From The Desk Of:
Port Elizabeth, South Africa
What is Network Marketing?
"How to leverage your time,
earn a residual income
and help others to do the same."
Clueless about Network Marketing?
You are not alone... Some who have been involved for years, still have no idea how it works or why it exists. Never before have the people in an industry been so confused with what they are actually actually supposed to be doing.
The confusion stems from misinformation from within-, but also from sources outside the industry itself. Thanks to the fact that Network Marketing is so extremely accessible and open to anyone that is willing to take a shot, we get all kinds of people that get involved - and even though that is one of the great features of Network Marketing, it also turns out to be one of its down-falls.
Open to everyone...
If anyone can get involved, anyone will... "Get-rich-quick Syndrome" is unfortunately, very alive and well - not exclusively in Network Marketing, mind you, but it does seem to attract its fair share of it. And it is no surprise - due to the abundance of people looking for a quick fix, some people within the industry have fallen to the temptation of watering down the methods needed to be successful and started selling "simple and easy" instead, using hype and ineffective techniques.
I have had to fight the mind-set myself, thanks to years of following the wrong teachings. Its natural for a human being to be attracted to the methods that involve the least amount of effort - especialy when you trick yourself into thinking that there are no alternatives.
And when people do not become rich over-night, they get angry. As you know, it is not really pleasant to admit that you have fallen to temptation and it is so much easier to divert the blame onto something else... Usually, the industry itself. The question is, when you look at it objectively: can an industry or distribution-model really be blamed, or should we be looking at the actions of some of the people using that model?
Some people from outside also take the bait - but in a different way. Most of the time, they do not get involved themselves and instead choose to go into the opposite direction - they actively promote against and criticise the industry, using the hype as a basis for their information. Again, that simply does not make sense either.
So, whether you are new to Network Marketing or have been involved for some time, I hope this page can at least clear up some of the confusion. In order to do so, I am going to break up "Network Marketing" into its two base components - "Networking" and "Marketing."
What is "marketing"?
In simple terms, "marketing" is simply a method of getting in touch with potential customers. Some methods include:
- Promoting products via a store-front,
- using direct mail,
- and promoting via the Internet.
By marketing effectively, it is possible to reach out to a potential target market and attract only those who are looking for what you have to offer. Sales is a natural outcome of good marketing and they go hand-in-hand, although most people sometimes make the mistake by thinking of them as the same thing. With good marketing, you can be really bad at sales and still make good money - with bad marketing, you will need to have a lot of confidence in your sales-skills.
What is "networking"?
Bob Burg, in his excellent book called "Endless Referrals," defines "networking" as the following:
"Networking is the cultivating of mutually beneficial, give-and-take, win-win relationships."
Human beings are social creatures - whether you are an introvert or an extrovert, you have to have some form of human interaction to survive. All of us have a sphere of influence - the people that are around us that will listen to what we have to say. Those people, in turn, have friends, who in turn have more friends. Networking is the art of finding the right people with which to build relationships, that will benefit all the parties involved.
So then... what is "Network Marketing"?
"Network Marketing", also known as "Multi-level Marketing" ("MLM") and sometimes "Referral Marketing," is simply just another way for a company to get into touch with their potential customers, by paying them to spread the word about the company and products - in other words, incentivised word-of-mouth advertising.
Every new customer has the opportunity to become an agent for the products of a Network Marketing company, if they choose to do so. They also have the opportunity, to build a team of agents themselves - effectively giving them a business with the benefits of having employees, but without most of the hassles associated with it.
In other words, every customer has the opportunity to build a network of customers who have a need or a want for the products that they are marketing, as well as a network of agents that they have trained to support them.
"Multi-level Marketing," is in fact the original name for "Network Marketing," which is the more progressive term. However, where "Network Marketing" is more descriptive of how you go about doing it, "Multi-level Marketing" describes how you get paid.
Let us take the diagram above as an example... If John, Pete and you are agents, the following will happen:
- You will get paid for your own efforts as well as every product sale that comes through John and Pete,
- Pete will get paid for his own efforts as well as every sale that comes through John,
- and John will only be paid for his own efforts - until he starts his own team, of course.
In traditional marketing and direct sales, you would only be paid for you own effort, not for those you have taken the time to train as well. Your commission might be smaller as well (since the commission gets split over multiple levels), but I believe the advantages outweigh the disadvantages. The difference is mainly the following:
- Direct Sales has limited potential, because it involves only one person putting in all the effort - you can only do so much;
- where Network Marketing has unlimited potential, because it allows you to get paid for a lot of people each putting in a little bit of effort.
At the end of the day, whatever you want to call it... "Multi-level Marketing", "MLM", "Network Marketing" or "Referral Marketing", it comes down to a very simple fact: It is just another way of getting paid - specifically for something that you are already doing: word-of-mouth advertising.