What Is Network Marketing, Really?
I’m stunned to find that in this day and age, so many people still have yet to understand what network marketing actually is.
Ask a stranger on the street what they think of network marketing and you will undoubtedly find two separate groups of people, based on their responses.
One group will tell you that network marketing is the ultimate way to level the playing field and create financial freedom. This group will typically consist of people who joined a solid network marketing company, took action, took time to learn the skills required, and had the patience to stick with it even when times got tough.
The other group will tell you that network marketing doesn’t work and the only people who make the big bucks are the ones who get in early. Typically, this group of people has joined a few different network marketing companies over the years, probably didn’t actually bother to get or apply the training, didn’t actually do the work, and then quit.
But neither of these really answers the question, “What is Network Marketing?”.
So … What Is Network Marketing?
Let’s begin by looking at what Wikipedia has to say about network marketing:
“Multi-level marketing (MLM) is a marketing strategy in which the
sales force is compensated not only for sales they personally generate,
but also for the sales of the other salespeople that they recruit”
I like to think of network marketing as a way to leverage your time and efforts.
Imagine you ran your own sales and marketing company. You decide that you can make a good living selling widgets. You come to an agreement with the widget manufacturer to sell their widgets. In return, the manufacturer agrees to pay you a commission for each widget you sell. If you are good at sales, you could make a pretty solid income selling widgets.
Now let’s say that you realize that the market for those widgets is absolutely massive and you could cover more ground, sell more widgets, and make more money if you build a team of other sales people that would like to also sell these widgets. So you strike another deal with the widget manufacturer. Now, in addition to the commissions you earn from your own sales, you would also like to earn a commission on all sales generated by your team members.
The widget manufacturer realizes that this makes perfect sense. They can focus on making incredible widgets. You can focus on selling widgets along with building and training a larger sales team to sell widgets. Each person on your team that sells widgets earns their own commissions AND the manufacturer pays you a small commission on each sale your team members generate.
To really leverage your time and income potential, imagine those team members being able to build their own sales team and you earn commissions on all of those sales, as well.
That is the basic idea of network marketing and is the perfect example of what I call “Leveraged Income”. Instead of relying solely on your own efforts and making money only when you personally sell, you are now leveraged and can earn income from the sales of the people on your team, as well. When your sales team is operating on a global scale, you can really see your income take off!
Why do so many people gravitate toward network marketing? See if any of these sound attractive to you:
- You get to be selective about who you work with.
- You get to set your own hours.
- You get an immediate income boost due to tax breaks usually reserved for the wealthy.
- You have the opportunity to literally create any level of income you desire.
So you conduct your research and you select a company that has a product or service that you know can move well in the market place. You decide to become involved so you sign up to become a distributor. Your total start-up costs for your new network marketing company can typically range from $200 to $1,500, total. You are not an employee but an independent contractor. This gives you significant tax advantages and allows you autonomy in terms of your work schedule. Your pay is based on results. Not only can you be paid commissions on your own sales but you can build a team of like-minded professionals that you want to work with and earn commissions every time THEY sell products, too.
Network marketing commissions are paid based on the movement (sale) of products to your customers. So you know it is in your best interest to sell AND teach your team to sell. More sales means more income.
Now let’s do the math on how leveraging your time can have a dramatic impact on your income via the network marketing model:
Let’s say you sell a product that results in a $150 commission every time you sell that product. And let’s say that you sell 20 units of that product each week. If you spend a full 40 hours per week selling, you are earning $3,000 per week. That is $75 an hour. You’re making a decent income.
But now let’s say you invest some time building a team by recruiting others to sell the same product. The manufacturer agrees to pay them the same commission for each unit they sell AND you get a $20 commission on every unit they sell.
Over time, let’s assume you build a team that consists of 100 people that each make 20 sales per week.
- Your income from your own sales comes to $3,000 ($150 x 20 = $3,000)
- The income from sales generated by your team comes to
(100 team members x 20 units each x $20 = $40,000)
This is a powerful example of the leveraged income potential when you build and train a team of professionals you can work with.
So Why Does Network Marketing Have Such A Bad Reputation?
Most people never really take the time to understand some of the realities of the business before they get started. They will consistently dedicate 30, 40, even 60 hours a week to a job that they know will never help them reach financial freedom but won’t take the time to learn new skills, master the art of sales, become leaders, and train others to do the same. Network Marketing is all about moving product or providing services through your sales team. Nobody gets paid until something gets sold. Guess what. It’s that way in every single business on the planet.
So before you decide to get involved with any network marketing company, keep a few things in mind:
- Network marketing is a profession; not a “scheme”.
- Network marketing can reward you with financial freedom if you are ready to work.
- Network marketing is really more about personal development than money.
- Network marketing can be extremely fun and very rewarding.
- Network marketing is a proven millionaire-maker business model.
The key is to recognize that network marketing is a BUSINESS. The professionals … the high-dollar earners know this and treat their network marketing business as their own multi-million dollar sales and marketing company.
About The Author:
Brian Rooney is a network marketing professional with over 12 years of experience in the industry as both a network marketing distributor and company owner. In addition to being an independent distributor for Organo Gold, he provides email marketing tools and advertising services to network marketers worldwide.
You may have found this article by searching for:
- network marketing
- what is network marketing
- multilevel marketing
- what is multilevel marketing
- network marketing company
- home based business