Network marketing, or multi-level marketing as it is sometimes called, is a distribution system of goods and services by individuals who are paid a commission to recruit others to also do the same thing. There has been much controversy and legal examination of this type of direct selling system, and not everything has always been peaches and cream.
Nevertheless, network marketing is a viable method of selling goods and services to the public. There are some key features that can be identified that will cause the business model to be effective in its operation. There are also some attributes of the system that will create certain disaster if not handled properly.
These factors are present in any endeavor or business. Businesses fail all of the time due to poor management, inept procedures and lack of financing. Anybody who goes into business should do so with their eyes wide open and they should thoroughly investigate the details before they spend any time or money getting involved.
A key ingredient of any business is the product or service being offered. This is particularly true in network marketing. You have to get past the hype. Avoid the products that promise miracle results. The creams, lotions, elixirs, etc. that you can readily buy at Walmart anyway need to be avoided.
The product needs to be something of real value that people can use and it is fairly priced. If people see value they will purchase it. The product has to be the main ingredient. Check the retail stores. Are there products similar to the one being offered by the MLM company? How does the pricing compare?
Is the product something that you could get a booth at a local fair or market stand and sell? Is there a potential demand for the product? Could the product stand on its own apart from the network marketing concept?
Do not get involved in a network marketing company where the product is the same as everyone elses. There has to be a difference in uniqueness, quality or price.
Once you are satisfied with the product, look at the company. How long has it been in business? Is it financially solid? Look at the financials, and see if it has been profitable several years in a row. Is there a steady upward progress of sales?
Next, take a look at the compensation plan. It needs to be clearly outlined and understood. If it is so complicated that it is difficult to understand at first glance, how will you be able to explain it to others? Some of the compensation plans can get so complex that actually achieving them can seem impossible.
Find out what the emphasis and focus is. Are meetings the main focus? If there is a lot of pressure to attend meetings that may not be what you want. Mature people can move products and services if the products and services are worth moving. In todays Internet oriented society the company should have an excellent way of utilizing that method for marketing as well as other possibilities.
Find out if the upline and mentors are really teachers and if do they have methods of moving products based on real results. Parties, market stands and fairs, Internet marketing and word of mouth are the ways that people will buy stuff from you. If these methods are available, then you can make it happen, and help others to do the same thing.
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Network Marketing Explained
Network Marketing provides business opportunities to the masses. Whether or not you pay any heed to the negativity that sometimes surrounds this line of work, it remains a fact that many people achieve success beyond their wildest dreams thanks to Network Marketing.
There are some Network, or Multi-level marketing companies that have more people earning over $100,000 USD a year than any other company in the world. So how do they work?
All legitimate network marketing companies have products to sell. Instead of hiring sales people and offering up a 10% commission with a low basic salary (or similar), they instead allow people to “join” as partners. They handle all sales themselves, work for themselves, and get a much larger commission, sometimes as high as 50%.
Those people can then invite their customers, friends, or even strangers to join the business too, should they want to experience similar financial and time freedoms. The person who invited them, the “sponsor” receives a percentage, usually around 5%, of their sales as commission from the company. They do not take a share of their “downline’s” earnings, but from the company instead.
Over time, by recruiting lots of downline wider and deeper (downline recruiting downline), and teaching them all to create sales of the product efficiently, the original partner can be receiving a large sum of money from their own sales, but more importantly from commissions they earned from downline. Essentially, once the foundations have been laid, the earning potential is endless.
Negativity
Some people perceive this business method as a pyramid scheme, but it is perfectly legitimate and ethical. The pyramid schemes that are illegal actually pretend they are Network Marketing companies to try and look legitimate, but tey have one large difference.
The Product
A real, legitimate MLM will offer products with value, that can sometimes massively improve people’s lives, and are always something that people want. No fees are receiving by actually “recruiting” somebody, just when they sell products.
A pyramid scheme on the other hand will not have a product, or it will pretend to have a product, but will really just be selling the business opportunity, and people will be recruiting people based on making money recruiting people. There are many companies like this out there, and unfortunately they give legitimate network marketing companies a bad name.
Open Door Policy
Because recruitment and growing a downline is a numbers game, there is rarely a situation where somebody is refused entry into an MLM. As long as they have somebody to sponsor them, they are good to go. This has its good and bad sides.
The good side is that it really means absolutely anybody has the opportunity to grow a real business and achieve fortune, without needing a lot of start-up capital or experience. Good network marketing companies provide plenty of training, and successful partners are always offering insight to their downline to help everybody grow.
The bad side is that all sorts of scammers and “get rich quick” people end up joining network marketing companies, behaving unethically, and again giving those companies a bad name. Even after they are expelled, the damage stays.
In the end, network marketing is a unique opportunity for hundreds and thousands of people and has proven this time and time again over the years. Sticking with one of the major companies can change lives. The important thing is not to get mistaken and fall for one of the mimic pyramid schemes and end up getting burnt.
