Multi-level marketing (MLM) is a $36 billion industry, but according to AARP, 73% of people who participate in MLMs make no money or lose money.
So what’s the appeal? Why do people keep coming back with such a high failure rate?
Today, Andy talks to Melissa Blevins from the Perfection Hangover about the two MLMs she took part in to make some extra money while staying at home with the kids and how she ended up losing money.
We talk about what MLMs are all about, Melissa’s personal experiences and her current side hustle (that has become more profitable for her).
What is an MLM?
MLM stands for “multi-level marketing”, and is sometimes called network marketing or a pyramid scheme. In those schemes, it’s the company at the top that makes all the money. Someone from the top recruits someone else, and they make money by adding you to their downline. This goes on until someone gets “burnt” and decides to quit the scheme.
Melissa first got into MLM because she wanted to work from home so she could be with her daughter. She couldn’t start a business because she had no money and no business idea. A friend then talked to her about an opportunity where she could make the big bucks selling makeup to others. And so the MLM journey started.
The important thing to keep into account here is that MLMs sell you on the lifestyle. They don’t sell you on the product. They tell you how you’ll have freedom and flexibility, and the fact that you can make it big. This is what captured Melissa’s attention, and that’s why she got recruited.
But as Melissa says, it was the worst financial mistake she ever made.
Melissa's Bad Experience with MLMs
Her first experience with an MLM was selling makeup for Mary Kay. In order to sell the makeup, you first need to buy the inventory. So she took out an unsecured loan of $2,000 and bought boxes of makeup.
After only making $300 at a party, she realized that this new venture wasn’t going anywhere. She didn’t care about makeup and she knew she had made a mistake by getting a loan. So she sold the product back to the company for a 50% discount and ended up paying off the rest of her loan on her own.
Related Interview: 14 Profitable Side Hustles Parents Can Do From Home
Her second experience with MLM was in 2014 when she moved to Illinois. She wanted to make new friends and be part of a community. She left her banking job and was staying at home with the kids. After some time she got bored and looked for ways to make an extra income to help support her family. This time, it was Beachbody Coaching. After talking to her sister, she went full-on and bought a challenge pack, a workout program, and a superfood shake.
This time, she really gave everything to the business. She did it all:
- Post embarrassing selfies
- Grow her social media
- Travel with members to the Beachbody Summit
She did it all, and yet, one year later she had made a total of $0.
Why? Because everything she earned, she would put back into the company. As she says, “you have to be the product of the product”, so she was also consuming bags of Shakeology and becoming healthy and fit in order to sell others into getting a beachbody.
One year later, she realized this was also not going anywhere. She left the Beachbody community and lost the team and the community. They turned their backs on her immediately. Another lesson learned from MLMs.
However, it’s not all bad news. Melissa learned a lot from her negative experiences with her MLMs … Stay away from anything resembling a pyramid scheme. She did eventually start her own business with a much more successful outcome.
What Side Hustle She Transitioned Into
Melissa is now a blogger and podcaster.
Where did it all start? In January 2018, she started writing and running a Youtube channel. She wanted to talk to women who struggled with perfectionism, who wanted to work from home and who also had been burnt out by an MLM.
When she started the blog, she knew this time it would be different. A blog is a long game – you need to consistently create content that helps people. So she set off to create content on both her blog and Youtube – a good content mix.
Although her first year was full of struggles and rough patches, she still managed to make $1,500 – a whole lot more than the $0 she had made with Beachbody. In 2019, she focused on SEO, Pinterest and producing high-quality content. She made a whopping $30,000!
How did she make the money? Blogging is an excellent side hustle to have because the overheads are incredibly low. In terms of income, she makes most of her money from ad revenues, affiliate marketing and a little bit of sponsored posts. It’s going so well for her that she just recently launched her podcast, and is now also going to start selling an e-course for budgeting.
The main difference between MLM and blogging? You need a lot of capital with MLM, whereas with blogging you hardly need any. Oh, and you don’t need to sell your friends on blogging.
Why Transparency and Authenticity is important With Online Businesses
Both Andy and Melissa have online businesses. How does someone working online keep their business authentic and transparent?
Melissa explains that it’s completely normal to start a business in order to make money. She wants to help people, but she also wants to make an income. It’s tricky to see who is authentic and who isn’t in the online world since those who work in the MLM space are also influencers who use SEO and social media marketing.
Melissa says transparency starts with staying true to who you are and keeping your values. You don’t need to say “yes” to every single deal. An example: someone approached her for a link in one of her blog posts to recommend an MLM scheme and was willing to pay $1,000. She said “no” because MLM does not align with her values.
Related Interview: How to Make $10,000 Per Month Working From Home as a Writer – with Eric Rosenberg
The truth is, it’s always better to be honest and transparent and do what you truly believe in. People really can see through a mask, and as online content creators, she feels she has a responsibility to people who read her content.
Melissa got burnt from two MLM schemes, but in the long run, she learned a lot and was eventually able to kickstart a real business online. She tells others who may be in an MLM scheme to consider stepping away and redirecting their efforts into something they are truly passionate about.
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Have you ever tried an MLM? What was your experience like?
Please let us know in the comments below.
My first job out of college was managing a country department for a medium-sized MLM. The company was full of good and kind people doing their best to market and sell generally good products. I have nothing bad to ever say about the people involved in MLMs.
Given my experience, though, I tell people I would never ever be involved in an MLM again, no matter how good the product. In spite of arguing that the prices are reasonable because they cut out the middleman (wholesalers), the reality is the prices are sky high in order to attract, recruit and retain top-level MLM professionals who bring hundreds or thousands of downline devotes with them when they switch companies. I would venture to say that 99% of those who make a comfortable income in any MLM must be among the first 500 to sign up for the business and then hope its product is good enough to catch on.
Even though MLMs are not legally pyramid schemes because they sell a retail product, they many times function the same since few people will ever pay the sky-high retail prices for the products. If you have to focus on recruiting to earn money rather than selling a product, please accept the reality check that it’s not a healthy business for all involved.
Avoid the hype and instead join a group of like-minded individuals focused on building blogs, YouTube channels, service businesses, or other side gigs that don’t require you to purchase the mother company’s packages every month.
That makes a lot of sense Todd. Early adopters take a lot of the risk so they should reap the most reward in my opinion. It all comes down to passion around your product or service, right? If you’re REALLY into it, then work doesn’t feel like work. Hopefully you’re making money with that work though.