12 Reasons the MLM Industry Has a Bad Reputation

Today, I want to share the top 12 reasons the MLM Industry has a bad reputation.

There are people passionate about this amazing industry, like I am, and there are people equally passionate about hating our industry. To each their own! Everyone knows someone who has done multi-level marketing and quit. Most people have been a customer or distributor with a network marketing company at some point in their lives.

Talk to 100 people and you will hear 100 different opinions about our industry. That’s what makes America great. You can believe whatever you want. I’m not here today to convert you to a believer in our industry like I am. Instead, my goal is to help educate network marketers, so they can become a professional, and do our industry the right way.

Let me start by telling you that network marketing is not perfect. Nothing is perfect. Network marketing is not for everyone. Neither is entrepreneurship. Building a successful business of any KIND requires a 100% all in mentality, a big work ethic, and lasting commitment. Most people do not have those three things. That’s why most people work in a job, rather than own their own business.

I should also tell you this. Many people love our industry. Not everyone hates it. If anything, I would say most people are NEUTRAL to the industry.

reasons the mlm industry has a bad reputation

12 Reasons the MLM Industry Has a Bad Reputation

In the paragraphs below, I will share what I believe are the top 12 reasons the MLM Industry has a bad reputation. These are the reasons some people dislike our industry. Keep in mind this is just my opinion and we can agree to disagree.

# 1: Not Taught in School

Here’s the truth. Network Marketing is not taught in college or school. Entrepreneurship is not taught in school or college. Instead, we are taught to be employees. That’s why most people seek jobs and avoid entrepreneurship.

When you talk to people about different ways of making money, most people are skeptical about anything other than a job, simply because they’ve been programmed their entire lives to look for a job. Doing something “different” scares a lot of people, even if they are unhappy with their “job” situation. This “mindset” can be difficult to overcome.

Here’s one thing I’ve noticed though. When someone with entrepreneurial experience sees our business model for the first time, they often get excited, because network marketing offers the benefits that a traditional business does without the financial risk or headaches associated with a traditional business.

# 2: High Failure Rate

Some people will say our industry has a high failure rate. I disagree. I would instead say that we have a high quit rate. It’s hard to fail at something you haven’t even tried. Most people quit their business in 90 days or less. They didn’t fail, they quit! Big difference.

People quit their business for a wide variety of reasons. Perhaps they had unrealistic expectations. Or they decided it wasn’t for them. Or, they didn’t like being rejected. That’s okay. Keep in mind most people quit everything they do. Few people can start something and stick with it long-term.

# 3:  Deceptive Recruiting Techniques

Another reason the MLM Industry has a bad reputation is because some distributors do shady things. They use deceptive recruiting techniques to recruit their friends and family. They normally do this out of ignorance because they haven’t been trained properly.

Some examples include inviting friends and family to your house for a party, and then doing a business presentation. Another example would be advertising your business as a job, when in fact, it is not a job.

It’s always best to take the high road and be honest with your prospects right out the gate.

# 4: Unrealistic Expectations

Our industry is weird. People who have been in the workforce, working full-time for 20+ years, earning $40k to $50k per year, will join our industry and expect to make a six figure income within a few months. Even though they haven’t put in the time or developed the skills, they look at this business as a miracle to their financial problems. It’s crazy.

Or they think everyone they talk to will be interested in the business. Or they think they can sign up two or three people and sit back and watch the money pour in.

Our job as a sponsor is to give our prospects and new team members REALISTIC expectations, so they know what to expect.

# 5: It’s Hard

Building a profitable business of ANY kind is hard. Just ask any entrepreneur. It takes time, commitment, patience, and big picture thinking. If it was easy, everyone would do it.

Nothing worth accomplishing is fast, free, or easy. While building a MLM Business, you will have ups and downs. You will have setbacks. Not everything will go as planned. You will get rejected. Most of your team will do nothing and quit. This causes an emotional roller coaster that most people cannot handle.

I’d argue that working a job you hate, having a long commute, and not being fulfilled is also hard. Sometimes life is just hard! Pick your hard.

# 6: It’s Easy to Quit

Our industry is easy to join and easy to quit. Most reps have no skin in the game financially. Let’s face it, when things don’t go exactly as planned, and you only have $500 invested in your business, it’s easy to throw in the towel and quit.

Most regular entrepreneurs are ALL IN. They’ve invested tens of thousands of dollars, quit their day job, and given their business a full-time commitment. They will do whatever it takes to make their business succeed because they want to protect their financial investment.

