20 Multi-Level Marketing Stats That’ll Make Your Jaw Drop!

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20 Multi-Level Marketing Stats That’ll Make Your Jaw Drop!

According to a sales report published by the World Federation of Direct Selling Associations (WFDSA), during 2017, over 116.7 million people from all around the world took part in Multi-Level Marketing organizations.

An enormous chunk of these people became involved in MLM only because they were approached with promises of extraordinary earnings, in very small timeframes, and without much effort.

However, most of the Multi-Level Marketing Statistics that have been gathered by experts during the last 20 years provide definite proof that such misleading and unrealistic claims couldn’t be further from the actual reality.

This list of 20 Multi-Level Marketing Statistics is dedicated to revealing the side of Multi-Level Marketing that’s deliberately being kept hidden so that you can fully understand exactly what you should expect from it.

If you’re thinking about giving the MLM business model a try, do yourself a favor and go through this entire article before signing up for an MLM.

If you’ve already joined an MLM and you’re having second thoughts regarding the viability and profitability of the MLM business model, then you MUST read this before investing any more money, time, and energy in your MLM venture.

If you’re trying to save someone from the teeth of an MLM, make sure that you share this article with them so that they can realize what they’ve got themselves into.

*Please note that all the MLM Statistics outlined within this article are backed by solid research conducted by official institutions such as the FTC, the AARP Foundation, and Magnify Money NOT on opinions and conjectures of clueless individuals or anti-MLMers.

**All the research papers, polls, reports, and studies I consulted during my research are referenced at the end of the article.

Without further ado, let’s get started!

Table of Contents

20 Jaw-Dropping Multi-Level Marketing Statistics

The Network Marketing Game

1. 99% MLM Participants Lose Money

A 15-year-long, worldwide study conducted by the FTC has proven that less than 1% of MLM participants manage to generate a profit through their MLM venture while the remaining 99% lose money.

This is after subtracting mandatory purchases to remain active and qualified for commissions, advance in the company’s ranks, as well as other operational expenses.

Among those 1% of MLM reps that do generate a profit are the founders of the MLM as well as a select few “TOPPs” (Top-of-the-Pyramid Promoters), who are most of the time those who are positioned at the beginning of the recruitment chain.

FTC goes on to claim that Multi-Level Marketing is even worse than classic, non-product, pay-to-play pyramid schemes whereas the profitability rate could be up to 10%.

2. MLM is 38% Less Profitable Than Owning a Small Business

According to a nationwide survey conducted by the NFIB (National Federation of Independent Business), 39% of small businesses are profitable over their lifetime.

This means that the chances of generating a profit by running a normal brick and mortar small business are 38% more than by being involved in an MLM venture.

3. The Top 1% of Amway’s Reps Lost $900/Year.

As part of a lawsuit that took place against Amway in 1980, the MLM company started being investigated by the Office of Attorney General of Wisconsin.

This investigation revealed that the top 1% out of approximately 20,000 Amway distributors that operated in Wisconsin were losing over $900 per year in order to maintain their MLM venture.

In addition, an investigation conducted by UK’s government, revealed that less than 10% out of the 39,000 Amway distributors that operated in Britain during 2005 made any profit, with more than nine in ten not having sold a single of the company’s products.

4. MLMs Lose 90% of Their Participants Within 5 Years

Over a five-year period, at least 90% of MLM participants drop out of their MLM ventures.

In addition, over 95% of MLM participants drop out within ten years, at which point, only the founders of the MLM and a handful of “TOPPs” (Top-of-the-Pyramid Promoters) still remain active, until the company inevitably collapses on itself.

That being said, retention rates of MLM companies are pretty awful compared to those of typical small businesses, whereas

  • 80% survive past their first year
  • 50% last five years or longer
  • 33% make it past 10 years

This basically means that people are at least 6 times more likely to drop out of an MLM company than a small business.

