What Do I Think of Network Marketing?

As I’ve stated many times here, I believe that entrepreneurship is one of the best ways to increase your income and extract yourself from the “credit grid.” As such, I champion internet businesses over traditional brick-and-mortar businesses because… well, they require a much smaller investment of time and money. You can get started for less than $10, and you can put in as many or as few hours as your schedule permits.

That said, people seem to equate “internet based business” with “network marketing” (also called multi-level marketing or MLM). That’s because there are so danged many of these things on the internet today. If you have an email account or frequent a discussion board, you’ve probably seen more than a few folks hawking these opportunities.

Now, for the record, I don’t think that network marketing is inherently “bad.” It’s just not for everyone. There are a number of problems that keep most people, both online and offline, from succeeding with these types of businesses:

• They can get expensive. You usually either have to pay a monthly membership fee or buy whatever the business is selling – the cost can range from about $40 to several hundred dollars per month. If you’re trying to pay down debt and become financially self-sufficient, this can be a problem.
• They require a “selling” personality. Let’s face it, everybody knows a MLM opportunity when they see one, and most people run away screaming. You’re not going to find a pool of prospects chomping at the bit to get in on one of these. If you aren’t into hard-selling, you’re probably going to hate pestering prospects to join (and to keep them from dropping out.) If you are into hard-selling, you’d probably do better as a car salesman. A lot of people make the mistake of thinking they can alter their personalities to fit the business. From experience, I can tell you this is a highly unlikely scenario.
• The attrition rate is horrible. As I alluded to above, there’s a lot of work involved in keeping people from dropping out. Suppose you finally get a prospect to join, and after a couple of months go by, the prospect isn’t making any money. Does he blame himself? Of course not! He blames you and the company for failing to provide support. The biggest problem most network marketers have is losing downline members faster than they can recruit them. This makes “exponential income” a damned hard thing to achieve.
• You’re competing with other network marketers for the same pool of prospects. Thinking you’re the only game in town is a huge mistake when you’re a network marketer. The number of people trying to build downlines is huge compared to the number of people actively looking for a network marketing opportunity. These opportunities are a dime a dozen, and if you’re not the most aggressive marketer out there (i.e., spending the most money on advertising and the most hours chasing prospects), you’re not going to make it very far.
• The income claims are unrealistic for most people. There’s only one reason a person joins a network marketing business – the promise of quick, massive piles of cash. Oh, and maybe the promise of exotic vacations. Most people won’t ever see income anywhere near the dollar figures those opportunities throw around. Hell, 98% of people who start network marketing leave the business in less than a year. (See “attrition rate” above and “everyone hates you” below for a more thorough explanation.)
• Everyone hates you. Let’s be honest. How many people wake up thinking, “Wow. I really hope someone hounds me to join an MLM business today”? No one, that’s who. Do you really want to tell everyone at the next cocktail party / family reunion / Alcoholics Anonymous meeting that you’re a network marketer? A powder blue leisure suit would probably do more for your social standing. Oh, and people online hate you too. Nothing screams “douchebag” like a forum signature pointing to “The Greatest Income Opportunity You’ll See This Year! Make $356,983,199 Right From Your Kitchen Table!”

My suggestion? If someone approaches you with a MLM opportunity, politely decline. Or fake a seizure. Whatever it takes to change the subject.

You can earn money online. Over time, it can even amount to several thousand dollars per month. But like most “shortcuts,” network marketing promises, but rarely delivers.

(Disclaimer: Yes, this post is mostly personal opinion, flavored with a few industry statistics and the experience of myself and others. You might be the type of person who gets into network marketing and earns a gazillion dollars. But I highly doubt it.)