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Understanding Network Marketing


April 20, 2018

Understanding Network Marketing

Network marketing uses a business model where a distributor network is necessary to promote the business. In general, this type of business employs a multilevel marketing (MLM) that provides payouts in different levels.

For individuals looking for part-time or flexible employment, network marketing is a good income opportunity. Some of the best examples of American networking companies are Avon, Mary Kay Cosmetics, and Tupperware.

Most network marketing programs are offered at a low upfront investment. They would require spending a few hundred dollars in exchange for a product’s sample kit. Then you can use these to sell a product line to a friend, family member, and other potential customers. Many network marketing programs seek members to recruit other people to become sales representatives. This is where recruits create a ‘downline’ to generate sales income for those above them (upline) in the program.

Earn by selling products
Network marketing or better known as multi-level marketing (MLM) implements a pyramid structured network of individuals who are willing to sell the company’s products. The network members are paid for their efforts on a commission basis. The network members get commission by doing several tasks such as making a product sale themselves or their recruits make a sale.

In simple terms, this business uses a pyramid model of non-salaried members, who are compensated every time their downline makes a sale.

Business models of network marketing
Network marketing relies heavily on a network of distributors to let the business grow. To generate income, network marketing employs three basic kinds of systematic approaches:

  • Lead generation or identifying new customers;
  • Recruiting or increasing your target customers or business partners to join your network; and
  • Building and management or using effective tools in recruits’ training, motivation, and management of their activities.

 

Network marketing has many types that include two-tier programs and multi-level marketing. However, many solid marketing firms such as Avon are classified as single-tier.

Single-tier network marketing. A member signs up with an affiliate program of the firm and can already sell their product or service. Recruiting other distributors is not part of the program. You can be paid right away after making a direct sale. Again, Avon is a perfect example of this.

In other online affiliate programs, you are compensated for increasing traffic to the affiliate's website. They use pay-per-click (PPC) and pay-per-lead (PPL) affiliate programs. These programs fall under single-tier networking.

Two-tier network marketing.This type of network marketing enables you to get paid through the direct sales or traffic you create for the website and the sales or traffic contributed by recruited affiliates or distributors under you. Ken Envoy's Site Sell is an example of a two-tier program.

Multi-level marketing (MLM). This is a distribution-based network marketing that uses two or more tiers. Other MLM programs enable you to earn more ways in five or more tiers available. Some MLM businesses that follow this approach include The Trump Network, Magnetic Sponsoring, and Amway.

 

Fundamentals of network marketing
Before starting an MLM business, ensure that you have a solid and reliable marketing team to back you up at the core of your organization. With a strong base of marketers, the easier to achieve your marketing strategies and succeed in your business endeavours in the long run.

It is also vital to note that not all who want to sell something will be successful in doing it. Know the strengths and weaknesses of your staff. Identify the best positions where your team will excel in their work.

Marketing is an essential ingredient to make any business achieve its full potential. Sincerity or real enthusiasm about a company or product is part of marketing. If your only goal for your sales team is all about money and earning more money, they might mislead their recruits to earn more for themselves and not focused on building the business or promoting the products.

It is very helpful to research the local laws in the country you are operating regarding network marketing to ensure that your business is fully compliant with the regulations. Deceptive marketing approaches and pyramidal structures can put you into hot water if you are not careful in your business transactions.

Your people are your greatest assets
Marketing is both industry-driven and creative thinking. In network marketing, it is also recruiting sales agents with charisma. When you employ people who believe in your business and product, they will be excited to share it with sincere enthusiasm for others. Enthusiastic sales reps generate more sales and add more recruits to your network.

 

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