5. Profiting in MLM is less likely than Profiting from Gambling

Yes, you heard that right!

The odds of profiting from gambling could be as much as 300 times higher than profiting in an MLM company.

More specifically, profiting from a single spin of the wheel in a game of roulette in Las Vegas has been found to be

  • 286 times more likely than profiting as a distributor for Amway
  • 48 times more likely than profiting as a distributor for Nu Skin
  • and 22 times more likely than profiting as a distributor for Melaleuca

6. Less than 1 in 25,000 MLM Reps Make Residual Income

The MLM business model is usually marketed as a way towards building residual, passive income, that is income generated while not actively working or as many people call it “while sleeping or on vacation”.

However, the chances of generating a residual income as an MLM Rep are even lower than the chances of earning a profit which are already well below 1%.

To be more specific, the odds of building a residual income in MLM are less than 1 in 25,000 (0.004%).

7. Up to 70% of all MLM Commissions are Paid to the Top 1%

A statistical analysis of Income Disclosure Statements provided by 11 major MLM companies revealed that 50% to 70% of all their commissions were paid to the top 1% of their distributors.

Furthermore, almost 100% of those commissions were not generated as a result of door-to-door retail sales but rather the incentivized investments of new recruits in signup packs, membership fees, products, marketing materials, and training modules.

That being said, the closer an MLM rep is situated at the bottom levels of the recruitment chain of an MLM company, the more unlikely generating a profit is.

8. Up to 75% of MLM Reps Are Women

Studies have shown that 60% tp 75% of all MLM participants are women.

That’s probably because the vast majority of MLM companies operate in industries that are of high interest to women, such as health, wellness, beauty, home care, and household durables.

9. 73% of MLM Reps Never Profit

A survey of 1000+ participants conducted by the AARP foundation, showed that 73% of MLM Reps either lost money (47%) or broke even (27%) during their MLM participation.

More specifically, out of those 47% MLM reps who lost money

  • 41% lost up to $5,000
  • 3% lost between $5,000 and $9,999
  • and 1% lost more than $10,000

In addition, out of the remaining 26% MLM reps who managed to make a profit

  • more than half (14%) made less than $5,000
  • 6% made between $5,000 and $9,999
  • 3% made between $10,000 and $24,999
  • 3% made over $25,000
  • and only 0.05% made over $100,000

10. Only 13% of MLM Reps Would Give MLM a Second Try

A huge percentage of those who join MLMs do it on the spur of a moment, without thinking twice, and without conducting any sufficient research.

This is exactly why 65% of MLM participants claim that knowing what they know now they would not re-join the same MLM company.

In addition, 62% of MLM reps stated that they wouldn’t give MLM a second try even if this was in a different MLM company and 25% said that they were not quite sure.

This means that only 13% of MLM reps had an adequately positive experience with the MLM business model that made them willing to invest more time and money in it.

11. MLM Reps are 7% more likely to file for Bankruptcy

According to a report published by the AARP foundation, MLM reps are 7% more likely to file for bankruptcy at some point during their lifetimes compared to those who have never participated in an MLM (18% vs. 11%).

This report goes on to claim that out of the MLM participants who declared bankruptcy

  • 24% did before their MLM involvement
  • 72% did following their MLM involvement
  • and 4% did during their MLM involvement

Lastly, AARP suggests that while their report is not able to determine whether bankruptcy is directly related to MLM participation, those who invest in the MLM business model seem to be running a higher risk of negative financial outcomes than those who don’t.

12. 75% of MLM Reps Have no Prior Experience

According to several polls and studies, 75% of those who join an MLM company have no previous experience whatsoever in commission-based sales and recruiting.

This, along with the fact that the vast majority of MLM companies provide either minimal or no training, could explain the extremely high loss and turnover rates of the MLM business model.

13. Banned in 3 Countries

All types of domestic and foreign MLM operations and trade are completely banned in Bangladesh, China, and Saudi Arabia.

