Why 97% of all MLMs Fail –How to become One of the 1-3% that Make Serious Money

As a small business coach I’ve worked with a lot of MLM (multilevel marketing, or networking marketing) business owners who had come to me asking why they couldn’t make this work even though they saw 1 or 2 in their networking making a killing.

Let me tell you a story about one of my clients.

Steve who had bought into an MLM opportunity had been a top salesman when working for a large company. Now that he’s selling MLM he’s actually creating a decent downline pretty quickly. He had grown it to about 30 when he asked me for help.

He told me that he wasn’t having a problem selling new downline people. However, he felt that he was spending a LOT of time making very little money. he made about $600 for each of his new downline he created.  But, here’s his problem. NONE of his down-line was selling.

Many MLM uplines talk about striving for NUMBERS. I’ll admit you’ve got to strive to accomplish a measurable result that’s a part of a larger picture every week, however, just focusing on the numbers alone can be slightly misleading.

Frequently MLM companies teach just to make X number of calls a week, or buy Y number of leads a week. The principle is simply that you should be able to convince maybe 1 in 20 that you talk with to buy that “starter package” or whatever it’s called in your MLM company.

The problem is that VERY FEW, probably less than 1 in 20-30 that you stuff into that downline will ever do anythin with it. And, even worse, maybe 1 in a hundred will become half way successful at it. And “halfway successful” isn’t ‘successful.” More will quit than succeed.

I’m not trying to discourage you. This stuff does work. It’s just that many times it doesn’t work the way it’s being promoted to work. Look around you. Yes, there are those that succeed, and are doing extremely well, but what percentage of everyone around you are they?

Are even 1% making enough to pay the bills? Are even 0.5% making as much as they did when working as an employee?

One of the biggest problems around multilevel marketing, or network marketing businesses is

Problem: Learning from Others Who Have Not Got it Right Yet

  • Everyone around you is copying what everyone else is doing. And when less than 1% succeed, you are likely copying the 99% that don’t. (And, by the way, the Small Business Administraton clearly states that 80% of all small businesses will fail within their first 2 years, and 90% will fail within their first 5. And among MLM’s it’s even worse).
  • While there are a few succeeding, you are likely a LONG way down the chain from a successful one that can teach you, or even cares about you. You are likely among the blind leading the blind.

Copy Your Business from the 1% Super Performers

So far it’s sounded pretty dismal. But here’s the trick, you MUST not copy the 99% that fail. You MUST duplicate your business like the few, 1% or less, that are succeeding.

I’ve built my coaching business around creating that 1%. Actually I get several calls a week from small start up businesses who want to “BUY” an off the shelf business plan. Their perception is that there must be a plan on the shelf that would show them how to succeed. And, yes, there are people out there selling off-the-shelf plans, but they aren’t focusing on the 1% who succeed, they are focusing on how to become a typical “whatever it is you want to become” business plan. In other words, you’ll look like the 90+% that will fail.

Stuff Your Downline With Large Numbers or Stuff Your Downline with Those That Will Succeed

Let’s go back to Steve. He had been focusing on his numbers and nicely stuffing his downline, but none of them had sold a darned thing. Yes, he was making some money, about 1 sale a week for 60 hours of door to door cold calls, and networking, about $600 a week, which would eventually end up around $30,000 for the year, about $10/hour.

After he took out his expenses, car wear and tear, gasolene, insurance, cell phone, memberships in networking groups, etc. he didn’t have much left for a LOT of work.

How Do You Find the Downline That Will More Likely Succeed?

I asked Steve, “How do you think you might find better qualified downline people? Those that already know how to 

  • Market and Sell
  • Succeed at almost anything they’ve tried before
  • Run a successful business, they’ve already got a track record.

As opposed to stuffing your downline with desparate people who don’t know how to succeed, and don’t have the experience of having done it.

Most MLMs teach you to “stuff the seats” by driving for a large number. They call it the “law of large numbers.”

And it’s also called “brute forcing” your results, or “working harder.” The idea is if you stick enough people into your downline, eventually someone will succeed. And especially when you leverage that by having more of your downline doing the same thing, the numbers could get pretty large pretty fast, but only if some of those in your downline succeed.

So the more you stuff in there the more likely you are to succeed. And, as far as the top person in your upline is concerned, if he puts enogh people under him, and they all put enough people under that next level, and on down the line, you’ll have the “law of large numbers” on your site. There will be a few that succeed scattered here and there throughout that downline.

Which Would You Rather do . . . Work Smarter or Work Harder?

I prefer working smarter to working harder, finding the RIGHT people to stuff into that downline that are more likely to succeed.

MLM’s frequently teach you to buy X number of leads from a lead generation company. Likely you are talking to someone who’s desparate to make some money, or even someone who isn’t quite so desparate but still doesn’t have the experience to succeed. 

So, I asked Steve where he’d find someone that is more likely to succeed. When he thought it through he decided that those that are more likely to succeed are:

  • Current CEOs, Presidents, other business owners that have a track record of success. They would have both money, and experience. They are starting with no knowledge like most of the MLM leads you’ve been buying. These people can invest in your products and services. They are more likely to succeed (with a little help from someone who can pass along the right steps). And they also will likely have enough savings to survive through the early stages until they see some money coming in. And they will be able to invest more into their marketing to make it grow faster. All of those are the reasons most MLMs fail.
  • Upper level managers, business owners
  • People from those categories above, that are looking for ways out of the corporate world, that want to retire, or that have recently been laid off.
  • Other business owners that already are selling products or services that will dovetail nicely with what your products. In other words they could set on the shelf in his store and sell right next to his current products or services.

You will make more money faster by spending time to develop a successful downline than if you just stuff the downline with just anyone. And, you will also make a LOT more money by relying on a successful downline than relying on your own direct sales of the products or starter packages.

Your success depends on you creating a successful downline.

Build your own successful business model around building a downline that has the skills and knowledge to hit the ground running. THEN, hand them your recently developed business model that shows them step by step how to create their own business just like yours.

And now that you have a downline of highly qualified and experienced people, PUT YOUR HEADS TOGETHER, starting with the business model you gave them, and take it even further. Not only will you be coaching them toward success around your model, but, now you have a LOT of successful people surrounding you that will input ideas from their own experience that will work this business even higher.

Here are some guidelines.

  • Search out the 1% or fewer that succeed in your business, and LEARN LEARN, LEARN.
  • Find successful people to stuff into your downline.
  • Build your own business model with step by step directions that isn’t a copy of the 99% around you, but at least starts by learning what the 1% successful people are doing.
  • Share that model with your downline. Coach them to succeed. Hold them accountable for delivering $X in sales every week. If they don’t offer more help. Those that succeed reward them with even more help or even more bonus dollars. The more you give the more you will get. If you grow quickly, start setting up mastermind groups where people will get help from others in the group that have started to succeed.
  •  Niche your sales — find a specific target market where your products and your downline will sell quickly. Develop a marketing message that is unique to you (a marketing message is about what the customer wants, not what you sell. This is a CRITICAL part of making this work).

Back to Steve. We spent 3 weeks working on his business model, while he also was out there looking for those new downline that are more likely to succeed. By the end of that 3 weeks he had doubled his downline (his sales had actually gone from 1 a week to 10, a 10 times increase; and these were people who were more likely to succeed.

In just another couple of weeks, that new downline was each already selling more than Steve was. The ultimate outcome was that Steve was now making several times more from his downline than Steve was making from his own sales, and he was putting a lot less work into his downline than ever before.

Over the next 6 months his business increased another 6 times.

The bottom line, multilevel marketing can work extremely well . . . find the right people to put into your downline.

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