MLM Failure – why do so many network marketers fail or why do so few succeed? Approximately 97% of all network marketers that sign up as distributors fail according to the statistics out on the internet and MLM trainers love to quote this number. This is an incredibly high failure rate.
I have been an entrepreneur for over 20 years, and I have built four successful businesses ( in different sectors), so I was blown away by these statistics. If I am to mentor and coach my network marketing team to success – identifying, influencing and inspiring as a global leader, it is critical that I get to the bottom of this industry failure issue.
Putting together my five-year business plan, it never occurred to me that my team would have to replace 97 out of every 100 distributors that we recruit. This does not make for a very satisfactory business model. No venture capitalist would take a second’s look at such a proposition.
So do 97% really fail or are these statistics skewed because the only metrics that can be published and truly measured is the length of time that any distributor remains in a single company? This does not necessarily mean that they have left the industry but rather shifted allegiance.
If we take my own experience, I have been a distributor for over 12 different companies as part of my due diligence and industry research in order to make a stable, business decision that I can confidently share with others looking for strong leadership and a global entrepreneurial opportunity. The companies that I joined and left would all have measured my performance as failure and added me to the 97% failure list. Skewed, indeed. However, this was my way of exploring what factors counted when choosing a company to partner with in my mission to mentor thousands of entrepreneurs globally to success.
So, let’s shift gears for a moment and discuss what drives success in network marketing and why would some teams have a much higher retention rate than others? I have heard of retention rates as high as 75% – 80% of distributors over a five-year period ( no good measuring success over short time frames).
I think there are a few key reasons:
1. Strong team leadership
A team will only perform at the level of the leader’s performance. I know how key it is to lead from the front, no matter what the business or the sector. My team have always looked to my level of performance for theirs. If the leader is recruiting daily, driving trainings, motivating, and permanently excited, this action will rub off. I believe that the most important decision you must make when choosing a network marketing company, is the leader of the team and make sure that you are truly accessible to the person you have identified. If they are not accessible, they are not a true leader!
2. Unique consumable product
Every business depends upon strong product or service. Network marketing is no different. If a company has a unique, consumable product that customers will want to buy on an on-going basis regardless of the method of marketing, this is key to the success rate of your team. Therefore picking your company will be critical to your success rate.
3. Will the product survive technological advancements?
This means that the product is not subject to a rapidly evolving industry such as mobile communications. There may be great opportunities in this industry but competition is so tough due to the fast-paced developments. This has a great impact on your success rate as a network marketer.
4. Training
This is a crucial element to the success of any team. So many network marketers have never been an entrepreneur; they have no experience of the amount of work required to build any business and they have been led to believe that it is easy to make money in this home-based industry. You only have to look at all the palm trees on capture pages to know that people are fooled into believing that this is an easy path to riches.
5. Age and financial stability of company
Is the company debt-free and financially sound? How long has the company been in business? We all know that start-up companies are higher risk and higher reward. This will have an impact on the retention rate of the team.
In the end, your success will be due to your level of skills, fortitude and experience in network marketing and building teams. I am sure there are so many other reasons for success and failure in network marketing so please leave your comments!
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All the points you've made here on why people succeed are along the same lines as what I have witnessed in my 16 years in network marketing. You are spot on!
Eddie
And I am sure in 16 years you have seen thousands come and go, Eddie! Thanks for dropping by and I look forward to learning from you!
Hi Clare,
I totally agree. The number of 97% seems very high and strange from a business venture point of view. Why would I invest in something that has such a high potential of failure?
I believe, like Eddie, that your points are spot on. There seems to be a shift in the network marketing industry these days to be more of a profession rather than a back room side business that people do. I look forward to seeing where it goes.
Make it a great day!
God Bless,
-ed
I couldn't have said it better myself! The greatest tragedy in this industry is the mis-begotten idea that one must recruit relentlessly…to the exception of all else, It is , in my opinion, one of the significant contributing factors to the 90%+ churn rate. If more emphasis were paid to mentoring the 'newbies', developing true relationships (regardless of program, product or lineage) that number would be far different. It is, as Edward points out, the difference between being a professional net worker or a mediocre recruiter.That's a lesson I learned early on from my mentor, and has paid dividends throughout my 30 years in this industry.
Keep up the great work – you are a 'leader of leaders”!
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