building strategy for a recruitment-focused MLM or an organization that provides incentives for hiring a "down line" squad. Although a network marketing software developed by a credible MLM software development company crucial for any MLM venture, the returns are directly linked to the efforts that are put in growing the business.
He expects total expenditures of at least $25,000 to include promotions, goods, telecommunications, and internet, give away, computer equipment, advertisement, and transportation. He entered a recruitment-focused firm to arrive at this number and worked full-time in the organization for a year. From buying regular educational materials to hosting events, he has done everything he was asked for.
Today, those prices are reduced considerably. Internet, online training, long-distance flat-rate and/or mobile phone coverage, and free and inexpensive internet marketing have made any company, including MLM, far more economical to develop.
In the more recent research by the AARP Foundation, 66% of MLM participants invested less than $1,000 in production, preparation, and services when they were in an MLM agency, 24% spent between $1,000 and $4,999, and 11% charged $5,000 or more when 23% did not know how much they invested. Just four individuals have registered more than $50,000 in spending.
How Much Money Can Be Made In MLM?
Can you make the MLM money? The short response is yes, but in fact, the high earnings reported in MLM advertising materials and at meetings are currently realized by just a small percentage of members. Few people make absolutely no money and other people even waste money.
The AARP Foundation found that only around 25 percent of those surveyed made a profit with MLM, 27 percent even broke, and about half wasted revenue. Taylor came up with a more grim finding from his research: "On average, one out of 545 is likely to have profited after subtracting expenses, and 997 out of 1,000 people involved in an MLM lost money (not including time invested)."
The amount of money that can be made by an MLM can be maximized if a reliable network marketing software developed by a credible MLM software development company is deployed and all the metrics are sourced from the portal itself.
Every MLM Is Not Created Equally
If you're even talking about entering an MLM then it's crucial that you research and extensively examine the business and goods and make sure it's not a scam. You do have to make confident it's a product and program that you like you can support.
There are several single-level marketing companies, selling goods without a recruitment component, where there is a far higher probability of profit production than traditional MLM figures. That is because compensation only comes from the sale of products and no down lines, minimums, or strategies for hiring. In comparison, some of the MLM businesses are product-centered and have incentive systems for product purchases.
Do the inquiries. When people enter the MLM ecosystem they make a lot of mistakes. Some are not investigating the business or the company. Others are not reading the contract they signed. Many newbies depend on their sponsors for details. And 47 percent of the participants in the MLM survey of the AARP Foundation said they did not provide a copy of the pay package for the organization until joining.
Collecting all the details and reading all the fine printing before entering an MLM should help you set yourself up for success. Just remember that for all your data-driven needs, having a robust network marketing software developed by a reputed MLM software company will be of tremendous help. A credible MLM software development company can go a long way in ensuring the success of your network marketing business.