What Is Bad About MLM? 12 Bad Things About MLM

Is MLM good or bad?

If you’ve been a reader of mine for any amount of time, then you know that I am a big proponent of MLM or network marketing.

But there are some not-so-great things about this profession. Quite a few actually.

So today we are going to discuss what is bad about MLM.

Many network marketing blogs exist for one of two reasons:

• Bash the industry
• Paint a picture of sunshine and roses

I want to use this opportunity to steel-man the anti-MLM position. My hope is that this will prepare future network marketers for the rough times that will inevitably come as they’re building their MLM business.

The reality is, most people get into network marketing with unrealistically high expectations.

They’re told that it will be easy to make sales. It will be easy to recruit people. Because the business is a no-brainer.

I mean, who would turn down such an incredible opportunity?

Well, if this is the mindset you have when you start your network marketing career, you will be in for a very rude awakening.

You need to have realistic expectations so that you won’t get so discouraged with your business that you give up and quit prematurely.

To succeed in this business, you need to know what’s coming.

You will need a thick skin.

So that you can take the required actions UNTIL you have the results that you want.

Truth: the only way to fail is to quit.

What Is MLM?

MLM, also called multi level marketing or network marketing, is simply a different way of doing business.

Instead of paying millions of dollars to advertising agencies and big box retailers, network marketing companies pay commissions to independent distributors in order to distribute their products into the marketplace.

As a network marketer, you can earn money in two ways:

• Sell your products
• Build a team of distributors 

These are both necessary aspects of your business.

The real power of network marketing comes from recruiting folks into your own sales team. Not only will you earn commissions from sales made by your team members, but you can also earn from the teams built by your team members.

If you are able to effectively sell products, build a team, and teach your team to do the same, your organization will eventually hit critical mass…

This is where your team continues to grow and earn commissions for you without you putting in any more effort.

You could theoretically take a few months off, spend your time on the beach, and watch your income continue to grow.

I realize that this sounds like a pie in the sky dream.

While it can certainly become a reality if you take the right actions for an extended period of time, it will not be easy.

Don’t let anyone convince you that it will be.

If you are looking for a comprehensive guide to show you exactly what it will take to succeed in network marketing, read my full MLM guide here.

So let’s talk about the ugly sides of network marketing. What is bad about MLM? There are 12 main things I would like to highlight.

1. Most People Don’t Make Money In MLM

In an AARP study conducted in 2017, it was revealed that 75% of MLM participants either broke even or lost money.

Only 25% actually made a profit.

While that number may not sound that bad, the study also showed that of the 25% who made money, only 3% made over $25,000.

This means that less than 1% of people will ever make a full time income with network marketing. They will never replace their job with network marketing.

And that’s often the bill of goods that’s solid when recruiting for network marketing, right?

Most people start out imagining that they will get rich and make millions of dollars from the comfort of their home office, working in their pajamas.

It’s only after they get started that they learn how difficult the business actually is. Often, they are ridiculed by some people for getting involved with MLM.

This is something that you must be prepared for before you get started so that you won’t get too discouraged and quit out of frustration.

2. Unrealistic Expectations

We’ve touched on this already, but if you start your business believing that you will make life changing money in a matter of a few months, you will be devastated when you make zero profit in your first year.

This is a very common occurrence.

And you need to understand that it is normal to make no money during your first year. In fact, you’ll probably lose money.

Understanding this, are you still interested in joining a network marketing company?

Are you in it for the long haul?

You may have seen videos online that show network marketing professionals who make millions of dollars and live a dream lifestyle.

And many of us tend to think that they did it quickly and easily.

But you don’t see the years of struggle and hard work that they had to endure in order to get to where they are.

And unfortunately, many of the folks who recruit for MLMs are not clear and up front about this fact.

They think that it will turn people away and result in recruiting less people.

And the truth is, it probably will.

But that’s OK. You want quality people who are starting out with realistic expectations. They will stand a much better chance of sticking with this business for the long run.

3. Vulnerable People Attracted To MLM

Because of the way network marketing is often pitched, it tends to attract people who are financially vulnerable.

People who are not making a ton of money and hate their 9-5 job.

These are often people who are so desperate to quit their job that they will join a network marketing company even if it means taking a large financial risk.

And because of the low success rate in this business, many of the people who don’t make it tend to be lower class minorities.

And the media has a hay-day with it.

They make it appear as though MLM companies are deliberately targeting those who are in unstable financial positions.

In reality, it’s not typically the company’s fault.

It’s usually the distributors who are representing the company.

