If you’re a mom … or a living, breathing human with a social media account … you probably know someone who has found an amazing, life-changing product that you need to buy, like, now.
That’s cool. I always need more buttery soft leggings, epic mascara, essential oils to cure all of my ailments, smudge-proof lipstick, miracle eye cream, blingin’ jewelry, indestructible manicures, or whatever it might be. And as long as you aren’t blasting my face all day with obnoxious ads and cheesy sales pitches, I’m happy to support you #bossbabes when I can.
But then the follow-up ask comes… Do you want to join my team?
Sometimes the answer is easy: No.
Practice saying it with me so you’re ready when the time comes.
No. No, thank you. Good luck with your venture, but not at this time. Nope. No way. Lol, no.
But then… sometimes… you find a product you DO really love and a company that sounds pretty rockin’, a team leader you’d like to learn from, a discount you just can’t pass up, and the opportunity to bring in a little side money.
That’s when the answer may not be so easy. That’s when it’s time to take a deep breath, step away from the life-changing OMG this is amazing product, and do a little thinking.
I’ve worked in direct sales for a several years now, and I’ve seen a lot of pros and cons to the business structure. I am proud of the business I’m able to run because of these MLM companies… but I also know that (despite what you may hear from your local #goaldigger), it’s not necessarily the right move for everyone, so I’m here to tell it to you straight if you’re considering jumping on the direct sales train.
So before we get too far, let’s start with a little background.
What is an MLM? Known as multi-level marketing, network marketing, direct sales, whatever you want to call it… this business model relies on individuals acting as the “middle man” between the company and the customer. Reps (or consultants, guides, distributors, etc.) market to their network, complete sales, provide customer service, and help the company expand by recruiting others to do the same. In turn, they share in the profits of sales and commission from their recruits’ sales.
So is this a pyramid scheme? Honestly, that can get a little fuzzy. The bottom line answer is “not really.”
Most MLMs offer some tangible product and encourage their consultants to build a business around selling this item at a profit. They can also earn income from recruiting and training new members, but this acts as a bonus rather than the sole purpose of the organization.
“Pyramid schemes,” on the other hand, technically have more to do with building a team of individuals who will invest in the company with no real end product or service to provide. Income is not made through true sales–only recruitment. These are illegal in the USA, and while some MLM companies have undergone government regulation and legal battles to defend their legitimacy, most of the companies you see scrolling through your FB feed are offering a real product or service and are therefore in the clear.
If you’re concerned a “business opportunity” may be a scam, however, look for these red flags from The Balance:
- No or low-quality product or service
- Outrageous and unfounded product claims
- High-pressure sales tactics
- Pressure to “buy in” and invest heavily in stock or merchandise
- Poor company communication
- Expensive on-going training or other required business items
- Deceptive advertising practices
- Cryptic “job interview”
- Leaves you with an unsettled feelng
Is this a new fad? Not at all. While social media has given us easy access to an audience and made network marketing (sometimes painfully) prevalent, MLMs have been a thing for moms across the USA since the ’50s brought us Tupperware parties.
And you know what?
It was actually a pretty revolutionary move in women’s rights.
Ladies running businesses and earning their own side income, channeling the buying power of other women, equipping new recruits to do the same… all in a time when societal expectations left women without a lot of business options. Definitely an awesome #girlpower concept at the very least. Check out this PBS documentary on the Tupperware revolution to dig a little deeper into their original #girlboss movement.
And that brings us to the big question: Is joining a direct sales company right for you?
Full-time income with part-time hours? Work from home and cuddle your babies all day? Easy money to relieve your family’s financial burdens?
Sounds like a sweet deal! Sign me up!!
Well, not surprisingly, it may not be as simple as all that.
The statistical truth is that if you are joining an MLM to build your family fortune, your odds aren’t good.
According to a study published by the Federal Trade Commission, 99% of women who enter direct sales lose money. In fact, the report uses some pretty harsh language:
Failure and loss rates for MLMs are not comparable with legitimate small businesses, which have been found to be profitable for 39% over the lifetime of the business; whereas less than 1% of MLM participants profit. MLM makes even gambling look like a safe bet in comparison.
Eek. And that’s not to mention the time and emotional energy spent, and the “crushing debt and psychological toll” that a truly unsuccessful MLM experience can cause.
Let’s take a moment to pause here and reflect.
I think it is important that we who are involved in direct sales are absolutely transparent about the above realities.
Maybe you are working your #hustle and #takingittothebank #becauseofinsertcompanyhere … but even so, the truth is more like #resultsnottypical, and we are doing a disservice to other women who are honestly seeking a source of income for their families if we are not upfront about that.
