Where Did The 97% Failure Rate In Network Marketing Come From?

It is kind of interesting, that you find this information all over the internet in network marketing the 97% failure rate, yet where did it come from.

The Mind of Vatke – Tracking Down The Truth In Network Marketing

97 percent failure rate

Yes it is very interesting how many people will take information without really knowing where it came from. What is really interesting is how many marketers have used this information and really stretched the truth on it, or have they?

I was reading a blog the other day and they where stating that it was 98% fail to earn more then Ten Dollars!

Now where did they get their research? Was it as in depth as the original report? Or was it just a good sound bite to hype for the system they are promoting?

I’ll take it a little further!

Just tonight I was reading, how someone was using a system you know one of those funnel systems, they had generated 500 leads and sponsored 2 of them.

And, the guy that had produced the system was congratulating him on sponsoring two people!

My only thought was wow, you generated your own leads and your sponsoring rate was not even one percent! What is wrong with that picture?

I’ve stated it so many times throughout this website and blog that even generating your own leads will not guarantee you will succeed!

Without good prospecting “communication” skills it doesn’t really matter if you generate leads from your own marketing efforts or purchase them from network marketing lead company!

I’ve watched many people that have spent some serious training time in Leadersclub and place this knowledge into action move into the 30 to 50 percent sponsoring rate.

Even Ann Sieg my former downline and leadersclub subscriber, failed miserably in the beginning! I know I gave her 100’s of leads that requested a physical piece of material.


So when I read that 500 leads and sponsored 2, I thought to myself what a waste. With the right training and skill development he might have sponsored 150 people.

Yet, this goes back to what we all want a quick fix no matter how crappy we are at doing our job!

So now if your still wondering where the 97% Failure rate in network marketing came from, now you know!

4 comments… add one
  • John Counsel Feb 27, 2010 @ 3:49

    Hi Glenn,

    I first published this statistic in one of my offline magazine columns in 1993, then again on my main web site in 1996.

    It was the figure that emerged from almost seven years of surveying participants in our MLM training seminars and workshops across Australia, and it tied in directly with publicly-available data from several MLM companies, including Amway, Herbalife, Mary Kay and Avon, at the time.

    Nothing I’ve seen since that time persuades me that the figure is inaccurate.

    John Counsel

    CEO, The Profit Clinic MLM Success Centre

    Melbourne, Australia

    Orlando FL

  • Glenn Feb 27, 2010 @ 9:02

    Hi John,

    It would be very interesting to see what you used for the criteria, not that I doubt what you are saying. But, in using the internet archives I can only find where you said this online in 2005 and stated 90% failure rate.

    And, since both of these studies occurred before the internet came into the picture, how has it changed since then?

    The interesting story would be, has anything really changed? We have more support services today than we probably have network marketers.

    Now finally at least here in the U.S. the FTC rulings companies have to show average earnings in their disclosures.

    I finally found one network marketing lead generation system that coincidentally used almost the same numbers from Leaders Club. Which was definitely not what their advertising had claimed for years.

    The real issues is why is this failure rate so high?

    Why has it not change with all the information available today?

  • Richard Brokenshire Apr 30, 2014 @ 13:21


    I guess I’m a little late in finding this post.

    You can read any of the network marketing company’s income disclosure statements to see how high the failure rate is. There are several caveats to their numbers as well. They will only count people that they say are “active.” Meaning that they receive a check from the company. This leaves out all of the casual, product buying people. The ones who wanted to buy the product at “wholesale” prices. It also leaves out all of the people who have quit over the years. With so many people not included in their calculations, can you really trust these numbers to be accurate? I understand that the companies can legally do this to make themselves look a little bit better. If you look at the best performing company, so far in my research it is Herbalife, they have .18% of “active” members that reach the top level in their pay plan. That’s the best of any company that I’ve seen. The average is about .16%.

    Anyone who is honest would have to say that those numbers are terrible.


    My opinion is that there is little to no real and effective training out there. Most people who come to MLM are employees. They know how to be employees. They have no idea what it takes to run a business.

    I’ve actually switched my thinking over to “what is it that makes some people successful in MLM?”

    Are they lucky? Do they “figure out the secret?” Do they just stumble upon the answer? Are they just willing to talk to enough people to find a few who will join?

    I asked Ray Higdon, of Numis Network, what changed for you that you became successful in MLM?

    I expected a profound answer to this question. He had tried 9 other companies and finally hit it big with Numis.

    His answer?

    He told me that he “had a better idea of who he wanted to become.”

    I had to scratch my head and wonder what that meant.

    Thanks for the post. At least you are giving people something to think about!

  • joo Apr 2, 2018 @ 6:07

    Reasons You Are Failing In Your Online Business

    Now, this is going to sound crazy, but the people over at Insta Builder have just released their new sales page for their “drag & drop” sales funnel creator (the one that over 6000 marketers are using right now)…
    And I have to tell you…
    If you need a “checklist” for your sales funnel (to make sure you are getting the highest conversions possible) you NEED to read that letter.
    Here is the link >>> http : //instabuilder.com?v1afs8g4S51B6A8J6A
    I’m not even joking right now.
    Get out a pen and piece of paper, go to the sales page, and go through all 32 of those points.
    If your sales funnel isn’t taking advantage of EVERY SINGLE ONE of those conversion boosting tactics… then your funnel isn’t performing like it should.

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