TO ANSWER THE QUESTION, why Network Marketing, we need to first understand what Network Marketing (NWM) is. Entrepreneur Magazine defines it as a business model in which a distributor network is needed to build the business. Usually such businesses are also multilevel marketing in nature in that payouts occur at more than one level. NWM is known by many different titles; Multilevel Marketing (MLM), Relationship Marketing, and Referral Marketing to mention a few. Whatever you want to call them, this is the fastest growing home-based business opportunity today.
Why? It’s mostly because of today’s financial and job insecurity. This platform allows the average individual to control their financial security, whether it’s paying down debt, building an emergency fund, or saving for that Hawaii Vacation. In NWM, you control your business without the huge financial investment to start a business. For the sake of this article, I will use NWM and MLM interchangeably. There are many benefits to starting an NWM business that will be discussed later, but first let’s look at questions you should ask when studying any business oppportunity.
- What industry suits my overall persona?
- What is the cost to get started?
- What is my monthly cost of doing business?
- How long will it take to earn back my initial investment?
- How much time will I have to invest to be successful?
- Are there experts and training tools available to help me in getting started?
- **THE MOST IMPORTANT** Does it offer an opportunity for residual income?
Many companies have grown to be very profitable--well-known companies through NWM. Companies such as Avon, Electrolux, Tupperware and Kirby started out as straight-line sales organizations and moved to MLM. Nutrilite, a California vitamin company, is credited as starting the revolution to MLM in 1945. The plan allowed Nutrilite distributors with at least 25 regular customers to recruit new distributors and draw a 3% commission from their sales. Unlike traditional direct-selling, this was an ongoing payment whenever the customer re-ordered, thus allowing direct-sellers to build a sales organization that could generate a residual-like income.
The Direct Selling Association, the Network Marketing Industry’s National Trade Association, reported that in 1990, 25% of members used MLM, growing to 77.3% in 1999. By 2009, 94.2% of members were using MLM, accounting for 99.6% of sellers, and 97.1% of sales. The DSA indicates that 88% of NWM work fewer than 20 hours per week. It is estimated that there are over 1000 firms using multi-level marketing in the U.S. alone.
Since many people are just a pink slip away from losing their jobs, either because of downsizing or businesses closing their doors completely, job security has become a myth. Because of this, many people are considering starting their own business, breaking out of their comfort zone, and trying something new to get more control in their lives.
Based on the DSA figures, it is important that we discuss the rationale behind becoming involved in a NWM business. Here is a list of benefits to having a home-based NWM business.
- Work when and where you choose
- Low startup cost
- No employees
- Minimal risk
- Minimal investment
- No inventory
- No shipping or receiving
- You are the boss
- No minimum education requirements
- Huge tax advantages
You control your own destiny. This is far from a get-rich-quick scheme. No matter what anyone might tell you, it requires a commitment to first finding the best NWM business to build and then setting up your business properly. Some network marketing companies will make it sound so simple that a monkey could do it. Don’t fall victim to their hype! If someone tells you that you can sit at home and the sales will role in, don’t believe it. You have to put forth some effort to building and marketing your business, it is, after all, your business.
Sales marketing is a big part of NWM. The word networking should be a clue as to the type of marketing you need to do. Have you ever gone to a great movie and the next day told twelve friends how great it was and convinced them it is a must-see? Well, NWM can be very similar if you do your research well and pick a company with a product that others want because it is such a good and useful product. Sharing your passion, excitement and products with others will produce great results.
Your passion makes people want what you have--give them a reason to buy from you. If you can convince them how great a product is, they will tell their friends and, many times, they will see the benefit in joining your business as a distributor.
Welcome to the way network marketing works.
Some marketers spend tremendous amounts of money marketing their products and never make any money. These are the very people who will tell you, oh, don’t get into network marketing, I tried it and you’ll never make any money. If you choose your NWM company wisely, they will have training, tools and expert advice to show you how to market with very little cost.
Your up-line is also very important to lead you in the right direction. In choosing to join a NWM, you should sign with and follow an up-line who you trust and who has a proven track record of success with the NWM company you join. Just as your up-line is very important to your success, you must become very active with your down-line. They need to be able to depend on you for advice and help in promoting their business. Remember, in this business, by helping your down-line you are growing your business as well. When they sell products or sign a distributor, you make money, too. Train them to succeed and you will reap the benefits. Zig Ziglar, a nationally recognized motivational speaker says, “If you help enough people to get what they want, you will get everything you want.”
Build your product knowledge and become well versed about your product and your system. You don’t have to be an expert, but be able to get answers for your contacts. Never lie to them, if they catch you in a lie, you have forever lost the sale. Just promise to get an answer and follow-up. Many people miss out on sales because they simply don’t follow through with the follow-up. Spend the time to learn everything you can about the product and how and why it works. With this knowledge, you reach a comfort level in talking and sharing your product to potential customers. The more opportunity you have to share with others, the more your business will grow.
Research has shown that successful leaders in business read 2-3 business or motivational books a month. Read, read and read some more! Talk to successful people in your business. Learn to mimic the ways they have used to become successful entrepreneurs with your company. All good NWM companies have scheduled training events throughout the country to help you learn the proper way to grow your business. Take advantage of all you can. Don’t try to reinvent the wheel. Not all of what they teach will always work for everyone, but most is very useful information. Learn what works best for you and go out and make serious income.
