Many people are reluctant to approach this type of "network marketing" (Network Marketing), also known as multi-level marketing (MLM), because of all the myths and confusion regarding this type of business.
But what exactly is network marketing?
Definition
Network marketing is simply a business practice where a company rewards its distributors for each person they bring into that business. That reward is usually based on the number of distributors or representatives brought into the business. The more distributors a distributor recruits, the higher the compensation.
There is a lot to say about Network Marketing, but let's start at the beginning: What is Network Marketing and MLM (Multi-Level Marketing)?
The MLM industry is quite large.
It can be classified as a direct sales company, an indirect sales company, or a multi-level marketing company (in other words, it has its own membership sites). One thing is clear: these companies share one basic goal: To help people make money. This common goal has produced some of the most successful MLM companies in the world.
The structure of a network marketing business model is quite simple. At the upper levels of the business model are independent representatives, or simply put, representatives. Independent reps earn money by bringing in new distributors that can benefit their business. Reputations determine the success or failure of each representative.
How is the structure of a network marketing business model formed? This can be thought of as a pyramid. At the top are the top distributors, in the middle are the mid-tier distributors, and below are the lower-tier distributors. In a pyramid, one distributor can earn more than another simply by being promoted to a higher level in the pyramid.
Now, when people think of how things work in the network marketing industry, they often think of a sales company with thousands of distributors, with the top leader making huge sums of money.
However, this type of business model is not exactly ideal. In fact, the reality of what network marketing is is much different than the image people have of it.
While a network marketing company uses a number of different direct selling tactics, the focus is on building really good independent reps who will bring people into the business who are interested and ready to buy from them.
It is much more important to have a smaller number of representatives, but very good and efficient, than to have as many representatives as possible, but which do not bring any benefit to your business. This is true in any type of business or field.
Also, a business model based on building effective independent representatives is much more feasible than one based on following customers and focusing mainly on selling to them. That's not to say you shouldn't research your environment, you need to know what type of customers you're targeting, but that shouldn't be your main goal in this Network Marketing process.
Therefore, rather than seeing network marketing as something that is about hiring a number of direct sales representatives to build a downline, it is important to look at it as a way to develop existing representatives who are effective and independent and that have the potential to develop in other areas as well.
The basic business models of Network Marketing
What are the main business models of Network Marketing? The answer to this question may vary, as some respond better to the concept of Network Marketing as a system, while others believe it is best described as a set of organizational tactics and strategies.
The network marketing business model basically consists of promoter, retailer and customer. In short, the promoter acts as an intermediary and brings together the three main components of the business model.
This is done through a regular sales or lead generation process. The retailer acts as an agent and functions as a bridge between the customer and the promoter.
These are the main business models, although there are other elements of the model that are important for a successful marketing campaign.
For example, the company itself may not be affiliated. A true multi-level marketing (MLM) company would include this as an integral part of their business model.
It is also important to realize that the business is cyclical, so the system must also be cyclical. Therefore, core business models may actually be a subset of the main MLM business model.
One of the key ingredients in Network Marketing is the ability to attract reliable customers to a business. Generating convinced customers is the essence of any business. Without qualified leads, no business can survive.
That's why the Network Marketing industry is a low-cost one with a direct correlation to company profitability. There is no business that has been able to achieve the levels of profitability achieved by Network Marketing.
A common model for network marketing is that of the lead generation component. There are companies that prefer this method of having sales representatives/agents to promote their products or services. This is effective when you want to launch a new product or service in the market and you need someone professional and highly experienced in selling products to help you promote it.
The second component is the actual sale of the products. This can be done through direct sales or indirectly through the use of a distributor.
Depending on the product type, the company will have two different options to choose from. The direct selling option is where the company uses its own products to generate sales. The indirect method is where the company recruits members into their network and then offers the company's products to those members. Both methods are powerful methods of generating sales.
History of Network Marketing
In recent years, the development and popularity of network marketing has increased dramatically.
