Do you recall the Tupperware and Pampered Chef parties your mother used to host when you were younger? You would spend the whole day cleaning the house, only to be confined to your room while your mother dealt with high-quality kitchen gear and entertained other moms in town. You weren’t entirely sure what was going on outside your bedroom door during those nights. It turns out, your mom was an entrepreneur – running her own home marketing business and participating in network marketing.
So, what exactly is network marketing? It is a business model that relies on individuals utilizing their personal networks to grow a business or sell a product. These networks are used to generate leads and recruit customers or partners, often involving a training and mentorship process for new recruits. Some network marketing companies utilize multi-level marketing (MLM) software to aid with lead generation and implement their strategies.
It’s important to note that network marketing is distinct from influencer marketing. However, it can be categorized into three essential types that all involve individuals using their personal networks to run their businesses. These types are multi-level marketing, direct marketing, and affiliate marketing.
Multi-level marketing (MLM) is a distribution-based marketing network that involves direct sales and a downline of distributors. While these home businesses have often received negative attention due to their resemblance to pyramid schemes, they differ in one crucial aspect. Pyramid schemes require people to invest in a false promise of wealth, whereas MLM organizations sell genuine products or services that distributors believe in. Examples of well-known MLM companies include Scentsy, Herbalife, and Advocare.
Direct marketing is a single-tier marketing system that requires individuals to sign up for a program to sell a product or service. These individuals do not need to recruit other distributors and are solely paid for the direct sales they make. Mary Kay cosmetics, Avon cosmetics, and Pampered Chef kitchen supplies are some top companies involved in this type of network marketing.
Affiliate marketing is a newer aspect of network marketing that utilizes online affiliate marketing platforms. Website owners and bloggers integrate links to specific products on their platforms. When people click on those links and make purchases, the website owner receives a referral fee. It’s crucial for those using affiliate links to be transparent about it and include a disclaimer to inform their audience of their financial gain. Amazon’s affiliate program is one of the most well-known, but there are other options like Partnerize and Google’s Affiliate Network.
To understand the evolution and prominence of network marketing systems, let’s delve into their history. Network marketing gained traction following World War II with companies like the California Vitamin Company (now Nutrilite) and the California Perfume Company (now Avon). These companies recruited independent distributors to increase sales, and these distributors were instructed to find new distributors within their circles. Amway, founded by two Nutrilite employees in 1959, played a significant role in expanding MLM companies to other countries. The rise of the internet in the late 1990s further facilitated network marketing through online shops and electronic orders.
As you consider entering the network marketing industry, there are several factors to contemplate and research. These organizations will require access to your network of friends and family, so it’s essential to protect them and only market what you genuinely find valuable. Before joining a network marketing company, ask yourself the following questions: How old is the company? What product or service do they offer, and do you find it valuable? How fair and generous is the pay distribution? What is the integrity of the company? Does the company have good momentum and timing? What support or training is offered by the company?
Keep in mind that network marketing is a business, and you are your own boss and employee. Embrace failure and be willing to try again if you want to call the shots. Understand how network marketing affects your taxes and finances, and consider hiring an accountant if needed.
Mentorship is crucial for success in network marketing. If you have joined a network marketing organization, your recruiter, who likely has more experience, should function as your mentor. It’s important to listen and learn from them. Likewise, when you recruit someone into your organization, support and teach them how to be successful network marketers. Long-term relationship building is the key to success in network marketing.
Lastly, as you utilize your network to sell a product or service, remember that your customers are first and foremost your friends and family. Show them that you value the relationship above all else.
