MLM: Research, Risk and Rewards
More than 20 million adults across the country are current or former participants in multilevel marketing organizations (MLM). This $36 billion industry represents the commission-based sales of a variety of products and services.
Most people who join MLMs do so with the hopes of earning extra money or achieving financial freedom. While some achieve these goals, many do not.
AARP Foundation has released new research exploring the mindset, expectations, and experiences of MLM participants. Download an executive summary of the report, “Multilevel Marketing: The Research, Risks and Rewards,” here.
There are several names for multilevel marketing, including direct marketing, network marketing, referral marketing, direct sales and consumer direct marketing. In a typical MLM, an individual seller earns commissions in two ways: (1) from direct sales and (2) from sales generated by others recruited by the seller. The seller’s recruits may have recruits of their own, and the original seller receives commissions from those sales as well. Download AARP Foundation’s toolkit, Multilevel Marketing: The Research, Rewards and Rewards, to learn more about MLMs and decide whether one is right for you.
In 2017, AARP Foundation set out to understand the mindset, expectations and experiences of MLM participants. The study revealed that nearly all participants join in hopes of earning supplemental income while working part-time. Yet only one-quarter of participants make a profit — and of those, 53% make less than $5,000.
These findings call into question a promise often made by MLM companies: that participants can make significant income working part-time. It’s crucial to do your own fact-finding when considering whether an MLM opportunity is right for you.
To learn more, download the full research report, MLM Marketing: The Research, Rewards and Risks, here.
Multilevel Marketing Research: The Breakdown
Despite its popularity, AARP Foundation research revealed two-thirds of MLM participants said knowing what they know now, they would not join the same MLM company again. Around the same amount said they would not join any MLM organization again. Here are some other important statistics:
Most MLM participants are women (60%) and have no experience in commission-based sales (75%). More MLM participants attended or graduated from college (66%) compared to those who were never involved (60%). Download the full infographic.
While multiple reasons were given, 91% said at least one reason they joined was to make money, either from the sale of products and services or by recruiting others into the organization. Download the full infographic.
Though MLMs are a source for extra money, the majority (73%) who joined reported that they either lost money (47%) or broke even (27%) during their participation. Download the full infograhic.
Multilevel Marketing: Explore MLM Aware Toolkit
Most (65%) MLM participants reported that knowing what they know now, they would not join the same MLM company again. The most common reasons for leaving? Participants found it awkward to pitch to family and friends (39%), were not making as much money as expected (36%) and did not like having to sell all the time (35%).
Are you considering an MLM opportunity? Doing your own research is a critical step that can save you time and money in the future. Check out the tools below to help you determine whether or not the opportunity is right for you.