Table of Content
- 1 What is Network Marketing
- 2 Network Marketing—Reasons Why You Should Get Involved
- 3 Difference Between Network Marketing and Pyramid Scheme (Multi-Level Marketing Vs Pyramid Schemes)
- 4 What You Should Look Out for in a Network Marketing Company
- 5 Legitimacy
- 6 Reasons for Failure in Network Marketing
- 7 The Best Practices for Network Marketing
What is Network Marketing
Most people do not have the slightest idea of what network marketing is, and they have all sorts of perceptions and prejudice about it. However, this article will seek to clarify all you need to know about what network marketing really is, how to be successful in it and make a living as a network marketer, and recommended network marketing company to start with.
First and foremost, you need to understand how the chain of manufacturing, supply, and demand goes. When the manufacturer makes a commodity, the transporters are used to distribute the goods. The transporters may be the manufacturer’s or maybe the distributors. When these goods get to the distributor, they are stored, and wholesalers come for them so that they can sell the goods to the retailers, who in turn sell the goods to the consumer.
Apart from these, other middlemen are involved. The company that makes the commodity has to advertise for it, and that is why your programs are filled with commercial breaks. Also, companies use salesmen to promote the commodity to wholesalers and retailers.
Needless to say, all these middlemen have to get their portion of the profits because none of them does free work. The company that manufactures has to pay for space, for its workers and its salesmen. It also has to maintain the industry and after all, expenses are met (including the tea at 10 am), the manufacturer wants to bank a huge profit to enable expansion of the industry.
The TV and radio stations have to be paid for every second the advertisement is being aired, and the distributors have to make a profit out of the same commodity after they have paid for space and the risks of storage, among other overheads. The chain goes on and on, through the wholesaler and the retailer (including the vendor or hawker) until it gets to you, the consumer.
Therefore, you find that an item whose value at the manufacturer’s place is four dollars gets to you when it is thirty or forty dollars! This means that it is you who pays every middle man involved before the commodity gets to you.
However, network marketing cuts short this chain and it directly links the manufacturer to the consumer. Therefore, you get part of the money that the middlemen would have gotten and your up lines get a portion. This goes up all the way to the manufacturer. No wonder you also get a portion of what your down lines sell.
Network marketing generally entails making a network in which promotion of goods or services is done and other people are also recruited into the network to make it wider.
Network marketing is also known as Multi-Level Marketing (MLM), and as explained earlier it is a business model where independent contractors buy into a company and earn a commission on the products they sell. The profession appeals to many people because they can be their own boss, set their own hours, and work towards their own success. It is a big commitment, but network marketing can be a very lucrative career.
Network Marketing—Reasons Why You Should Get Involved
Most of the business elites have turned to network marketing as a way of achieving financial freedom. This is a good idea, but it will only help if you conduct your business in the correct manner. Network marketing is a tricky trade and it requires a lot of skill and knowledge to succeed in it. This should not demoralize you if you had plans of starting your own network marketing business; it is more than possible so long as you give it your all. As a matter of fact, there are other reasons why you should get involved in this trade.
To start with, its initial capital is relatively low as compared to other business sectors. In fact, the capital can go to as little as $25.00 (N 10,000 in Nigeria Naira) depending on how well you plan for the business. The initial capital is normally for opening up your website, paying the small amount required by the affiliate company plus buying the little gadgets that you will require for the business to run smoothly such as a PC plus a scanner.
All that is required of you is for you to look for the cheapest rates there are in the market. For example, instead of buying a brand new computer why not go for a second-hand PC that is in good shape.
Furthermore, it will still serve the purpose. Generally, network marketing does not need a lot of cash for one to start their own.
On the other hand, network marketing has evolved to a point whereby it does not require one to have the normal facilities that are required for official matters. This refers to utilities such as an office or working hours. There is something known as home-based network marketing.
This is simply whereby one sets up a miniature office in the comfort of his or her office consisting of mainly a computer and a desk. This is where you will conduct all your transactions from. There is no restriction to working hours and above all, you are your own boss.
Finally, joining network marketing does not mean that one has to change his or her lifestyle. This is not necessary. Unlike the other business sectors, one can still go on with his normal lifestyle; and still own a network marketing business. All that is required is for you to look for some amount of time to deal with your clients and continue with your life. This is why many conduct their network marketing businesses as part-time jobs.
Difference Between Network Marketing and Pyramid Scheme (Multi-Level Marketing Vs Pyramid Schemes)
Multi-level Marketing (MLM) or network marketing, is individuals selling products to the public – often by word of mouth and direct sales. The main idea behind the MLM strategy is to promote a maximum number of distributors for the product and exponentially increase the sales force.
The promoters get a commission on the sale of the product as well as compensation for sales their recruits make thus, the compensation plan in multi-level marketing is structured such that commission is paid to individuals at multiple levels when a single sale is made and the commission depends on the total volume of sales generated.
Pyramid or Ponzi Schemes are, however, fraudulent schemes, disguised as an MLM strategy. The difference between a pyramid scheme and a lawful MLM program is that there is no real product that is sold in a pyramid scheme. Participants attempt to make money solely by recruiting new participants into the program. The hallmark of these schemes is the promise of sky-high returns in a short period of time for doing nothing other than handing over your money and getting others to do the same.
