Today, I want to share the top 10 reasons that MLM Industry has a bad reputation. Please keep in mind that (1) these are simply my personal opinion, and (2) I am a fan of the MLM Industry. Here they are, in no particular order.
1. Not many people make money
Our industry has a pretty high failure rate. A few get rich, lots of people make $200 to $5k per month and most make nothing. Making money in any selling profession can be tough. If you don’t believe me, study the turnover rate in any profession with 100% commission based pay.
I also realize that most businesses fail. Most entrepreneurs are strapped for cash. Additionally, most people who get involved in network marketing try it out for a couple months and then quit. To build any type of successful business you need a game plan, you must work hard, and you must put in the required time. I’d challenge that no one could build a successful business of any kind in 90 days or less.
One of the biggest issues in our great industry is the false expectations people have. They expect quick and easy money without doing much work. I tell everyone that this is not the lottery, nor is it fast or easy money.
2. The deceptive recruiting practices
This is probably the biggest problem in our industry. There are so many people doing shady things to recruit people. Don’t lie to your prospect. Don’t mislead your prospect. Don’t give them the wrong information. Doing something unethical to take advantage of your prospect will get you nowhere in the long run. Sure, you might sponsor them today. But once they find out you lied to them, they will never trust you again. And there’s a good chance they will grow to hate the industry too. So do the right thing and always be professional!
Deceptive recruiting practices include (1) promising easy or fast money, (2) telling your prospect that all they have to do is get two who get two, (3) posting your opportunity as a job listing, (4) inviting people over to your house to show them the plan without telling them the purpose of the meeting, (5) telling your prospect what you think they want to hear, (6) lying about your income and much more!
3. Most new distributors don’t understand sales, marketing or entrepreneurship
Another reason our industry gets a bad name is because most new distributors have never done anything in the sales, marketing or owned a business before. They have never been paid to produce and work solely on commission. As a result, they don’t have the right skill-set or right mind set when they first join our industry. Unfortunately, most of these folks quit the industry before they get a chance to develop the right mind set and skill set. Anyone can learn these skills, but it does take time.
4. Most compensation plans are designed for the heavy hitters
Most compensation plans in our industry are designed for the heavy hitter, not the part-timer. If the little guy can’t make a decent income by having a small team of distributors and customers, he will quit. Companies need to do a better job restructuring their compensation plan for the little guy. If lots of little guys make money, they will stick around. As a result, there will be more heavy hitters. It’s important that you find a compensation plan that is balanced and fair.
5. It’s easy to quit
Another reason our industry gets a bad name is because it is so easy to quit. Most distributors spend less than $500 to get started with their new business, so they don’t have any skin in the game. This makes it very easy to quit when things don’t go as planned. The average traditional business owner has tens of thousands or hundreds of thousands of dollars invested in their business so they will do everything in their will power to make it work. Not so in network marketing.
6. Some scrupulous distributors lie to their prospects and team members
Every business and every industry has its good apples and bad apples. In the MLM Industry there are a few shady people who do some really bad things. These are distributors who lie and steal from their downline, cheat people out of money, have an affair with someone else’s spouse, etc. One bad apple can ruin it for everyone. However, please keep in mind that most people in our industry are great people who simply want to improve their life.
7. Lots of MLM Companies go defunct
In the business world, companies come and go. Most MLM Companies eventually shut down or go bankrupt or change their business model. I’ve heard thousands of horror stories of people who built a large team of distributors, only to wake up one morning and find out the company went bankrupt and closed down. That’s why it’s so important to team up with the right company. Avoid start-ups at all costs. Try to work with established companies that have been around at least 10 years.
8. The attrition is so high
Attrition is very high in our industry. Probably 50% to 80% of the people who get involved each year will quit. Most of those folks quit within 90 days or less. It’s hard to build a large team with that many people quitting. One of the best ways to lower your attrition rate is to look for quality people, to give people realistic expectations, to train your team, and help your new team members get started right. It also helps to be product focused.
9. Many of the products are way overpriced
Many of the products in our industry are WAY overpriced. If you can get a similar product at Wal-mart for 10% of the price, not many people will keep reordering it from you month after month. Sure, some of our products are unique and competitively priced, but most of the products in our industry are way overpriced. Make sure you team up with a company that has products at a fair price for retail CUSTOMERS, people not involved in the business opportunity. If the products don’t make sense, neither will the business.
10. Social Media and the Internet
I truly believe the internet will one day wipe out the industry for good. I believe this because there is so much negative stuff about our industry online. Some of it is true. Some of it is lies. Unfortunately, it’s hard to distinguish between what is legitimate and what is not. Additionally, you can buy products from former distributors at a highly discounted price on Amazon or eBay. It’s hard to get a retail customer when your prospect can go online and buy products for a cheaper price than you can get them for as a distributor. In addition, so many people are tired of being spammed by network marketers on social media sites.
Overall, the MLM Industry does have a bad reputation with a lot of folks. Some of that bad reputation is deserved, but a lot of it is incorrect. If you are currently involved in the network marketing industry, I challenge you to always be a network marketing professional. Remember, that you are an Ambassador to our industry. People will watch what you say and do. So always be professional and do the right thing.
You can’t control what everyone else in our industry does, but you can control what you do! Just do the right thing and you have nothing to worry about.
What are your thoughts? Why do you think the MLM Industry has a bad reputation? Leave a comment below to let me know what you think. I look forward to hearing from you.
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Network Marketing Professional (21+ years)
Top Recruiter & Top Rep