As soon as I came across the words “Network Marketing” (or MLM), they immediately sparked my curiosity!
My aunt introduced the concept to me, and she is part of a “Network” herself. To be honest, at first I was afraid… I was petrified! Well not to that extent however, I had my suspicions. So I did what I always do when something seems too good to be true: geek the s#@t out of it!
I did extensive research about the subject. I listened to specialised podcasts, read articles and watched videos debating the pros and cons of MLM.
Long story short, I joined my aunts network. This article will explain why I did and what the potential of Network Marketing is, along with its flaws.
What is Network Marketing?
Remember that amazing restaurant you recommended to a friend? They wanted to go to this other restaurant but you did everything to convince them not to go there and go to your place instead.
This is the perfect example of Network Marketing, except you did it for free!
So, let’s analyse this situation for a minute. Why did you represent this establishment with so much passion?
Out of the many possible reasons, these two are the most likely:
- This is your favourite restaurant and you would gladly go back there for a meal
- You want to guarantee great food for your friend
See, Network Marketing’s success is extremely dependent on the product(s) involved. If the product isn’t good, people would just stop buying it and network distributors would have to turn into sneaky salespeople to scrape a few more sales.
For this system to work, you need at least the same two components stated above, which more generally speaking are:
- A product so great you would pay for it yourself
- A product that is truly helpful for others
How does it work?
You usually have three main ways to earn money with Network Marketing.
- Commissions from direct sales
- A portion of your network’s earnings
- Network performance bonuses
Some companies add other perks and bonuses however, I will stick to those three for now.
Well, how do you get involved and what does it imply? First, you have to find someone who is already in a Network Marketing program. Then, they’ll invite you to join their network and will earn a commission on your direct sales and personal purchases of the product.
So far your only earnings come from your direct sales commissions.
Fast forward a few weeks or months later, you still use the product and you keep selling it. However, you begin to think longer term and want to build a passive income. So you go out and talk about the opportunity to become part of the network. Most people will reject the offer for many reasons, but some will be interested and one or two might actually join you. You spend the next week or two training those who joined and they generate a few sales in their first few months.
Now you’ve built the foundation for your passive income. As they purchase the product for themselves and sell it to other people, they will generate some “points” for you and your network including the person who got you in, the person who got them in, and so on. Are you beginning to see the power of Network Marketing? But hold your horses, this is not a perfect system and I’ll explain why later.
In a nutshell
Good and sustainable Network Marketing must have:
- External customers. If the people who buy the product or service are all within the network, it probably means that it doesn’t add that much value to people’s lives after all.
- A commission system based on actual sales and not the amount of people you bring in the network. Some similar systems give commissions to their network solely based on the amount of people they bring to it. Thus, people pay a juicy fee to join the network and try to earn it back by making more people sign up whether they sell the product or not. And this my friend is called a Pyramid Scheme! It is not only very dangerous and can crash at any moment, but it is also illegal in many countries.
Great Network Marketing should also have:
- A system that forces you to help the underdogs in your network. When I invite people in my network, I can either put them in my “left” or “right” branch and I only earn commission on the branch that has the least sales. This means I have to help the people in the latter branch to develop their activity or invite others in to that branch.
- Training materials and resources to help you kickstart your journey.
Things to watch out for when you are invited to join a network
- The person who wants to invite you doesn’t use the product or service they are selling.
- You get more information about how you can make lots of cash than how you can actually help people and add value to their lives.
- You have to pay an expensive fee to get in and the person who referred you will get a portion of it.
- Ask how the network works and run a hypothetical scenario where you have invited a few people who invited others themselves. Then calculate how much you would earn if every single person in your network stopped selling the product and buying it for themselves, but continued inviting others. If this number is 0 you should be fine, people in the network shouldn’t be able to earn money out of thin air!
When people advertise Network Marketing, they often throw around some catchy phrases such as “you will be your own boss!”, “you won’t have to work anymore!” or even “you can earn a 6-figure income within 1 or 2 years!”.
Let me get things straight. You are still selling someone else’s products! Meaning it doesn’t matter who sells for them, as long as sales are happening. The company making those products will always be the one winning in the end.
This world-of-mouth marketing is a proven tool to help you earn financial freedom, location independence and passive income. However your return on investment will be proportional to the effort you put into it and it’s not a get rich quick scheme. Some people have made multiple 6-figure income through Network Marketing however, they treated it like a real business and probably spent at least a few months in hell to get there. Whether you want to make extra cash on the side or invest your time in creating a network to create long term passive income, it is totally up to you!
Do you want to create an extra source of income?
As I said earlier, I am part of a Network myself, so here’s a shameless plug!
If you are based in Europe (including the UK) I can invite you to start your extra source of income by making others and yourself healthier.
You can have a look at the products by clicking here.
If you prefer selling online with more traditional methods, you could also build your own online business!