MLM MythBusters: 99% Of Network Marketers Lose Money
Posted on 18. Apr, 2008 by Ty Tribble in Network Marketing News
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According to the DSA:
More than half 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.In addition, research shows the following:
- four in five (82%) direct sellers have been with their current direct selling company for one year or more, and 34% for five years or more.
- 88% of direct sellers rate their personal experience in direct selling as excellent, very good, or good.
- 85% 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.
(Source: 1999 National Salesforce Survey, MORPACE International, Inc.)
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15 Responses to “MLM MythBusters: 99% Of Network Marketers Lose Money”
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Renshi_D
18. Apr, 2008
OK, so your source is 9 years old. Are you saying that things in direct selling haven't changed in 9 years?
I think your snapshot from 9 years ago is interesting but not especially relevant to today. What may have been a myth 9 years ago, may be a fact today.
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Amy Robinson
18. Apr, 2008
Renshi_D – updated data is available and is included below. No notable differences except for the number of people who have been with their company for 5 years or more – that number is up significantly. (In fact the newest installment of this survey is currently in process.)
The Dec. 2002 version of the survey shows the following:
–82% of direct sellers have been with their current company for one year or more; 47% have been with their company 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 direct selling meets or exceeds their expectations
–89% 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.
You can find additional stats on directselling411.com.
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Roosevelt Cooper
18. Apr, 2008
Ty,
Wow this is some great information. You don't know how many times I see that quote all over the internet. However, I never see the source of where that data was identified from. It's great to see an actual source that identifies the real data.
Roosevelt Cooper
http://www.web204mlm.com
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Cheryl Gonzalez
19. Apr, 2008
You state that according to the DSA – DSA stands for Direct Selling Association and the website is at http://dsa.org
The link you provide is just a DirectSelling website…so this is just an FYI
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Sarah_L
20. Apr, 2008
Cheryl Gonzalez,
The directselling411.com site is run by DSA. Take a look at their "About" section, and the links at the footers. The 411 is aimed more at consumers while dsa.org is aimed at providing info to their member companies
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Ty Tribble - MLM Blog Author
20. Apr, 2008
Yeah…what Sarah said. = )
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Renshi_D
20. Apr, 2008
Okay, so newer information is still 6 years old. Besides, what would you expect the DSA to say anyway?
Who is being surveyed? How do they know their sample is representative? Keep in mind, the people who even consider MLM are different from the general population. For some reason, I think these stats have a high likelihood of sampling error.
Lies, damned lies, and statistics…pretty much says it all.
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Dilip
21. Apr, 2008
I am planning to start a Blog Agregator of all the famous network marketers. I think this will help to make all the good materials readable in only one page.
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Rick
21. Apr, 2008
So the most current information/study is 6 years old. Speculation that it may be out of date doesn't equal fact. Where's the data that shows that the statistics have changed. No one has posted any information to the contrary. Why speculate that it has changed for the worse? Maybe it has changed for the better, especially with the increase of internet usage to build a business.
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Renshi_D
22. Apr, 2008
I'm not saying the statistics have changed. I'm saying the statistics are irrelevant because the sampling method is not known or explained. They are also irrelevant because we know the investigators and/or reporter of this data has a known bias. If you are hired to do research for the DSA, you better come back with data/results they like or they won't hire you again.
In essence, I'm saying this "study" is actually advertising spin. I'm not saying the numbers have changed.
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Amy Robinson
22. Apr, 2008
Renshi_D – I take your skepticism as a sign of an inquisitive mind and I'm glad to see in this day and age that someone looks for validation of facts. Accordingly, I have no problem standing behind the numbers in this or any other DSA research as the information is intended as much for public education as it is for our members.
Research is an important component of DSA's work in its capacity as an authority on direct selling. Our "bias" is toward painting an accurate picture of the industry – sometimes that's positive, and sometimes we find areas where improvements can be made. Part of supporting our members is having accurate data that shows the state of the marketplace, for better or worse. You can find plenty of people out there who call themselves "experts" on direct selling, but you will also find that in most cases they either have no data or the data they present does not cite or source or illustrate the use of a scientific methodology.
Also, if you have ever hired one of the major research firms before you know that their credibility lies in being accurate – not on reflecting the client's desires. DSA has no voice in the outcome of the study. The results are the results, and we are required to report them as they are delivered to us.
As for methodology, this particular survey is based on 1801 phone interviews conducted by Research International (the number more than qualifies as a representative sample). The subjects are current direct sellers selected at random and the study achieves a 95% confidence level.
So, keep up the skepticism, but don't let it get in the way of being able to take something at face value.
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Jim Rivas
30. Apr, 2008
Why is it that 99% of Network Markers loose money. Whether it is or is not that number is irrelevant to the fact that most people, that get started in network marketing make little or no money.
The reason for this is simple. Because of the low price points for starting and capitalizing a home based/network marketing business allows many individuals, who have little or no business experience a way to pursue their dream of financial freedom and independence.
What these most of these individuals do not know though is that they are in fact the "customer" for the product that is being distributed. MLM is merely a product channel distribution business for the MLM company.
However, most people are lured into the industry with a seductive "get rich" proposal that generally sounds so easy. The only problem is that success is never easy, even for those that have marketing and sales skills when they get started.
In my experience, 50% of the people that sign up and purchase products, NEVER start their business. Another 30% (for a total of 80%) give up after very little effort as soon as they realize that there is more to the success equation than what they "hoped" for.
That leaves us 20% that will make at least a reasonable attempt at success. When we apply the 80-20 rule again we end up with 4% (the upper 20% of the 20%) that will experience some results.
When we apply the 80-20 to that 40% we end up with less than 1% who make substantial money in the industry.
So the real reason so few people make money in the industry has less to do with the quality of the companies and products and more to do with the skill sets and determination of the individuals that make up the population.
It is sad that so few people will pursue their dreams in a way that changes the dreams to specific goals. However, that is the fact of life. It is based in science, and that is just the way it is.
Should you desire to join the 4% and ultimately the 20% of the 4%, you require shortcuts, wisdom, and the know how.
When you decide that you want what you came to the industry for,
Jim
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Derrick Jones
05. May, 2008
Great work, the comments I see here are powerful. I'll use what I've found here in my business…
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Renshi_D
05. May, 2008
Derrick,
Before you take this "myth-busting" information as gospel, you better ask yourself a question like, "If all this information is true and accurate, why does MLM/direct selling STILL have such a bad reputation?"
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Rivers Corbett
18. Jun, 2008
What this is good for is…
1. Reinforces to the gazillion of us playing in this game that it is real and legitimate and profitable.
2. Provides us with resources for the naysayers…which..let's face it we sometimes want to prove them wrong even if they don;t join our opportunity.
To Your Success
Rivers Corbett
Cofounder
MLMOutlaws
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