After 12 years in the network marketing industry I have come to the conclusion that direct selling is MUCH better than MLM.
Why?
There are tons of different reasons. For the purpose of this article, I want to share my hangups with MLM, and why I think direct selling is better.
Here are the major problems with MLM as I see it.
# 1 Auto-Ship – With most traditional network marketing companies, you have to spend $100 to $200 per MONTH, just to qualify for your bonus. Most people can’t afford to go on auto-ship in the first place and the ones that do cancel their auto-ship within 2-3 months if they aren’t making any money.
# 2 Overpriced Products – Most MLM Companies have products that are so overpriced that NO ONE in their right might would buy them at the suggested retail price. That’s why most MLM Distributors don’t have any customers! The only people using the products are the distributors. If you can buy a similar product at Wal-mart for 90% less, you won’t be able to convince anyone to become and stay a retail customer.
# 3 High Attrition – In MLM, there is a revolving door. At least 80 to 90% of your team will quit every year. So even if you are good at sponsoring, you will have a revolving door in your business. That means you will keep needing to replace people who quit with new distributors. If people only stick around a few months, you won’t get a chance to earn a long-term residual income from them like you were promised.
# 4 High Competition – Look around the internet, even in your own company, and you will find tens of thousands to MILLIONS of people promoting the business opportunity. That’s what everyone is taught to do and that’s what they do. Even worse, new companies launch every day. By the time you’ve sponsored someone they’ve received 100 additional messages about other business opportunities. As a result they quit just as fast as you signed them up, and they bounce from business to business.
# 5 High Rejection Rates – In MLM, if you are serious about the business, you will experience a lot of rejection. At least 9 out of 10 people will tell you no. People will laugh at you and harass you. Your friends and family will lie to you and stand you up. Once your family finds out what you are doing they will run the other way and avoid you like the plague. Most people can’t handle this level of rejection, so they quit.
# 6 Long Time To Build Up Income – Most people in this industry are part-timers. Traditional MLM is made for full-timers, not the part-timers. It would take most distributors five or more years working part-time, just to make a few thousand dollars per month.
# 7 You Need a Huge Team to Make a Large Income – For instance, if you earn $3 per team member, you need 3,333 ACTIVE team members to earn $10k a month. With the high attrition this is next to impossible to do.
On the other hand, I believe that direct selling is much better than MLM. Here’s why I decided to join a direct selling company.
# 1 Make Immediate Profit – When you make a sale, you make an immediate wholesale-retail profit. The percentage will vary by company, but most companies have a 20 to 50 percent wholesale-retail markup. So, if you sell $100 in products, you can make a $20 to $50 immediate profit.
# 2 High Retention Rates – Customers who buy your products because they actually LIKE and WANT them are going to keep reordering the products month after month, regardless of whether they pursue the opportunity or not. Compare that to most of your distributors who will only stick around 30 to 90 days, and then quit.
# 3 Less Competition – In most companies, very few people are promoting the products. Instead, everyone is fixated on the business opportunity. This means that when you focus on getting customers, you have less competition (assuming you have good quality, affordable products).
# 4 Less Rejection – When you pitch people on a home business or network marketing, you will get more rejection than you know what to do with. However, if you lead with the products, you can do very well. More people are receptive to products than they are business opportunities.
This is just the tip of the iceberg.
Do I still recruit? Of course. But I let recruiting be a byproduct of getting customers. In other words, I NEVER lead with the business opportunity. I only upgrade happy customers into distributors (if they want to) or sponsor people if they ask me to.
If you’re tired of struggling to build your network marketing business the traditional way, why not change? After all, insanity is doing the same thing over and over and expecting something different to happen.
I encourage you to make the transition from MLM to direct selling as quickly as possible.
The sooner you can do that the better off you will be.
What are your thoughts? Leave a comment below to let me know what you think.
Chuck Holmes
20+ Year Network Marketing Professional
Top Earner & Top Recruiter
Email: mrchuckholmes@gmail.com
P.S. Learn how to grow a successful network marketing business. Secret tips, training, and practical ideas. Free training delivered by email.
You are so right. This is why I have had issues with some MLMs. This is why people make it with companies such as Avon, Mary Kay and the like. Direct Selling is the first priority, gaining a down line is secondary. When you mention the price structures, you also hit a huge truth. I won’t mention any companies, but when you can buy comparable vitamins at 1/4 the price, why would you pay so much more? It makes it harder to sell some MLM products. Now if the products are extremely better, people will pay more.
Now, I must say…to each their own. If MLM is working for you, don’t jump ship. If direct selling is the ticket…work it.
We all have different talents.
I actually prefer direct selling over MLM, at this point. If you like to sell and can find good products at good prices with good commissions, you can do quite well. But, trying to sell a $100 weight loss shake or $200 skin care set is hard to do.
You just hit on another reason that many MLMs have such a difficult time in the business world. If they were just slightly higher priced, that would be one thing, but it seems so many MLM products are very unreasonably priced. If a person can go to Walmart and find a comparable product at 1/4 the price, they will usually not purchase the product we have. I believe it would help all MLMs if they would get their prices down some; even if it means making less profit.
Very true.