Follow-Up To My MLM Re-Print: Market Saturation.....The Truth Is In The Numbers

 In my last entry, I touched upon the inherent issues that come along with many MLM companies. I'd like to dig a bit deeper. These inbuilt issues when understood, can provide you a bit more intel when you are pursuing a career in MLM as a home business.

Again, I like to add that I am in no way attempting to denounce nor promote MLM. Merely providing facts I can confidently write upon. With a number of years actively participating in this industry under my belt one thing is for sure, I can say its night & someone will see it as day. Yet, in MLM , it's ALL about the numbers & the numbers don't lie.

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 How you intake this information can surely be up for debate, but please feel free to reply, comment and discuss said topics.

Realize, that a lot of our societies infrastructure incorporates some form of pyramid like structure.  

Lets see.......the military, Army & Air Force, (Generals, Majors, Sgt, etc.,) our government and as I pointed out in my last entry most traditional business models this pyramid structure.

- A typical corporation will have a CEO or President at the top, then their directors, the directors have their managers, and the managers their supervisors, and the supervisors have workers who do the work! 

In an traditional supply chain structure it operates like this:

- Manufacturer

- Distributor

- Wholesaler

- Retailer

- Customers

   Each step adds expense to the final destination........the  consumer!

In Network (Internet) Marketing (MLM) the structure operates like this........

- Manufacturer (supplier)

- Distributors (you)

- Customers (the end user)

These customers, represent a targeted market that you the distributor have to penetrate.

Running your online business so that it becomes profits, is where some MLM companies structure make it nearly impossible to achieve. Why......?

Well, you've heard that famous quote.....
"It's a numbers game"!

You best believe, that it is the numbers needed to stay ahead (profit) that does.......become the issue.

The compensation vs. the consumer vs. the distributors 

Simply by the numbers alone: 

Let say your business needs to employ/recruit 5 people now that 5 needs to employ 5....and so on and so on! 

Here what it would look like.................

LEVEL ~ New Members needed

1       ~ ~     5

2     ~ ~      25

3     ~ ~      125

4      ~ ~      625

5      ~ ~     3,125

  6     ~ ~      15,625 

7      ~ ~      78,125

8     ~ ~      390,625

 9     ~ ~      1,953,125

10    ~ ~      9,765,625

11    ~ ~     48,828,125 

12    ~ ~     244,140,625

13     ~ ~    1,220,703,125

This is just you - what about the other 10,000+ people that are also looking to market that same business!

In this manner, MLM can differ financially from normal business practices.

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Market saturation - Point at which a market is no longer generating new demand for its products or services. A result of competition, decreased need. Simply not enough targeted consumer or end user!

Knowledge:

This is why the importance of a solid product and/or service oriented company will be your true money maker in your online endeavors. 

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Copyright © 2010-2018 Andrew Hayes All Rights Reserved

Reprint 2010: Some REAL TALK (facts) About MLM...... Why Its Tough To Really Make Good Money!

Reprint from June 2010, 

Years before this original print, I started this journey to work from home. I saw the potential a computer & Internet access could have. 

My youngest son was just born. Shortly thereafter, became a single parent Dad. I was even more determined to succeed in this world of Network marketing/MLM (Multi-level-marketing). My passion was there, my "WHY" on point (my child). And as desktops became laptop then tablets. I could picture me at my sons practice or games and not missing a beat when it came to answering messages, working on my latest website/blog or promo, seeing in real time new orders or welcoming new clients. 

Yet, even with some success, a few dollars in my pocket here and there. This never quit mentality, that complete picture just seem to eluded me. 

See it's not that success couldn't be achieved, there are handfuls of very successful marketer in MLM. Then are those that keep a few dollars in the bank and the rest, well......the rest, live to fight another day.

Several things I have learned along side this print.......

1) You really do need an outstanding product or service

2) You will need to put in work, lots of work.

3) Some companies will fold.

4) There are no over-night successes.....Don't believe the hype!
5) Life events will have their way.

See if any of what I wrote back then applies to your business mentality today. Enjoy my flashback in MLM.

REAL TALK!

 02/08/2018 Market Summary

Market Quotes by TradingView

Ask yourself this question (particularly if you have been working with MLM)......

• What is the average time your clients STAY with your business?
• Are you constantly, replacing clients that dropped out with NEW ones?

