What is Network Marketing? – Profitable Business Model?

In these times, a lot of people are looking for ways to earn a living online. The pandemic has put a huge strain on the economic economy, and most of the working class have lost jobs. This has caused a big chunk of the population to search for business models that can help them earn a living. One of the more popular models that has peaked the interest of these opportunists, is Network Marketing. So, What is Network Marketing? In this post I'll be going over exactly what it is and if it could be a profitable business model for you.

What Is Network Marketing?

What is network marketing

Network Marketing is a business model that works through a network of distributors to scale and grow a business. This is often done through independent sales reps that utilize person to person sales as a way to earn revenue. Usually these representatives recruit other reps to create a team to network, assist with lead generation and making product sales.

I think that one of the main draws to network marketing is that it is mainly a work from home job. This is a good thing for stay at home parents or people in their retirement years.

However there are some drawbacks which we'll get to in a moment.

How Network Marketing Works

What is Networking Marketing

The structure of how network marketing works can seem very simple but in fact there are a lot of factors that come into play with the process. Really, it all comes down to creating a network of reps for yourself, this in a nutshell is what earns you sales. Below is an outline of how it all works.

Lead GenerationStarting off, you are usually given training on garnering leads and customers to your product or service.
RecruitmentThis can be one of the hardest task in this business model, as your main goal will be to recruit others to join your team to promote the chosen product or service.
Recruit TrainingAfter getting sign ups for your networking team, you then will train your recruits in making sales and all aspects of the business.
NetworkingAt this point your recruits will be on their own and will basically recycle the process and garner more signups to sell and promote your product.
Product SalesThe larger the network you have the more sales you will be able to accrue. Usually your income will depend on the sales of those you recruit.

As you can see, it seems pretty straight forward. However, the process of getting leads and converting them into sales reps can be a huge headache.

The thing is, to be successful in network marketing, you are going to want to be the type of person who has good sales skills. Someone who is really charismatic with good social skills. Having a good network of friends that have like minded business ethics and skills , is definitely something you would want to have off the bat.

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Next we will go over the different types of network marketing that you could expect to delve into.

The Different Types of Network Marketing

Not all network marketing programs are the same. There are many different facets of this business method that you can expect to see should you delve into it. We will now explore some of the main types of network marketing.

Single Tier

If you were to sign up for any networking marketing program, joining one with a single tier system would be your best bet.

In single tier network marketing you basically would sign up for the companies affiliate program. This means that a majority of your earnings will come from direct sales which you refer. While you can recruit others to your network, it is actually not necessary for you to earn income.

In my opinion this version of network marketing is more similar to being in affiliate marketing, which is an easier way to create a passive income.

Two Tier

Two Tier network marketing is similar to tier one, however in this version you will need to do some recruiting. Your earnings will still come from direct sales, but in this tier you will also have to rely on the sales of your recruits.

In some programs you will also be able to earn commissions from traffic you send to the companies site. Also any affiliates that are referred by you can earn you money.

What is Network Marketing – Multi-Level Marketing

Multi-Level Marketing, is where things start to get pretty complicated.

MLM Marketing usually consists of at least 2 tiers and fully utilizes a recruitment based system. This is where, you would be fully embracing the process of signing on sales reps and training them in business and sales skills. As you gain more recruits, the commission levels will grow for you under the sales that they make. You will still get earnings from your own direct sales, however most recipients will be counting on the sales of your team.

Now this may sound like a great opportunity to get some great earnings, however it's easier said than done.

The problem is that a percentage of what you actually make, will usually be going to the person that recruited you. Fact is, you will be in the network of someone else, and usually starting off you will be barely making anything. Which is why it would be crucial for you to start garnering recruits to be under you, to actually make money yourself.

Again, actually getting recruits is an extremely hard task unless you have some serious sales skills.

What is Network Marketing – Can You Make an Income?

So, Can you make an income from network marketing? Sure it is possible. There actually are good programs out there that will pay good sales commissions. Companies that sell very trendy and popular items have seen huge surges in sales from network marketing, and there are people who have created small fortunes for themselves through this business model. Granted it usually is a very small percent, but it is possible.

What is Network Marketing? – The Sad Truth

That being said, there is a lot of work to actually make it into a full time income for yourself. Tracking down leads, friends and family to offer services and products, will really wear on you. Constantly, trying to recruit and sell on your social media accounts will also create major headaches.

Then there's training of the recruits that you manage to get. You will constantly be pushing them for sales and at the same time you will be pressured by your own personal network mentor. Not to mention the cost of ordering the products that you will be selling. Most of the time it will be coming out of your own pocket.

Is it a Good Business Model for Beginners?

What is Network Marketing?

Well, The straight blunt answer is NO.

You see, the entrepreneurs that actually do succeed in network marketing, usually have some experience in business and marketing. They've been trained in sales skills and social relations. Helping them to make sales and recruit the right people to create passive revenue into their business.

Also, being in the marketing business model they usually already have friends and business colleagues that join them to form mini marketing dynasties within these programs. This alone would get them into the upper tiers of any network market they choose to join.

As a beginner you literally would be fighting an uphill battle to actually earn anything.

My Final Thought

While Network Marketing can be lucrative for some, it is definitely not for everyone. It takes the right person with the right mindset and skills to achieveany sort of success.

There are business models that are way easier and give you a way better chance to earn a living online. One of the easiest, happens to be Affiliate Marketing.

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I hope my post helped you get a good understanding of network marketing. Till next time.

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My name is Steven Howell, an affiliate, coach and marketing enthusiast who helps people get started in the world of affiliate marketing via my blog posts and inside of a global membership community.

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