MLM Analyst

I’ve recently suggested there might be better ways of measuring the appeal of a network marketing company & their opportunity. Most new network marketing members I know make the decision to join a particular company based on emotion, typically fueled by questionable information. But when a distributor is looking for a new opportunity, shouldn’t they be most interested in a company’s momentum – their recent and ongoing growth?

Why Growth & Momentum?

If a distributor joins with a company whose market share is shrinking, they’ll find it increasingly difficult to win team members, make sales and otherwise succeed.

So, I decided to look at growth & momentum. Since no network marketing companies regularly publish audited revenue numbers, we can’t use those. Plus, revenue lags momentum in this industry so it would be a late indicator.

How to Measure MLM Growth & Momentum

I think the best indicators of most trends today are found in online data. Here’s why:

1. Most people use the internet to research products & companies they are interested in.
2. There are very reliable 3rd-party services that monitor website and search traffic over time.

Every online data source has some flaws, but intelligently combining reliable sources provided me with some interesting findings. I wanted to see which MLM companies are experiencing momentum built on long-term growth.

The Results

The results might surprise you. First the chart with companies in alphabetical order:

MLM Company Momentum Comparison

And here are the results sorted by rank:

Methodology

First, to ensure I was comparing apples to apples, I had to focus my scope of companies to the largest segment in network marketing-namely those companies marketing primarily nutritional products. So I didn’t include those focused on technology or broad consumer product lines. I’ll try to find a good way to tackle those segments later. I chose 15 popular nutritional product MLMs.

I looked at website and search traffic growth over the past 3 months. You wouldn’t want to measure just 1 month since a lot can happen online to cause only a momentarily spike in a site’s traffic. But 3 months gives a good view of immediate trends = momentum.

Besides just immediate trends, it’s important to look at what companies are growing overall. A few companies I looked at were actually decreasing over the past year so their short-term growth looked more like an element of recovery than momentum building on long-term growth.

Reaching back to my past statistics training, I combined the 3 month and 1 year website traffic & search data for each of the 15 companies by standardizing their growth percentages and then giving a slightly higher weight to the 3 month score. I used data from the following services: Alexa, Compete Inc, and Google Trends.

Conclusion

I’ll admit, I was fairly surprised at the results. At the top you have some more established companies like Xango and Shaklee generating buzz and building momentum, next to, and sometimes above, newer companies like Vemma, Zrii and Agel. I wonder why.

Could it be new product launches, company marketing & support, the elusive “critical mass?” What do you think? Like any research, there is more to dig into here. Maybe I can expose the drivers if I look at search engine keywords, traffic patterns, product launch activity, etc.

Whatever the drivers happen to be, this seems to be the type of data I’d be relying on if I was considering joining an MLM company and building a successful network marketing business – partly because it’s the sort of market growth data that successful traditional businesses rely on when they launch into new markets.

FYI: Here is the full article on MLM Companies with Momentum with some revisions.

I was looking at the (very warped) “before” and (still warped) “after” tables in my recent post about the changing MLM 500 Earners List wondering how well one could trust the self-reported income figures of most top distributors – especially those posted on a publicly open site like the MLM earners list. At first glance you might think there is a lot of benefit to be gained from reporting the highest possible numbers, regardless of their validity.

If I was a distributor anxiously recruiting people into my downline I might state the largest imagined number as frequently as possible. If there was some public list where I was able to submit whatever average monthly income number I felt like…well, you get the point.

What if you were part of some top earner’s downline? Would you be tempted to submit to some free-for-all public list the highest rumored number you’ve heard to help support your claims that you belong to the best organization in the best company? After doing so would you blog and comment all over the web to promote your organization? Haven’t we all read dozens of such posts and comments? Can you trust them?

Finally I wonder about the companies who are anxious to publish their distributor numbers online. If most normal companies, including most reputable MLM companies, wouldn’t reveal their sensitive internal numbers online which companies would be desperate enough to release such numbers?

My research on MLM company momentum seems to indicate that the companies most anxious to publish their distributor numbers (for those of you keeping score that would be MonaVie and Amway) are actually those experiencing NEGATIVE momentum & growth. Perhaps a slightly altered Shakespearean quote applies, “The company doth promote too much, methinks.”

Want to know which companies seem to be experiencing the greatest momentum? I’m still crunching some numbers but it’ll be out soon.

BTW, I can see why a short-sighted distributor or company might want to publish some high earnings figures. But what is that really saying about the opportunity for all other distributors? Could it be that their compensation structure is so top heavy that the cash is only flowing to a few elite? Here’s my analysis on that topic, appropriately titled Which MLM Comp Plans Screw the Typical Distributor?.

You may have noticed a response to my previous post from Ted Nuyten, author of the MLM Top 500Earners List. I appreciated his comments and thought they were insightful.

This was the bulk of his response:
“The MLM 500 rankings is a list which has approx. 30% of all Top Earners listed. So if you miss people that is the only reason. It’s a lot of work, but our list grows every day. We are independent of which direct selling companies may exist. Some companies and distributors however are more willing to share their top earnings income then others.”

Some Lingering Questions

Those are fair disclaimers, but they leave me with some additional questions. I’ve invited Mr. Nuyten to to comment again on the following questions.

What are the origins of the list and what relationships caused you to initially focus so heavily on 1 or 2 companies in particular? Specifically, is there a business relationship? Are you, or have you been a distributor for one of the 2? Honestly, the way this list was launched makes it looks suspect.

I’ve contacted my sources at some major MLM companies and they claim they were never approached with the opportunity to contribute or respond to the list before (or even after) it was published. That seems to intentionally create an uneven playing field which, again, raises some questions about the list’s purpose and objectivity.

An Alternate Approach

I wonder how the list would look if some additional research had been done before it was published. I’m guessing that a number of MLM companies would have been reluctant to reveal their earnings numbers at all and others would have been tempted to disclose artificial numbers, either to build up their perceived success or to reduce the poaching of their top distributors.

Couldn’t the first concern (privacy) be countered by allowing a company to disclose top earners’ payouts without actually naming the distributor, thus protecting their privacy? Couldn’t the second concern (accuracy) be handled by requiring proof of payments that would be averaged over time.

If that’s not possible, how about providing a confidence indicator for each line? A more useful list might show which entries were based on 1) verified company records (including records over time), 2) unverified company reports (no records to back up the claims), 3) distributor self-reports, or 4) hearsay/rumors.

A Completely Different Approach

While looking at an accurate static list of earners might be interesting, indicators of growth might be more important to distributors wanting to compare which MLM companies offer them the greatest potential future. A lot of companies say things like, “pre-launch” or “ground floor” or “look how much we currently make/pay.”

But that doesn’t mean they are growing, let alone going viral. What if they are actually shrinking? I have some interesting ideas for estimating growth trends of network marketing companies that I’ll be fleshing out in future posts. Stay tuned…

This post explores the motivations of MLM companies that publish their distributor earnings numbers.