Network Marketing

How Does Network Marketing Work?

Network marketing relies on word-of-mouth promotions and the products or services can only be purchased from a company representative, or from the company itself.

Also known as multi-level marketing (MLM), it’s a business model where individuals sell products or services and earn commissions from their own sales as well as from the sales of the people they recruit into the business.

They are NOT employees and DO NOT receive a salary.

Network Marketing products and services solve problems and whilst these products are often of higher quality than similar options found in the shops, they tend to be more expensive, especially when shipping is involved.

That’s why they will only appeal to the specific niche of people who have the problem the product or service can solve …

…and are actively looking to solve it.

It’s important you thoroughly research and understand the business model before getting involved as whilst some people have had positive experiences with Network Marketing, many haven’t.

The OLD model for this type of business often receives negative views, because the focus used to be more on recruiting new members into the business rather than selling the actual products or services.

This created a pyramid-like structure, where people eventually ran out of others to recruit. Only those at the top could significantly benefit and the model was often referred to as a pyramid scheme.

These systems are unethical and now illegal.

Also, Network Marketing companies often created a sense of urgency or used high-pressure tactics to convince others to join their ranks. That made people feel uncomfortable.

Many felt they were coerced into making decisions they later regretted, especially as the income potential in Network Marketing varies greatly and the significant residual money, they thought they’d quickly earn never quite materialised.

It’s true, the people at the top of the network earned substantial incomes, but most people further down the structure often struggled.

High dropout rates were common so it’s no wonder the industry got a bad name.

However, if you find a good product or service you can prove has benefitted you in some way, Network Marketing is a very good business model indeed.

The NEW Network Marketing business model is actually very clever.

Yes, it still relies on reps/distributors, or partners to promote the product or service via word-of-mouth, rather than traditional advertising, but Network Marketing companies now need to comply with legal regulations.

They must have customers who only buy the product or service without being recruits who receive a commission (rather than a salary) for promoting the company.

This NEW way focuses on both personal performance and the sale of actual products or services, so you don’t just make money by recruiting others; but also by selling real products or services to customers.

That means someone in a lower position can easily earn more than their upline.

Of course, money does flow up from the lower levels to those above, but now the amount each person can earn is directly connected to their own hard work and sales skills.

Here are a few more things to consider about the new way of Network Marketing.

No Guaranteed Earnings: Unlike pyramid schemes that promised big earnings just for recruiting, this new model gives no guarantees. Your income depends on how well you sell and how much effort you put into your work.

Product or Service Focus: The heart of this approach is the actual product or service being offered. You must genuinely provide something of worth. It should be valuable and useful to the end user.

Multi-Level Structure: Just like in traditional network marketing, there may still be multiple levels of distributors, but the key difference is the money you earn primarily comes from selling products or services, not just from recruiting others.

Earning More Than Recruiters: In this new type of network marketing, it’s possible for someone to earn more money than the person who recruited them. That’s because your income is tied to how well you sell. If you’re really good at selling and building a customer base, you can earn far more than the person who brought you into the business.

To sum it up, the new approach to network marketing focuses on genuine products or services and rewards personal effort and sales skills. As long as the emphasis is on real value and individual performance, rather than just recruiting, it’s a legitimate and ethical way for people to earn money.

Just remember to always do your research before getting involved with any network marketing company to make sure it aligns with your goals and values.

Here’s why …

High Initial Costs: Many network marketing companies require new members to invest in starter kits, products, or training materials. These costs can quickly add up and might not always lead to the expected returns. Critics argue these costs can create financial strain, especially for those who are desperately hoping to earn income, but end up spending more than they actually make.

Exaggerated Income Claims: Some network marketing companies use flashy marketing materials and promise huge income potential to attract new recruits. However, the reality is that only a small percentage of people in these programs actually earn significant money. This can lead to disappointment and frustration for those who join with high hopes but struggle to achieve the promised earnings.

Pressure and Hype: There can be instances of high-pressure sales tactics and emotional manipulation to encourage people to join or stay in the network marketing business.

It can put a strain on friendships and create an uncomfortable environment and lead to negative perceptions about the industry.

See our Duplication Is A Myth page.