Part of the guide: Network Marketing Lead Generation
If you’ve been in this industry long enough to build a six-figure check, you already know how to evaluate an opportunity the way most people do. You look at the comp plan. You look at the leadership. You look at the timing, the momentum, the pre-launch buzz, the founder’s track record. You’ve probably gotten good at it.
And you’ve probably still gotten burned.
I’ve been in this industry part-time since 2002 — over twenty years of watching companies rise and fold. What I’ve learned is that the standard diligence checklist is mostly noise. Comp plans get restructured. Leadership leaves. Momentum reverses. None of those are the load-bearing wall. There’s one question underneath all of it, and if the answer is wrong, nothing above it can save you.
Would this product exist as a business if nobody could earn a commission on it?
That’s the end-user customer test. It sounds simple. It isn’t, and at six figures it’s the only test that carries real weight — because you’re not just risking your own time anymore. You’re risking a team that trusts you.
In this guide
Why this test gets harder the more you earn
Here’s the uncomfortable part. Six-figure earners are worse at this test than beginners, not better.
A newcomer looks at a product and thinks, “Would I buy this?” That’s a naive question, but it’s directionally correct. An experienced earner looks at the same product and thinks, “Can I build a team on this?” — which is a completely different question, and it’s the one that gets people into trouble. You’ve built the skill of moving volume through an organization. That skill is real. It also means you can move volume through a product that no unaffiliated human would ever purchase, and you won’t find out for eighteen months.
The other thing that happens at your level: you get shown the deal before anyone else. Founder’s call, ground floor, pre-launch positioning. The pitch is designed for you specifically, and it’s built around your organization, not around the product. Notice what’s happening — the entire conversation is about distribution. Nobody in that room is talking about the customer, because in the room, there aren’t any.
I stepped back from doing network marketing seriously in 2017 largely because I got tired of this pattern. I’ve written about why, but the short version is that I kept finding companies where the product was a formality wrapped around a compensation event.
What the test actually looks like
The end-user customer test isn’t a vibe check. It’s a set of mechanical questions with verifiable answers. Run all five.
1. What percentage of volume comes from non-participants?
Not “customers” in the company’s definition — companies love to count distributors on autoship as customers. I mean people with no position, no commission eligibility, no downline, buying at retail because they want the thing. If the company can’t produce this number, or if the number is under a meaningful fraction of total volume, you have your answer.
The FTC’s guidance to the industry is explicit on this. In its Business Guidance Concerning Multi-Level Marketing, and in the more detailed guidance for MLM participants and companies, the agency states that compensation in a legitimate MLM is “based on actual sales to real customers, rather than on wholesale purchases or other payments by its participants.” That’s not my opinion. That’s the enforcement standard.
2. Do people keep buying after they quit the business?
This is the cleanest signal in the entire industry and almost nobody asks it. When someone resigns their position, cancels their back office, walks away entirely — do they still order? If a meaningful share do, the product has independent demand. If retention collapses to zero the moment the commission disappears, the product was never the product. The opportunity was.
3. Can you buy it cheaper somewhere else?
Take the actual formulation, the actual specs, the actual service tier. Compare it to what’s available on the open market. If a comparable product is available at a third of the price, you’re not selling a product — you’re selling a distribution premium, and every customer you acquire is one Google search away from leaving. This is the complexity trap in its purest form: layers of proprietary language stacked on top of a commodity to obscure that it’s a commodity.
4. Is the pitch about the product or about the position?
You have been paid late before
You have watched the number on the dashboard not match the number in your account. What is different now is simple: it settles on a public contract you can check yourself, not a dashboard I control.
Read the contract →Most participants earn little to nothing. No income is guaranteed. You can verify every payout on the public smart contract.
Sit through the company’s own customer-facing material — not the opportunity deck, the customer deck. If it doesn’t exist, that’s the finding. If it exists but spends more time on the income potential than on what the product does, that’s also the finding. Companies with real end-user demand have marketing that works on people who will never join anything.
5. What happens to the product if recruiting stops entirely?
Imagine the field freezes. No new distributors for twelve months. Does revenue hold, decline gracefully, or fall off a cliff? Companies built on end-user demand survive recruiting droughts. Companies built on participant purchases die in them, which is why they’re structurally addicted to constant expansion into new markets.
The categories where this test fails most often
Some product categories are inherently hostile to the end-user test, and you should apply extra scrutiny.
