Network marketing, also known as referral marketing, multi-level marketing or MLM is a unique industry within the business world.
You'll need to educate yourself first before deciding if it's a home business option you should consider.
I've also included some resources and links to help you learn more about the industry.
How is network marketing different?
How is a network or referral marketing business different from traditional business?
Instead of most businesses which are based on a few business owners selling their products to many customers, the multi-level or referral marketing model is based on many business owners each selling products to a few.
The traditional business strives to be unique, whereas the multi-level marketing business seeks to be duplicatable.
The traditional business sells products.
The referral marketing business sells products and promotes a home business opportunity.
Network marketing success requires that you sell products and that you develop a team of business partners who also sell products.
Advantages and disadvantages
Some of the benefits of a referral marketing business are:
- Low start-up costs.
- The company ships products directly to the customer, so no need for inventory or shipping.
- No complicated paperwork since company takes orders.
- The company is responsible for product development, research, legal fees, and more.
- No need for a merchant account or expensive business supplies.
- MLM is based on teamwork so you're rewarded for helping others to succeed.
- You can set your schedule and have the freedom to run your business at your convenience.
- Good multi-level marketing companies will provide you with many business tools like websites, fax-on-demand, voice mail, etc.
- Successful network marketing companies produce high-quality unique products that typically are more effective than most store-bought products.
- You have unlimited income potential.
Some of the drawbacks to a networking marketing business are:
- You are at the mercy of the company you distribute for.
If they go out of business, raise the product prices, or make business decisions that you disagree with, there's not much you can do about it.
- You need to keep up a certain product purchase and sometimes group sales volume as well to be paid.
If the purchase requirement is low, and if you already use the products this will not be a problem, but you may lose out if your company has large sales quotas.
- In most cases, if you have an offline business, you will need to pay for your own sales aids, catalogs, and other sales materials.
- With most companies, you will not be paid a lot at first.
In most companies commission levels are traditionally low for beginners which can be discouraging.
It can take months or years to show a profit.
- Multi-level marketing is controversial, and so some people will think you are involved in a scam.
- Multi-level marketing requires a person to person relationship marketing approach that may be unfamiliar to you.
- For many, but not all companies, you need to develop a team of fellow business owners to earn enough to start making a profit.
- Like all other business ventures, the majority of network marketing businesses do not succeed.
Why is network marketing controversial?
Why is multi-level marketing considered controversial?
Everyone has their own opinion on this, here is mine…
Some people believe that the network marketing model itself is flawed because an unlimited number of distributors selling products creates market saturation.
Because I am not an economics or business expert, I don't know whether this is accurate or not.
I do know that many network marketing companies continue their growth year after year.
A good research project would be to compare the relative income levels of distributors coming into a company that is mature and has more distributors, with those of distributors entering a young company without a lot of distributors.
Unfortunately, network marketing can attract lazy people who think they will make money off of the work of their downline without selling products themselves.
There are also some network marketers who do not think about targeted advertising, and instead try to sell their products or their business opportunity to anyone who breathes, regardless of whether they want to hear about it!
This approach can alienate friends and makes a terrible impression, thereby contributing to the ‘sleazy' image of network marketing.
Even worse, some companies use this as the model of how to start your business.
There are network marketing distributors who clog up the internet with zillions of business opportunity unsolicited e-mails, newsgroup posts, and other unscrupulous advertising.
The successful network marketers have learned to build their business with permission marketing.
This kind of marketing has been shown to be highly effective when done correctly.
You build relationships of trust with people and offer something valuable.
Some methods that have worked successfully on the internet include using high-quality opt-in leads and creating your own unique website.
Traditionally most internet based network marketing resources are replicated websites and duplicatable systems.
These are good for one to one communication of information but are not going to bring you any website traffic from search engines.
For that, you'll need to work a little smarter.
Do some research to find an appropriate niche market on the internet related to your company's product.
Then once you know what people are looking for, and have found a niche that is not yet filled, you can build a website that meets that need.
Some scam artists use network marketing to distribute their products quickly and then take the money and run, giving the entire industry a bad name.
Tips on choosing a network marketing company
If you are considering a network marketing business, this article will give you some pointers on what to look for in a network marketing company.
Network Marketing Resources
One of the smartest longterm online strategies for creating rapid growth in any network marketing business is to create a unique niche on the internet that no one else is doing.
We've found the Affiliate Master's Course to be one of the most helpful tools on the net for this.
The course has extensive information that can be applied to any network or referral marketing business.