Network marketing or Multi-level Network Marketing (MLM) is a method of marketing that makes use of independent sales reps as a way to reach a wider range of networks, where conventional methods such as traditional online or offline advertising wouldnt work. It is a very popular business opportunity for people looking to work part-time doing flexible jobs.
Hundreds of companies utilize this method, including some well-known brands such as Avon, Tupperware and Mary Kay Cosmetics: these companies and their respective associates hire a sales force, much like insurance companies have been doing for years, and they use these individuals to reach networks such as friends and family.
Ever come across an ad on TV using the term Independent Insurance Agent, or something similar? These individuals are not really employees of the company; they operate independently by purchasing a product sample starter kit, which usually costs a few hundred dollars, and with that they get an opportunity to sell the product line to their own contacts, friends, family, etc.
These types of programs rely on an individuals ability to influence their network and sell products; and when properly executed, both parties benefit. Many network marketing programs require participants to recruit more sales reps, and as a participant adds to their own downline, sales made by the new recruits generates income for those above them.
Compensation cannot be made exclusively on the basis of recruitment: instead, it should be based on the ability to sell company services and/or products. If a network marketing program generates revenue almost entirely from these recruitments then it may be illegal, and by definition would be a pyramid scheme.
A network marketing program is usually exempt from traditional business regulation and state and federal laws dont define it as franchises under franchise law, so you may need to do some research before putting in any money.
Why do businesses use network marketing?
Its pretty simple, they need to access your network, influence your family and friends, and traditional advertising methods tend to be limited. You would have an easier time trusting a new brand if a friend or family member suggested it, and thats what makes these programs effective.
The types of products and services included in a network marketing program can range from Nutrition, Finance, Communication, Internet Access, Electric Power, Weight Loss, etc. Word of mouth marketing is too powerful to ignore and because its not as expensive as the alternative, which would be spending millions of dollars each year on complex marketing campaigns, companies are more than willing to pay you to spread the word.
The difference between a successful attempt at being a network marketer and a complete disaster doesnt necessarily depend on a persons ability to bug their friends, or lecturing them into submission to have them buying the product or service. That strategy might yield immediate results but it wouldnt work for long.
Your ability to learn who in your circles would benefit from what youre selling, and who would be interested in joining the program: that information will get you better results in the long run.