Most network marketers don’t think that way. Easy come, easy go. They’re never “fully committed” because they don’t have much money invested. And that’s one of the biggest reasons they end up quitting.

# 7: High Attrition

Attrition is brutal in our industry. It’s like the “sales” industries with high turnovers. As much as 50 to 90 percent of your team will quit each year. It’s frustrating when you work hard, someone joins, and they only stick around a few months before they drop out.

Here’s the truth. We are a business of attrition. All businesses, in every industry, have attrition. Not everyone will stay. Most will not. That’s okay. You don’t need everyone to stay. You can still create financial freedom even if most of your team quits.

biggest challenges in mlm

# 8: Overpriced Products

Many of the products in our industry are way overpriced. Some companies sell a product for $100 or more, when you can purchase a similar product at Walmart or Amazon for $10 to $15. This makes it almost impossible to acquire customers, because most people won’t overpay for something when they have cheaper options.

Don’t get me wrong here. Some network marketing companies offer some unique products you can’t purchase anywhere else. Some of these products are high quality and amazing. However, we live in tough economic times and most people have a budget.

If you’re trying to get someone to commit to a $100 to $200 monthly auto-ship, when they could buy similar products on Amazon for $20, good luck with that!

# 9: Negative Publicity

Negative online reviews can be a real thorn in the side of the MLM Industry. It’s like a persistent rain cloud that just won’t budge. People often take those reviews at face value without digging deeper to understand the nuances. It’s tough because some MLM Companies genuinely offer valuable products and opportunities, but a few bad apples can spoil the bunch. Those negative reviews can cast a shadow over the entire industry, making it an uphill battle for legitimate businesses trying to stand out. It’s a reminder of how powerful online perception can be, even if it’s not always the full picture.

# 10: Pyramid Like Structure

It’s a pyramid. You hear that a lot in our industry. Or, “only the guys at the top make all the money!”

Here’s the truth. Every organization in the world is structured like a pyramid. Your church. Your job. Your civic group. They all have pyramid structures. In the corporate world, the people at the top also make all the money, considerably more than anyone else.

What you need to know about network marketing is that everyone starts at the bottom, in an equal place, and must work their way to the top. No butt kissing. No office politics. No discrimination. You rank up based on your performance. I think that’s fair.

# 11: Cult Like Behavior

Some companies in our industry do have cult-live behaviors. I will not deny that. But not all of them do. Many companies are positive, uplifting, and encouraging. They want you to the best you possible.

I don’t believe in following anyone blindly. You should have several mentors and trust your own instincts. If someone is trying to control you, determine who your friends can be, and make you drink their Kool-Aid, you need to tell them Bye Felicia!

# 12: Exploitation of Personal Relationships

Many people who dislike our industry claim that our industry exploits people’s personal relationships. I don’t feel that way. First off, if you started a traditional business, you would tell everyone you know about your business and hope that they did business with you.

Next, you don’t have to contact your friends and family about the business. You can build your business completely through the cold market like I do.

If you treat people well, don’t lie, and don’t use pressure or hype, you won’t exploit any relationship. I believe you should let everyone know what you’re doing, but not pressure them to get involved in the business.

There is nothing wrong with asking your friend to support you in a business.

Final Thoughts

In conclusion, these are the top 12 reasons why the MLM Industry has a bad reputation. Although I do love our industry, it is far from perfect. No business is perfect. Whenever you involve people, things become imperfect.

As reps, our objective should be to become a Network Marketing Professional. Do the right things the right way. Treat everyone with respect and take pride in what we do. If we can do that, the reputation of our industry will improve.

What are your thoughts? Do you think the MLM Industry has a bad reputation? Why or why not? Leave a comment below to share your thoughts. I look forward to hearing from you.

Suggested Reading
  1. 34 Ways to Get MLM Leads
  2. My System for Building a MLM Business
  3. The 4-Hour Work Week
  4. Amway Business Review
  5. Top Robert Kiyosaki Quotes
chuck holmes






Sincerely,

Chuck Holmes
Network Marketing Professional (since 2002)
Author, Blogger, & Entrepreneur

P.S. Level up your life today! FREE resources to help you improve your health, finances, business, and relationships. I'll even give you FREE leads and a free business plan template. Learn more.

