Income Multi-Level Marketing vs. Social Media.
Tell someone you are joining a multi-level marketing company and you may hear people say things like.
"That sounds like a pyramid scheme."
"Dude, that's a scam!"
"No one actually makes money network marketing... unless they got in first."
But is trying to make money on a social media platform really just as difficult, if not impossible, as MLM? Who actually makes any “real” money on say YouTube, a pod cast, Instagram, or any other platform? Is Multi-level marketing really just as hopeless as trying to make a career online as an influencer type person? Any person looking to make easy money, or a lower income family looking for a new higher paying career, should always look at these opportunities with a great deal of skepticism.
Negative feedback about multi-level marketing
Scam. Fraud. Waste of money and time. You've heard these arguments before, and perhaps you've even considered them in your own mind. After all, if you haven't seen success yourself, you'll be asking yourself if you've been duped by your upline. And if you've got a budding downline, but they aren't seeing any success and dropping off like flies, you probably don't have rock-solid faith in the business.
"Is multi-level marketing just a big racket?" you ask. The short answer is no, it's legit (if you are working for a transparent company that follows FTC rules around MLM). The long answer is a bit more complicated. However, as you'll see, it's possible to become a network marketing success story, but the chances of it happening are very rare. But then again, the chances of making money with a podcast, or putting together YouTube vides, or being an influencer are probably just as tiny .The chances of making money from a restaurant are say a Shopify online store are probably just as tiny.
Why Do People Think Only Those at the Top Of Network Marketing Make Any Money?
First of all, we should define the difference between a pyramid scheme and a legitimate multi-level marketing business.
A pyramid scheme has no product. The point of network marketing, much like its sister, affiliate marketing, is to promote products through word-of-mouth, allowing the company to leverage its consumer base for free advertising. However, instead of merely giving you a percentage of its profits in exchange, it allows you to build your own team of marketers who also use the product, and you get a percentage of not only the customers you directly bring in but a (smaller) percentage of the customers they, too, bring in.
The cycle continues down multiple levels, hopefully with each member you've brought in successfully recruiting people of their own. This is called a downline, and if it's growing properly, it can look like a pyramid.
In principle, it's similar to recruiting affiliates, who are paid a percentage of each sale they make for the company, or paying a social media influencer to give your product a little promotion on their social media, usually for an up-front fee. The difference that makes so many people wary of MLM companies is that the focus feels less like it's about promoting the product and more about promoting the opportunity.
It also doesn't help that a lot of people will jump on the opportunity, irrespective of whether they enjoy the product or not, only to find that they struggle with the business. In theory, it's a simple business. However, as we all know, what sounds simple isn't necessarily so. This is true of any business opportunity in life, whether being an influencer, opening a restaurant (which the majority fail), or starting any small business (once again, most small businesses fail – about 60% by year 5 per most studies such as from the BLS).
Instead of reflecting on their own skills, or lack thereof, and deciding to treat the business like a business and learn the skills they need, they blame the model. MLM companies are all scams, or so they think.
An Apt Comparison
So, if network marketing tends to appeal to people, sometimes desperate people, single mothers, or those with a low income, who pay to join and then don't hit the goals they've stated, what does that sound like?
To be blunt, a lot of people set out on entrepreneurial adventures and don't hit their goals. YouTubers, TikTok folk, and podcasters will often spend untold amounts of time, energy, and even money to start their projects only to find that they never gain traction. Are they scams? No, plenty of influencers have successful channels, videos, and podcasts.
But while the “top” YouTubers or Instagram influencers are successful, the data, such as from Offenburg University and others, studies show most online jobs fail. Multiple studies show that about 93 to 95% of influencers make less than poverty wages. The top 3% of YouTubers average about $17,000 per year, with the top 1% of influencers making the vast majority of money.
Have you ever heard people say that being a podcaster is a scam? No. Do people say trying to be an influencer is maybe not the best career path? Yes.
Or what about realtors? There are a lot of comparisons between multi-level marketers and the people who jump on the real estate bandwagon.
- 1. You have to pay to join. It's true; realtors have to pay to take the exam, just as multi-level marketers have to buy the product to join the business.
- 2. The product can be an afterthought in both MLM and real estate businesses. Just as not everyone who joins a multi-level marketing company is thrilled about the product (often, the compensation plan is what wins people over), most realtors are only interested in the commissions. It doesn't matter if the house is a one-bedroom shack on a couple of acres of land or a sprawling mansion hidden away in the scenic countryside; what matters is that they can sell it and make money.
- 3. Unfortunately, many don't achieve the wild success they thought they would. Here are the numbers from the National Association of Realtors and others.
Around 700,000 people buy the real estate exam materials each year. About 113,000 of those actually go on to take the exam. Then, only about 50,000 actually pass it. Unfortunately, roughly 37,000 realtors who pass that exam make any money at all, the average commission being $5,000.
