82 Top Network Marketing Questions | MLM FAQ

MLM stands for multi level marketing. The terms are used interchangeably with network marketing and direct selling.

Nothing. The terms are used interchangeably.

No. 

A legitimate network marketing company earns the vast majority of its revenue from product sales. According to the Federal Trade Commission, this classifies it as a legitimate network marketing enterprise.

However, there are several reasons that folks confuse network marketing for pyramid schemes. You can learn more in this deep dive MLM article.

You might also be interested in this article where we discuss pyramid schemes in relation to network marketing in more detail.

Network marketing in its current form has been around for about 90 years. 

The first MLM company was California Vitamin Company which was started in 1934. In the 1940s, California Vitamin Company was rebranded as Nutrilite. In the late 1950s, Amway was born out of Nutrilite.

Some people argue that Southwestern Advantage was the first network marketing company. Founded in the 1800s, they didn’t really have a multi-tiered pay structure though they definitely used a direct selling strategy.

Absolutely. Network marketing is legal all across the world. 

There are, however, illegal Ponzi and pyramid schemes that operate under the disguise of network marketing. This has created some distrust in the general public in regards to network marketing.

If the company earns more than half of its revenue from distributors rather than customers who are not registered as distributors, then it is more than likely a pyramid scheme.

A pyramid scheme can be quite easily identified. If the company doesn’t sell any products or provide value to the marketplace, and it has a multi-tiered pay structure, it’s almost certainly a pyramid scheme.

Define quick.

While it is possible to earn life changing amounts of money in 5 years or less, you likely will make very little in your first year or two.

But if 5 years is “quick” to you, then yes, I suppose it is.

But it will certainly not be easy.

Of course. 

The marketing method certainly differs from the traditional corporate business model, but it’s as real as any other business. 

You earn income by providing folks with valuable products that are in demand.

That’s business.

The network marketing tips outlined in this article might give you some perspective on what it’ll take to make it in MLM vs traditional business.

Definitely. 

Unfortunately, most don’t make it.

Many people get started in network marketing with unrealistically high expectations. When they realize that they won’t make life-changing money easily or quickly, they tend to give up and quit.

But those who can stick with it and put in the work can certainly become rich.

Thousands of network marketing millionaires can attest to this.

If you would like to dive deeper into this question, you might wanna read this article.

Absolutely not.

Hundreds of thousands of people have become millionaires by starting brick and mortar businesses, profitable side hustles, and even working regular white and blue collar jobs.

It’s not necessarily about making a ton of money. Rather, it’s about doing the right things with the money that you do make.

I do believe however, that network marketing is the easiest and fastest way to become very wealthy.

Be sure to check out our article where we talk about how to become financially free.

• No income cap
• Personal growth
• Travel opportunities
• Low startup investment
• Time freedom
• Tax advantages
• Can be done part time
• Can be done on the internet
• Being your own boss
• Choose the people you work with
• Succeed by helping others
• No education, degrees, or experience necessary

You can go through our full list of network marketing benefits here.

• Poor reputation
• Will require you to grow a thick skin
• Income will be low initially
• If you don’t perform at all, you make zero money

Read more about the downsides of network marketing here.

It depends what your goals are.

If you want to be your own boss and you’ve found a network marketing company that sells products that you are passionate about, then that is the best opportunity for you. Why start your own company when you can plug into an existing one and reduce your risk?

But if you have an idea for a business that you’re confident will fill a hole in the market, then you should absolutely pursue that.

It is mypersonal belief that everyone should be building a network marketing business on the side, whether you already have a job or own another business.

The leverage is just too great an opportunity to ignore.

Yes.

If you truly put in the work for a solid 5 years, you could build a passive income stream that could last a lifetime and beyond.

This is why I think that no matter what you do for a living, do network marketing in addition to that.

Think of it as a part of your retirement plan.

Check out this article where we discuss the question: Is Network Marketing Worth It?

Yes.