In fact, at the present time, it is one of the most popular business methods entering today's economy. Unfortunately, this popularity has also created a great deal of confusion about this industry and what its exact definition is.
Network Marketing is not a new concept, but the way it has been popularized in recent years has developed quite recently.
In the past, marketers generally built their companies based on word-of-mouth advertising. In the process, entrepreneurs solicited business leads through letters, telegrams, and phone calls. Network marketers also maintained regular contact with customers by sending printed informational materials or distributing leaflets describing their products and services.
Network marketing differs from conventional marketing in several ways. First, Network Marketing professionals are much younger than the average professional.
In addition, it is based on the principle that the key to achieving widespread success is to build a concrete list, rather than a large list of loyal customers. Thus, network marketing does not usually involve inventory or holding events regularly to sell products. Instead, they rely on word-of-mouth marketing and customer referrals to grow their businesses.
At the same time, this aspect can also result in different challenges for marketers.
Traditional marketers usually run successful businesses based on reputation and brand recognition.
Network marketers depend on customer referrals and limited media exposure. As a result, network marketers usually face a difficult challenge in establishing a consistent and steady stream of income.
However, how is the history of network marketing relevant to contemporary times? With a limited number of target markets, network marketers must rely on various forms of viral or popular marketing to promote their businesses.
Network marketing was popularized by the advent of the Internet. In the late 1980s, technological changes affected the way marketing was done. For example, email has become the most common form of marketing strategy. Social media sites like Facebook and Twitter are now seen as everyone's default activity.
As this trend continues to grow, so does the need for marketing professionals who are experienced in using these tools. There are also different forms of digital marketing that you can use to promote your network marketing business. These include website optimization, video marketing and social media marketing.
The advent of social media and mass media has meant that marketing strategies have gone back a bit to traditional networking strategies.
Network marketing is a great business option for people who want to earn a long-term income online, build long-term relationships with people, and help other people make money online.
The role of distribution, pricing and retailing in network marketing
In network marketing, the term "distribution" can mean a few different things. However, in this sense, it represents the distribution of products from A to B. Products are sold in units and each unit is marked with a special price.
If a distributor has a lot of product inventory that they want to sell quickly, they will price the product very low. If a distributor has a lot of inventory but no customers, they can mark up their product higher to get a better return on investment.
To understand how distribution and retail pricing works in network marketing, it is important to first understand why it is used. Most network marketing distributors work on "pro bono" sales. This means that they are making money simply because they are in a position to do so.
They often work very long hours and are only paid on commission, so the more they sell, the more money they make.
As a distributor, you are solely responsible for ensuring that your product reaches the retail outlet. Your retail outlet must have a consistent flow of customers. When your product does not reach the retail outlet, then you can lose your potential income.
Now, there are many ways that your product can reach the retail outlet.
First, you can rent out your retail space. However, this method is likely to be a waste of time and money. Typically, the cheaper your rent is, the less profit you'll see.
You can also choose to go on the open market. Thus, you will be able to set your own price for your product.
Of course, if your product sells well, you won't have to worry about distribution costs or your retail outlet becoming unprofitable.
However, you must realize that there are thousands of retailers who need to keep their prices as low as possible.
One of the best ways to make a profit is by using discounts. If you offer a discount to your customers regardless of how much they have to pay for your product, you will make money.
Even if your product is priced higher, if you give them a discount, they will definitely buy from you.
Another way to increase your profit is by putting your product on promotion. If you have your own retail outlet, you can hold a special event or sale to promote your product to people.
Of course, you will need to set the retail price to this promotional price. But don't worry, you will make a profit regardless of the amount of the discount or promotion, because as many people as possible will want to buy from you.
The Importance of Promotional Content and Promotional Channels in Network Marketing
Marketing through promotional media and promotional content is becoming more and more important as the evolution of network marketing grows more and more. At the same time, the world of network marketing is becoming more and more complicated and competitive.
As the network marketing business world becomes more complicated, so does the importance of promotional media and promotional content in network marketing.