   I know there are die-hard MLM fans out there, but really, there is a disturbing truth behind this question! And many folks involved in this industry.....know the truth!

   In my last entry, I talked about the worth of working from home as an Internet marketer. One word that should stand out is "EFFORT". There are many reason why people fail in this industry.....lack of effort is only one of them.

   Why, because most people are "recruited" under the pretense that to make a lot of money, it only require a few hours of work. After a few attempts, a few hours "effort" with little response they are ready to throw in the towel. But MLM type companies have many other issues as well.

   Before I begin this article, let me be perfectly clear. This is not an attempt to undermine or put down MLM as a home based business opportunity. I have (in the past) marketed some MLM companies and would most likely (under the right conditions) market some in the future.

*These participation usually pertain to products or services that will benefit your online business!*

Keywords being an actual product and/or service (to an end user)!

TIP: See, what a few marketer in this industry do not understand is that many of the techniques, products & services use to promote MLM type businesses can also be use to build other types of legitimate online business.

   However, there are some real facts based on a number of years that I have spent....dealing with, participating in & research of MLM companies over those years.
Once again, this is not an blog that is meant to degrade MLM, but as an aid to those who maybe looking into  or wondering why they are not succeeding in their MLM type business.

   Let's start, over the years, they are people who have made plenty of money in MLM companies. Truth is, the basis of MLM structure is that of traditional business model. A typical corporation will have a CEO or President at the top, then their directors, the directors have their managers, and the managers have their supervisors, and the supervisors have their foreman's who have workers that do the work!

   The structure of MLM is at it's basic.... build upon this platform.  I'm not here to discuss in-depth MLM structure. Whether, the inherent facts that are embedded in every MLM!

Some real talk when it comes to marketing MLM companies.

In my first months of marketing online as a real business, meaning that even though I had done some direct sales marketing in the early 90's. I was still wet behind the ears when I became interested in internet marketing.  (After some research), I understood that money could be make with hard work & effort. See, there were certain aspect of direct sales marketing that taught me much about MLM type business to that point!

TIP>>> Truely, one really simple fact.......You will have a much higher success rate (% wise) when you have an actually product or service to sale to an end user.....a customer!

Even with that wisdom in mind, I began using the training, paying for online/offline advertising, buying leads trying to convince prospects to join or stay in  my businesses. 

Clients would just drop-out for any reason......I've heard so many different excuses (which is really what they were, excuses).

The income from commissions was still less than my R.O.I. (Return On Investment). I was truthful in my presentations, careful not to hype products or services excessively ( I'm turned off by this types of tactics of advertising myself), willing to build relationships etc., yet I kept losing my clients. The harder I seemed to work didn't seem to stop my rollercoaster ride in building my MLM business.

There is a reason for this.

Now this was a few years ago. I've seeked, explored & have learned so much since then!

Nowadays, there are 2-3 times more of these MLM type businesses and more every month.

Seriously, the odds for an individual to achieve financial success is against them straight out the gate.

For one, MLM are not defined nor regulated like say, franchises (McDonalds, Subways etc.,) are. MLMs can be established without federal or state approval. There are no federal law specifically against MLM with many of them in fact, being nothing more than pyramid schemes in disguise. Not all but many are floating around out there!

MLM, just like pyramid schemes, generate income from those continuous influx of new distributors at the bottom that goes straight to the top and that profits those in top level positions & their sponsoring corporations.

Fact ~ one the largest MLM, Amway, of all distributors they only produce 1/2 of 1% of basic "direct" distributor level, with an average income from those Amway distributors being about $40 a month. Where do you think ALL of that revenue from the other 99 1/2% went too???

And think about this, you are likely to find these businesses, at one point will claim that there are X amount of people enrolled in their business. Usually some number in the thousands, of other distributors who are making money just like you.

 

Which brings upon another fact......

Market saturation! The simple fact is that even the most successful products will have only partial market penetration.

Huh???  LOOK......not everyone will buy, say, a PS3 (Playstation3), some will buy the Xbox! Not everyone will buy a GMC car some will buy Toyota.

Yet, these MLM companies have 10's of thousands of distributors. Is there a cut-off  point when enough sales people are hired? In a traditional business, there is someone that says, "OK, we have enough, let's stop hiring people at this point." But in most MLM, there is no way to do this. Or they don't do this. And your MLM company continues to saturate the market. Out of control by design, this will eat up the lower level distributors money, time, credibility, and entrepreneurial energy of well-meaningful people who joined trying to find other distributors.