The actions you need to take for success in MLM are quite simple. But do not mistake simple for easy.

If it were easy, everybody would be a network marketing millionaire, right?

That’s not how the world works.

You will need to create a personalized MLM business plan and then follow the plan no matter what happens.

No excuses.

Feel free to check out this article we wrote about network marketing “secrets”.

I see a lot of folks in the network marketing industry bashing jobs. They use the word “job” in almost a derogatory way.

I do not agree with this.

Look, you may have a job that you love. You may decide that even after you’re earning 6 figures and beyond in network marketing, you still want to keep your job.

And that’s OK!

Our economy has many jobs that need to be done.

But if you’re comparing the income potential of a job vs network marketing, there is simply no comparison.

By that metric, network marketing is better. Full stop.

Check out this article where we discuss the pros and cons between network marketing vs job.

Yes. 

In fact, I read a story a while back about a blind and deaf person from Florida who built a 6 figure income in network marketing.

There are barriers that you may face. But you can get around them if you’re willing. There are no gatekeepers in network marketing.

If you have a strong, winning mindset and you’re willing to do the hard work, you will be amazed by what you can achieve.

You may feel as though you’re the only person who struggles with introversion. But you’d be surpised at how many introverted people become fabulously successful in network marekting.

It’s all about strengthening your mindset, focusing on your goals, and becoming a progressively better person over time.

Using affirmations can have a profound positive impact on your mindset.

There are nearly 130 million network marketing distributors all across the globe. In 2020, the industry did nearly 180 billion in retail sales. 

I think it’s fair to say that network marketing is pretty popular all over the world.

Since 1971 when the world economy took their currencies off of the gold standard, wage growth has not kept up with inflation.

Perhaps you get a raise every year, but that money becomes worth less as each year goes by.

As life is becoming more and more difficult and household budgets are stretched to the max, people are looking for options to earn income on the side.

I believe this is where the popularity of network marketing comes from.

You can read more about how the economy has changed and how network marketing can help in this MLM deep dive article.

We think network marketing is a great way for a regular Joe or Jane to build a large sustainable income stream.

If done right, network marketing can provide an opportunity for you to earn from the efforts of many people instead of just your own.

This can provide long term financial stability and resilience. If for some reason you lose your job, your income goes away. But a large network marketing business built correctly will keep paying you even if you stop working on it in the future.

You may want to check out our full list of reasons why we recommend this business model to our readers.

Typically you will need to sign up through an existing distributor for a network marketing company.

You will earn a commission for each sale you make. You will also earn a small commission for each sale made by every member in your downline. Many companies also pay various bonuses depending on the performance of yourself and your team.

Read this article for a more in depth explanation of making money in MLM.

Absolutely not. This is a common misconception by folks that misunderstand network marketing and think that’s some type of Ponzi or pyramid scheme.

The reality is, you can earn more money than anyone in your upline… as long as you perform. If you generate more revenue, you will earn more money.

Potentially millions. There are thousands of network marketers all over the world who have become millionaires through network marketing.

But it’s important to realize that this is not the norm. In fact, the average network marketer doesn’t even earn enough income to ever quit their job.

Don’t let that stop you though!

You don’t wanna be just average after all, right?

Yes.

And I recommend you do so.

Don’t get started in network marketing and quit your day job prematurely. You will be putting way too much pressure on yourself, which will more than likely lead to failure and bitterness towards the MLM profession.

It’s not great. In fact, it’s downright dismal.

Less than 1% of MLM participants ever make a profit. I believe this is because of the low barrier to entry.

Because of the fact that you can get started with such a tiny financial investment, many people don’t take it that seriously.

There is a lack of commitment because you don’t have to make a huge financial sacrifice in order to get started.

It doesn’t matter. Any network marketing company worth their salt will not require you to carry your own inventory.

Your customers would simply log onto the online portal, place their order, and get it shipped straight to their address.

And you earn the commission.

If a network marketing company requires you to buy inventory, be very skeptical. It could be a scam.

