Network Marketing is a business model in which companies distribute their products to the end user through a word-of-mouth, direct selling type of method. This eliminates the middle man - there are no advertising, wholesaling, or retailing costs involved whatsoever.
What do you mean by "No Middle Man"?
When companies use "middle men" they spend money, and lots of it, on things that don't enhance the product. If they don't have these costs, they can spend more on research and development. This means that they can produce a higher quality, more unique offering.
The other main benefit of the Network Marketing business model is the fact that some of the money spent on advertising and the distribution channel (wholesalers, retailers, etc.) can now go to the people who actually promote the products by their word-of-mouth advertising.
This person is referred to as an associate, independent agent, or distributor. He or she is a salesperson who has their own business or distributorship. They create income by building up a customer base that buys the products directly from the parent company, or by recruiting other entrepreneurs who in turn build their own customer base, or usually a combination of both. This increases the size of the overall organization.
Indepedent agents earn their money in at least two ways - through the efforts of their downlines, and by purchasing products from their company at wholesale prices then turning around and selling them for a profit. Commissions are paid based on what's called a "compensation plan", which determines how many levels of people will be receiving income from one person's sales.
What's the Difference Between Network Marketing and Multi-level Marketing, or MLM?
Basically, nothing! The two terms network marketing and multi-level marketing refer to 2 different aspects of the same business.
Network marketing is just how it sounds: a network, or group of people, communicate with each other and products are marketed this way.
Multi-level marketing is simply the means by which the people in the network are paid for their efforts. Commissions are paid to multiple levels of distributors, which creates leverage.
What exactly is leverage?
Leverage can mean different things. In this context, it means the ability to earn commission on something that someone else sells.
The leverage concept is nothing new. It's used by all for-profit businesses that have employees. The company charges money for something that the employee produces, then only pays the employee part of that. The owner of the company then keeps the rest, thereby leveraging the employees hours to create income for himself.
This is kind of the same as network marketing compensation plans, but there is a big difference: In a network marketing plan, the ones that are being leveraged off of are other independent distributors instead of employees. Therefore, there are no employee costs involved and hopefully these people will be more motivated because they also own their own business.
Is This What's Called a "Pyramid Scheme"?
A company is a pyramid if the distributor mainly makes money from new signups or they have to buy more products than they can sell or use. Pyramids are illegal everywhere, but network marketing is legal in all states and most countries.
Network marketing companies are not pyramids, though some pyramid schemes try to pass themselves off as legitimate MLM businesses. In most legitimate MLM companies, commissions are earned only on sales of the company's products or services. No money can be earned from recruiting alone, as in sign-up fees.
Want to learn more about the industry of Network Marketing?
The two resources are The 45 Second Presentation That Will Change Your Life by Don Faila, and Brilliant Compensation by Tim Sales. These are both excellent third-party tools that are not only informational, but extremely useful for showing to prospects that are dubious.
What do you mean by "No Middle Man"?
When companies use "middle men" they spend money, and lots of it, on things that don't enhance the product. If they don't have these costs, they can spend more on research and development. This means that they can produce a higher quality, more unique offering.
The other main benefit of the Network Marketing business model is the fact that some of the money spent on advertising and the distribution channel (wholesalers, retailers, etc.) can now go to the people who actually promote the products by their word-of-mouth advertising.
This person is referred to as an associate, independent agent, or distributor. He or she is a salesperson who has their own business or distributorship. They create income by building up a customer base that buys the products directly from the parent company, or by recruiting other entrepreneurs who in turn build their own customer base, or usually a combination of both. This increases the size of the overall organization.
Indepedent agents earn their money in at least two ways - through the efforts of their downlines, and by purchasing products from their company at wholesale prices then turning around and selling them for a profit. Commissions are paid based on what's called a "compensation plan", which determines how many levels of people will be receiving income from one person's sales.
What's the Difference Between Network Marketing and Multi-level Marketing, or MLM?
Basically, nothing! The two terms network marketing and multi-level marketing refer to 2 different aspects of the same business.
Network marketing is just how it sounds: a network, or group of people, communicate with each other and products are marketed this way.
Multi-level marketing is simply the means by which the people in the network are paid for their efforts. Commissions are paid to multiple levels of distributors, which creates leverage.
What exactly is leverage?
Leverage can mean different things. In this context, it means the ability to earn commission on something that someone else sells.
The leverage concept is nothing new. It's used by all for-profit businesses that have employees. The company charges money for something that the employee produces, then only pays the employee part of that. The owner of the company then keeps the rest, thereby leveraging the employees hours to create income for himself.
This is kind of the same as network marketing compensation plans, but there is a big difference: In a network marketing plan, the ones that are being leveraged off of are other independent distributors instead of employees. Therefore, there are no employee costs involved and hopefully these people will be more motivated because they also own their own business.
Is This What's Called a "Pyramid Scheme"?
A company is a pyramid if the distributor mainly makes money from new signups or they have to buy more products than they can sell or use. Pyramids are illegal everywhere, but network marketing is legal in all states and most countries.
Network marketing companies are not pyramids, though some pyramid schemes try to pass themselves off as legitimate MLM businesses. In most legitimate MLM companies, commissions are earned only on sales of the company's products or services. No money can be earned from recruiting alone, as in sign-up fees.
Want to learn more about the industry of Network Marketing?
The two resources are The 45 Second Presentation That Will Change Your Life by Don Faila, and Brilliant Compensation by Tim Sales. These are both excellent third-party tools that are not only informational, but extremely useful for showing to prospects that are dubious.
About the Author:
Learn the new techniques of social network marketing today! Can't stand network marketing?? Then visit our online home-based business blog for other money-making web-based businesses.
Posts
No comments:
Post a Comment