Network marketing business can be found almost anywhere that it would be almost impossible to not know about it. There is a very high chance that someone has already invited you to join a network marketing company at least once in the past couple of years.
Network marketing business is a multi-billion dollar industry. The business model is being taught in leading universities all over the globe. In fact, the model is said to be a perfect fit to the current information age. Over 20% of the approximately 1 million millionaires in the country owe their fortunes and success over the past 6 years to the business. In the worldwide scale, around 700,000 out of 3.5 million millionaires made their money through this business. Why is it such a big hit and what makes it suited to today’s modern age?
What is the network marketing business model?
Network marketing business model is now being used by most drug, food and packaged goods companies. It has become one of the most promising financial opportunities in marketing today. The general idea of network marketing is having many individuals doing little work each, rather than having fewer people doing tons of work. It To be able to see why the network marketing business is effective, we first need to understand what this business model is. Here, we will discuss some of the business model’s important unique points and what sets it apart from the traditional business model.
In traditional companies, the distribution process involves moving the products from the manufacturer to the wholesalers, to the retailers and finally, to the consumers. For network marketing businesses, they move the products from manufacturers directly to the consumers via a wide network of independent marketers.
Traditional companies spend millions on advertising to convince customers to choose and buy their products over their rival company’s products. Basically, these companies spend tons of money BEFORE the actual sale. On the other hand, the network marketing business model allows network marketing companies to spend money AFTER the sale. How do they do this? Instead of spending on advertisements, they pay sales commissions to the independent marketers or distributors, who would advertise their product for them through word of mouth. From a business standpoint, this cost structure would make more sense as compared to the former.
Source of income
In traditional marketing, the salesperson earns income from the purchases made by the customers who buy from them. As a sales marketer, you would have to constantly make sure that your pool of customers are buying products from you and not from anyone else. In the network marketing business model, you can earn money in two ways. First, your income can come from the sales commissions that you yourself make, just like in traditional marketing. The second source of income is called the residual income, which is the commission you get from sales made by other people, otherwise known as your downline. In essence, it is getting paid for the work of other people.
What is a “downline”?
Basically, your downline is like your team of independent marketers. You can build a downline by first getting some people to market the product, then they would invite people they know to do the same, and those people would invite more people, and so on. You can have a downline with as few as 10 people to as many as 10,000 people. If your downline works for you and with you, then your earning potential will increase significantly. By having more people doing the marketing, you can get more amount of work done and increase your income. This makes the business very powerful.
So, if you are thinking of starting your own home based business that could supplement your income and provide financial security for your family, a network marketing business is the perfect choice for you.