It varies widely from company to company.

It can be as low as $20 or as high as a few thousand depending on the structure of the company you decide to join.

You will also need a few basic office tools such as a planner, computer and cell phone. For a detailed list of the required tools, check out our article on network marketing tools.

Preferably you want the company to be registered with the Direct Selling Association but not necessarily.

At least half of the company’s revenue should be derived from customers who are not registered as distributors.

But I can’t really get too specific because a lot of this depends on your own passion.

If you have a passion for energy, then perhaps Ambit Energy is a good choice for you. 

If you have a passion for real estate, then maybe eXp Realty. 

Love financial markets? Maybe IM Mastery Academy.

Health and wellness? Maybe Shaklee.

Physical fitness? Team Beachbody.

At the end of the day, you should have a passion for the products you are representing and ultimately selling. Without passion, you risk burnout and will likely quit your business prematurely.

You can check out our list of the top MLM companies in the industry.

No. It used to be the case before widespread use of the internet. But with modern technology, it’s simply not necessary.

You can stock inventory if you want to, but it’s certainly not necessary.

Legitimate network marketing produces revenue by selling products into the marketplace. Period.

By definition, that is not a pyramid scheme.

A pyramid scheme promises that you will earn money by bringing more folks into the organization but doesn’t actually provide value to the economy.

Not as many as you think.

Remember, the ultimate goal of network marketing is to create duplication within your team. You want your team to be able to duplicate what you do. So you need to be following and teaching a simple system that is possible for the average Joe or Jane to follow.

If you take a course to learn high pressure closing, you may be able to recruit a ton of people… but they will not be able to duplicate your process. 

They will not last in the business and you will be forced to constantly replace people in your team. And you will never earn good money in network marketing.

Instead, you need to recruit a few people per year and invest the effort to insure that they are able to do the same, and teach their own members to do the same.

If you can recruit an average of one person per month for a few years in a row, you will be amazed at how large your team will grow over time.

Be sure to check out this article on duplication to learn how it’s done.

Because it’s not easy.

It takes perseverance, patience, and the development of a few very specific skills. 

If it was easy, everyone would do it, right?

The most famous type of pyramid scheme is the Ponzi scheme. The most well-known Ponzi scheme of our generation was Bernie Madoff’s financial scheme.

Certainly not.

Network marketing pay structures are based on a pure results-based compensation model.

If you earn revenue for the company and are able to create duplication in your team, you will earn more than the very first person who ever joined the business but only recruited one person.

Network marketing is definitely not perfect, but it is the option for middle class folks to build a very lucrative business.

Unfortunately, a few bad actors have ruined it for all of us.

In the past few decades, there have been several high profile Ponzi and pyramid schemes that were cleverly disguised as network marketing.

When these organizations inevitably collapsed, they received a ton of bad press from the media. 

And for good reason.

Many innocent people were financially ruined and these predatory companies needed to be called out.

Unfortunately, our media is much better at shouting bad news from the rooftops than having intelligent and nuanced conversations.

They demonized the network marketing profession as a whole, resulting in widespread distrust in the business model.

Find the time.

If you are willing to sacrifice 3-5 years of your life and work hard on network marketing, you could create an incredible life of time freedom through network marketing.

Lack of time freedom is one of the reasons that you should consider network marketing.

Don’t let your reason become your excuse.

I think it could be.

But look…

If you’re going to school to be a doctor or engineer, your effort may be best spent on learning the skills you’re going to school for.

At least in the short term.

But if you’re a student and you feel you have the time and energy to start building a network marketing business on the side, it could be a great fit for you.

Spend some time really thinking about why it didn’t work previously.

Did you refuse to follow the system that you were taught?

Did you give up too soon?

Were you ridiculed and alienated by your friends and family?

Find out why it didn’t work before and make a real commitment to yourself that you will not repeat mistakes that you previously made.

If you truly believe in the business model and the products that you will be selling, you will get the money…one way or another.

If you don’t, then you won’t.

