Network marketing or Multi-level Network Marketing (MLM) is a method of marketing that makes use of independent sales representatives as a strategy to reach a wider range of networks. Where conventional methods such as traditional online and offline advertising wouldn’t work. Network marketing is a very popular business opportunity for people looking to work full-time or part-time doing flexible jobs.
There are hundreds, even thousands of companies that utilize this method, including some well-known brands such as Avon, Tupperware and WorldVentures. These companies and their respective associates hire a ‘sales force’, much like insurance companies have been doing for years, and they use these individuals to reach networks such as friends and family.
Ever come across an advertisement on television using the term “Independent Insurance Agent”, or something similar? These people are not real employees of these companies, but they operate independently by purchasing a product sample starter kit, which usually costs a few hundred dollars, and with that they get the opportunity to sell the product line to their own contacts, friends, or family.
These types of programs rely on the ability of a person to influence their network and sell the products, and when properly executed, both parties will benefit. Most network marketing programs require participants to recruit more sales representatives, and as a participant adds them to their own downline, sales made by the new recruits generates income for those above them.
The compensations cannot be made exclusively on the basis of recruitment. Instead, it should be based on the ability to sell the company’s services or products. If a network marketing program generates revenue almost completely from the recruitments then it probably may be illegal, and by definition it would be a so called pyramid scheme.
A network marketing program is usually exempt from traditional business regulation and state and federal laws don’t define it as franchises under franchise law, so I highly recommend to do some research before putting in any money.
Why Businesses Use Network Marketing
So why do businesses use network marketing? The answer to that question is pretty simple. These network marketing companies need to access your network, influence your family and friends, where traditional advertising methods tend to be limited. Would you trust a new brand if a friend or family member suggested it to you? That is exactly what makes network marketing programs so effective.
The types of products and services included in a network marketing program can range from Nutrition, Finance, Communication, Travel, Weight Loss, and many more. Word of mouth marketing is too powerful to be ignored and because it’s not as expensive as the alternative strategy, which would be spending millions of dollars each and every year on complex marketing campaigns, network marketing companies are more than willing to pay you to spread the word.
The difference between a successful network marketing business and a complete disaster doesn’t necessarily depend on a person’s ability to convince their friends and family, or getting them into submission to have them buying the product or service. That strategy might produce immediate results but it wouldn’t work for long.
Your ability to learn who in your circles would benefit from the product or service you are selling, and who would be interested in joining the program is information that will get you better results in the long run.