There are lots of them out there of which you might have been a victim or someone close to you. And you know why that is… because we want shortcuts.
But, hey, there are no shortcuts if you really want to succeed in real MLM
What You Should Look Out for in a Network Marketing Company
Learn more about the company, by finding and studying the company’s track record. Do an internet search with the name of the company and words like review, scam, or complaint. Look through several pages of search results. You also may want to look for articles about the company in newspapers, magazines, or online.
- how long the company has been in business
- whether it has a positive reputation for customer satisfaction
- what the buzz is about the company and its product on blogs and websites
- whether the company has been sued for deceptive business practices
- Check with your state Attorney General for complaints about any company you’re considering, although a lack of complaints doesn’t guarantee that a company is legitimate.
Don’t pay or sign a contract in an “opportunity meeting.” Take your time to think over your decision. Your investment requires real money, so don’t rush into it without doing some research first.
Ask your sponsor for the terms and conditions of the plan, including the compensation structure, your potential expenses, support for claims about how much money you can make, the name and contact information of someone at the company who can answer your questions
Get this information in writing. Avoid any plan where the reward for recruiting new distributors is more than it is for selling products to the public. That’s a time-tested and traditional tip-off to a pyramid scheme.
Keep in mind that when you recruit new distributors, you are responsible for the claims you make about how much money they can earn. Be honest, and be realistic. If your promises fall through, you could be held liable, even if you are simply repeating claims you read in a company brochure or heard from another distributor. If you don’t understand something, ask for more information until it is absolutely clear to you.
If you are promoting any Ponzi scheme now in the form of an MLM company without a product, you are in the wrong hands, stop now before you get stuck and lost everything.
Reasons for Failure in Network Marketing
Network marketing is a very cool strategy, and it can give you a residual income if only you know the right secrets in it.
One of the reasons why people fail miserably in network marketing is because they are in the wrong company.
One way in which you can know whether a person is in the right company or the wrong one is by looking at how enthusiastic they are. If he is not, then just know that he is in the wrong company. Also, a person who cannot explain why he finds the products he is selling so great, then he is sailing in the wrong boat. Such a person will always have products in his bag that have overstayed simply because he has not sold them. He will also get a minimum payment that cannot take him/her through half the month.
People in network marketing also fail because they do not strike a balance between recruiting and selling the product. You cannot purely do recruiting without selling because you may run out of leads and cause your network to stagnate. You cannot also sell your products without recruiting because there comes a time when the market for those products is just not at the peak season to enable you to rely on points made from sales only.
Also, you need to put effort, because network marketing cannot be a ticket to overnight richness. This get rich quick mentality is what makes most people in network marketing to fail.
Another mentality that makes people in network marketing to fail is the one where they do not see network marketing as a job simply because it is not set up in a proper office setting.
Therefore, they end up doing it like a part-time job or they place it at the same level as golfing, if this is their hobby, it cannot work like this. However, the funny thing is that when the end of the month comes, this person expects rewards that only a “real” job can give.
Also, you cannot do network marketing without short term, medium-term and long term goals, because you will fail miserably. It cannot work if all you are living and dying for in your network marketing is this current month. All you care about is how much you will get. This is very harmful to your network and it is the easiest way to kill it.
Inexperience is the most common reason for failure in the network marketing industry. Especially with the rookies who expect the business to pick within a fortnight. If they understood the entire marketing process, then they would not give up within weeks of the business. This is the main reason that pulls back the development of the network marketing industry. Another reason for failure that is associated with inexperience is the lack of some vital skills such as people and communication skills. These are vital especially in the marketing industry.
The Best Practices for Network Marketing
Network marketing is a great business strategy, and it also needs tips for good practice just as is the case with every other strategy.
The first thing to know is that business is first about people and secondly about money.
These two should never interchange position, otherwise, you are going to fall big time. Therefore, you cannot recruit people into your network with the mentality that they have now come to make money for you.
First, try to see them as people before seeing them as money-making machines. One favorite quote by Michael Dlouhy is that in network marketing, “people do not join a company; they join other people.” If every person in network marketing has this as their principle, then great success is assured.
Also, most people in network marketing get it wrong when they are mean with information for fear that the person will not join the network or the person will go to a higher rank in the network than them. This is pure nonsense because you benefit from any person in your network rising even above you. People from outside should not join the network because you told them; they should join it because you are a living example to them. Their admiration of you reasons enough for them to join your network.
Excellence is the key principle in network marketing. If you want to get more from network marketing, then be prepared to give more, and you will be sure to get it back in even multiplied and greater portions than it was when you were giving it.
Raise your standards by paying for training and purchasing materials that will better your knowledge. Treat network marketing as a business.
Buy books, listen to CDs and tapes, and watch videos. Interact with other people in your field of network marketing, and learn from them as you share your experiences too. Do not only purchase materials for network marketing; buy materials that are motivational, ones about leadership, business, et cetera. Do not sit on your potential while it can be of help to another person; mentor someone.
All that really matters in network marketing is the attitude one has and the mentality one has. Remember, what you do, your down lines will do more. Therefore, any negative step you take will be taken by each of your down lines, making your network start receding. Let the battle be first won in your mind, and it will be won indeed.
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Let me know what your thoughts are by leaving a comment below.