This means over 650,000 people don't make money. In fact, they lose money because of the exams and whatever they've sunk into failed advertising. However, have you ever heard anyone say that real estate is a scam? No. Have you ever heard people say that real estate is a high-risk business? Yes.
Make no money as influencer or MLM, but talked about differently
As per above, 95 to as high as 99% of YouTubers, TikTokers, podcasters, and “influencers” make no money or maybe hundreds of dollars per year. The average Shopify e-commerce stores grosses less than $2,000 per year (with it estimated than 90% plus gross under $1,000 per year). About 60% of restaurants fail in year one per the National Restaurant Association. And we can go on and on….starting, and keeping, a successful business (not matter what you do) is hard with most failing.
If that's the case, why should network marketing be talked about any different? The reason for failure is the same in most industries: people want quick riches, think they know more than they do, or underestimate the amount of work it takes to become a professional in the industry, and then refuse to put in the necessary work and learn the skills.
What makes MLM look worse is that it's usually easier to join a multi-level marketing business. There are less barriers to entiry than some other businesses, say than it is to pass a real estate exam. Or it is easier to join that starting another business, such as a restaurant or ecommerce store. The point being the barriers to entry to a Multi-Level Marketing company are very low.
This low barrier to entry often makes low income families, non-English speakers, women such as single moms and people in or near poverty to join. It often gives MLM a bad stigma as the low entry costs help encourage people with fewer resources to join a network marketing organization.
It's usually not incredibly expensive to join a network marketing company unless the product is particularly high-end, so you wind up with more people deciding to take a chance on it. In other words, the chances that someone is really serious about the business decreases.
Also, some people have no interest in the business side at all and truly do just want the product. This happens more often than you may think (and the point of the parent company is to move products), so when you look at the big picture and take in all the data, you see a lot of people who aren't making any money at all, but they don't really care because they eschew the business side of things.
These numbers lead to skepticism regarding the network marketing industry, but very seldom do people take into account the number of people who sat on their hands, waiting for their upline to do all the work for them or just didn't bother to learn how the business actually works. Nor do they regard the people who enjoy the product and don't want the hassle of promoting it.
But How Do You Become a Professional at MLM or Anything?
First thing's first: learn the skills. Do the research. Have a plan. Know what you are “walking into”. This is going to take time, energy, and money. Prepare. As the famous quote from Ben Franklin goes, “Failure to Prepare is Preparing to Fail”.
If you are going down the MLM path, unless you have a fantastic upline that's full of people who are already professionals and are giving their courses and expertise to their downline, you'll have to go looking for real training. Even if you have such an upline, you may have to look for supplemental training to fill in the gaps in your knowledge.
If you think you want to be a podcaster or TikToker, be sure you have a large social following already. Learn about internet advertising and how posting content works on platforms like Facebook or something else. If you are starting a small business, whether physical or e-commerce, understand the customer, the marketplace, and how you can differentiate yourself.
After all, what some people consider to be minor skills or obvious skills can sometimes be the difference between great success and minimal success.
Coaching programs are fantastic for this, but they're pricey. This means people who came in looking for easy money aren't going to go looking for one-on-one teachers or group teachers taught by industry professionals. However, teachers are the best way to improve your skills.
Secondly, work on making yourself, or your business, attractive to people. As you acquire knowledge, be willing to share it. Let people know that you know what you're talking about, and try and do one thing to demonstrate that every day. The best way to do that is through a website and/or YouTube channel. Make a daily or weekly blog post or video, which also counts as content marketing and can draw people to your website and then to your business.
Remember, the company is how you make your money, but people don't join companies, they join people. You are the business.
No matter the business you start, finally, get out and talk to people. You can talk to people in real life (without chasing your existing relationships and acquaintances) or online. There are fantastic books about how to talk to people about network marketing, you just have to buy them. They're usually cheap to boot, although a good coaching program should include this subject in its curriculum.
This ties into the first step, which is learning skills. However, it's included separately here because you have to actually start doing this from day one. Even before you've mastered the skill, start gaining experience by sharing your business with others. Reaching out isn't something you do eventually, once you feel confident.
It's infinitely easy to think of success as "the future" and to put off the work. Procrastination is deadly, and it affects us all to varying degrees. You need to take at least one action toward your goal every day, building consistency as you learn from both teachers and your own experiences how to do the job.
Success is Hard - Whether Network Marketing or Any Business
Every business is hard work, with very high failure rates. Does this mean you'll get rich overnight, within a month, or even within a year at Network Marketing or social media? Probably not, although some people experience rapid success. However, the minute you quit, you become like those many real estate agents who thought the business was doable merely by passing an exam and not working on themselves or their skills beyond that.
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