What is Network Marketing?
Network marketing is a business strategy that focuses on selling from person to person by individual contractors. This can allow you to build a system of business partners or salespeople. This database can be used to assist with the generation and closure of lead sales.
Network Marketing has achieved a great deal of popularity in America over the last decade. This is because the space offers more flexibility and more money. This marketing structure has the versatility of a company with a payroll framework.
Despite its innocent exterior it has serious flaws that opens it for illegitimate manipulations. There is a variety of legitimate network marketing activities, but others have been dismissed as pyramid schemes. The latter may rely less on selling to customers than on the recruiting of salespeople who will be expected to pay in advance for costly starter kits.
There are several tiers of this system. Along with payouts at each of these stages, which is why this marketing approach is also referred to as multi-level marketing.
How does this MLM Work?
Several companies have been able to use network marketing to their advantage and build brands with global recognition. Such impressive success stories include Tupperware, Mary Kay, Amway, and Pampered Chef. All of these companies made a name for themselves long before the Internet era. But that doesn’t mean that multi-level marketing doesn’t work today.
Indeed, with social media, e-commerce platforms and easy-to-build websites readily available, there are more opportunities than ever for independent distributors to market and sell their products. At the same time, however, there is more competition than ever before.
Because multi-level marketing success depends more on sales than on “downline”. Thus distributors must invest a lot of time and effort along with a small upfront investment to find customers, sell their products, and make a living.
The Pros And Cons
There is some stigma attached to the networking marketing sector. This is because in those with numerous third parties that can be described as pyramid schemes.
What is a pyramid scheme? That is, top-tier salesmen will make incredible sums of money on commissions from third parties below. Those on the bottom strata would gain a lot less.
The attraction of network marketing is that a person with a lot of resources and strong selling skills can make a profitable company with a small investment.
According to the Federal Trade Commission (FCC), single-tier network marketing activities aim to be more reliable than multi-tier systems. Individuals make money on the basis of the amount of distributors they employ. Reputable examples of single-tier network marketing activities include Avon Goods and Mary Kay.
Is Network Marketing Right For Me?
If you’re trying to get rich from network marketing, the odds are almost non-existent. As for every other business pattern, this is meant only for the fortunate few.
With that being said, network marketing is not as time-consuming as a full-time job and is definitely more convenient. If you work from home, you have a lot of freedom than you would otherwise have. This begs the question, is this freedom worth involvement in a pyramid scheme? Or investing in ventures with the possibility of small returns?