Nonetheless, direct selling is permitted in China under extremely strict requirements, in order to ensure that the operations are not pyramid schemes or MLM companies in disguise.

14. The Majority of MLM Reps Make less Than $0.67/Hour

Based on the results of a 2018 poll conducted by magnifymoney.com, the vast majority of MLM reps earned no more than $0.67 per hour, before deducting business expenses.

In addition, that same poll supported that over a five year period

  • 84.5% of MLM reps earned less than $5,000
  • 33.7% of MLM reps earned less than $100
  • and 20% never managed to even make a sale

The book Business Students Focus on Ethics (Praxiology) comes to confirm those statistics by stating the following:

In the USA, the average annual income from MLM for 90% MLM members is no more than $5,000, which is far from being a sufficient means of making a living.

In addition, back in 2006, the DSA (Direct Selling Association), revealed that the median annual gross income from direct selling is about $2,400 per year.

15. 32% of MLM Reps Acquired Credit Card Debt

According to the 2018 poll I mentioned in the previous section, in an attempt to finance their MLM involvement 32% of MLM reps claimed that they acquired credit card debt while 9.1% of MLM reps reported that they even took a personal loan.

In addition, about one-fifth of MLM participants (20%) claimed that they had borrowed money from friends and/or family to fund their MLM venture.

30.9% of those people admitted that borrowing money either significantly damaged or completely destroyed their relationship with the person they borrowed money from.

16. 22% of MLM Reps Lie to Family and Friends

In that same 2018 poll, over 22% of MLM participants admitted that they have lied to friends and family regarding how much money they earned and/or invested in their MLM venture.

More specifically, those who were the most likely to lie were either married men (36.5%) or people who had borrowed money from family and friends to fund their MLM business (35.2%).

Not only that, but over 42% of all MLM reps claimed that they’d been consistently fighting with their loved ones for matters that revolved around their MLM involvement.

My wife began asking questions after a few months of pitifully small commissions, even though I had risen to a level of the top 1% of distributors. She did not like the changes that were occurring in me and in our relationships with treasured friends and family members, whom I was attempting to recruit. Finally, at the end of a year, she threatened to leave me if I continued, as it was changing for the worse the man she married. “It‘s Nu Skin or me – take your pick,” she warned. – Jon M. Taylor, MBA, Ph.D in the The Case (for and) against Multi-level Marketing

17. 39% of MLM Reps Hated Pitching Family and Friends

39% of MLM Reps claimed that they decided to drop out of the MLM business model because they hated constantly pitching their family and friends.

The next five most common reasons that made people quit their MLM journey are:

  1. not making as much money as expected (36%)
  2. disliking to sell all the time (35%)
  3. it took too much time (29%)
  4. the commission structure mostly benefitted those at the top (29%)
  5. and that the market was too saturated (25%)

18. Success in MLM Requires at Least $31,000/Year

Back in 1994, Ph.D., serial entrepreneur, and founder of the Consumer Awareness Institute Jon M. Taylor, decided to join and work full-time in a recruitment-based MLM (Nu Skin) for a year in order to conduct research as well as gather some first-hand experience regarding the MLM business model.

During that year, Taylor kept a very in-depth financial record of all his expenses while trying to climb to the top 1% of Nu Skin’s Reps.

According to his records, Taylor ended up spending a minimum of $2,600 per month on operational expenses, such as:

  • mandatory purchases to remain qualified for commissions
  • incentivized purchases to advance in the company’s ranks
  • travel & telephone
  • computer supplies
  • advertising & marketing
  • training materials
  • conference rooms
  • giveaways
  • & more

That’s an investment of over $31,000 per year…

According to Taylor, this figure is considered a bare minimum, conservative investment towards running an effective recruitment campaign, which is essential for any hope of success in a typical MLM company.

Taylor goes on to claim that this figure could be several times higher for TOPPs who must frequently travel, rent meeting facilities, etc., in order to recruit a sufficient number of new recruits to replace those who are dropping out from their downline.