13 thoughts on “12 Reasons the MLM Industry Has a Bad Reputation”

  1. Hi Chuck
    It’s refreshing to see an MLM advocate make a brutal assessment of the industry.
    I will be honest, I do not like the industry for the reasons you have listed.
    What do you make of the many digital MLM companies that seem to pop up every few months?

    1. I think they keep popping up because so many people are actually looking to “get rich quick”. These ads and opportunities appeal to people’s greed.

      I own several types of online businesses and all of them took me several YEARS to master. None were fast or easy.

      My traditional businesses that I own were the exact same thing, at least several years to get profitable and really figure things out.

  2. Great thoughts and points. I would add one thought. Most people in North America have been programmed to go to school and get a good job making them employees for life. Can we see the problem with that and the MLM model? Most people can’t think of making other sources of income including their employee income. To be financial independent in the real world you have to think of different sources of income whether its a part time job, business or investment. MLM, Network Marketing, and Direct Sales is a great way to do that BUT it seems that people who are more sales minded and don’t have a hate on the profession or think with a business mind do very well and get the model. The numbers don’t lie either in North America with this fact. And lastly, I really believe the training for most companies are horrible and don’t teach you the skills and mind set needed. Training is everything along with good people, business, and sales skills. People hate sales so that will back up the stats to why most people fail at this business. Its an 81 Billion dollar industry so someone is doing it right. Just my thoughts.

  3. One of the many challenges I have faced in advertising AmeriPlan has been the negativity and stigmas that most MLM companies face. When I try to share helpful work from home tips or advertise Network Marketing on Reddit, people treat me like I am the devil.

    A lot of people immediately assume that if you have to pay to work its a scam. What they fail to understand is, what business opportunity can you do that doesn’t require startup fees? I think about jobs like Insurance Agents or Home Realtors…sure they can be part of a corporation but the agency or selling a home is ultimately up to them, they will most likely spend money out of pocket for advertising materials to get their insurance or their houses sold.

    Another thing is that some people who don’t have what it takes to be successful would rather look for someone or something to blame rather then placing faults on their own failures. That is just the society that we live in today. I would love to work with people to change the perspective and way people think when it comes to genuine MLM companies like AmeriPlan who actually have great products that do help people out. It’s a shame that someone who can’t afford to go to the doctor would pass up on an opportunity to save money with AmeriPlan due to the negativity that surrounds the company.

    1. A lot of folks advertise our opportunities as a work from home job. I personally think that should be illegal, since this is a business, not a job.

      Any legitimate business does have some type of sign up cost.

  4. I agree that the cost of products for many MLM companies is a major turn off. The jewelry, for example, with the exception of perhaps Silpada, is usually stuff that you could get at a department store for much less. Return policies are difficult: tracking down the representative, or mailing the broken or defective back to the company can be burdensome, and usually it is for an exchange, not a refund. The food MLMs (Tastefully Simple, for one), are better. Those are consumable goods that I have usually been fortunate enough to get to sample before purchasing. But even then, the costs of those foods are usually higher than I would pay even at local specialty food boutiques. I have to really like those consultants.

    1. The food companies are good. While a lot of products in our industry are more expensive that what you might find in the market place, others aren’t. You do have to shop around. And some MLM Products are very unique or high quality, so the price is justified.

  5. I guess what it comes down to is if you are going to be involved in MLM you have to do your research. Knowing the company, their integrity, policies, training practices, and reputation are very important. I know of several people who are involved in MLM companies and are very satisfied with what they get out of it. I also know a lot of people who have had bad experiences. Research, research, research. Thank you, chuckholmes for providing us with a lot of information!

  6. It is sad that all of MLM gets a bad reputation because of some. The fact is: that is how the world is. No matter the business, if one person does something deceptive or wrong, many innocent parties pay the penalty.

    MLM has in its favor people like yourself that are using the internet to give a better reputation. I commend you for that.

    I must admit that when I am approached over any MLM, I am highly reluctant. Why? Because I have been deceived and manipulated by bad practices of some. I know of some individuals who have done quite well in their MLM networks.

    #9 on your list seems a major factor for many. If the companies could find ways to make products more inexpensive, I believe it would help. A good example is Avon; sure, representatives don’t make as much profit on one sale, but personally, I would rather make less profits and gain more sales.

    Hopefully MLM companies will take a hard look at this post and make changes accordingly.

    1. The price point for many products is a big turn off, especially in this bad economy. No one spends $40 for shampoo or $80 for a multi-vitamin. You need something of good quality that appeals to the masses if you want to make sales.

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