Some of these businesses are primarily in the business to continuously enroll distributors with little focus on products or services retailed towards consumers (an end user). Unless, of course, it benefit the company. Things like leads generation programs, auto responders, splashpages etc., 
(Which again does what.......benefit top level participants).

   BIGGEST mis-conception about MLM is it can be done  in your spare time. As a business, it offers the greatest flexibility and personal freedom of time. A few hours a week can earn a significant supplemental income and may grow to a very large income making other work unnecessary.

Come on, now really.......I understand this business of advertising.

Example: You go to one of these fast food joints, We look at the menu, and boy those pictures makes you want to eat the menu. When ever, has your burger sandwich or meal ever come to you looking like it does on the menu? So yes, there is always a bit of hype (exaggeration) in advertising, commercials. This is or has been reasonably except-able. MLM companies or their distributors on the other hand, sometime really do over do it. Many times bordering false advertising. Which is almost always cover by the fine print - disclaimers!

   Decades of experience involving millions of people have proven that successful entrepreneurs who make even a reasonable amount of return on their investment ~ requires extraordinary time, commitment as well as hard work, effort & persistence.

Which is WHY people drop out of they're respective business.

   It’s sad that 95-99% of all home businesses (mlm and network marketing) fail to produce a substantial income (if any income at all). And this is well documented. The remaining 5% are considered to be the home business or internet “guru’s” that make ALL THE MONEY! 
The average income for those that do make an income is $5000.00 per yr. The top 2 sales group are Health & Wellness & Services.

   
Top level participants

Most people begin and end their MLM career only talking to a few family members and friends. That is the extent of their lead generation, their marketing campaign. Their effort to run a business. Clearly, any serious network marketer or business owner cannot build a sustainable income like this.

   Truth is these guru's can claim they built their massive organization nearly over night, however, it took them years of building teams through affiliations with numerous other MLM companies. After years of building relationships with hundreds or thousands of distributors, these top producer can switch companies, contact their down-line (list)....... and have what seems like an overnight success.

   Choosing the wrong product, a weak compensation plan, the wrong team or the wrong lead generation system are other reasons you will fail in this MLM and network marketing arena.

   Strategic planning, organizing and goal setting are all a major parts of running a successful business, whether at home or in a traditional brick & mortar business.

The exact nature of your internet marketing activity will depend on the following things:

   - What do you want to achieve?
   - How you are going to achieve it?
   - How much you are willing to invest?
   - Are you willing to dig in and work hard towards your goal/dream?

TIP>>> Understand that most home business entrepreneur and network marketers are ALREADY in business for themselves. They already have a business opportunity, or affiliate program, and don’t want to hear about yours. So don't spend alot of time or effort in that direction!

(Don't believe or understand this statement.....take a look at your inbox of your email, social networking etc.,)
How many opportunities do you pass up?

   Ok, the question at the beginning of this entry "What is the average time your clients STAY with your business?"

   After an intense research...... There seems to be no actual hard data, giving the nature of many MLM business over the last decade. With no real state or federal regulations in place and many company's being fly-by-night operations. True data can only be calculated through numbers provided to the IRA by up-front companies who reps are required to provide their social security number for tax purposes.

 * Roughly 70-75% of new start-up MLM companies fold after the first year

    * Nearly  60% of sign-ups to an online business cancel after the 1st month
                 * Nearly 80-85% after the 3rd month                                                        

                                              

   Again, many many MLM. network marketer understand that there is a very high turn-over ratio in this industry. Granted that you have been networking for a little bit, it is easy to see.

I know I  do.


Visit these sites for some interesting topics on MLM

 http://pyramidschemealert.org/

 http://www.falseprofits.com/FalseProfitsBlog.html

 http://www.mlm-thetruth.com/

 http://www.mlmwatch.org/

   Hope that you find this piece, of value to your online endeavors. Also remember to really focus on the basic of marketing online. When you take care and have a solid foundation of the essential working of marketing online. Many of the pitfalls can be avoided.

   Find your own groove or niche, that is how a true entrepreneurs succeeds. Don't just think outside the box.........Get rid of the box all together. If you need and want to work successfully from home/online you've got to be willing to adjust, work hard and stay informed.

Sincerely,

Andrew

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Copyright © 2018 Andrew Hayes All Rights Reserved

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