That’s great!

Many trained sales people struggle in network marketing because they feel as though they need to do all the selling.

In network marketing, you want others to do the work for you… in the long run.

It’s a recruiting and teaching business, not a sales business.

If you have extensive professional sales experience and you get started in network marketing, you will likely need to “unlearn” some of the sales skills you’ve developed.

If you’ve been recruited into a good network marketing organisation, you will likely recieve all the training that you need from your business leader.

Although there is a nearly limitless number of training resources available online, your best source of training will come from within the team you joined.

But there are other resources you can and should tap into so that you can take your business to the next level…

You can learn all about them in our article on network marketing training resources.

You may also be interested in checking out our list of the best network marketing books.

Direct marketing would have you sending out marketing and advertising materials directly to customers in the hopes that they will respond by going to the store and making a purchase.

In direct selling, you would be personally sharing and ultimately selling products directly to consumers. 

It depends on the company and what type of system is being implemented.

While door to door sales is largely a thing of the past, home parties are still widely used in network marketing.

Absolutely. 

Your government will view your network marketing career similar to an independent sales contractor.

Make sure to put aside some of your income throughout the year so that you won’t be caught flat-footed when tax time comes around.

Remember, tax time comes every single year.

I suppose you could…

But I strongly recommend against it.

You’ll be spreading yourself out way too thin.

One network marketing business done right will allow you to make millions of dollars over time… 

What more could you want??

If you try to build multiple companies at once, you will likely earn very little in each one, adding up to very little in total.

Put all your energy and focus into just one company. It’s all you need.

Yes.

There is the Direct Selling Association as well as the World Federation Of Direct Selling Associations. These resources can provide a lot of news, insight, and information on specific companies in the industry.

There are also many online communities such as Facebook groups or events like Network Marketing Pro that can provide a feeling of community and belonging as you’re building your business.

Ideally though, you should have these types of communities and accountability groups within your own company so that everyone can relate and help each other grow as people and business owners.

Massively. 

It is now more possible than ever to build a massive global team and connect with folks individually regardless of their geographical location.

We have incredible technology available to us and as network marketers, we should take full advantage of it.

While there isn’t really a way to know this for sure, there is very good reason to believe that the highest earner in network marketing is from Amway.

Dexter Yager, an old school Amway rep, has earned an estimated $460,000,000 from his network marketing business.

Feel free to check out our list of some of the most powerful women in network marketing.

The most successful people in network marketing have a lifelong desire to improve, grow as a person, and learn constantly.

The most successful people in network marketing are those that have put in the time and work. They have a genuine desire to bring people into the business and help them succeed. Personal income simply becomes a side benefit.

The most successful people are leaders.

Have a look at our list of network marketing success stories here.

I personally believe that there will be an explosion in network marketing in the coming years.

Because of globally rising energy prices and food price inflation, folks will be more motivated than ever to earn side income.

Not only that, but people got a taste of what it’s like to work from home during the early days of the COVID-19 lockdowns in 2020.

While most people hated being locked down (no duh!), they discovered that they kinda enjoyed working from home.

I believe we have no idea how much the world has changed after the pandemic especially the global financial system. And I also believe that network marketing will have a huge part to play.

Yes. 

Especially with modern technology and the explosion of video conferencing software, it is more possible now than ever before to build your business completely from the comfort of your home.

A candidate, also commonly called a prospect, is someone that you are attempting to sponsor (recruit) into your business.

Every MLM company will have a slightly different method that they will teach you to sponsor new reps into your team.

However, certain rules and processes apply universally to network marketing. You can read my full MLM recruiting guide here.

In network marketing, your sponsor is the person who brought you into the business. You will be placed directly underneath your sponsor in the pyramid-like hierarchical organization.

Your upline consists of all the folks that are above you in the hierarchical network marketing organization. For example, your sponsor’s sponsor is a part of your upline.

Your downline consists of all the people that are below you in the hierarchy and within the organization that you and your team have built. These are the folks that will drive your income.

