What is Network Marketing?

Network Marketing means different thing to different people. For many, it is a means to financial freedom or more time with the family.

But what is Network Marketing really?

This article provides a very basic and unbiased description of Network Marketing – also known as Multi-Level Marketing (or MLM) – for those of you who are new to the business.

The basic definition of Network Marketing is “a business-distribution model that allows a parent company to market its products directly to consumers by means of relationship referrals and direct selling”.

Stated simply, Network Marketing companies count on YOU, once a member, to refer their products/services to others instead of directly marketing the product themselves.

Most Network Marketing companies do provide you with the materials that they believe can help you generate sales and keep your business going. However, the majority of successful network marketers look elsewhere for the tools to promote their businesses.

Network Marketing businesses operate and in more than 100 other countries. The Direct Selling Association (DSA) estimates that over 17 million people are working in the network marketing / direct selling industry.

There are literally thousands of Network Marketing opportunities to choose from and the list continues to grow. Many new companies fold within the first five years of their business lives but some companies have been around for over 50 years and are still going strong.

Nypros http://www.npros.com/directory.asp is one site that offers an updated list of current MLM opportunities.

What is Network Marketing: How do you become a Sales Representative?

It’s not hard to get into Network Marketing. Anyone above the age of 18 can join for a relatively small fee and some opportunities are even free. Most Network Marketing employees will tell you that “Anyone can succeed in this business”. And although that is simply not true (in fact, about 95% of people setting out to try network marketing fail), the reasons for such a high failure rate might surprise you.

You will learn that there are many interchangeable terms for a Network Marketing “Sales Representative”. MLM Sales reps can be referred to as distributors, associates, independent business owners, dealers, franchise owners, sales consultants, consultants, independent agents, and the list goes on and on. So, don’t be confused (like I was in the beginning!) if you come across different terms in your various MLM resources. They all mean the same thing.

An initial sign-up fee is charged by most Network Marketing companies to get you started as one of their representatives. This fee usually covers the cost of the marketing materials your company provides you with as well as some of the company’s products. There could also be an additional monthly charge or annual renewal fee to continue but these vary from company to company.

What is Network Marketing: Compensation Plans

Once a member of any Network Marketing business, you get paid commissions when someone buys your product/service either from yourself or from your team. Anyone you recruit to the business is referred to as your “downline” and you are their “upline”.

The terms “width” and “depth” are some of the terms used to define the various compensation plans.

Depth refers to the number of levels under you. So, the first representatives that you recruit are considered a depth of 1. Those under them are a depth of 2. Those under them are a depth of 3, and so forth.

Width refers to the number of people at the same level. So if you directly recruit 4 representatives, the width of that first level under you is 4.

MLM compensation plans differ greatly from one business to the next. In any case, there can be multiple levels of people receiving royalties from one person’s sales.

Although most Network Marketing Compensation Plans fall under the following categories, these are not all-inclusive:

Unilevel plans

This is sometimes considered the simplest of compensation plans. With these types of plans, the commissions you are paid are based on the number of levels you are from the lowest person in your downline.

Commissions do not depend on the title or rank you achieve. By qualifying with a minimum sales requirement, you earn unlimited commissions on a limited number of downline levels.

Matrix Plans:

This type of plan is similar to a Unilevel plan except that it limits “first-level” representatives (those recruited directly by you). So, if you directly recruit more than the specified number allowed, the “overflow” is automatically placed in other downline positions under someone else you recruited.

When all positions in your downline matrix are filled (maximum width and depth is reached for all participants in a matrix), a new matrix may be started. As with Unilevel plans, representatives in a Matrix earn unlimited commissions on limited levels of volume with minimal sales quotas.

Binary Plans

A binary plan allows you to have only two front-line distributors. If you sponsor more than two distributors, the extras are placed at levels below your front line (such as in the Matrix Plan). This “spillover” is an attractive feature for new Network Marketers since you only need to sponsor two distributors to participate in the compensation plan.

However, in this plan, you must “balance” your two downline recruits in order to receive commissions. What this means is that the number of sales from one downline leg cannot be more than a specified percentage of your total sales. And you most probably will get paid based on the lower income of the two recruits.

Stairstep Breakaway Plans

If you enter a Network Marketing business which employs this type of plan, you are responsible for both personal and group sales. You earn commissions from recruiting representatives to work on your downline as well as selling your product or service directly.

You can also receive discounts or rebates if you bring in one or more downline recruits. Once you reach the established personal and/or group sales goals, you move up in rank. This continues until you “break away” and are no longer considered part of your upline.

Hybrid plans are compensation plans that are constructed using elements of more than one type of compensation plan.

What is Network Marketing: Why Do People Join Network Marketing Companies?

There are many reasons for anyone to get involved in Network Marketing. The hope of financial freedom, especially during downturns in the economy, is why many people are open to non-traditional business opportunities.

