This unique business has millions of distributors doing billions of pounds in sales annually. It is conducted in nearly 100 countries around the world. It has been praised by leading business people and also by heads of state for boosting the economy. Yet most people in the UK are still totally confused by it.
Network marketing has created many millionaires and spread that excitement to millions more, but just what are the realities of this business?
So what is network marketing?
Network Marketing is based on the concept of ‘networking’. We all have a circle of people we know through the circumstances of our daily lives and each of these people will have their own circle of acquaintances, colleagues, family and friends. Network Marketing involves tapping into these networks not only to sell product but also to offer the business opportunity to potential new distributors who then start the process of developing their own networks for selling and recruiting.
In network marketing, services and products are distributed to the final consumers through a network of independently contracted distributors or agents (also known as consultants). These distributors are then financially rewarded in two ways: a) from commissions and overrides from sales generation and b) for their contribution to the building up of the network by getting new ‘recruits’ to be downline distributors. The network marketing business model works because of the price differential that is generated from the distributor to the consumer. If the recruits of the one you recruited generate sales, you get a percentage of the price differential for the sales, and so on.
Network marketing is usually associated with pyramid or ponzi scams. This is because the main structure of the two models can be quite similar at first glance. However, if one takes a closer look at the models, there is one big and defining difference between them. The main difference between a legal network marketing firm and a pyramid scam is that the first one offers real products and services, the latter only promises opportunities and generates money from the cost of entry of the recruited members. A pyramid scam re-channels the incoming funds from the fees that newly recruited ‘members’ pays for entering the scheme and does not generate any kind of profits from other endeavors. The masterminds of the scam benefits while leaving most, if not all, of the downlines in financial burdens.
o As the networks widen, so the individual leader benefits not only from their own sales but also a percentage of the sales from their network. As more people join the network, so residual income increases.
o network marketing allows its distributors not only to network outwards in order to sell the product but also to benefit from their downline’s downline, either to a limited depth or ad infinitum. However, the two terms tend to be used fairly indiscriminately.
o As with any other home-based business, distributors need to work hard and have courage and determination. Finding a good sponsor is just as important as finding an interesting product and a good compensation plan which offers flexibility and just reward for effort. Contrary to expectation, the newcomer has the same potential for success as the long-term sponsor provided that the necessary research and skills training takes place. It is not necessary to be ‘in at the beginning’ and in some cases it may prove more difficult and risky to join at the beginning than to join a plan which has reached a more mature phase. Network Marketing is particularly suited to married women with family commitments as it offers them an opportunity to start a business on a part time basis with very little capital. The opportunity now exists for enterprising women to use their talents and the skills gained from motherhood to build businesses based both on selling and on finding and supporting the efforts of others.
There are 2 trends that are driving this industry forward:
a. General shift towards self-employment.
b. People’s quest for a better lifestyle – They no longer want to work 40 or 50 hours a week just to pay bills.
For many people Network Marketing is the only way to Create Financial Freedom in the UK today.
One business magazine wrote “Network marketing is so far ahead of the competition when it comes to money and lifestyle that is in a league of its own.”
With a traditional career you only get paid for the hours that you work. When you leave your employment your monthly salary stops and all you are left with is experience and perhaps a pension, which is rarely enough to live on. Network marketing is entirely different – Your efforts are multiplied by helping people succeed with their businesses, so that your investment comes back many times over, to create time and financial freedom. The longer you work at it, the easier it becomes. The more you help others become successful, the more successful you become.