Defining MLM Success and Failure

One thing that I happen to see a lot in MLM discussions is idea of MLM success or failure. Success and Failure is a concept that we all know, but it does seem to mean different things to different people. With that in mind, this post is intended to explore it and achieve a reasonable view that all parties can agree on:

Quitting vs. Failing

Let's start off with quitting vs. failing. An MLM distributor will say that a distributor quit and that he didn't fail in MLM. This is the kind of logic that Tim Sales has been known to use many times. However, quitting is equivalent to failing in MLM as the person who quits will never make a significant amount in MLM. If I want to be an NFL quarterback and I quit, I have failed to become an NFL quarterback.

Many in MLM consider quitting to be a very bad thing and something to be looked down upon. This is because when someone quits MLM their upline loses revenue. However, when looked from an unbiased, objective point of view, quitting can be seen as a positive thing. Quitting a negative habit such as smoking comes to mind. Quitting the quest to be an NFL quarterback would also be a positive for many people, as only about 75 people in the 300 million in United States enjoy success at it... and some of those are back-ups that rarely play. Similarly quitting a business where well over 99% of people involved lose money would be a positive move.

To recap: Quitting ensures failure, so quitting is failure. However, quitting can be a very good thing if the odds of success are low as in MLM.

MLM Success vs. Failure as a Business

Most people join MLM because of the business "opportunity." The business is often marketed as a way to "fire your boss", "work from home", and "make unlimited income." Often a new recruit is asked to success his/her dream car, house, or lifestyle. From that moment the expectation is set that success in MLM is achieving these things.

To take the minimum of "fire your boss", it would require most people to profit at least $40,000 after expenses. If we are going to a dream car likely costing 6 figures and a dream house costing 7 figures we have to bump up the expectation to around $200,000 after expenses. Given those expectations, it seems reasonable to state that success in MLM is dependent on meeting those expectations.

In reviewing the amount of money that a typical person makes in MLM, data suggests that well over 99.5% lose money after their expenses. That means, in the best case scenario you have a 1 in 200 chance of making money. In some of the worst cases it is 1 in 10,000. If you are looking at the people who actually meet the success criteria of achieving the expectations they create, the odds are astronomical.

It is fair to suggest that 9999 of the 10,000 people who get into MLM fail at the business.

MLM Success vs. Failure in Other Areas

I've heard people who suggest that people may have other goals than monetary when joining an MLM. One of suggestions I've heard is that people join for the social aspect. I would like to think that people have better social prospects than ones that fail to live up on the dreams they sold to people... all while making money off them. Another suggestion that I've read is that people join an MLM to get a discount on the product. It is worth recognizing that the discounted product is still overly expensive in almost every case. Additionally, one wouldn't analyze joining an MLM in terms of success or failure any more than one would analyze drinking a glass of water as a success or failure. It is just something that you either decide to do or not.

This post involves:

MLM Business Opportunity

... and focuses on:

,


One Response to “Defining MLM Success and Failure”
  1. » MLM Mind Game: Pretending Everything is Black and White Says:

    […] first place to start is at the use of the word "fail." That word alone requires a lot of defining in the world of MLM, since no one seems to agree on what it means. Also, in any pyramid scheme, whether it be an MLM or […]

 

Previous: MLM and the Reality of Saturation
Next: FTC: MLMs with Required Minimum Purchases to Earn Commissions are Pyramid Schemes