Fact: A minimum of 995 out of every 1,000 MLM-ers will LOSE money in their MLM of choice.

Multi Level Marketing and Network Marketing explained

Is there really

"Outstanding Growth Potential"

for MLM ?

Is there really a "Million $$$ Income" to be had?

Study these telling World Figures...

A Perspective on MLM Sales Trends

The "World Federation of Direct Selling Association" (WFDSA), has published the worldwide sales figures for its member companies for the years 1991 to 2001, on its website. [See graph below]. Note that since the year 1999 there has been a marked decline in the collective gross turnover achieved. (A truly revealing aspect of these figures is that they clearly indicate that when more people join MLM, the trend is that average income drops. Turnover goes up, company profits go up, but average distributor income drops - when recruiting increases).

Why do MLMs and their successful self employed dealers so often claim to have an "outstanding growth potential", in the face of actual figures that tell a completely different story? Could it be that they manipulate the statistics to suit themselves?

Such definitely appears to be the case. In recent years, even insiders are accusing the WFDSA of including turnover of non-member companies in order to minimise the negative results reflected above.

Quotation from the German magazine "Network Press", issue 40, page 62:

"For the first time in the long history of direct selling, the World Federation of Direct Selling Association (WFDSA) has had to announce a downturn in the collective turnover for their organisation's worldwide member companies. It has left such a bitter taste that they have tried to whitewash the figures!"

"If WFDSA hadn't added the turnover of 'non-member companies', a massive downturn would have been seen."

"Without this statistical manipulation, the member companies would have had to declare a worldwide reduction in turnover of more than $10 billion."

But why "first-time"? Look again at the graph....

The FIRST downturn in turnover took place in 2000. The downturn in 2001 was actually the SECOND consecutive downturn! And there is little reason to suspect that this trend has improved.

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Distributor Growth

The WFDSA has also published the worldwide number of direct selling distributors for the years 1988 to 2001. [See Fig 2 below]

Fig 2 shows a significant improvement in the number of networking distributors. In 2001, the actual increase is more than 15 percent. In real terms, an increase of more than 5 million networkers world wide. Just in the year 2001. An impressive result indeed!

Things should have been looking up in MLM shouldn't they? This was really positive growth. Wouldn't you say?

The question is, if this was a positive signal of any kind, then for whom was it a positive signal? The MLM companies most certainly had good reason to celebrate of course, because every MLM-newbie generates an entry business volume income for the company, money for the recruiter, and money for the recruiter's upline members. What a fantastic result!

But is this really a positive signal for each individual MLM distributor?

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Growth in Distributor Earnings?

Let's now have a look at the development of the average MLM distributor's business volume during these years by dividing the yearly turnover by the number of networkers for the same year. [See Fig. 3 below]

It's not surprising that when the number of distributors goes up and the amount of turn-over goes down, we have the individual distributors earning fewer and fewer dollars!!

Quotation from the German magazine "Network Press", issue 40, page 62:

"Parallel to the turnover breakdown the amount of alleged world-wide active distributors continuously rose, which means nothing else than that the per head income conversions of the individual MLMers sank dramatically. This could also be an indication for the rising operational presence of network firms because the traditional direct sale normally works with a lower number of partners and therefore generates higher conversions per head."

When taking into account that income per head within traditional direct sales is higher because of the fewer number of dealers required per company to achieve their turnover, it's clear that the per head turnover (and consequent income) figures for MLM people must be a lot worse than shown above. This is In spite of the fact that MLM's promote themselves as the superior marketing concept in comparision with direct selling.

Please note the fact that the average turnover related income per head of MLMers has constantly fallen since 1992. It's very likely that your "sponsors", if they know anything about these figures, will present them a bit differently from the plain truth represented above. That's if they bother to tell you anything at all about them. Lies of omission are easier to tell than bald-faced lies.

So ask! Find out if they know. If they claim they do know, find out exactly what it is they think they know. The truth is, most distributors never bother to find out anything about these facts. Does your sponsor really know? If so, how much has he voluntarily told you? And in light of the above, how accurate is what he told you?

If he hasn't told you, the fact is he is either ignorant of this vital data, or deliberately duping you with lies of omission. How can you trust in someone who is ignorant of even the basics of his business - or someone who consciously tells you, his contractual partner, false information?

Anyway the WFDSA doesn't publish the average annual turnover or related income per networker! Can you imagine why...?

The inevitable conclusion...

Even though income figures for individual distributors are progressively dropping, recruiting rates are rising. It seems from the above that everyone is losing money. Not so. The truth is, the majority of the people at the top DON'T lose money in this circumstance. The company and the upper echelon of distributors are able to maintain their income from the increased recruiting activity of new distributors who consequently burn out their resources and fade into oblivion.

This is exactly why the business of MLM should be illegal. MLM never has, and never will, present a fair opportunity for the average new distributor to do anything more than contribute his/her own money to the welfare of the company and higher up distributors. History proves it.

This document is an English language translation of part of an original document in German. The original is authored by, and is copyright to, Karl-Heinz Kreiter. The original German language page may be viewed at MLM-Beobachter

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