Also known as network marketing and direct marketing, Multi-level marketing (MLM) is a strategy of selling products independently directly to the customers, often by word of mouth and direct sales. Direct sales companies use this monetary strategy to encourage existing distributors to recruit new ones.
The statistics suggest that a total of 6.22 million Americans are MLM enthusiasts, and 1/13th of American adults are engaged in MLM. Nearly half of the participants registered quit within a year. Also, only ¼ th of the total participants earn a profit. Also, healthcare and personal care are the most selling sectors in MLM.
Here are some MLM statistics in detail for you to go through.
10 Best MLM Statistics You Need to go Through
You must have come across the terms like multilevel marketing, network marketing, direct selling, pyramid marketing, and various other names at some point in time. Mostly, these are portrayed in an optimistic way that creates a great impression of them like these are the best ways of earning $$. And you might even have heard some success stories somewhere, but that’s just the upper part of the iceberg.
The MLM network model can sometimes be devastating. No worries! These MLM statistics will assist you in analyzing the associated risks and outcomes before joining the network.
Currently, 6.21 million Americans are Multilevel Marketers
The MLM statistics by DSA suggest that nearly 6.2 million Americans actively participate in direct selling. The number is not even 2% of the total American population, which showcases the descending rates of MLM enthusiasts with each new year.
An Estimated 1/4th of MLM Marketers Earn a Profit
The Federal Trade Commission(FTC) states that 99 of 100 multilevel marketers face a loss. But that is not the entire story.
According to survey research conducted by AARP, 1/4th of the participants earned a profit, while nearly 1/4th experienced a break-even. Just ½ of them faced a loss. The study further revealed that out of those who made a profit-14% earned less than $5,000, 6% earned about $5,000-$9,999, 3% earned between $10,000-$24,999, 3% earned nearly $25,000+ while just 0.05% made $100,000 or more.
Nearly 1/13th of the American Adult Population is Engaged in MLM
While the data is quite astonishing, nearly 8% of American citizens participate in multilevel marketing to some extent.
About 52% of those Engaged in MLM State that the Company doesn’t Accurately Represent Profitability
MLM has gained a negative impression thanks to the media depicting schemes involving investment by people in hopes of earning a profit but receiving low-grade products that are tough to sell. Though the vital scenario isn’t that harsh, it’s not even that appealing. An AARP study revealed that 52 out of 100 MLM investors accepted that the company’s prediction regarding the profit associated with direct sales was misleading. At the same time, 43% felt it was relatively justified.
MLM Costs the Participants Nearly $25 000+ Annually
In the research on multilevel marketing for FTC, Dr. John M. Taylor appraised that aspiring MLM participants generally spend a minimum of $25,000 annually. These expenses include advertising, incentives, products, and travel.
To urge these statistics, Dr. Taylor joined a recruitment-based company and worked full-time there for a year, doing each task he was assigned.
The MLM Industry Generated $35.4 Billion in Revenue in 2018
Despite the increasingly unpopular opinions regarding MLM, the MLM statistics prove this industry’s strength. The Direct Selling Association (DSA) estimated the worth of the MLM business to be more than $35 billion, which was nearly 25 billion in 2009. While the WFDSA study reveals that direct selling is a $193 billion industry.[1]
Healthcare and Personal Care are the Most-Selling Sectors in MLM
Yes! You guessed it right! Healthcare and Beauty products/personal care are the most popular direct selling. In 2019, the wellness sector made about 33.2% of the total sales, and beauty products were 31.2% of the direct selling products.
Nearly Half of those Engaged in MLM Quit Within a Year
Most people join MLM in hopes of earning more money in a short period, and most quit within 12 months primarily due to not being able to earn as expected.
An AARP study revealed that more than half of the participants quit within 12 months of joining, while 9/10th stayed no longer than 10 years. On the other hand, 1/3rd of the small businesses pull through more than ten years.
33/50th of Multilevel Marketers Incur Expenses Less than $1000
One of the factors that MLM companies conduct various incentive programs is the low investment by the candidates. As per the survey conducted by AARP, nearly 33/50th multilevel marketers spend less than $1000, 12/50th of these spend $1000-$4,999, 11% spend more than $5000, while 23% weren’t able to recall the amount they paid. Just 4 people in the survey invested more than $50,000.
