If several years ago the world of network marketing seemed fraudulent, today this type of earnings is preferred by an increasing number of people. Such a business provides a chance to start from scratch without higher education and work experience - and to achieve success in a short time.
Network marketing - what is it?
Products and services can be implemented in a classic way - through retail networks. There is a category of goods, the manufacturer of which chooses a more closed way of sales, carrying out business through a ramified system of personal sellers. Network marketing is an economic model of profit making by the hands of sales agents working for a percentage of sales. Their income depends on partners who have similar in scope rights.
How does network marketing work?
Sellers under this scheme work personally with the client, so it refers to the method of direct sales. The first customers, as a rule, are friends and relatives - the sales network develops due to trust and belief. The essence of network marketing can be reduced to this algorithm:
- Registration of a new trading company and purchase of a wholesale consignment of goods
- Search for distributors who will become direct representatives and begin to conduct short advertising campaigns without additional investments
- Getting distributors a share from the cost of each sold product, expanding the circle of acquaintances and transferring part of the earnings to senior partners.
What is the difference between a pyramid and network marketing?
The financial pyramid is profitable only to its founders, who invented a fraudulent scheme. Its purpose is to issue fake shares or bonds that have no real value. The difference between the pyramid and network marketing is that it closes after the commission of illegal actions. The principle of direct sales is legal and brings profit for many years to all distributors. If the financial pyramid promises, but does not pay bonuses for the friends attracted to the company, then the marketing representatives receive additional income for this.
Network Marketing - Negatives and Pros
As the main or additional source of income, marketing has its advantages and disadvantages. Among the advantages of this format of doing business are:
- The opportunity to purchase truly worthwhile products . Advantages of network marketing guarantee high quality of goods in comparison with those that are realized in the usual way.
- Flexible system of discounts . Representatives spend 30-40% less on buying than their customers.
- No need for starting capital . Network marketing does not need a primary investment of finance provided the scheme is legally valid.
- Free training . Distributors are introduced to products, sales rules and passive earnings .
- Remote work . Several years ago, it became possible to conduct a network business through online sites, so distributors do not have to search for customers on their own.
The main disadvantage is the dependence of the price on the product on the number of employees in the firm. Sooner or later there comes a time when you can not raise the price for profitability purposes, because the ceiling of the possible value in the market has been reached. Knowing what network marketing is, it's not difficult to guess that the revenue of new partners will be much lower than those already operating. Without this, they still have to spend a certain amount each month to purchase goods from their own pockets.
Types of Network Marketing
Business strategies differ in the number of levels and the list of responsibilities of participants. There are five main types of network trading that have become widely known:
- One-level (money paid for sales, services to attract new agents are not considered encouraged).
- Stepped with the department (mixed earnings for the implementation and connection of distributors to the network).
- Binary (business network marketing considers as an actual trend, so entrepreneurs are willing to sponsor binary plans).
- Matrix (members of the structure are interchangeable and shift each other from one cell to another).
- Layered (network marketing of this kind delimits employees to distributors and managers).
Network Marketing - How to Earn?
Work in networks many people avoid, being confident that it can not become a stable source of income for an adult and successful person. It will be no less comfortable than office work, if the distributor can understand what character traits he should rely on. Work in network marketing is easier given to communicative personalities who do not suffer from complexes. One should not be afraid of talking beautifully and confidently with strangers, offering them goods of the most diverse groups.
Network Marketing - how to attract people?
None of the partners of the MLM-structure will advance above the base level on only high sales. The project needs constant updating of the participants, which requires the agents to know the human psychology . Being confident how to involve partners in network marketing, the manager sometimes encounters a skeptical attitude to this kind of activity. Therefore, the main goal should be the persuasion of a potential employee in the futility of the idea.
How to succeed in network marketing?
Statistics say that in networks of a good result, people who want to go beyond the bounds of an imposed understanding of the working day with systematic advancement reach people. The secret of how to succeed in network marketing is in several rules:
- the ability not to deviate from the appointed goal;
- self-control while communicating with people;
- desire to plan your own life and income;
- ability to permanent self-education.
Network Marketing - Motivation
Failure leads to a lack of enthusiasm in the first stage, when the newcomer is not sure whether the profit will bring profit work and how soon. In the failure of the beginnings, the person himself, who is not ready to radically change habits and way of life for the sake of development of personal qualities, can be to blame. Motivation in network marketing can be scooped from books, search engines, audio recordings and video tutorials. She brings up from the ordinary worker a creative nature with organizational qualities - the future leader.
Network Marketing - Facts
Like any business, network marketing is curious to study in terms of statistics and history. MLM-structure easily experiences financial crises - this is the only type of entrepreneurship that does not reduce profitability in difficult times. Other interesting facts about network marketing can be included in the following list:
- The total annual revenue of all existing distribution companies is more than $ 250 billion. If you divide this amount by the number of representatives, you get a monthly salary of $ 4 thousand for each of them.
- 60% of the goods sold worldwide, sold through MLM-sellers.
- 20% of the current billionaires, began a career as a network representative. Another 4 billionaires in the world are getting rich for the same reason every week.
- Network marketing can not be considered frivolous, because the shares of large corporations are officially sold on exchange markets.
- This work is more like women than men: for each guy-distributor there are 4 girls.
Books on Network Marketing
To achieve success in any field, it is necessary to constantly replenish the luggage of knowledge. In this type of business, reading teaching materials helps to avoid failures and pitfalls, which are familiar to experienced people. Each organization has its own set of books written by managers who have achieved success. In addition to them there is a general list, which includes books on network marketing of different areas:
- Don File "Ten lessons on a napkin . " Describes the boundaries of commercial opportunities for beginning entrepreneurs.
- Jarnell Mark "Your first year in network marketing . " Gives practical advice for beginners who want to earn millions.
- John Maxwell "Leadership" . Reveals the principles of cooperation with other people and building the right relations with partners.
- Tom Schreeter "Turbo-MLM" . Debunking the myths that the main principle of network marketing is fraud.
- John Milton "The Greatest Networker in the World" . Narrative of the biography of the author of several best-selling books.
Top-leaders of network marketing
The criteria for selecting leaders in this area are the number of employees and the steady growth in sales. Absolute leaders developing network marketing in the world through obtaining a large annual revenue are:
- Avon - a company engaged in the sale of decorative cosmetics, funds for waste, costume jewelry and perfumes.
- Amway - means for cleaning, perfumes, vitamin supplements.
- Herbalife - drugs for weight loss and recovery.
- Mary Kay - fragrances for men and women, makeup.
- Tupperware - utensils, kitchen tools, containers for storage.