What is Network Marketing?
In our previous blog, we have discussed the various type of marketing that can benefit your business. In this blog, we will be looking at the network marketing, how it works, advantages to give you an overview. Let’s get started:
Network marketing is a business model that is dependent on person-to-person sales via independent representatives. It is mostly working from home. There are various reputable network marketing operations, but some have been discredited as pyramid schemes. The latter focus less on sales to consumers as compared to the recruitment of salespeople who will be paid up front for expensive starter kits.
How Network Marketing Works?
Network marketing is known by many names. The list includes multilevel marketing, affiliate marketing, consumer direct marketing, cellular marketing, referral marketing, or home-based business franchising.
Companies who are following the network marketing model mostly create tiers of salespeople. In this, salespeople are encouraged to recruit their own team of salespeople. The creators of a new tier referred to as upline earn the commission on their own sales along with the sales made by the people in the network created by them referred to as downline. Furthermore, a new tier can build a new tier resulting in more commission to the person in the top tier along with the middle tier.
In these scenarios, the earnings of salespeople depend on recruitment and product sales. Remember, the people who are in an early tier and on top earn the most.
Advantages of Network Marketing
Let’s move on to the advantages of network marketing listed below:
In networking marketing, those with multiple tiers can be termed as pyramid schemes. As discussed earlier, the salespeople in top tier make good amounts of money on commissions coming from other members in the team. The people at the lower tiers will earn less amount of money. In the whole game, the company is earning money by selling expensive starter kits to new recruits.
In network marketing, an individual who possesses energy and good sales skills can create a profitable business with a modest investment.
According to a good rule of thumb, as per the Federal Trade Commission (FCC), single-tier network marketing operations is more reputable as compared to multi-tier schemes. In this, people make money based on the number of distributors they are recruiting in their team. Some good examples of single-tier network marketing operations include Mary Kay, Excel Communications, and Avon Products.
Considerations on Network Marketing
If you are planning to join a network marketing operation, then you should do some research before making a final decision. You should have the answer to the following questions:
- Will it provide a chance to make money by selling products or by recruiting others?
- What is the history of the company’s founders?
- Personally enthusiastic about the products?
- Do you know people enthusiastic about the products?
- Are your product promoted effectively?
- Can you foresee a fast pathway leading to profits in the long run?
Network marketing is best for the person having a lot of energy and good sales skill sets. It will be best for the person who is planning to create a profitable Small business with a modest investment. It is highly recommended to thoroughly research the company before you join it.