5 Tips For Network Marketing - SKengineers

 

NETWORK MARKETING -

What Is Network Marketing?

Network marketing is a business model that depends on person-to-person sales by independent representatives, often working from home. A network marketing business may require you to build a network of business partners or salespeople to assist with lead generation and closing sales.

There are many reputable network marketing operations, but some have been denounced as pyramid schemes. The latter may focus less on sales to consumers than on recruitment of salespeople who may be required to pay upfront for expensive starter kits.

What Does Network Marketing Mean?

There are many well-known companies whose business model is based on network marketing. A few examples are Avon, Amway, Herbalife and 4Life. These companies have different tiers or levels that are created each time a new member is added to the network. Depending on the number of levels these systems have they can be classified as single tier, two tier and multi-level. A single tier network is a company that recruits individuals that become direct affiliates and benefit from discounts and sales commissions. A two tier model can involve the creation of a new level below the first affiliate, established by members recruited by this individual.

Each person, under this model, is entitled to some benefits that come from the sales of this additional level of the network. Finally, there are multi-level schemes that work with many levels below the initial affiliate, entitling them to benefits coming from each stage below them. Some of these structures have been questioned in the past because of alleged false advertising, contract breaches and Ponzi schemes, nevertheless, many renowned companies are successful because of this marketing technique.

Example -

LonHome Co. is a company that manufactures house cleaning products. They have a very extensive product line to serve different purposes like dishwashing solutions, floor waxes, shoe polishers, among many others. The founder of the company Stan Matthews deeply believes in network marketing as the future of sales. Since he started the company he developed a network of very well trained individuals that not only sell products directly but also recruit other representatives in many states across the country.

He started five years ago and now the company has more than 5,000 representatives located across the country and this first group of individuals are now very wealthy and serve like company’s marketing directors for different regions. The network marketing technique employed by Stan has been very successful and he sees more growth coming the next years.

Types of network marketing –

Network marketing can be broken down into three essential categories. These categories are similar in that they call upon individuals to use their personal networks to run their businesses. Through these networks, individuals make sales or recruit others to sell products.

Network marketing, although similar, is not to be confused with influencer marketing.

Direct marketing -

This single-tier marketing system requires an individual to sign up for a program to sell a product or service. Individuals who sign up for these programs do not need to recruit other distributors and are paid only on the direct sales they make.

Direct marketing is the most immediate form of sales. Find a product you like and get your friends and family to buy into it. A few top companies involved in this type of network marketing are Mary Kay cosmetics, Avon cosmetics, and Pampered Chef kitchen supplies.

Affiliate marketing -

A newer aspect of network marketing is using online affiliate marketing programs. Website owners and bloggers integrate links to specific products on their platforms. When people click on those links and purchase products, the website owner is rewarded a referral fee. This provides customers with access to a trusted site where they can immediately purchase the products being advertised.

It’s important for those using affiliate links to be transparent about that. A simple disclaimer at the bottom of a blog post fits this purpose and lets your audience know that you’re making money from these links. Amazon’s affiliate program is one of the most well known, but Partnerize and Google’s Affiliate Network are also options.

Those are thousands of affiliate programs out there for both brands and individual individuals can leverage. Be sure to research the most high-paying affiliate programs out there before you join a program.

Multi-level marketing -

Multi-level marketing (MLM) is a distribution-based marketing network that includes direct sales and a downline of distributors. These home businesses tend to get a lot of bad press for their similarity to pyramid schemes. In reality, they have one key difference. Where pyramid schemes require people to invest in a false promise of wealth, MLM organizations sell real products or services that distributors believe in.

KEY TAKEAWAYS -

Network marketing appeals to people with high energy and strong sales skills, who can build a profitable business with a modest investment.

A network marketing business can be a single-tier program, whereby you sell the products, or multi-tier, where you also recruit additional salespeople.

Beware of network marketing companies that create many tiers of salespeople or require you to purchase expensive products or training material up-front -- and thoroughly research the company before you join.

