MLM companies are careful to keep information on attrition rates hidden. However, a Google search for “MLM” – associated with the words “turnover” or “retention” or “attrition” – reveals a great concern about the number of participants that drop out each year. And some of the most damaging evidence of high attrition rates has come from court cases in which MLM officials have been forced to reveal data they have attempted to keep from participants, the media, and from law enforcement.
For example, according to Eric Scheibeler, author of the book Merchants of Deception, from a 2005 Quixtar (Amway) internal management report, out of 10,000 participating IBOs, only 414 remained in the business after the 5th renewal. That’s a 95.9% dropout rate in only five years for the largest of all MLMs – truly a smoking gun!
Melaleuca at one time claimed to have the highest retention rate in the MLM industry – 94.5%. But in a Texas court case, it was revealed that instead of an average attrition rate of 5.5% per year,
it was 5.5% per month
, for an annual dropout rate of approximately 66%!
That’s a huge difference. Prepaid Legal also revealed on its annual report that half of its customers and distributors quit each year. Nu Skin and Excel Telecommunications also reported such high dropout rates. (Robert Fitzpatrick, 10 Big Lies of Multi-level Marketing).