Why Network Marketers get No Returns for their Business Building Efforts

In other words, I was here to build a consumer network, where passive income was gradually built from the regular consumption of the company’s products by the people in my downline.

At first, I thought “Fantastic!… I don’t have to sell any product to anybody. I just have to introduce people to the business and the products will sell themselves!” A lot of distributors in MLM think this way. They like the idea that they don’t have to sell any product and just recruit people.

This business model is especially prevalent in companies that have a wide range of products. It’s probably taught because most network marketers don’t want to become “sleazy salespeople”, or because of some distorted view that selling is a JOB, which totally goes against the idea of passive income – the Big Promise of MLM…

Well, I can tell you now that this is NOT a sustainable way to build an MLM business. It never was… And now that we live in an age of the internet, doing business this way will suck your bank account dry.

First, let’s just go briefly through the numbers. MLM compensation plans typically reward you on wholesale volume, which means, the bigger your monthly volume, the larger the percentage of your bonus.

Now say that you have a consumable product, such as a multi-vitamin. How many regular consumers (who only consume what they personally need in a month) would you need to build up a substantial bonus? LOTS and LOTS!

Here’s a question for you: Would you rather have a 20% – 30% commission on the retail price of your product or a 5% or less commission on the wholesale price? I think you get the idea…

Second, if you’re not selling a product, you are selling a business opportunity and therefore your customers are business opportunity seekers. Business opportunity seekers are the worst people to have in your downline. They are the “get rich quick” types. While you do all the hard work, they’ll just sit back and watch and then leave, hoping to the next shiny opportunity that comes their way.

Downline attrition is a huge problem in modern day network marketing because of the shear number of available opportunities and the amount of information there is out there. The average distributor quits after 3 months!

Third, even if you’re a lean, mean recruitin’ machine, most of your recruits will not be. MLM industry stats show that the average networker sponsors less than 3 people in their entire MLM career.

Therefore you would have to recruit for the rest of your life just to combat the rate of attrition in your organisation, getting absolutely no return (a negative return in most cases) for your recruiting efforts.

Finally, you are required by law to selling products to customers. All legitimate businesses must sell a product to an end user. A business that is sustained purely through recruitment of people is a pyramid scheme.

Passive income in MLM is NOT built on recruitment. It’s built on serving your customers with a good product and developing long relationships with them so they’ll continue to purchase products from you and refer your business to others.