Network marketing is a type of business that is accessible to everyone, regardless of their level of education, previous experience, etc.
Definition of network marketing
Network marketing, also known as multi-level marketing, is a marketing strategy for direct selling companies. With this marketing strategy, companies sell both products and services. The network marketing structure involves members distributing the company’s products and attracting new distributors. Members are not paid a “hard salary”, but their income comes from commissions on product sales, plus a small share of affiliate commissions.
While this is a great opportunity for anyone to start their own business, there is a downside to network marketing – it is often used in what is known as the “pyramid scheme” business model. Pyramid schemes are very easy to spot, however, as they usually offer poor or no products, but empty promises.
The most popular network marketing companies such as Amway, Avon, Herbalife, Tupperware, Oriflame, etc. offer very high quality products and their marketing strategy is well understood. The more you and your referrals sell the products of these companies, the more you will earn.
These companies are huge success stories and are based on network marketing. If you want to start your own network marketing business, one of the key factors to choose a company is the products it offers. There are many “scam” and “get rich quick” companies in this sector that offer fabulous results if you pay in, for example, €100 and attract 10 friends. The result, of course, is that you and your friends will have lost €100 and wasted time.
Is network marketing right for you?
If you are considering joining a network marketing company, be aware that some network marketing companies – even those that are not pyramid schemes – may not be a wise investment. Other network marketing companies may not match your interests and lifestyle. Here are some tips on how to protect yourself from a bad network marketing experience.
Ask yourself these questions:
Do you want to be a salesperson? If you join a network marketing company, you will be selling products, services or a business idea. Your job will be to sell the company’s products or services and, in many cases, persuade other people to join, invest money and become a salesperson. If you don’t like selling or if you are uncomfortable asking people you know to invest their time and money in your business, joining a network marketing network is a bad idea.
Do you have a well thought-out sales plan? Think about whether you have friends and family who will buy the product from you again and again. Think about how you could find and keep other loyal customers. Can people buy something like this elsewhere, perhaps at a lower price?
What are your income goals? You might think that with your willingness to work hard, you can earn a substantial income by getting involved in a network marketing business. In fact, most people who join MLMs and work hard earn little or nothing, and some even lose money.
Can you afford to risk money and time? Every business has its risks. Network marketing is no exception. Even if the initial costs seem low, the additional costs can quickly add up. Expenditure may include training and travel costs, development and maintenance of web resources, promotional material, meeting costs and product acquisition costs. If you need to borrow money or use your credit card to finance your expenses, you may also be charged high interest fees. Consider also how much time will be spent, for example on training, recruiting new salespeople, paperwork, ordering and delivering products.
Summary of the network marketing business model
- Network marketing is a legal and modern marketing strategy used by direct selling companies to sell their products or services.
- Existing salespeople are motivated to recommend the company’s products to other individuals and to attract new salespeople.
- For each new seller, the Referrer will receive a small commission on the new seller’s turnover.
- Sellers have the possibility to receive commissions at many levels, which means that people you refer can refer new people again and so on. If you are at the top of the pyramid, you will receive commissions from all the turnover generated by the people below you.
- Unfair network marketing companies are often brought to justice because they are based on financial pyramids.
Take a look at these reviews of network marketing companies:
How Avon Network Marketing works
Herbalife Network Marketing Company Overview
Amway MLM business review and testimonials
