Avijit Chaudhury Official

The 95% Fail in MLM

MLM critics like to quote that 95% of all people sign up for a MLM opportunity fail. Is that true?

How do you define Failure. Is that losing money, or a break even situation, or dropping out? And what about people signing up and not taking any action to establish a business? And do you separate networkers, retailers and customers? Statistics are very much different per company. The myth is simple, as always with myths, the answer is more complex.

More than 50% of direct sellers report that their net income from direct selling, after taxes and expenses, is positive.

In addition, a positive net income is reported by nearly half of new direct sellers — those representing their current company for less than a year — and by nearly half of direct sellers who say that they are not very likely or not at all likely to continue in direct selling in the future.

If you do a due diligence on a MLM opportunity you can better take a close look to the Retention Ratio. The popular definition for Retention Ratio is: Which percentage of distributors renew their contract, or buy a product. Depending on the opportunity this can be between 10% -80%.

The facts about distributors: (Source: 2002 National Salesforce Survey, Research International, Inc.)

82% of direct sellers have been with their current direct selling company for one year or more, and 47% for five years or more.
89% of direct sellers rate their personal experience in direct selling as excellent, very good, or good.
84% of direct sellers say that direct selling meets or exceeds their expectations as a good way to supplement their income or as a way to make a little extra money for themselves.
91% of direct sellers say that direct selling meets or exceeds their expectations as a business where the harder they work the more money they can make.
78% direct sellers who are in direct selling for less than a year report that they are very or extremely likely to continue as a direct seller in the future

In addition, research shows the following

25% -50%+ sign up to get a product for wholesale price.
10% -80% renew their contract, depending on the company.
50% -60% do not take business action.
10% -15% works the business.
80% of sellers say direct selling meets or exceeds their expectations.
74% of US adults have purchased products from a direct seller

It is easy to start a MLM business, which can be a threat. People do not take their new venture serious as the investment is low, and treat it as a hobby. If you treat your business as a hobby you will likely to get paid as a hobby. They enjoy their products but will not get paid for doing nothing. Is that a failure of the MLM system? Do not think so…. There is no business in the world where you get paid to do nothing…..

A good MLM – Network Marketing company gives money back (usually 90%) if business kits and/or products/services initial cost are returned within 90 days (some up to one year). So it is a great way to try a business at low or no risk. If it doesn't suit somebody, they can drop out with little or no loss. In general: people who take serious action makes money in MLM and enjoy the fruits of the opportunity.