Ahhhh the MLM’s…multi-level marketing if you will. Some people supposedly make millions, others reportedly lose their shirt and are left angry, used, and determined to never join an MLM ever again. But, what’s the real truth? Can you really make money in an MLM? Or is it all just a scam?
Can You Really Make Money in an MLM?
The following post was written by our fabulous staff writer, Kerah Kemmerer.
It’s the MLM sales pitch heard round the world…
“Hey friend! I know we haven’t talked in awhile, but I wanted to share with you an awesome opportunity I’ve found that I could NOT keep to myself. Let me know when you want to meet up or schedule a call to talk about it!”
- If so, you may be frustrated to see many of your friends dropping like flies to one networking business or another, or seeing your social media feeds become cluttered with promotional sales posts.
- If not – you are one of the few who has somehow managed to fly under the radar despite the ever growing reach of networking marketing.
However, before you write off these companies completely, there may be something more to this mysterious world of MLMs.
I interviewed 5 reps (out of 10 as 5 didn’t respond to my request) to learn why they decided to pursue their business, if they make money as an MLM business owner, and would they would honestly recommend that others give it a go.
What is an MLM/Network Marketing Company Exactly?
Many of you are already familiar with the usual pitch or the stream of social media posts coming from people you know who are suddenly obsessed with a new company or product.
- fitness programs,
- health supplements,
- fat-loss products,
- clothing, or
- totes and bags,
…it’s likely you can find it being sold through a network marketing company.
Multi-level marketing (MLM) and/or network marketing have actually been around for over 50 years and doesn’t appear to be going away anytime soon. While some organizations have come and gone, ones like Amway and Herbalife are still going strong and will celebrate 60 years in business come 2020.
Also, while many people confuse these company models with the Pyramid Scheme model, there are some significant differences.
A pyramid scheme offers:
- payment or a bonus for anyone bringing in new recruits and
- often provides commission on the sale of a starter kit.
- They usually require high startup costs, membership fees, and required training.
On the flip side, be sure to do your research on any company you are considering joining as some pyramid schemes can masquerade as an MLM. Usually, if an MLM company enables its reps to make a commission on selling an actual product and not just getting as many recruits as possible, it’s legit and financially valid to pursue.
Before you join any company, however, make sure they are members of the Direct Selling Association, or that you have taken the time to do some online research to find out what current and former reps are saying about it.
Love them or hate them, what I wanted to explore is how financially successful one could hope to be when building “their business” through an MLM. So let’s dive in!
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Hearing From the MLM Reps Themselves!
I decided to reach out to several individuals who had reached out to me in the past to share their product or opportunity. I wanted to know if they’d be willing to share their personal experience for the sake of helping others learn more about MLMs…and to see if one can actually make money in an MLM!
While many turned down my request, I did come across a few willing to share. Among them, your financial guru himself – Derek!
While I’m disappointed that some were unwilling to provide more insight into their personal experience – especially those that are claiming online to be doing so well financially – I do understand the hesitation to share.
My own previous experience with a network marketing company prompted my interest in how others were faring. In 2014, I invested in a natural-based makeup and skincare company at the prompting of my sister-in-law and went all in. I was absolutely going to make money in an MLM – I was sure of it…
After purchasing my $100 start up kit, I still didn’t have quite enough products to host my first party, but my upline had a ton and helped me kick off my first event.
I made $400 in sales that first night and was completely convinced this was going to be worth it!
- I signed up for every training I could find,
- began posting online, and
- even bought products for others to sample.
However, other than few more small orders over the next two years, I only managed about $800 in sales.
I made a lot of rookie mistakes…
A big one was ordering products that people said they wanted to buy, but they’d often change their mind after the 14-day return window. I believed I was providing good customer service by allowing them the option of getting a product they liked better, and by believing I could sell the product to someone else. But of course, I was then left with the task of trying to sell them to someone else at a steep discount.
Over the two years I was an active rep, I invested in about $2,500 worth of product that I did not sell. Yeah. Even I was shocked when I added it all up. One consolation is that at least I won’t have to buy makeup and skincare for a very long time. Ironically, I rarely wear much makeup anyway.
2) Gina’s MLM Experience
My sister-in-law, Gina, was part of the same company and started about 6 months before me. Gina stated that she joined the company because her friend got her hyped up and she was excited about the opportunity to make money from home.
She also said she felt like making money off of the company was a guarantee because people love make-up.
“I knew I would make 25% of the products, so I assumed I could make $100 a month minimum,” Gina said.
Gina invested about 7-10 hours a week promoting her business online and in-person, and saw some initial traction in the first few months. However, it wasn’t long before sales began to taper off as consumer interest waned.