Please note that prior to his MLM involvement, Taylor had a Ph.D., and an MBA degree in economics, statistics, finance, accounting, and the analytical skills essential for business success.

In addition, he had many years of experience in direct selling and sales management, he had founded or consulted in the founding of over 40 home-based businesses, and also had first-hand experience in analyzing MLMs and their compensation plans.

What I’m trying to point out here is that despite being exceptionally qualified, Taylor still ended up spending $31,000 to climb to the top 1% of Nu Skin’s distributors whereas he was actually netting a loss of approximately $2,100 per month.

Just imagine how worse both of those figures could be for an average MLM Rep that isn’t as qualified as Taylor…

*All the figures within this section have been adjusted for inflation.

19. Only 10% of the 1% Made More Than $100/Week in MonaVie

Based on a federally-required Income Disclosure statement that was published by MonaVie back in 2007, less than 1% of its distributors actually qualified for commissions and out of that 1% only 10% made more than $100 per week.

That same IDS revealed that over 90% of MonaVie’s MLM Reps were considered wholesale customers, whose earnings were mostly discounts they’d receive for personally purchasing the company’s products themselves.

20. 94.9% of Fortune’s Reps Made an Average of $256/Month

In October 15, 2010, a statement published by Fortune Hi-Tech Marketing revealed that 30% of its distributors made no income at all.

Out of the remaining 70% that made an income

  • 54% made an average of only $93 per month
  • 40.6% made an average of $256 per month
  • and 4.7% made an average of $2,627 per month

This basically means that a whopping 94.6% of Fortune Hi-Tech Marketing’s Reps made less than $3,100 per year.

After receiving numerous complaints, Fortune Hi-Tech Marketing started being investigated by the Attorneys General of Texas, Kentucky, North Dakota, North Carolina, Missouri, South Carolina, Illinois, and Florida.

Eventually, Fortune Hi-Tech Marketing was labeled a pyramid scheme by the FTC which actually mailed 285,361 checks totaling more than $3.7 million to people who fell victims and lost money to the scheme.

In addition, Fortune Hi-Tech Marketing’s operators were banned from multi-level marketing under a settlement with the FTC.

Must-Watch MLM Video

In 2016, Dr. Jon Taylor received a call from Liz Day of Partially Important Productions asking for information on multi-level marketing that could be used in John Oliver’s Last Week Tonight show.

The show, which I highly suggest that you watch right below, gives a remarkably accurate portrayal of multi-level marketing in a very entertaining and insightful manner.

Conclusion

Before I close this, I want to emphasize once more that all the MLM Statistics shared within this article are NOT a figment of my imagination or a representation of my belief systems but rather a result of years of solid research conducted by 100% reliable and official sources such as the FTC, the AARP Foundation, and Magnify Money.

Having said that, there’s nothing to argue about and nothing to prove wrong here (I’m talking to you Mr. Brainwashed MLM Rep).

Either you want it or not, numbers don’t lie, period.

Now that you’re aware of the “hidden side” of Multi-Level Marketing, you can finally make a 100% informed decision about whether investing your time, money, and energy in the MLM business model is in your best interest or not.

Personally, I can’t come up with a single reason that someone would want to become part of a “business model” that leads to a certain loss 99% of the time, especially when there dozens of other business models out there that offer extremely higher success and profitability rates.

But hey, that’s just me…

Or am I?

According to the FTC, with the odds of profiting being about 1 in 3,922, calling an MLM program a “loss certainty” is much more appropriate than calling it an “income opportunity”.

Your call…

 

  • Have you ever joined an MLM company?
  • If yes, did you manage to make a profit?
  • If not, how much money did you end up losing?

Please leave a comment right below and let us know all about your experience.

Best wishes and stay safe,

Harry, Founder & Editor at dearboss-iquit.com

 

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