Active members are the folks in your team that are actively building; making sales and sponsoring new reps.

Inactive members are those that are still on the team but have completely stopped performing.

There is no limit to the number of reps that you can sponsor. This is a big part of the reason that your income in network marketing doesn’t really have a cap.

Your income is purely based on your results over time.

There are 3 main categories of prospects:

• Hot market – Friends and family whom you know well
• Warm market – Folks that you have engaged with a little bit and established a relationship
• Cold market – Folks that don’t know you from Adam. Complete strangers.

The truth is, prospects are absolutely everywhere.

The leaders within your network marketing organization will teach you a system to find and recruit prospects.

You may also want to check out this detailed list on finding MLM prospects or this one on getting business leads.

You can also learn about some prospecting techniques here.

This is likely an excuse.

You know way more people than you think. You just need to plug into the system that your business leader teaches you.

You should also learn how to grow your personal network so that you can have an unlimited lifetime supply of people to talk to about your business.

Be sure to check out this article where we discuss how to earn money by networking.

The role of a distributor is to produce revenue for the company.

In network marketing, this is done by selling products and growing an organization by sponsoring reps into the business.

The best thing you can do is share your own awesome experiences with the products. Remember, you don’t necessarily need to sell thousands of products every single month.

No need to get too fancy because that will hurt duplication in your business.

Learn what duplication is here.

You need to strike a balance between the two because both are essential to your long term success in network marketing.

Selling and recruiting are BOTH necessary to earn residual in come in MLM.

Just use your best judgment. When you’re speaking to someone about your business, would they be better suited and/or more interested in your products or business opportunity?

Income producing activities include anything that directly leads to you making a sale or sponsoring a new rep.

It does not include education or self improvement. Those things can help, but they do not directly produce income.

Income producing activities include actively prospecting, making follow-up phone calls, reaching out to folks on social media, or creating a piece of marketing content such as a blog post or video.

All sorts. 

• Health and wellness
• Beauty
• Cleaning
• Financial services
• Education
• Insurance
• Energy
• Food
• Consumer goods

Your company can mail you a check. Most companies will also have an option to link your checking account so that you can accept direct deposit.

A compensation plan is the structure that your company uses to pay out commissions. 

Since you will be earning commissions from your own efforts plus the efforts of many other people, these compensation plans can be quite complex.

The Party Plan is a method of selling and sponsoring that is completely based on hosting events at a network marketer’s home.

Tupperware and Avon are a few examples of companies that use the Party Plan.

The Unilevel Plan allows you to earn from the volume of a predefined level of depth.

In the example above, you can earn commissions from the sales of 3 levels deep in your organization, although most MLM companies have more depth, typically around 6 or 7 levels deep.

The width of the organization you can build is unlimited, so this incentivizes constant recruiting forever.

Young Living and PM International both use the Unilevel Plan.

The Binary compensation plan consists of two legs, meaning you can build only two wide.

Any distributors you add after your first two will be added underneath one of your existing distributors.

Typically, whichever leg has earned less commissions in a given pay period is the one that you will get paid out. This incentivizes you to build out both legs rather than concentrating on only one.

Herbalife and Ambit Energy are a few examples of the Binary Plan.

The Forced Matrix compensation plan can come in various sizes: 3×3, 4×4, 7×7, 4×7 etc.

For example sake we will be talking about a 3×3 Forced Matrix as shown in the picture above. 

In this example, you can build to a maximum width of 3 people; so you would only ever have a maximum of 3 people directly underneath you in your downline.

You would also have a maximum depth of 3 levels. 

What if you continue to recruit more people after your “frontline” is filled up?

Well you would be able to place those people anywhere in your organization as you see fit. So if you have a distributor that’s struggling, you could do her a favor and add someone to her downline in order to boost her motivation for her business. 

IM Mastery Academy is an example of a company that uses a Forced Matrix Plan.

It really depends. 

