Network marketing is that method of selling and promoting products or services which makes exclusive use of a network of people to achieve their goals. The goods are distributed via the network, they can’t be found in classic shops and in order to buy them you have to become a member in the network.
Most members will just buy products for their personal use only. Others, determined to make a living out of network marketing, will work hard to recruit other people and build themselves a strong downline, which may grant them a nice income level, even if they don’t actively promote the business anymore.
Network marketing is also called multi-level marketing, because of the multiple levels of compensation within the sales force representatives. The more referrals a representative brings into the network, the bigger his commissions will be. When their referrals bring other people in, the first ones will also get commissions on this new level of the network. Compensation levels may go as deep as seven or even ten layers.
This is the dream of every network marketer: to build a downline of active and motivated people. That’s where the true money is. However, in order to get to that point, one needs to work hard for many years without any real compensation and under the suspicious looks of their family and friends.
This is the biggest challenge of the network marketer: to overcome objections and suspicions of their beloved ones. It’s easier if both husband and wife are in the same business, but it’s also more risky, as they have all their eggs in the same basket. Besides, the basket will be very fragile for a long while in the beginning of their journey, so it’s probably wiser that one of them keeps a job outside the network.
Suspicions may have a real origin, though, as many pyramid schemes presented and promoted themselves as MLM businesses. When they turned out to be fraud schemes, people turned their weapons against all multi-level marketing businesses, without difference. Those empty network marketing schemes collapsed one after another, leaving most members of the network empty-handed. There were a few members, probably the top ones, who made good money, but when the chain got broken, more than 90% of the participants had to suffer losses and live with that.
Independent, active and persuasive persons have the biggest chances to put network marketing to good use and record levels of success unknown to the biggest majority.
While widely contested, multi-level marketing is still a force today, with giant companies using it as their sole promotion method. Nonetheless, we can observe a shift in the way they do marketing. We see now TV advertisements for MLM businesses, we see print ads, we see representative booths inside shopping centers and malls. Years ago, these practices were unknown to network marketing and it would have been crazy even to think they could be employed to help distributors broaden their downline network.