What is Network Marketing or Multi Level Marketing (MLM)?

Looking at Network Marketing? Lets investigate what is Network Marketing / MLM, and take a look at how it differentiates itself from other business models.
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Are you researching the question of what is network marketing?

Firstly, lets be clear that network marketing, multi level marketing, and MLM all refer to the same business model; which we will refer to in this blog post as simply “network marketing.”

Network marketing is a very simple business model that can be used by any company to get their product or service out into the marketplace.

A company utilizing the network marketing business model will allow anybody who is willing to follow the company policies and procedures and pay a modest start-up cost, to become what is called a distributor or independent business owner (IBO).

Note: The word distributor, independent business owner, and IBO all refer to the same designation, which we will just simply refer to as “distributor.”

Now, a distributor for any particular company has the right to sell the products and services offered by that company, as well as the opportunity to purchase the products and services for themselves at the best possible price.

As products or services are purchased, the distributor makes a commission on each sale.

In addition, a distributor has the right to sponsor other people into the company to become distributors as well.

When a distributor (Ex. John) sponsors a new distributor into the company, the sponsor (John) is responsible for teaching and working with the new distributor in order to help them become successful.

When the new distributor becomes successful, it means that more products or services are being purchased which is good news for the company. As a result, the company compensates the sponsor (yupp, John again) not only for his own production, but for the production of the distributors that he has sponsored as well.

The new distributor can then sponsor other people as well, and so on, and so forth.

The same compensation applies to all the distributors, so every distributor has an equal opportunity for success.

Network marketing is a very effective way to get products and services out into the marketplace.

Traditional advertising methods are incredibly costly and impersonal.

In a network marketing model, the customers of the company are typically the friends, family, and associates of each individual distributor. In addition, the distributors will typically purchase the products or services themselves as it is something that they truly believe in, need, or want.

So the entire model is based on relationships, 1to1 transactions, and personal referrals; as opposed to the traditional marketing routes such as TV commercials, online ads, junk mail, telemarketing, billboards, etc.

Network marketing is so powerful because all things being equal, people will do business with people that they know, like, and trust. Hence the power of relationships is utilized to not only acquire customers, but to maintain existing customers over a long period of time.

Lets go through a couple different comparisons. In traditional business, the business owner hires employee’s to sell the product or provide a service. Furthermore, these employee’s work for the owner.

In contrast, distributors for a network marketing company are independent business owners and are not employees of the company. This entitles a network marketing distributor to all of the incredible home based business tax advantages!

Another comparison is to that of direct sales. In a direct sales model, the company will have independent distributors who represent that company’s products and services out in the marketplace. Like network marketing, the distributors have the right to sell these products and services, and are eligible for commission on their volume of sales.

However in direct sales, a distributor cannot sponsor people to become distributors. And obviously, therefore they cannot be compensated on multiple peoples efforts.

The ability to be compensated over many different peoples efforts is called leverage and it is very powerful attribute of a network marketing opportunity.

Has this helped to answer the question of what is network marketing so far? Alright – now lets take a look at a common misconception.

What Is Network Marketing? Is It A Pyramid?

No. A pyramid scheme is when you are paid to recruit others, whilst no product or service is being brought to the market.

In a legitimate network marketing company there is a real product or service being brought to the market, and distributors are compensated based on the volume of products or services being moved out into the marketplace through them and their sponsored distributors.

Network marketing is one of the most powerful business models in existence, both for the company, distributors, and customers alike.

Since customers are acquired through relationships, network marketing companies have a very powerful advantage over traditional companies. In fact, this cannot be overstated and it is the exact reason why some network marketing companies are able to grow very quickly into billion-dollar empires.

For distributors, the profound advantage is that they get paid not only on their own efforts, but on the efforts of the people they sponsor. This key point is what makes it entirely possible to grow a very large income as a distributor, and build a perpetually growing business that can continue to grow without you.

Customers also get the benefit of getting access to quality products and services, at competitive prices, from people they already know, like, and trust.

Still looking for more information on Network Marketing to see if its a good fit for you? Checkout these other resources to help further understand What is Network Marketing:

10 Powerful Things I Love About Network Marketing

Can I Get Wealthy In MLM?

What Is Residual Income?

To Your Empowerment,
Colin

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