4. Alienation From Loved Ones

One of the things that tends to happen as a brand new network marketer is that you might start viewing your friends and family as targets.

You’re always looking for an opportunity to talk about your business and convince them to either buy a product or join your sales force.

The vast majority will invariably have no interest in your business, especially if they feel like they’re being pitched a bill of goods.

You’ll find yourself being surprised and frustrated that they’re not as excited about this opportunity as you are.

How can they not see the power of this business??

You imagined yourself recruiting folks on a weekly basis and when that doesn’t happen, you feel a sense of profound disappointment.

And desperation starts to kick in.

You may find that your loved ones start to avoid you. And when you’re around, they will make a conscious effort to avoid the topic of money and business.

Which results in you becoming pushy. 

Annoying even.

Do not let this happen to you!

If one of your contacts doesn’t accept your invitation to have a look at your business, then just drop it.

No means no.

Listen, you’re not trying to force anyone to join your business. You are simply sifting through the numbers to find the few who actually are interested. The ones who don’t need that much convincing.

Because if you manage to force someone into your business, they’re not gonna last anyway.

And it will hurt your personal relationships.

No business is worth that.

5. Too Much Rah Rah, Not Enough Training

Part of the reason that network marketing is often misrepresented is due to poor training. 

There tends to be a lot of focus on motivation. Getting distributors so emotionally hyped so as to drive them to recruit more people.

The rationale is that their excitement will rub off on the folks they are speaking to, which theoretically will encourage more people to join the business.

This is simplistic, short term thinking.

If you want long term success in network marketing, you need to recruit smart people who will stick with the business for the long term.

You want smart people who are motivated by their own desires and ambitions, not hyped up marketing and conferences.

6. Courses Are Often Expensive

Because of the vast number of people who are struggling in MLM, there are many internet marketers who sell extremely expensive training courses and coaching programs that claim to be able to help.

Some of these programs are priced at thousands, even hundreds of thousands of dollars.

It can be quite difficult to find a fairly priced training program that is thorough and well structured, especially on the internet.

When a struggling network marketer falls down the internet rabbit hole, things can get very difficult.

You may find yourself subscribing to 20 or 30 different email lists, just waiting for somebody to give you the elusive secret to succeed with network marketing.

The reality is, you just need to follow the training you’re given by your team leader in whatever company you’ve joined.

If you’re not getting the training you need, then find somebody within your organization who will.

Be very wary of buying any network marketing courses online.

7. No Base Salary

In network marketing, you do not receive any type of salary.

If you don’t perform and bring in revenue for the business, you will make no money.

This is not a job. 

Most people who get involved in network marketing have zero experience working for commissions. It’s a foreign concept and can make the first few years of the business very frustrating.

The truth is…

You will be way overworked and underpaid during the first few years of network marketing.

This is something that you will need to be prepared for mentally so that you don’t lose motivation and become too discouraged.

Don’t let anyone tell you that you will be able to replace your day job quickly.

Statistically, it’s just not gonna happen.

8. Products Tend to Be Over-priced

Many network marketing products will be much more expensive than comparable products that you might buy in your local retailer.

This is often due to MLM products being produced to a much higher standard than what you would find at Wal-Mart.

For example, I personally use vitamin supplements from an MLM company that conducts their own private clinical trials. They also invest millions in scientific research and have a number of scientists on staff.

This is the case with many MLM companies, which significantly increases prices.

But it’s not always the case…

There are a number of companies that purchase the rights for a product, rebrand it as their own, and then start selling it through network marketing.

This is shady and deceptive. Their prices are artificially inflated so they can pay higher commissions and attract more distributors.

This has done a lot of damage to the reputation of network marketing.

It’s important to do your due diligence and research before jumping into any network marketing opportunity.

9. Monthly Minimum Purchases

Many MLM companies require you to make a minimum purchase every single month in order to stay qualified to earn commissions.

This is usually referred to as an Autoship program.

They argue that you should be replacing products that you normally buy at your grocery store with the products from your MLM company.

After all, you should be using products from your own store rather than competitors, right?

And this does make sense to a certain degree.

But the fact that it’s usually a requirement to earn commissions is not a good look for the network marketing profession.

And some people who get started in network marketing may not be able to comfortably afford the high priced products. This means they’re making a real financial sacrifice by using these more expensive products month after month.

This can often lead to increased desperation and by extension, less effective sales and marketing practices.

10. Poor Reputation Worldwide

Network marketing has a very poor reputation all over the world.

In fact, many people who are involved in the industry tend to be embarrassed to admit it to their loved ones.

Which seems like an obvious detriment to their own MLM success.

