The Truth about "Direct Sales" - Why Direct Sales Is More Profitable Than "MLM"

After many years of marketing online I have learned one thing. There are businesses for the 95% of the world and there are businesses for the 5%. The majority of the businesses online target the 95%. These businesses include MLMs, affiliate marketing, HYIPs, gifting programs, and many other spin-offs. The reason these businesses are so popular is they require very little startup money (usually under $300) and they preach that you can make an extra $1000-$5000 per month with little effort. Most people love these businesses because all they want in life is an extra couple bucks every month so they can take the kids to Disneyland. The sad truth is that these businesses have the same success rate as any other business. About 5% will make about 95% of the money. An MLM will traditionally take about 5 years of exhausting effort to attain a 6-figure income. The average person in an MLM makes less than $10 per week. The scarier thing is that 1 in 1000 makes more than $100,000 per year. Does this sound like something that is easy to succeed in? I met a top producer in an MLM not too long ago whose team was generating $300,000 per month in sales and his residual income was only $12,000. The point is that these types of businesses rarely produce much profit. Buyers end up jumping from one deal to another in search of the “next big thing.”

Then there are the businesses for the 5% of the population. These are the direct sales businesses. These companies attract individuals that are traditionally more successful in their current occupation. They have income goals in the neighborhood of $100,000-$500,000. These individuals are looking to create more time freedom to be with family. They are also looking to create enough passive income so they never have to work again. Direct sales appeal to this group because of the larger upfront commissions. Direct Sales companies usually have 3 products with upfront commissions of $1000, $5000, and $8000. The good companies also have a residual income portion in the comp plan that allows you to build your customer base once and then profit forever. These businesses usually cost about $2000 to get started and require the individual to learn about marketing, communication, and motivating a group. That is why they attract the smarter individuals. Smart people know it takes money, effort, and education to make a business succeed. Top producers in direct sales can earn as much as $1,000,000 in their first year due to the large upfront commissions.

If you are looking to start an online business and you are debating MLM versus Direct Sales you must weigh these statistics. The average MLM customer buys products for 60 days. How much money does that pay you? The minimum commission in Direct Sales is usually $1000. How many months of MLM purchases would that take? The average MLM associate makes less than $40 per month. The average Direct Sales rep makes about $30,000 per year. It is a fairly dramatic difference. The last thing to consider is the level of commitment you will encounter. It is easy to walk away from a $300 investment in a business. People treat it with about as much respect as a night at the bar. An individual who spends $1500, $8000, or $13000 is going to be much more committed to the success of their business. There is more at stake. This will result in much more intelligent conversations for you on a day to day basis.

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