Why Do People Join MLMs? -

Multi-Level Marketing companies also known as MLM companies are a controversial business model. There are MLMs that sell all kinds of products and services. Chances are, you know someone who sells for an MLM or you’ve been presented to join the opportunity. What you may not know is that 99% of people who join MLMs lose money. So if that is the case, why do people join?

With so few people making money in MLMs, why do people join?

What are MLMs?

Multi-Level Marketing companies or MLMs are a type of direct selling model. This is where individuals are recruited to sell the products or services by an individual. If you join under them, they become your upline, and you become their downline. Some companies that sell under an MLM business model are Monat, Beachbody, Color Street, Pampered Chef, Tupperware, Pruvit and so many more. If you’ve been invited to a Facebook “party” to shop, there is a good chance that was an MLM. While it is possible to earn money by only selling products in MLMs, it is a very small amount of commission. The typical MLM compensation plan does not allow you to earn any substantial money until you successfully recruit many different “legs” into your downline. This is often why people believe MLMs are pyramid schemes because to be successful, you need to recruit others just like an actual pyramid scheme. So now that you know all that, let’s get into why people would be tempted to join an MLM, even though the numbers aren’t in their favor. For more information on MLMs, here is an overview article I wrote: Are MLMs Pyramid Schemes?

Why do People Join MLMs?

Entrepreneurial Spirit

Most people are influenced to join an MLM with the idea they are starting their own business. For a lot of people, this is very appealing because they have an entrepreneurial spirit. They think by joining an MLM, they will be their own boss, and make their own hours and the sky is the limit for earning potential. But, in reality, that is not the case. When you join an MLM you have an upline of those who recruited you. They earn additional bonuses based on how much you sell. So while they are not your boss in the traditional sense, they are completely invested in your performance and will influence you to be a “higher” performer. This means working more and making more sales. Often uplines encourage you to join Zoom calls for “personal development training” or “power hours”, to motivate and then ensure that you are actively “working your business”.

Generally Low Start Up Costs

Going hand in hand with the idea of owning a business, comes the low start-up costs. When you take a look at the costs of opening a traditional business, it can be quite pricey. MLMs market low start-up costs. This is because they will recruit anyone that’s interested to be part of their downline. This will create larger bonus opportunities for the uplines. Basic business principles are ignored, like supply and demand. If you’re considering joining an MLM make sure you’re checking out their income disclosure statements, because even though the start-up costs are low – they could be more than you expect to bring in for income.

Looking For A Community

MLMs do a lot of recruiting online. They often talk about the sisterhood that is formed by joining their teams. Higher-ranking women have often given their teams names, like The Empire or Limitless. It creates this perception of a solid team of like-minded women (sometimes men) moving towards a shared common goal. This is especially appealing to stay-at-home moms or other individuals who may be feeling lonely. If this is one of the reasons you’re thinking of joining, just keep in mind that if you decide to leave the MLM, more times than not, you will lose those friendships. I have listened to and read many stories about women who once they leave the MLM, are isolated from the group. This is a common technique in other organizations (cults) to keep people from leaving.

Flexibility to Make Money From Anywhere

Most MLMs offer the opportunity to make a full-time income from your phone. Who doesn’t love the sound of that? Being able to travel, deal with family obligations and escape the “rat race”. That sounds like a dream, and just like anything that sounds too good to be true. As we’ve discussed, most people will not even break even in joining the MLM, let alone make that full-time income. It is absolutely true that some people do make a good living in MLMs, but they are a very small percentage. They also are doing this by making money off those that are losing money.

Vacations, Cars, and Other Perks

Some MLMs make it appear that you can get a “free” car. However, it’s a car bonus. If you reach a certain tier they will give you funds towards a car payment that is in your name. However, if you lose your rank, you’ll lose your bonus and be on the hook for the car. MLMs that offer “free” cars include Arbonne, Mary Kay Younique, and Monat.

Another perk that is often advertised is retreats/vacations. You can earn your ability to attend retreats that look like lavish vacations. However, you have to earn the commissions and instead of being paid cash, you’ll receive a travel package. This is still income you’ve earned.

Not Being Informed

Ultimately, I think most people who join MLMs are not informed. If you are recruited to join an MLM, please, first look up their income disclosure and second look up their compensation plan. Take a look at the numbers, and really look at what it takes to rank up so that if you decide to go in, you’re going in with your eyes wide open.

Wrap Up

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Why Do People Join MLMs?

What are MLMs?