It can also make it extremely difficult to convince people to join the business. 

When most people think of multi level marketing, they immediately conflate it with Ponzi or pyramid schemes.

And there are some very valid reasons why folks might do this…

11. Illegal Pyramid Schemes Disguised As MLM

Over the last few decades, there have been several illegal Ponzi and pyramid schemes operating under the disguise of legitimate network marketing. 

When these organizations inevitably collapsed, they received a lot of negative press from the media and policy makers. 

For good reason…

A lot of innocent and unsuspecting people got badly hurt and lost a ton of money.

The problem is, the media never made an effort to explain the difference between legitimate MLM companies and dangerous illegal pyramid schemes. 

Instead, they painted everything with a broad brush, leaving the general public confused and scared to join a business model that could potentially improve their finances.

So what’s the difference between a pyramid scheme and network marketing?

When you join a pyramid scheme, you simply pay for a spot in a pyramid shaped organization. There is no valuable product or service offered that the market would demand.

That’s the major distinction.

With network marketing, revenue is only generated when products are sold.

The mark of a good network marketing company is when people who are not involved in the business model buy and consume the products.

This tells you that there is a real demand for the products in the marketplace, and many people don’t care about the business model.

They simply want the products.

Look…

Network marketing is not actually that different from a traditional business. There are real products and services sold into the marketplace in exchange for hard earned money.

It’s simply a value for value exchange.

Goods and services (value) are sold in exchange for money (value).

The only difference is the method by which products are marketed and distributed into the real economy.

In the video below, top earner Ray Higdon does a pretty good of explaining what a pyramid scheme is why it doesn’t apply to network marketing.

What About The Pyramid Shape?

This is a valid question. How is network marketing legitimate when the organization takes on the shape of a pyramid?

Before we go any further, have a look at the corporate business structure:

Looks suspiciously like a pyramid scheme, doesn’t it?

As humans, we will always organize ourselves into hierarchies. It’s what allowed us to evolve into who we are today and climb to the very top of the food chain.

Human hierarchical organizations are completely unavoidable. You see them in:

• Friend circles
• Families
• Small business
• Large corporations
• Churches
• Sports
• Government

The difference between network marketing and the traditional corporate hierarchy is that it is inherently more fair.

If you were working in the mail room at a large corporation, you would never be able to earn more money than the CEO. 

Unless you were able to climb your way up the corporate ladder, displacing people all the way up, and taking the CEO’s job for yourself.

In MLM, it’s completely possible for you to earn more money than those who are above you in the organization.

If you make more sales and recruit more reps, you will earn more money.

12. Cult-like Atmosphere

We alluded to this already, but many network marketing companies put a lot of focus on rah-rah motivational tactics. 

This often results in the formation of a cult-like atmosphere within the company.

You might find yourself becoming too exuberant. 

Many network marketers start making unrealistic claims about the benefits of their products, or the income that their business generates.

They make it sound as though joining the business is the end-all-be-all. It will solve every single problem you could possibly have in your life.

Don’t fall into this trap.

Understand that this type of attitude will be a huge red flag to anyone you speak to about your business. 

In fact, I believe that this type of attitude is a huge contributor to many folks believing that network marketing is some type of scam.

If it sounds too good to be true, it usually is. 

So don’t be a part of the problem.

Instead, be the solution.

Is MLM Good Or Bad? | Conclusion

As I’m sure you know, I am a big fan of network marketing. I think it is an opportunity for regular middle class folks to build a very large income.

But just like with everything else in life, there are pros AND cons.

Nothing in life is perfect, especially when it comes to business and money.

So if someone tries to convince you that network marketing is completely perfect, do not believe them.

The truth is, you CAN be financially successful without network marketing. You just need some basic knowledge about personal finance, some tenacity, and a bit of discipline.

But if you decide to get involved in the MLM profession, you will need to be prepared for the negative aspects of the business so that you won’t be blind-sided and simply give up.

I believe that if you are mentally prepared for the rough times, you will be able to persevere and actually experience the massive benefits that an MLM business can provide…

IF you persevere and put in the work.

Overall, I do believe that everyone should think about getting involved in some type of network marketing business.

Even if it’s nothing more than a side hustle.

It can be a way to build a large income stream. And it can also force you to grow stronger and more resilient as a person.

For a full overview of what network marketing is and why it could be a good option for the crazy times we’re currently living in, read my full MLM analysis here.

You may also want to check out our MLM FAQ page.

Have you had any poor experiences with network marketing? What is bad about MLM in your own opinion?

If there’s anything I missed in today’s article, leave a comment below and I’ll get back to you as soon as I can.