How Network Marketing Works -

Network marketing is known by a variety of names, including multilevel marketing (MLM), cellular marketing, affiliate marketing, consumer-direct marketing, referral marketing, or home-based business franchising.

Companies that follow the network marketing model often create tiers of salespeople—that is, salespeople are encouraged to recruit their own networks of salespeople. The creators of a new tier (or "upline") earn commission on their own sales and on sales made by the people in the tier they created (the "downline"). In time, a new tier can sprout yet another tier, which contributes more commission to the person in the top tier as well as the middle tier.

Thus, the earnings of salespeople depend on recruitment as well as product sales. Those who got in early and are in a top tier make the most.

 The FCC advises that that single-tier network marketing operations tend to be more reputable than multi-tier schemes.

What to consider when entering network marketing -

If you’re ready to start your own home business as a network marketer, there are some things you should consider and research first. These organizations want access to your network of friends and family.

You value the people in your life, so protect them and only market what you personally find valuable.

6 questions to ask before joining a network marketing organization

How old is the company?

What product or service do they offer (and is it something you find valuable)?

How fair and generous is the pay distribution?

What is the integrity of the company?

Does the company have good momentum and timing?

What support or training is offered by the company?

Like in any career, you need to make sure you are securing yourself and your customers. A large number of scams exist, claiming to be network marketing opportunities. Use the simple checklist above to begin research into network marketing organizations.

Remember that this is a business. You are your own boss and your own employee. If you want to call the shots, you need to be okay with facing failure and trying again.

Keep in mind that not everyone in your network may be supportive.

Additionally, have a clear understanding of how this affects your taxes and finances. If you’re not versed in accounting, consider hiring an accountant. There are many people who specialize in dealing with home-based businesses.

Mentorships are key to successful network marketing -

If you joined a network marketing organization, chances are you were recruited by someone you know. This person has likely been around longer than you and should function as your mentor until you get off your feet.

It’s in the best interest of your mentors to help you succeed, so be willing to listen to them and learn the system.

Equally as important, it’s vital for you to be a good mentor when the time comes. When you recruit someone into your organization, support them and teach them how to be a successful network marketer.

Long-term relationship building is how you’ll find success in network marketing.

Advantages and Disadvantages of Network Marketing -

There is some stigma attached to the networking marketing business, especially those with multiple tiers, which can be characterized as pyramid schemes—that is, the salespeople in the top tier can make impressive amounts of money on commissions from the tiers below them. The people on the lower tiers will earn much less. The company makes money by selling expensive starter kits to new recruits.

The appeal of network marketing is that an individual with a lot of energy and good sales skills can create a profitable business with a modest investment.

A good rule of thumb, according to the Federal Trade Commission (FCC), is that an operation that ensures compensation which is based on actual sales to real customers tends to be more reputable than multi-tier schemes, in which people make money based on the number of distributors they recruit.1

Special Considerations -

Anyone considering joining a network marketing operation should do their research before making a decision. Consider these questions:

 Was it pitched as a chance to make money by selling products or by recruiting others?

What is the track record of the company's founders?

Are you personally enthusiastic about the products?

Are people you know enthusiastic about the products?

Is the product being promoted effectively?

Do you foresee a relatively fast pathway to profits or a long time treading water?

Is Network Marketing a Pyramid Scheme?

While network and multi-level marketing programs have been accused of being pyramid schemes, there are some important differences. While those who are able to recruit more members into the program are often able to enjoy greater residual commissions, network marketing is a legitimate and legal business structure that offers real products and services sold to customers.

Will I Make Money by Joining a Network Marketing Program?

It is certainly possible, although not probable. Some people do enjoy great success at network marketing, largely due to their ability to recruit more members to the network. There are two main revenue sources: selling products, and commissions from sales made by team members downline. The more people there are downline from you, the more money you will accrue - the larger the team you can recruit, the more money you can make.

Most people who join legitimate network marketing programs make little or no money. People may actually lose money. Some may become involved in an illegal pyramid scheme and not realize that they have joined a fraudulent venture, and can lose everything they invest. Do your research and ask around before diving in.