Home » Network Marketing » No Long-term Residual Income in MLM!

No Long-term Residual Income in MLM!

No Long-term Residual Income in MLM!

Some of the information you are going to read was passed on to me by someone who has been in the industry for 11 1/2 years and has earned millions of dollars.  This information is going to contradict what you’ve been told by some old school and new school internet marketing gurus.  This particular person built his organization of over 5,000 distributors only to end up with 56 customers ordering product.  This type of loss has been validated by several other interviewed top earners in various MLM organizations.

What Happened?

The issue is not with the marketing methods.  Any method used will never bring you long-term residual income, period.  It has nothing to do with how many leads you get.  You could be a real pro at attracting leads. The MLM business model is flawed by design.  No matter how large your circle of influence is, you will fail to earn long-term residual income using the MLM business model. The biggest reason this model is flawed is that the products and services being sold are not competitive in the real marketplace AND they are not something the consumer has previously purchased.  The top MLM companies, who have reached billions of dollars have proven this by their failure to succeed in winning market share in the United States.

The Proof

Let’s take Amway as an example.  They did 12 million in sales, worldwide.  Amway is over 50 years old and they’re only doing 5% of their sales in the United States which comes to 600 million.  The other 95% comes from other countries. That’s 11.4 billion! So while Amway has made a lot of money, where is the success of the Amway distributor earning long-term residual income?  This is true of all the other MLM companies. They’re showing the same thing! Just a few hundred million in the United States. What’s happening is their escaping to other countries to keep the sales volume up. That’s why the smart internet marketers are leaving the industry in droves.  When is the last time you saw a MLM company earn 300 million sales in the US and then grow for the next three years?  And, where the majority of products being consumed is by the public and not by the people involved with the opportunity or the high entry fees paid by the people joining.  You can’t name one company who has done this inside the US.  Many people have done over 300 million but it’s outside the US and it’s all new volume not volume created by customers coming back.  The MLM’s are claiming residual income, but where is it?  How many  top earners have branched out into training?  How many of them are selling you training on lead generation and other networking techniques?  Think about it.  They’re still trying to sell you on the MLM model because they’re making money from it.  There is no real long-term residual income selling the types of products and services being offered in these MLM companies.

Real Long Term Residual Income

Real long-term residual income won’t come from selling $40 bottles of juices or expensive weight loss formulas where there is no real savings.  If you are selling these types of things you will eventually see your business implode.  You can have success in these companies for years, but we’re talking about long-term residual income.   The current business model is destined to fail.  Let’s analyze what is needed in order to have a business that gives you real long-term residual income.  After all, isn’t that why we all participate in this industry?

80/20 Principle

The 80/20 principle is a principle that cannot be broken by anyone, anywhere.  The world is made up of the 80/20 rule.  20% of people do something, while 80% of people don’t really do too much.  What makes our businesses work when 80% of people don’t do much?  It doesn’t matter if you’re in Amway, Herbalife, Scentsy, or others.  This is a numbers game. Numbers equal orders, orders equal residual income.  The question is, who is going to have the most numbers on the board.  The difference is what happens to people once they join your business? 80% of them will quit in almost all of the MLM businesses and become zero’s on your business report.  The 80%ers are your family, friends, people with no sales experience, and other people who just don’t do much.  The 80/20 rule needs to be applied to the network marketing industry differently than other industries if your goal is to create long-term residual income.   Take an ordinary sales type company like a real estate company or mortgage broker.

In a traditional company 20% produce the most sales volume and are doers and 80% don’t do too much, It’s about a few people producing a lot.   In a home based business it’s got to be about the 80%ers, even if the 80%ers all do a little.  The 80%ers need to be the ones creating the sales volume.  Not because they’re producing sales but from the consuming of the products and services month in and month out.

It’s the 20%ers that will bring the 80%ers on board but the long-term residual income will come from the month in and month out consumption of the 80%ers.  You can’t keep recruiting up expecting to find a bunch of 20%ers and not worry about the 80%ers.  This will never lead to long-term success.  It’s about having a lot of numbers on the board.  If the larger part of anyone’s business is the 80%ers, shouldn’t you find a business that the 80%ers will work?  Can work? Attrition is so high in most MLM companies because there wasn’t enough value in the product to keep the 80%ers on board.  A lot of the 80%ers leave the business because they expected to make money right away or at least in their first 30-90 days. When they don’t, they quit and at that point won’t even order any more product associated with the opportunity.  In the first place, they would never spend that much for that product and they probably wouldn’t have bought that product at all.  Even if they were products that the person was buying, they wouldn’t keep buying it for more than they would pay at the stores they’re already shopping in.  No matter your product, only 3 or 4 will have “life changing experiences” enough to keep them buying.  That’s not enough to give you long-term residual income.

It Comes Down To This

You can’t be changing people’s budgets and ask people to buy products they’ve never bought before at prices they wouldn’t pay long-term.  Or, ask them to switch services where there is no real big savings.  So having luxury over priced  items or services will never lead to long-term residual income, Period.  Shouldn’t you find a business that the 80%ers can do?  Which is not asking them to sell over priced items because we know they’re not capable.  Find a business where it doesn’t matter if the 80%ers are doing much selling as long as they’re consuming and buying.  I have learned that there are 12 elements that must be in place for a business to have success and produce long-term residual income.  Many top earners have learned this.  Wouldn’t it be nice to really have the time freedom and residual money you were promised when you got into this business?

12 Essential Elements

  1. The company should be in business a minimum of 5-10 yrs. Don’t join if they are on the “ground floor”.
  2. The company should be financially sound. Debt free.
  3. Strong management, not MLM guys who instill “fake it till you make it”.
  4. They should sell consumable products by everyone. Products people are already buying  not creating a new expense for someone.
  5. The products should be competitively priced.
  6. There should be a high monthly reorder rate.
  7. There should be a low personal production requirement.
  8. A low entry fee.
  9. Low attrition. People are sticking around.
  10. The company should still be growing because the demand is growing.
  11. No breakaway. People shouldn’t be penalized for bringing in someone better than you.
  12. No risk and safe for everyone. 100% money back guarantee. No one loses money. 80%erss can duplicate.

Would you be willing to invest your time, money, and reputation and join a company that’s missing even just one of these elements?  If you’re like me, you’re looking for a company you can call your “last one” not your “next one”.   I found such a company and it’s not in the MLM industry but it does pay you on multi levels and does give you long-term residual income.

A Few Facts

Remember that the top MLM companies are only doing 5 – 19% in the United States.  In my search for such a company, I found one that has done billions in sales and the majority (60%) are in the US!  In the last three years this company has had a net growth of 240 million dollars in one of the worst economic times!  This company has a 95% reorder rate!  If you’re interested in learning about this business model that I have found and other industry leaders have chosen, please fill out the form below and I will be in touch.  Have a great day! 


4 thoughts on “No Long-term Residual Income in MLM!

  1. Great content! Most people that join MLM don’t understand business. They enter a business opportunity with a consumer mentality. Most don’t set goals or don’t even know how to make $1000 in the company they join because of how compensation are written. People don’t ask business questions, they as ask consumer questions. That is why 98% fail in business. I enjoyed reading your article and look forward to reading more! 🙂

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