The evolution of network marketing is happening very quickly. People in the industry are continuously evolving with the times and growing in every aspect. This means that in order to be successful in network marketing, you have to adapt to the changing times, the market and the current business climate.
One way you can adapt to the ever-changing business climate is to make sure you're using all the network marketing tools you need in your efforts to grow your business.
One of these tools is the promotional channel. Promotional media can be used for many reasons, but the most common reason for using it is to promote your network marketing business. Promotional media is the tool that will promote your name in the community, both online and offline.
Also, promotional content and marketing go hand in hand. Content is the energy your network marketing search engine needs. Search engines are where many people look for the products and services they need online. This is why content marketing is so important in network marketing.
Content written and shared online will drive traffic to your website, blog and other marketing platforms. This is also a great way to build your email list, generate leads and keep in touch with them.
The types of promotional media that are most commonly used online are video and audio clips. This is because, videos and audio clips are something that many people enjoy watching and listening to.
When it comes to making money, promoting your business online is just as important as using offline methods. There is no reason why you can't promote your business using both offline and online content. Your main goal with these promotion methods is to drive quality traffic to your websites and blogs. This is how that you can generate leads and build relationships with.
It is also important to know how to market using promotional means. Knowing how to use these promotional tools to your advantage will help you build and grow your network marketing business.
Tips for effective and successful Network Marketing
- Analyze the realities of MLMs
To protect yourself from pyramid schemes and MLM scams, arm yourself with knowledge. To begin with, you need to learn about the direct sales industry as a whole, research MLM companies carefully, and then determine if they fit your needs and desires. The truth is, while you can get rich in MLM, statistics show that more less than one in 100 MLM reps are actually successful or making money. Any big decision requires knowledge and action.
- Find a company with a product you love or would use
Too many people fall prey to the hype of the high income potential of MLM that they don't pay enough attention to what the company is asking you to sell. You can't sell something or share your business if you don't take real pride in what you stand for. Make a MLM research and partner with a company that has a product you would really recommend. Be sure to review the company's compensation plan before joining and make sure it's favorable to you.
- Be authentic and ethical
One of the reasons why direct selling has a worse reputation, is that many reps use hype and sometimes deception to attract new recruits.
Legitimate MLM companies want you to be honest with your customers and potential recruits. If you love that product, your enthusiasm is enough to promote it. Make sure, however, that you don't go overboard in your promotion or make exaggerated or false exclamations.
- Do not disturb your friends and family
Nothing will annoy your family and cost you friends more than constantly pestering them about your business.
There's nothing wrong with letting them know what your business is about, but if they're not interested, don't push.
Many companies suggest you make a list of 100 people you know, and while this is not wrong, you should consider that most successful MLMers end up with very few people from their original list. 100 people in their business. Success in MLM comes from treating it like any other business where you focus on people who want or need what you have to offer.
You must know that it is not right and advisable to bother, beg or blame anyone in your promotion attempts, but especially your family and friends, because you will only have something to lose.
Therefore, it is important to decide what is the target market for your products/services as well as the business opportunity.
- Select the best people to collaborate with
There are a lot of opportunities in the market, but choosing an exclusive one among them is quite difficult. We suggest that you first do thorough research on the company you want to work with. So, you can consider the following points: How old is the company? What are the products/services offered by the company? How are payments distributed? It is important to know these aspects in order to make an overall decision.
- Learn from your mentors/leaders
Once you know that the company is a good fit and you can consider working with them, you should learn as much as possible about their working style. Because of the MLM structure, it is in their best interest that you be successful in this process. In addition, they have achieved something to be able to climb as high as possible on the "ladder" of the pyramid, so it is your duty to listen to them carefully. If you have the patience to learn and follow their path, the "ladder" of success becomes much easier to climb.
- Rate the product in detail
When you start marketing for a particular business, the products you will sell are the most important. Right from the material used to make the products, to how they will be useful in our daily lives; you should study and answer all possible questions that will be useful to you when marketing and promoting the product.
