Monday, 30 May 2011

What is network marketing?

Anyone looking for a business opportunity would almost certainly have come across network marketing, but what is network marketing?

Network marketing is sometimes known as Multi Level Marketing (MLM) or referral marketing. So the following explanation refers to all these various terms.

As the name suggests, network marketing is where everyone involved in the business has an equal opportunity develop their own “network” of fellow distributors. I think the term “develop” is significant because a good network is not just about recruitment but after recruitment the new joiner is trained and coached to achieve the level of success that they are themselves committed to achieving. From here it is then the responsibility of the person building the network to expose their new people to the bigger picture of what is available with their network marketing opportunity. This will then help the newer team members to raise their ambitions over time so that as their own network develops then their goals get bigger too.

The fundamental aim of network marketing is for each individual to generate orders and then introduce or “sponsor” others into the opportunity who also generate orders and also sponsor others and subsequently show their own new joiners how to generate orders and sponsor others into the team, and so on.

Everybody works for themselves and is paid by the Company on two factors:-

  1. The volume of business generated by themselves and their team.
  2. The structure of their team

Importantly nobody gets paid by their team and nobody pays their sponsor. Everybody is rewarded by the Company commensurate with their success at growing the Company’s business. If a distributor goes to the time and trouble to sponsor and train someone to be effective at moving the Company’s products or services, it is logical that Company rewards them for doing so.

It is fundamental to the ethics of a good Network Marketing business that the sponsor only benefits from sponsoring when their new team member starts to move products or services to the market. It is not appropriate to be remunerated for purely sponsoring people into the business; the new people must be shown how to be effective themselves.

The idea is that everyone introduces (say) five good people, who are each shown how to introduce five good people each and then those twenty-five people introduce five good people each and so on – thus developing a network of distributors all marking products or services. It is a logical, ethical and highly effective means of marketing and distribution.

As per “2” above, the structure of a team is on the whole a reflection of what the leader of that team has contributed to the building of that team. This makes the whole business fair. Without going into details of each Company’s pay plan it’s fair to say that a leader that has built a team consisting of say 5 teams will earn considerably more than someone who has just sponsored someone else that has built a team consisting of 5 teams. This creates the potential for everybody to earn more than their sponsor.

In our Own Kleeneze business we earn significantly more than some of the people “upline” from us while there are also fantastic leaders upline that earn much more then us because they have been involved for longer and built bigger teams.

For more information in answer to the question “what is network marketing” click here

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