All compensation plans have their downsides which is why most companies create their own unique plans, combining two or more of the most commonly used plans.

Personally, I like the Binary and Matrix plans. They allow for “spillover” which can produce a lot of excitement within the organization.

This is a really big question to answer. 

It really comes down to commitment. You need to understand that it’s not going to be easy. You are gonna want to quit. Trust me on that.

You will need to make a commitment to yourself that you will take the required action until you have the results that you want.

At the very least, give yourself one year. And don’t expect to earn good money in that year. Look at your first year as training or initiation.

You may want to check out my full guide to succeed in MLM here.

Another thing you should know is that learning from other successful people can be a great way to avoid making some mistakes and get a better idea for how to effectively move forward in your business. Here is a list of MLM leaders that I recommend.

It’s all about confidence and posture. 

You must expect that you are going to be accused of peddling “pyramid schemes”. It will take some time for you to develop enough confidence in your business that these accusations will simply not affect you.

That’s what it’s going to take.

Never try to convince anyone that your business is not a pyramid scheme. It’s an argument that nobody can win.

Instead, just say, ”Actually it’s network marketing. But it’s obviously not a good fit for you. That’s all good! If you know of anyone who would be interested, send them my way. Have a good one!”

Our article on network marketing scripts might be helpful to answer this question in-depth.

This will require marketing and copywriting experience. 

There’s no need for you to do this because it will wimpy not duplicate.

Instead, you should be using the tools and marketing materials that your company provides. 

This is another big question to answer. Too big for a Q and A page.

But the most important thing for you to do is that you need to take the actions that you want your team to take as we outlined in this MLM leadership guide.

Your team will be watching you. Whether you realize it or not, they are looking to you for leadership.

Follow the simple system that you were taught. When you produce awesome results and your team sees that you’re just following the simple system, many of them will be motivated by that because they will realize that they can do this, too.

Be sure to check out this guide to MLM team building.

If you’re thinking about naming your team, this article might be helpful, too.

• Eat healthy
• Exercise
• Read educational and personal development books
• Listen to podcasts that encourage you

If you take care of your body and mind, it will be much easier to stay motivated.

Also, I would encourage you to focus more on the actions than the income that your business is generating.

Your actions are directly in your control… the income will come with a lag. So don’t obsess over it.

You may also want to check out our list of inspiring network marketing quotes here. You can download the images and save them as your desktop background so you’ll get a motivational boost whenever you turn on your computer.

Take massive action immediately. Don’t wait until you think you’re “ready” and everything is perfectly in place.

Perfection does not exist. 

Don’t be afraid to make mistakes. 

You must fail your way forward.

This article on MLM success will give you over 50 tips and provide tangible action steps to create long term success in this business.

I. Create Content

This content can be in the form of articles, blog posts, YouTube videos, Twitter threads, Facebook posts etc.

The main objective is to provide a ton of value to your readers.

When your reader asks herself a question about network marketing, you want to be the first person who comes to her mind because of all the valuable content you’ve provided her online.

You’ve become a thought leader.

Oh and by the way, NEVER mention your company name online!

II. Build An Email List

You could offer some type of freebie to your content readers, like a free ebook, free weekly newsletter, free course etc.

If you’ve successfully built trust and become an authority figure in your readers’ mind, they will want your free gift.

The only way they can access it is to sign up to your email list.

III. Email Your List Regularly

After your reader joins your email list, you should continue providing value.

If the first thing you do after they join your list is to spam them with a business opportunity or product, they will immediately unsubscribe and you’ll never hear from them again.

But you have to make money, right?

So it’s OK to send out offers here and there, but do it sparingly.

I would say about 80% value and 20% offers is a healthy ratio.

Building a network marketing business on the internet is a big topic… check out this in-depth digital network marketing article for the step by step guide.

The most important thing you need to understand about recruiting on social media is this:

You need to attract folks to you, not force yourself onto them.

Don’t spam your company link all over your profiles. It will not work.

Check out this deep-dive article on using social media to build your MLM.