"Why should I use this product?" is the best question to start with. Find out what the problems are in your customers' lives and sell the solution your product will provide.
Network marketing is a great field with endless opportunities. Many people try their luck in this business but very few of them are successful. It totally depends on how you shape your business path to be a successful network marketer.
- Promote your product/Business Plan every day
Your legitimate Network Marketing income comes from selling products or services (either through you or through your recruits).
In addition, customers who love your products or services can easily be converted into new "sales representatives" indirectly.
Just like any other business (home or otherwise), promoting your product or service can benefit your target market and is key to generating new customers and recruits.
Some ways you can do this include sharing a product sample(s), hosting a product launch party, or launching a website or social media account.
- Sponsor, don't recruit
One of the benefits of MLM is the ability to create new representatives and take advantage of the sales they make in their business. While some see this as "taking advantage" of others, the reality is that you are rewarded for helping others succeed. But in order for them to succeed, it is necessary that you see your role as a leader and coach, not that of accumulating as many recruits as possible. Then the focus is on the success of those you help in business, not yourself.
- Listen to your customers and sell them the solution
Many companies offer ready-made texts to help you sell your product or service. While these can be useful for you to learn about your product and deal with questions, sales should primarily be a solution to what a customer needs. By listening to their needs, you can tailor your tone to be the solution to their problem.
- Learn how to market
Marketers often follow the 1 meter rule (everyone within 1 meter of you is a potential customer) and other traditional marketing tactics.
But direct sales is like any other business. It can and should be marketed in a variety of ways that take into account your target market, what they need, how you can help them, and where they can be found. To this end, you can use a variety of marketing tools, including a website, email and social media to increase product sales and interest in your business.
- Stand out from other distributors
One of the challenges of MLM is convincing prospects to buy or join you, unlike other reps in your area or that they know online. You sell the same things as thousands of others, which means your potential customers have a choice. You have to do something that makes you unique compared to everyone else. Give people a reason to choose you over other representatives. You can, for example, include more personalized service, launch a rewards program, or something that gives you more value.
- Develop a tracking system
While you don't want to bother people, in many cases, with good follow-up, you can complete the sale or recruitment you want at some point.
If someone tells you no, but there was something in the conversation that suggested they might be interested in the future, ask if you can put them on your email list or call in six months to see if they're interested. Many will give you their email address or phone number just to be nice. But it's worth a try, maybe you'll be able to convince them in the end.
- Determine why you chose to do this
It is very important. This is your main force, your reason "why" you decided to take this action and become a network marketer.
It can be family freedom, financial freedom or even time freedom. Make sure it's a strong reason and write it down somewhere you can see it on those days when things aren't going so well.
- Don't give up
The only way you can ever fail in network marketing is by giving up. This might sound cliché, but it's true. Today's Network Marketing Professionals have at one point or another had thoughts of giving up, but they didn't, and that's why they are where they are today, having the success they want and earning well-deserved amounts!
Network marketing takes time, but if you really want to succeed and are consistent, the results will follow immediately!
Frequent questions
- What is Network Marketing?
Network Marketing is the business method by which the promotion and marketing of products/services is carried out directly or through a network of direct representatives. This can be a business opportunity for those with limited time or people who would like to make a full-time living on a part-time basis.
- What does MLM mean?
MLM (Multi-Level Marketing) or Multi-Level Marketing represents that business practice that is based on pyramid sales systems (multi-level), thus the marketing and promotion of products/services is carried out directly or through recruits . This is also known as Network Marketing.
- What is Network Marketing Business Plan?
The network marketing business plan can be viewed as a pyramid with distributors/representatives at the top, mid-level distributors below, and low-level distributors below. Another way to look at this plan is the one in which 3 very important components are presented: retailer, promoter, customer. Thus, the promoter acts as an intermediary and brings the three components together, and the retailer, who is represented as an agent, acts as a bridge between the customer and the promoter.