Network Marketing businesses are especially attractive because the initial investment is very low and the potential for gain is very high.

The desire to work at home is another reason that drives many to seek out Network Marketing opportunities. Any MLMer can work from home (or anywhere, really) and establish their own schedule, goals, plans, etc., instead of those of their employers.

Most Network Marketing companies offer reasonably priced products that can be consumed in a short amount of time. This makes it easier to get started right away.

The biggest perk offered by Network Marketing is residual income.

In simple terms, residual income refers to the continuous monthly payment or compensation that you receive even if you stop working. So, once you join a Network Marketing business, you get a portion of the company’s profits every time the customer you have referred to them buys the product. This means that even if you are not selling anymore or even recruiting somebody into the company, you can still earn money.

Network Marketers leverage the time of others. Once you have an established downline, they will go on to train others as you have trained them (hopefully), leading to more profits for you without you spending any extra time or effort. The most successful Network Marketers are also the best trainers.

Many start out on a part-time basis to substitute a second job – the thought of working a “night-shift” from home rather than at a factory, all-night supermarket, etc. is very appealing.

More and more people are becoming Home Business Owners as the economny struggles – Network Marketing home businesses are also on the rise.

Hopefully this answered your question about What is Network Marketing.

Searching for Unique Network Marketing opportunities?

Do you know what REALLY makes a Network Marketing company stand out? Is it the company’s revolutionary products? Is it the killer compensation plan or the support system?
Sure, these things help. . .

But do you know what REALLY makes the company unique? It’s YOU. Yes, YOU!

It is what you think about the company and its services. It’s how you share information about the company. It’s how you help other people like you to achieve success with this company.

One of the most basic key components that is often overlooked by Network Marketers is the thorough understanding of their target markets.

Why? Well, for one thing, in the old model of Network Marketing it was taught that EVERYONE is your target market so there really was no need to break it down.

Secondly, many Network Marketers get so caught up in promoting their product and sales and numbers, that they forget to listen to whoever happens to be in front of them or on the other end of the line.

But the reality is that no one buys anything because of what it is. They buy it because of what they will get out of it. They buy it because they have a problem that needs solving and they believe a certain product or service will be able to do that. Same goes for your Unique Network Marketing opportunity.

What are you selling your prospects? A plan for financial freedom. A secure future for their kids. An escape from the stifling grip of a corporate employer. A flexible work schedule. A way to pick up the pieces after they have lost their old job. . .

Those are just some problems that people are tryint to solve with a Unique Network Marketing opportunity.

Do you understand them? Chances are you’ve been in their shoes. . .You know their worries, fears, challenges, dreams, goals, likes, needs and interests. Let them know that. Your goal is to become the solution to their problems and the step towards their dreams.

People will join you because they see YOU as the person who is going to help them solve their problem(s).

Stop selling prospects on your Network Marketing opportunity – they don’t care. You are a means to an end. Sell yourself and your marketing system and do so though educational marketing. Provide valuable information and step-by-step how-to plans in your style and words – be yourself and be unique.

Anyone who has ever acquired wealth has done so by solving other people’s problems. That’s the formula for making money. People are willing to pay money for solutions, especially, believe it or not, in this economic crisis.

Unique Network Marketing starts with YOU – not your company.

New Network Marketing

In the past, the Network Marketing industry’s reputation has been tainted by media reports and stories from those who have failed. Even today it is reported that ninety-five percent of those who attempt MLMs fail–a statistic that is not disputed even by leaders in network marketing. And the media has used these numbers to further their notion that all network marketing companies are scams which anyone involved in network marketing knows not to be the case.

In the New Network Marketing model, as more and more people become successful, the negative perception of the industry is slowly being altered. I meet more and more successful MLMers every day. . .

Here is some common criticisms and counters:

The recruiting methods are less than honest and are designed to line the pocketbooks of a few who “make it.”

This stems from the fact that MLMs use uplines and downlines. In most MLMs, you make money off the sales of people you recruit as well as the product/service that you offer.

However, whoever “makes it” does not do so through dishonest methods. And if you are trained to do business in the New Network Marketing model as I have been, you will see that your upline guides you to success through leading by example.

MLMs are just disguised pyramid schemes.

Legitimate MLMs sell a product or service. Pyramid schemes are about creating levels where money is exchanged without a product or service offered. The government is quick to investigate and shut down pyramid schemes. Network Marketing does not equal pyramid scheme!

MLMs take advantage of poor people who believe they can get rich quick.

The truth is no one should look at a Network Marketing opportunity as a “get rich” scheme or think it will work without a lot of time and effort. Any legitimate Network Marketing will emphasize the strong work effort needed to make the business work.

The 95 percent of the people who don’t make it in an Network Marketing also contribute to the theory that MLM companies are “bad” and don’t work.

But more and more people are reaping the benefits of New Network Marketing models. Here are some reasons why:

New Network Marketers take advantage of the current internet training and resources available to them. Network Marketing companies provide what they believe (or expect you to believe) to be all training materials and marketing information.

