WHAT IS NETWORK MARKETING
Network Marketing, also known as Multi-Level Marketing (MLM) is a legitimate business model that uses direct selling and relationship referrals as a method of selling a company’s products or services. In a typical networking model, individual associates (often referred to as distributors) essentially contract or act like a franchisee to the parent company and are paid a commission based on the volume of product or services that are sold as a result of their own organisation’s efforts.
To fully appreciate this home-based business opportunity, we encourage you to look at it from the perspective of both the company as well as that of the business operator.
Why Would Companies Choose to use the Network Marketing Distribution Model?
Just like any other company that sells goods or services the ultimate goal of a network marketing company is to make sales and increase its customer base. In a traditional manufacturing company who sell their products to the general public there is normally a large amount of costs associated with advertising and distributing their product (ie the middleman is responsible for a lot of the cost), before it is then sold at a retail outlet who again add a profit margin. Instead of using the traditional method of manufacturing and delivering their products, MLM companies choose to bypass the middleman, selling direct to the customer. They use referrals and a word-of-mouth approach to develop their customer base as opposed to a large advertising budget and as such the money that would normally go to the middleman and advertising can now be used to reward business operators (distributors) a commission for helping the company to make a sale.
There are a number of reasons why many companies are now choosing to use this increasingly popular business model. Firstly, it allows start up companies to build a customer base through referrals without having to try to outspend their competitors advertising budget. Essentially network marketing levels the playing field and allows small businesses the same opportunity as their competing international heavy weights. It also allows the manufacturing company to build a relationship direct with their customers creating better customer satisfaction and loyalty. Selling direct to the customer and bypassing the middleman also helps the customer to save money (without compromising quality), which additionally makes their products more appealing.
What Makes MLM Attractive to a Home-based Business Operator?
There are a number of benefits to operating a networking business, many in which are discussed in detail throughout this webpage. Arguably the biggest attraction to joining the industry is that in return for a low risk investment you have the potential to earn a very rewarding residual stream of income whilst enjoying the time freedom to significantly improve your quality of life. To fully appreciate how this home-based business opportunity can lead to a lifetime of financial freedom
LEGIT MLM VS Pyramiding scheme
Pyramid Scheme (illegal scam)
A pyramid scheme can be defined as a fraudulent money-making scheme that is based on a non-sustainable business model that involves the exchange of money primarily for enrolling other people into the scheme without a legitimate product or service being delivered. Eventually the number of new recruits fails to sustain the payment structure and the scheme collapses with most people losing the money they paid in.
In a more practical sense, probably the easiest way to identify pyramid schemes is firstly there is no legitimate product or service involved (ie you do not get a legitimate product in return for your initial investment). The second way to identify pyramid schemes is that you do not get a financial return unless you have successfully introduced a number of new recruits into the pyramid. Basically, pyramid schemes concentrate on the money that you could earn by recruiting new people into the pyramid and generally ignore the marketing and selling of any products or services.
Network Marketing (legitimate, legal business model)
The concept behind network marketing is a distribution model that allows a company to sell their products directly to the consumer. Choosing to use a word of mouth approach (networking) instead of advertising through traditional streams (eg media). Therefore instead of paying the media for advertising, network marketing companies are structured to reward distributors through commission in return for selling their products and finding new customers. Therefore the main focus of a network marketing company is product distribution. In fact, in a legitimate network marketing company, distributors are not required to recruit new distributors in order to earn a commission, they can earn money purely by selling the companys product.
Although distributors can choose to sell the companys products to earn their commissions, not everybody wants to be a sales person and therefore choose to recruit more distributors into their organisation as a means to build their referral base. Not only does this create a group of loyal customers, it also allows you to leverage the efforts of others to create a residual stream of income.
I would rather earn 1% of 100 peoples efforts than 100% of my own efforts
- John Paul Getty (American Billionaire)
Therefore the recruiting element of a network marketing business is merely a way of distributing more products and helping to build a leveraged income.
Why Network Marketing
The perfect business?
Network marketing has been described as the perfect business. Here’s why that just might be true.
Most people who want to supplement their income or maybe even create massive wealth can’t afford to start their own businesses. They certainly don’t have all the skills necessary. And they probably don’t have the time.
Typically, starting your own business requires you to
Why bother with the risk and all the hassle, when everything is done for you.
14 great reasons why network marketing might be the perfect business 1. Low start-up cost
The cost of getting started and having your business up and running is typically around 10-15% of your monthly income. That is when your are just starting up, and not making any commissions.
You don’t earn a 100% of your own efforts, you earn a percentage of you entire networks efforts. This means that you are not restricted by your personal time, instead you can get paid for hundreds of hours of resultoriented work every day. This cannot ever be done with a regular job.
3. You have the time
The typical workweek consist of 7-10 hours a week for part-timers. This means that you can keep your day job. Just turn off your TV and you’ll find the time.
4. Paid support and training
Since people ONLY get paid when you succeed, other people have a genuine interest to help you get better. Your sponsors will make it their business to help you in any way that they can. Absolutely free of charge!
When you invite people to meetings, your sponsor is doing all of the talking, while you listen. This means typically that you get paid while you learn.
5. Proven business system
Network marketing is paying out commissions to millions around the world. You don’t have to reinvent the wheel. Your company has already done all of the heavy lifting and delivers the product right to your doorstep, all you have to do is distribute it by either sales or recommendations.
6. Zero low-margin activities
You will never ever have to deal with unnecessary paperwork, regulation, contracts, negotiations or any of that stuff. It’s the companys job to develop, manufacture and deliver the product to you and the customers that you acquire. All you do is what makes you money – market the products.
7. Personal development
In this industry your income will only grow as fast as you do. You will have an unlimited opportunity to grow and become a respected leader in your business and community.
8. It’s a people business
You will never be trapped behind a desk. Your job is to meet new people. And surprisingly enough you only do business with open-minded positive people with a great attitude.
9. Succeed with your friends
If you become successful in a regular business you would be sitting on a beach and sipping on a drink by yourself. Network marketing is an equal opportunity. This is the only industry where you can succeed together with your friends regardless of differences in background, profession or degrees.
10. Incredibile tax advantages
All of your business related expenses are tax deductible. This means that you get to (1) make money, (2) spend money and (3) pay taxes on what’s left. Not the other way around.
11. Working full-time is about 25 hours a week
That’s right. You can’t network all of the time because most of the people that you want to talk to is going to their regular job. So you have all day to do what you want. It’s called freedom.
12. Work almost anywhere in the world
You’re not tied up to your zipcode. Network marketing is a worldwide phenomenon and most reputable companies work in over 50 countries in the world.
Every company and team in this industry makes it their business to recognize a job well done. You get real credit from people who matter to you. Both your upline and downline will congratulate you and thank you for what you’ve done and achieved.
Network marketing is all about having fun with new and old friends. We laugh. We party. This is what attracting new people is all about. They see us having fun and they want to join. That’s how simple that is.
This is just a few of the benefits of network marketing
Network marketing could just be the perfect business.