So let’s just agree that if you are in the “desperately need cash now” or “hoping to make millions by tomorrow” camp, the answer to our big “should I join?” question is a pretty resounding “no.”
And yet despite the numbers, an overview from the Direct Selling Association states that there were 20.5 MILLION people involved with a direct sales company in the USA in 2016.
That’s a lot of ladies (and fellas–about 25% for what its worth) investing in something that, according to the numbers, is not noticeably profitable across the board.
So while MLMs may not be the quick road to fame and fortune you’ve been promised, there are clearly plenty of people who have said “yes,” so what the deal? While every situation is unique, based on my experience as a customer, consultant, and general observer of the world, here are a few scenarios in which you might and might not want to consider joining a direct sales team.
If this sounds like you, joining your favorite company might be right for you:
- You L-O-V-E the product and know you’ll be ordering a lot for yourself. Of the 20.5 million consultants mentioned above, 75% considered themselves “discount customers,” essentially like joining a wholesale club to get a lower rate on a product they would be purchasing for themselves anyway. You may not necessarily make money this way, but you’re getting what you want out of it–that amazing, wonderful “whatever it is” that you love.
- You have some creative energy to channel. There are so many fun routes to take with branding and marketing your business and a ton of fun and easy tech tools for adding your own creative touch to your sales. I really enjoy this end of running my MLM business and find it to be a pleasant creative outlet.
- You want to tackle some new skills. I’ve learned SO much from my involvement in direct sales–business wisdom that I’ve applied to my local business, practical and life skills I’ve gotten to develop along the way, personal growth from working closely with other women I admire… things I’m truly glad I’ve had the opportunity to learn and experience in a season of life when I needed some new and different challenges.
- You are looking for a place to connect. Aside from the product discount, the biggest reason women join or stay with direct sales is the opportunity to form relationships, both with their customers and their sales team. Each company and team will have it’s own vibe, so find somewhere you really click with and go make some new besties!
On the other hand, if you fall into these categories, joining an MLM may not be in your best interest:
- You need cash now and your family is depending on a quick return on your investment. If the idea of not recouping any investment you’re thinking about making causes you anxiety… just say no.
- You have an unhealthy tendency towards gambling or hoarding. These companies know that consultants are their #1 customers. If you think you might find yourself spending more than you intend, either because you can’t pass up a great deal, you tend to get caught up in the excitement of chance-taking with your investments, or you just can’t say no to all the wonderful things, it’s best to keep your distance and remain a loyal customer.
- You don’t really love the product. No one likes a fake salesperson, and trust me, it will show. Plus, there’s always the chance that you could end up with a case of leftover “whatever it is,” so you should probably be okay with using it for the rest of your life.
- Your minimum sales requirement is much higher than you would spend on your personal purchases. Really dig deep into the requirements beyond any initial joining fee or investment and make sure that keeping up with your sales will not create unwanted stress in your life. In some cases, it’s better to forgo the consultant discount and pay full price rather than take on unnecessary pressure.
- You expect your friends and family to order a lot. Believe me, your friends are inundated with advertising and probably already know three people who are selling the same thing you are. If you’re expecting them to bust down your door to get a crate of your goods every week, you might find yourself a little disappointed. If you want to really run a business, you will have to take the time to build your client base by finding customers who truly appreciate your product and your style of customer service.
- You don’t really have time to do the job. To run your MLM as a business, you have to actually do the business part–sales, customer service, shipping, returns… it’s all you!
- You saw someone else’s success and want to bring in the dough too. Are people successful with MLMs? Sure! Are all people successful? No way. Success stories are wonderful and inspirational… but incredibly difficult to replicate. It is great to dream big, but know that no success is guaranteed.
If you are considering joining an MLM, take some time to truly consider what the best and worst case scenarios would look like in your situation. For example…
Best case scenario: I sell a ton of stuff and make all of my friends happy with this amazing product while earning enough money to quit my job, retire my husband, and buy a lifetime supply of fancy cheeses.
Worst case scenario: I don’t make any money, never regain my investment, and am stuck with a closet full of this stuff I once thought was super cool.
Make sure you’d be okay with the outcome either way… because one of those scenarios is more likely than the other (just to help you keep your expectations realistic).
Love them or hate them, MLMs are not going away any time soon and consumers who may be considering a new venture have a right to be informed about the risks, challenges, and actual success rate before making potentially risky business decisions.
On the other hand, joining a direct sales team can be a fun outlet for growth and creativity and a great way to stockpile your favorite whatever.
Ultimately, the decision is yours. Just be sure to send some of those sweet leggingsmakeupjewelrycandlesbagsskincareoilssupplementsshakeswrapscleaningclothswhatever my way if you sign up.