However, anyone who has ever been involved in network marketing knows that the traditional training methods don’t work and the provided materials should be avoided in first approach sales.

Now, in the New Network Marketing model, Attraction Marketing is being applied so that Network Marketers are now in a position to reap the rewards of prospects actually seeking them out instead of the other way around.

New Network Marketers work hard.

That is the bottom line. With a Network Marketing company, as with any business, you have to work hard. You have to do the same as with a traditional business–market, fill orders, give excellent customer service and be creative.

Finally, when people hear the words MLM, multi-level marketing or network marketing, they don’t realize that some of the most successful companies in the world are MLMs.

Shaklee, Avon, Pampered Chef and Mary Kay are all very successful Network Marketing Companies. Although not everyone becomes wealthy in the these businesses, many do make a successful living.

As more and more people lose their jobs in this economy and look for other career choices, Network Marketing options are becoming more popular. And as people learn more about New Network Marketing and how to use attraction marketing and the internet to make them successful, the reputation of Network Marketing is changing.

How To Be Network Marketing Professionals

The importance of being professional for anyone in business should not be underestimated. And I believe it’s even more crucial for Network Marketers since we’re up against a history of unprofessional behavior.

How to Find the Best Network Marketing Company for YOU.

There are literally hundreds of Best Network Marketing companies out there so you don’t have to worry about not having a choice.

But it is imperative that you understand that it is not a particular Network Marketing Company that will make you successful in your endeavor. Instead, it is the training and support you receive and how easy it is for you to pass this training and information on to your team.

You need to find a company that can show you a plan right upfront. The plan must be one that works for YOU and your team (downline) – it should be simple and easy for everyone to understand and apply.

Having said that, there are some things to look for and some things to avoid as you are researching YOUR Best Network Marketing company.

Falacy Number 1

The most important factor to consider when joining a Network Marketing company is the Compensation Plan.

The Truth

While the Compensation Plan is important, it shouldn’t be the most important factor in making a decision about which Network Marketing company to join.

As stated above, you can be successful in any Network Marketing company with any compensation plan if you have the right tools and marketing system.

What you do want to keep in mind with the compensation plan is that it should be team focused and hopefully (but not absolutely necessarily) simple. And by team-focused, I mean that the better your team does, the better you do as well. Again, this is why it is important that you acquire the marketing skills and knowledge to pass down to your team.

Falacy Number 2

The best companies are the ones where the upline says they will do your work for you.

The Truth

You want to make sure that your upline has a system that will work for you and all the tools and resources if you need them. You should be 100% involved in all your marketing efforts – no one should be doing your work for you. This is how you will prosper in Network Marketing.

Falacy Number 3

The Company has a great product that sells itself.

Any of you who have read Ann Sieg’s 7 Great Lies of Network Marketing already know why this is a myth. (And if you haven’t read it, that is what you should be reading as soon as you finish this article!)

The Truth

No product sells itself. You can have the greatest product in the world but if you don’t know how to market it, it doesn’t matter. On the flip side, if you have a mediocre product and know the right way to market it, the sky is your limit.

By the way, I’m not endorsing mediocre products – I AM endorsing professional marketing.

Another important aspect concerning the products of your next potential Network Marketing company is that the products must need the Network Marketing model.

This simply means that the products or services must be suitable for the direct sales process in which the consumer needs a good deal of information before they buy the product.

If the product is too straight-forward and doesn’t need anyone (you, as the potential distributor) to explain its value, you might want to look elsewhere. A good example of this type of product would be books.

On the other end, if the product is too complex, you want to avoid that as well. Anything which requires a license or some sort of qualification to sell the product is not a viable option.

Falacy Number 4:

Getting in at the start of a new Network Marketing Company is a plus. Because that’s how you can really make the most money.

The Truth

Be wary of very new Network Marketing companies – that is not to say they are all big risks but any new company is apt to have more problems than ones that have been around for a while. Many of these new start-ups fold within the first year.

A good rule of thumb as far as stability is concerned is to go with a company that has been around for at least 5 years.

And, contrary to the myth, you can start with a company that’s been around for 50 years and be incredibly successful.

A couple of very important points to consider when choosing YOUR Best Network Marketing Company are:

1) Pick a company that offers something you really love – something that genuinely interests and excites you. The passion and dedication towards the company and its products far outweigh the other criteria.

2) I’ll say it again. . .training and support are an absolute MUST if you want to do well with any Network Marketing company so make sure that the company that you love also exceeds in that area. Make sure they have the most up to date resources such as company websites that you can send customers to for orders, marketing materials, product conference calls, etc.

And a final note, the company should be “hypless”. The more valuable information provided and the less hype, the better it looks. . .

I hope this article helps you in your search for YOUR Best Network Marketing Company – remember that YOU are what makes it the best!