After about two years as an active rep, she estimates that she likely broke even on investment vs profit.
Make money in an MLM? Not so much… She chalks it up to a good learning experience but says she would likely never join an MLM again. Even though she is pretty outgoing and forthright, she doesn’t think the business model works well for her on a personal level.
Related: 5 Steps to Build Rapid Wealth
3) Positive Experience from “Anonymous”
I spoke with another rep within the same company who was willing to share her experience, although she wishes to remain anonymous.
This mom of four joined the makeup/skincare company around five years ago and said she joined because her friend sold the products and she personally loved them.
Interestingly, she didn’t even join the company with the intention of selling products – she just wanted a discount on the products.
But because of her passion for the makeup, she sold simply by sharing her rave reviews and experiences online.
“I like how easy it is to do at home from my phone. Good products that are easy to share. I really like that I don’t have pressure and can do whatever I want with it with no outrageous fees or upkeep cost. I’ve never had to keep inventory and I think the company does a great job keeping it simple for presenters.”
She added that the excellent customer service, return policy and easily attainable incentives kept it fun and helped keep her motivated. She also loved the free resort incentive she and her husband have enjoyed.
In the beginning she says she worked on it 24/7, but now she rarely puts any time in.
When asked if she plans to stick with it she said she intends to for now.
“I guess I really don’t have a ton of complaints, it just boils down whether you stick with it and work at it. If you want to be making full time money and residual money long term you will have to be working at it hard in the beginning to get your momentum going and continue that momentum.”
When asked about her income numbers, she responded:
“It varied with how much effort I was putting in. Sometimes $300 a month and some months over $3,000. If I put in minimum amounts (of time/effort) to my business currently, I could easily be earning $1,000 a month.”
Not a bad side gig f0r a mom that is always running from one activity to the next with her little brood. So…is it possible to make money in an MLM? Apparently yes!
4) Alaina’s Experience as an MLM partner
As a regular user of essential oils, first-time mom, Alaina, decided to join an essential oils company to make money from home. A year ago, she invested around $100 in the starter kit, (there are different investment level options) believing in the potential to earn “thousands” with the business.
She says she only actively promotes her business about an hour per week, and has earned absolutely nothing since joining. She decided to keep with the company for a discount and recently joined another one – a health and wellness supplement business.
Since joining the new company two months ago, she has already received a promotion and credits it to being passionate about the products and investing several hours per week promoting via social media.
5) Derek’s Experience in MLM
Finally, Derek Sall has enjoyed his own journey within a network marketing company. Back in the day, Derek joined Team (formerly known as Team of Destiny) because his brother was involved and at the time, he says, the premise made sense.
“Purchase product online, avoid the middle man, save money, and get paid for building a network of people,” Derek said.
He made the $195 investment believing “the sky was the limit,” and thinking there was the potential to earn “a million dollars, plus.”
After five years with the company and investing an average of 2-3 hours per week promoting it, Derek says he ultimately ended up losing money in the venture.
Although he came out of it netting -$4,000 “after all the books and CD’s on leadership”. Although it wasn’t all a loss as he credits the material for helping him become a better person and moving up the ranks of Corporate America with his better understanding of leadership.
But would he ever do it again?
While he admits that it was tough to sell to people when they thought he was selling them a pyramid scam, he sums up his experience as follows:
“I had a positive experience and I think the model can definitely work if it’s done right. If I had a product that I absolutely loved and I believed would help the world, I’d probably sign up for an MLM again.”
Make Money in an MLM? Final Thoughts
While this research doesn’t begin to scratch the surface of potential pros and cons, and I would love to see someone conduct a large scale study, I believe that just hearing from others offers some valuable insight.
- I believe that most individuals won’t experience significant financial profitability,
- but for the ones that are truly passionate and throw themselves into networking for sales, there is a greater opportunity for return.
Although many have not experienced great financial success, one of the most common things I hear from others who are actively promoting their business is how much they love working with a team of motivated leaders.
They credit their growth in confidence and newly-found focus on self-development to the challenge of putting themselves out there and experiencing the rollercoaster ride that is network marketing.
So how about you? Are you going crazy seeing all the MLM posts and losing friends and family to the madness? Or are you the one fighting to make money in an MLM?? Do share!
AUTHOR Kerah Kemmerer
Hello! I'm Kerah. I'm a writer and personal finance enthusiast with a background in marketing. I'm also a wedding and portrait photographer, part-time RVer and a lover of simple and minimal living. Always up to some project or adventure over @krisandkerah on Instagram.