Last summer, the BoldMoves Country team learned about the extremely high new-recruit drop-out rate affecting the entire MLM industry. We became curious and interviewed network marketing leaders who reported that 87% to 95% of new MLM recruits quit their businesses within the first year, or never truly engage to perform. That seemed astonishingly high to us, when compared with a failure rate for new, non-MLM, small business owners at 25% to 50%.
Why, we wondered, with so many great products, viable companies, and principled leaders, is the MLM industry consistently subject to such a monumental loss of well-intentioned new talent? And more importantly, why does the entire industry seem to accept this loss as a given? Especially when critics use it as one point of evidence that the industry as a whole may be somehow suspect?
It made sense to us that since the problem is pervasive throughout the industry, its contributing factors would also be pervasive, or systemic, in nature. It seemed likely that social and cultural factors were involved. We looked to what we’ve learned about the challenges shared by all small business owners and entrepreneurs in a culture designed for large corporations and their employees, and we found a number of direct correlations to MLMs.
Ultimately we formed an hypothesis that the high MLM drop-out rate could be significantly reduced if there was a greater understanding of a number of hidden factors that negatively impact individual associates during the recruitment and business start-up processes.
Over the next few months, we will share our findings and ideas in this blog, so stay tuned. There are some surprises in store! Or you can learn more right now by entering your name and email address above.
What is an MLM?
Kimberly,
MLM means Multi-Level Marketing – otherwise known as network marketing, a way of getting products and services into the hands of people who want them by selling directly to them. Traditional examples include Mary Kay Cosmetics and Amway, but the Internet has spawned a zillion new companies, many of which sell information products with the help of individuals called “affiliates”. These businesses are called multi-level, because one person encourages others to help sell the product and then shares in a percentage of the revenue created.
Many people who have lost corporate jobs look to multi-level marketing companies as a way of working at home, being their own boss, and replacing some or all of their income. Many have difficulty making the transition from corporate to being their own boss. We have studied why they fail, and seen that our BoldMoves Country system for personal and professional development can help them to succeed.
To NOT drop out requires that ‘we’ choose to be personally responsible and accountable two attributes that we long ago chose not to teach or reference in corporate sanctioned education …
Thanks so much Paul – a great reminder!
Hi Shayla,
that is a topic that I am very passionate about.
One of the main reason the failure rate is so high is that people don’t get accurate and truthful information about the industry. And in many many cases, it’s not even their fault. Some of them however even refuse to learn about accurate and truthful information and rather believe in the lies they were told.
Many marketers don’t know that they have to learn some skills, skills that aren’t taught in school and in normal jobs. Not that these skills are complicated, they’re just different.
Many people are just habitual quitters: They quit marriages, families, jobs, hobbies etc. and business, such as MLM.
The problem is intrinsic to the MLM industry, yes, but it is also related to human nature.
So I wouldn’t suspect the MLM industry as a whole. I would say, the MLM industry is kind of a focal point of all good and bad human qualities. Probably because it’s a people’s business.
Just like money brings out the best and the worst in humans. But it’s not the money’s fault.
I am glad that the mastermind group I am part of teaches 5 basic rules what a good MLM business should include. We are referring to them as the “5 pillars to success”
Thanks for sharing your insights.
Take care
Oliver
Hey Oliver,
I absolutely agree, that the MLM industry is a focal point for human qualities. The exciting part is that because it is a people’s business, it might prove to be much more responsive that other industries, to some systemic, human interventions.
You are so right about marketers needing to learn more skills. In our research, we identified at least 6 sets of new skills they need to develop. However, our findings suggest that it isn’t just the skills or even the number of skill sets that are the crux of the problem. The primary challenge is that these skills must be learned in a whirlwind of change (and stress) that occurs when people shift from being employees to becoming business owners.
We discovered a proven formula that explains what happens for people who are experiencing occupational change. It explains why so many become immobilized when they jump into network marketing, even though there is great excitement at first. I’d love to share more about that with you if you’re interested. You are rare in your willingness to deal with what is really going on. You and your master mind group are one powerful step ahead of the curve in discovering what can be done to address attrition.
So fun to find such a vibrant dialogue on the subject!
Warmest best,
Shayla