Home » Business » Network Marketing

How To Make Money In MLM: Do The Math

Dec 25, 2007
MLM, or network marketing, is still one of the best business opportunities available, hands down. Someone with very little money and education can generate a 6 or even +7-figure income, if they know what they're doing. Unfortunately, most have no clue and buy into the hype of quickly making Millions by simply recruiting 3 who find 3. These numbers simply don't work that way.

So, let's make sure we're on the same page together.

I'll start with the bad news.

Statistically, you have a 99% chance of failing to make money in MLM and network marketing. Less than 2% ever earn more than an average of $110 per year, while shelling out thousands of dollars in credit card debt on product samples, fliers, CD's, DVD's, company web sites, traveling to conferences, etc.

Only the top 1% ever earn enough to actually quit their jobs and survive. And, while everybody gets excited talking about how they're going to be making 7 and 8-figure incomes, only the top .8% ever reach these levels (yes, that's point eight percent).

By law, MLM companies have to disclose this information to you now, but these numbers don't change much from one MLM company to the next.

Despite these odds, making 6-figures your first year is, actually, very realistic.

While there are many components to successfully marketing your business, you must first step back and look at the simple mathematics of building a downline that will create the level of income you desire in a realistic timeframe to see if it's even feasible for you based on your marketing abilities.

Let's say you believe you can beat the odds. After all, everyone knows statistics can easily be manipulated to prove anything. Besides, you're not going to allow yourself to fail.

Good for you!

Then, let's run the numbers.

Most people would like to retire with at least $1 Million annual income. So, we'll use $1 Million to keep things simple and conservative. If you want, say, $2 Million, then just double everything here.

Many MLM companies like to say you can retire in about 5 years of working hard. I agree ...if you know what you're doing and are in the top .8% (that's point eight).

The math gets a little sticky here because products and services vary widely from one MLM company to the next, as well as the pricing, pay plans, bonuses, etc. However, using a "loose" industry average, each person typically earns from around $15 to $40 in monthly residual income from each distributor in their downline. You may plug in a number that you think fits your pay plan best.

For our example, we'll just use $40 per month because it's on the high end (to try to make things look good).

So, for each distributor in your downline, we'll say you will earn an average of $40 per month, every month, forever and ever (even though this is never reality, but we're being super optimistic).

To earn $1 Million a year, you must have about 2085 distributors in your downline. (Of course, if you want $2 Million, go ahead and double it, and so forth.)

If you want to retire in 5 years, you must recruit around 417 new people per year, or about 8 new people per week.

You must recruit 1 new person a day, every single day, (and 2 on Saturdays) for the next 5 years, 365 days a year, with no vacation, no time off, no breaks, nadda.

And, that's assuming 100% of the people that come in never drop out (considering the "real" average drop-out rate is somewhere around 50%, this is completely impossible ...but, remember, we're being super optimistic here).

Even if 100% of every person you talked to signed up (which will never happen) and paid in full, and ordered every month, forever and ever, and never quit...

...is it even possible to recruit 1 new person every single day using "warm-marketing" techniques of talking to people in person or dragging them to your home parties or hotel meetings?

Plus, realistically, you'll probably have to talk to at least 10 people to get 1 person to say yes and sign up... every single day for the next 5 years.

Not to mention, since the average drop-out rate is around 50%, for every 1 that drops out, you'll have to recruit 2.

Therefore, you must give a presentation to at least 20 new people ...every single DAY... for the next 5 years to barely hit your minimum goal of $1 Million annual income.

Is this even possible? In 10 years? 20...?

Even on the 'super optimistic' high end?

Now, you're probably sharp enough to think, "But, wait a minute, Mike. What about my downline recruiting? Won't I come across some superstars with those numbers?

Good thinking, and, yes, you might get lucky to find a real superstar. However, there's only one in about 1250 people, statistically. So, you're going to have to recruit 1250 people before you get lucky to find your superstar.

'Hope' and 'might' and 'luck' are not sound ways to create a business model and base the rest of your financial life (and retirement).

You need to make sure that the business model you're working is something you can actually do and leverage a skilled mentor or trainer who can teach you how to put the numbers in your favor.

Doing the math when joining an MLM company will help you get a clearer perspective on exactly how many people you need to bring in to achieve your goal. Then, you can set your sights on a game plan to reach that goal in a realistic time.

Most never do this, and, probably nobody in your MLM company has illustrated this to you before now.

Nevertheless, lots of people are making great incomes using this business model. If you're not, you need to find someone in this industry who can train you how to put these numbers in your favor.

Here's to your success... in numbers.
About the Author
Mike Lewitz is a certified International Marketer who teaches marketing to an international organization of over 6000 entrepreneurs in 33 countries who come from all walks of life and market hundreds of different products and services, including people in MLM and Network Marketing businesses.

You can learn more about Mike Lewitz and how to grow your MLM business at his web site at:
http://www.mlmultrasecrets.com
Rating:
Please Rate:
(Average: Not rated)
Views: 189
Print Email Report Share
Article Categories