65% of the Multilevel Marketers Stated They Wouldn’t Join the Same
The AARP MLM statistics suggested that 39% of those engaged in MLM found pitching to acquaintances awkward, 36% found their income not up to their expectations, and 35% did not like selling all the time.
See Also: What are the 8Ps of Marketing? The 101 Guide
The Modern Norm( New Normal) In The Direct-Selling Industry
Under the Direct Sales Act, companies engaged in direct sales must get a license before starting operations. Although offering items is not prohibited, businesses must have the appropriate authority’s consent before selling any new products. The headings below show how the new norms in the direct selling sector differ from earlier practices.
Meetings In Person Vs. Meetings Online
Building trust with your customers and distributors also requires face-to-face communication.
It has always been the most straightforward approach to interact with them responsibly. But because of the restrictions placed on such meetings resulting from the pandemic’s development, it is now challenging to establish a rewarding relationship with the customer.
Modern technology has made it possible to recreate the experience with exceptional audio and video qualities thanks to the contemporary online meeting capabilities that are now readily available. Direct sellers effectively conduct online parties and knowledge-sharing sessions with its assistance to maintain the network tightly knit. One of the reasons direct selling has survived the COVID-19 crisis is this method’s success in satisfying clients.
Offline Sales Vs. Online Sales
Due to how simple it was to display the product and speak with a consumer one-on-one, most direct products sell offline. Since completing the same selling process is challenging, an increasing number of direct sellers are setting up their virtual businesses on internet platforms.
Not only is the selling process made more straightforward, but sellers are also better equipped to gain insights into the behavior and preferences of their customers. Online sales provide a fantastic possibility for business growth because they assist the consumer base to grow without regard to location.
Word-Of-Mouth Vs. Digital Marketing
Most marketing conducted offline through word-of-mouth began when direct selling became popular. Since the review of a specific product originated from a reputable source or peer group, it had an advantage in effective sales establishment. Most of these conversations occurred at social events and other comparable situations.
However, such marketing has significantly decreased in a circumstance like the one we currently find ourselves in. Instead, sellers are now more concerned with branding their firm online by investing time and energy into implementing the newest marketing and sales trends into their enterprise. Online advertising campaigns, co-branding, point-of-purchase (POP) marketing, and programmatic advertising are often utilized.
Physical Vs. Online Back Offices
The effective adoption of the work-from-home program has caused businesses to reevaluate the necessity for expensive office space because most could complete their work using the WFH approach at a significant cost saving.
Companies are switching to virtual back-office solutions, which incorporate all necessary elements to run a business as if functioning offline, to enforce this without defects. Technology advancements have also made this strategy effortless.
FAQs
Does Multilevel Marketing Help People Earn Money?
No. Only those in the top tier. The system is built to funnel wealth upwards at the outlay of the people who join late, usually those who already have fewer resources than the others profiting from them. Of course, it is plausible to earn a bit of money through it. But if you do so, you might be scamming your acquaintances or other strangers.
What is the Working Algorithm of Multilevel Marketing Companies?
MLM companies usually generate a massive captive audience that not just purchases the commodities but also provides money to join, provides money for seminars and conferences provide, money for training, provide money for online access per month, pays for training and marketing materials, and pays inflated shipping and handling fees all from their pocket. And also gets the occasional odd customer who is not associated with the opportunity.
Which Multilevel Marketing Ventures can Lead to Failure?
First of all, multilevel marketing is a business, not a scheme. If your assumption regarding MLM is like this, then indeed, it's not your piece of cake. But if you have a complete understanding of the model, and it's working, if you are confident that you can meet the required expectation, you genuinely love doing the job, and you don't feel pressured or uncertain about it, then you are on the right path. Every business involves selling may be directly or indirectly. So if you are willing and don't have any problem with selling the commodities, you won't fail.
Conclusion
Whenever you hear terms like MLM or network marketing, those TV jokes, marketing chains, and pyramids generally come to mind. But that’s not all about MLM. Whether it be MLM or any other job, it is crucial to research before you opt for a new role or investment. It would be best to study every aspect of MLM, like the sales levels, what you need to do to earn a sufficient sum, checking whether the company is a member of the DSA and many other factors.
Hope these MLM statistics will help you!
See Also: 9 Best Health and Wellness Network Marketing Companies