Anything where the “product” is education about the opportunity itself. Anything where the deliverable is a subscription to a platform whose primary use case is running the business. And increasingly, anything financial — the crypto tokens, the trading signals, the prediction market access. I wrote about how the MLM playbook migrated into crypto, and the reason that migration was so easy is that financial products make the end-user test nearly impossible to run. When the product is returns, every buyer is a participant by definition.
Compare that to a company selling something with a functional use — where you can find people who bought it, used it, never joined, and bought again. That’s a real answer to a real question.
If you want the broader pattern-recognition set, the MLM red flags piece covers the surrounding signals. But red flags are a screening tool. The end-user test is the decision.
Running the test when you already have a team
This is where it gets professionally uncomfortable, and I won’t pretend otherwise.
If you’re at six figures, you likely have people in your organization on a product that wouldn’t pass this test cleanly. Running the test honestly means confronting that. The instinct is to not run it — to stay busy, stay positive, stay in motion. I understand the instinct. I’ve felt it.
But the alternative is worse. Companies that fail the end-user test don’t fail gently. They fail through enforcement action, or payment processor loss, or a comp plan restructure that quietly guts the mid-tier, or a market pull-out. And when they fail, you’re the one your team calls. Not the founder.
The practical move isn’t to blow up your business tomorrow. It’s to start measuring. Track what percentage of your volume comes from people with no position. Track what happens when someone quits. If those numbers are healthy, you’ve got a real business and you can stop worrying. If they’re not, you now know what you’re building on, and you can start building something with a floor under it.
That’s also the honest case for recruiting professionals rather than warm-market volume: people who evaluate businesses for a living will run this test on you whether you’ve run it yourself or not.
The FTC has also published guidance on the income claims MLM companies and participants make, which is worth reading alongside the customer-volume standard. The two failure modes travel together.
The one-sentence version
A business with real end-users can survive a bad comp plan, bad leadership, and a bad year. A business without them can’t survive anything.
Run the test before you move your organization. Run it on the business you’re in right now. If you want to think through what building on that foundation actually looks like, start here.
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Most affiliates earn little, and that is disclosed up front. The difference here is not a promise about what you will make. It is that you can verify every payout yourself, on a public contract, in about twelve seconds.
See how the payout works →Most participants earn little to nothing. No income is guaranteed. You can verify every payout on the public smart contract.
What’s interesting is the piece is really describing a form of motivated reasoning specific to expertise, the more skilled you get at moving volume, the more that skill substitutes for the judgment about whether the volume should exist at all. There’s research on expert overconfidence that maps onto this almost exactly: expertise in execution and accuracy in evaluation are different skills, and building one doesn’t automatically build the other. The piece calls this a paradox. It’s actually a well-documented pattern outside this industry too.
Philip’s expert-overconfidence framing is right, but I’d add a measurement problem underneath it: question one asks what percentage of volume comes from non-participants, and the article correctly notes companies define ‘customer’ loosely. Without a standardized definition enforced by a third party, that percentage is self-reported by the party with every incentive to inflate it. The test is sound. The input data usually isn’t audited by anyone who’d catch it being massaged.
Philip’s framing is useful, but underneath the psychology there’s a plainer question: once you can see the gap between what you’re good at and what’s actually true, what kind of person keeps building anyway. The article is gentle about this, calling it ‘professionally uncomfortable.’ I’d call it the actual test of character in the whole piece, more than any of the five mechanical questions.
Best case against Hollis’s character framing: maybe it’s just an ordinary sunk-cost response, not a moral failing. I don’t fully buy that, but it’s worth separating the two before assigning blame.
At sixty-one, rebuilding what a pension failed to provide, I confess I read this piece with a measure of relief, because it gave language to a suspicion I had carried for some months without being able to articulate it properly. I was shown, last year, a very confident spreadsheet, full of percentages and projections, and when I asked to meet a single customer who was not already a participant in the plan, none could be produced, only promises that such people existed somewhere upstream of me. I did not join. I am grateful now to have a name for what troubled me at the time, because a feeling is easy to talk yourself out of, and a five-question test is not.
Six mechanical questions, and a section on how uncomfortable they are to run honestly, that’s longer than any one of the five. That’s not an accident.
Marla, I think this is right, and I would add, the discomfort is even sharper outside the US, where ‘walk away from your organization’ does not have the same safety net underneath it. I am asking myself these five questions about my own business in Izmir right now, and question two, whether people keep buying after they quit, is the hardest one for me to answer honestly.