All About Network Marketing

All About Network Marketing

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Syed Aquib Ur
Syed Aquib Ur Rahman
Senior Executive Content
Updated on Aug 16, 2022 17:10 IST

What is network marketing? Is it even legit? If so, how should you start earning money with it? Find all answers here.

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If you have great communication and sales skills and do not prefer the 9 – 5 schedule, network marketing may be a good source of income. 

This area of marketing is a business model that was pioneered by Avon, Amway, and Tupperware, among many others. 

While there are a lot of controversies surrounding the term, it has many advantages when done right. Also, there are a lot more legit network marketing opportunities today in the digital marketing landscape. 

Learn about – 

  1. What is network marketing?
  2. How does network marketing work?
  3. Types of network marketing
  4. Pros and cons of network marketing
  5. Tips for successful network marketing

What is Network Marketing?

Network marketing involves creating a distribution chain for selling products of a company, and earning commission from the sales the distributors make.  

How Does Network Marketing Work?

In this marketing strategy, a company does not distribute products to stores. Instead, it leverages a network of distributors who are particularly passionate and have immense knowledge about the product. 

When these distributors are able to sell the product, they earn a commission from the revenue made by the main company.  

Overall, there are two main strategies to generate revenue through network marketing. 

Lead Generation  

It is nurturing the relationship with anyone who shows interest in the product. In network marketing, the communication is done face-to-face and lead generation can be multifaceted in approach. 

Here are some things to keep in mind when you generate leads. 

  1. There can be situations where the customer may want to turn into a distributor under you. So you have to ensure that they have the right selling skills. 
  2. All in all, your first customers are likely going to be relatives and friends, so you can recruit them and/or train them. 
  3. Also, companies usually suggest their distributors to sell products to the top 100 people you know. 

Have a look at sales courses!

Recruitment 

Recruitment in an organisation is a highly planned process. And since you are doing it alone, you may want to consider some tried and tested tactics. 

If you are trying too hard to convince the people you interact with – why they should join your distribution network or even buy the product – they may perceive it negatively. 

Some things to consider

  1. Try to incentivise them by offering them an initial sponsorship. Let them decide if they can help your business instead of the other way around. 
  2. It is best if you do not put too much pressure on your new recruits. Instead, you can try showing enthusiasm and encouraging them to do the same. 
  3. Focus on leadership qualities. You can offer coaching lessons to your new recruits and guide them on how to convince others. 

Check out free recruitment courses

Types of Network Marketing 

Network marketing works through a tier system. There are three tiers. 

Single Tier

In a single-tier network marketing model, you do not have to recruit anyone but sell products to your contacts yourself. It is like affiliate marketing, where you join an affiliate programme and earn a commission based on the sales from clicks and views. 

Benefit: In this type of network marketing, only you are paid. 

Two Tier 

The two-tier network marketing model is also followed by some affiliate programmes. Here you have to recruit someone. Brands including Grammarly and Avon follow this model. 

Benefit: You earn money from the business and from the sales your recruits make. 

Multi-Tier

In the multi-tier system, there are more than two tiers. It is also called multi-level marketing. One popular example of this is Amway. 

Benefit: Every salesperson in the chain who is responsible for selling the product earns, and the ones who recruit them also earn. 

Pros and Cons of Network Marketing

Let’s explore the advantages of network marketing first. 

Advantages

360-degree Flexibility

Network marketing is not only flexible regarding work hours, but also, gives you an upper hand on whom you want to work with. You can also find many businesses that follow this business model. 

By promoting products you like or the businesses you truly believe can help your prospects, it becomes easier to sell transparently and honestly. 

Another thing to note is that you are not limited to recruiting personnel. You can grow your distribution network and earn more revenue. 

Lower Costs To Begin With

As a business also, you can encourage customers to become your distributors and you can cut the distributor prices. 

At the same time, for you as an individual promoting and selling other products, there is no real requirement for a huge infrastructure. Even when you are unsure, you can just start by buying the sample product and try to sell it yourself without too many overhead costs. 

Limitations

High Drop-Out Rates

In the network marketing business, a few remain successful in the long run. According to the AARP Study of Multilevel Marketing, 90% of sales representatives leave an MLM (multi-level marketing) business in one year. But this statistic is debatable, as these representatives who leave are not well-trained in marketing or sales. 

Do check out marketing courses

Too Many Rejections

There is a danger that network marketing can seem like a pyramid scheme where money is made fraudulently by recruiting investors. For that, a lot of people instantly reject when you speak to them about network marketing and opportunities. This is also one of the main reasons why many people drop out abruptly. 

One thing to note is that this marketing model has a low conversion rate, but if you pull through, there can be a success. 

Tips for Successful Network Marketing 

Here are some tips that you can consider before you start with it. 

Follow 1-3-5-7 Formula

Many professionals in the game follow this principle. They also mentor their recruits with it. 

All in all, the formula equates to becoming skilled in selling for one year. If your efforts are consistent, you can convert your career from part-time to full-time in three years. To earn a high five- to a six-figure income, at least five years in the network marketing business is required. To make it further, you need at least seven years. 

Research the Company and Products

It is advised that you know the company well enough. You can check for its validity online. Just do a Google search and see if it comes up on the first page results. 

For example, if you type Amway on the search engine, its official website is the first result. 

Amway google search results

Have a look at their social media handles and their content to figure out if their message resonates with your business mindset. 

Also, do thorough research about their products. Ask important questions such as, ‘do they really have a market demand?’, ‘are these products of good quality and reasonably priced?’, and so on. 

You can even refer to our blog on the marketing mix to understand the most important aspects of marketing.  

Leverage Social Media

Social media marketing best practices can be a boon. But yes, you have to create a consistent image with regular posts. Also, do consider creating posts that do not look spammy. 

Many experts suggest that you do not mention the name of the brand. Instead, you can try focussing on building curiosity through actual customer/distributor testimonials and how they have been successful. 

While you are at it, check out the free social media marketing courses too!

Parting Thoughts

So, what do you think? Is network marketing going to be your next step to earn residual income while you work from home? 

The thing is, network marketing is a double-edged sword. It has as many benefits as much as there are an equal amount of disadvantages. But how you approach marketing, distribution, and selling a product persistently will play a vital role in your success.

About the Author
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Syed Aquib Ur Rahman
Senior Executive Content

Aquib is a seasoned wordsmith, having penned countless blogs for Indian and international brands. These days, he's all about digital marketing and core management subjects - not to mention his unwavering commitment ... Read Full Bio

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