What is network marketing and why should you try it?

by Moises Hamui June 27, 2023

If you are interested in having your own business, earning extra money and working from home, network marketing may be the solution you are looking for.

In this article we will explain what network marketing is, how it works, what its advantages and disadvantages are, and how you can start doing it today.

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What is growth marketing?

What is network marketing and how does it work?

Network marketing, also known as multi-level or referral marketing, is a sales model in which the company makes transactions directly with the end consumer through a network of independent distributors.

Distributors are responsible for bringing the product or service to their own network of contacts in order to sell it and take it to end customers, obtaining a percentage of profit for each transaction.

This business model is based on the direct marketing of products or services without intermediaries. Network marketing emerged in the United States in the 1940s.

What does network marketing mean? Network marketing (NWM) is also known as network marketing, multi-level marketing or referral marketing.

The idea is that those who have already tried the product or service become one of its main promoters after having a good experience.

That is why we talk about networks, because sales are made among the same acquaintances (friends, neighbors, colleagues) of the distributor, and not among the wholesalers of a department store or marketing company that have a much larger presence, reach and infrastructure.

Advantages and disadvantages of network marketing

Like any business model, network marketing has its pros and cons. Let's see what they are:

Advantages

You have control over your own work schedule. You can choose when and where to work, based on your availability and preference.
You progressively increase your income. Your earnings are proportional to your sales and those of your network. The more you sell and the more people you recruit, the more you earn.
You don't have a boss or a stressful work environment. You are your own boss and you work from home or wherever you want. You don't have to answer to anyone or put up with pressure or mistreatment.
You generate passive income by recruiting people. In addition to earning from your own sales, you also earn from the sales made by the people you invite to your network. This way, you can create a recurring source of income that doesn't depend solely on your effort.
You have more time with your family. By working from home and having flexible hours, you can spend more time with your loved ones and your hobbies. You improve your quality of life.

Disadvantages

It requires patience and perseverance. It is not a business that will make you rich overnight. You need to work hard and consistently to build your network and retain your customers.
It can generate rejection or distrust. Some people may confuse network marketing with pyramid or fraudulent schemes. There may also be market saturation or unfair competition.
You need to constantly train yourself. To be successful in network marketing, you must be up to date with market trends, new developments in the products or services you offer, and sales and persuasion techniques.
You must have social and sales skills. To sell and recruit people, you must know how to communicate well, build trust and empathy, and resolve objections and problems.

Who is network marketing ideal for?

Network marketing is a business model that can be adapted to different profiles and needs. However, it is not for everyone. There are some characteristics that you must have or develop if you want to succeed in this field. Some of them are:

Be an entrepreneur and self-taught . You must have initiative, creativity and the ability to learn. Don't wait for anyone to tell you what to do or how to do it. You are responsible for your business and your training.
Be disciplined and organized . You must set your own goals, plans, and schedules, and stick to them. Don't let yourself be carried away by laziness or procrastination. Be consistent and focused on your goals.
Be sociable and outgoing . You should be able to relate to others easily, make contacts and create bonds. Don't be afraid to speak in public, make calls or send messages. Be friendly, polite and professional.
Be honest and ethical . You must act with transparency, integrity and respect. Do not deceive or manipulate your customers or your distributors. Offer quality products or services that really add value and solve problems.

What is Relationship Marketing?

How to start network marketing: steps and tips

If you've decided to try network marketing, here are some steps and tips to help you get started:

Choose a company you like and trust. Research their track record, reputation, products or services, compensation plan, support and training. Look for testimonials or references from other distributors or customers.
Know the product or service you are going to offer well. Try what you sell, find out about its features, benefits, competitive advantages, guarantees, etc. Be an expert in what you offer and convey your enthusiasm and satisfaction.
Define your target audience and your value proposition. Identify who you can sell your product or service to, what needs or desires they have, what problems or difficulties they face, what solutions they are looking for, etc. Define what value you can bring to them with your offer, what sets you apart from the competition, what benefits you can provide, etc.
Create your contact list and start prospecting. Make a list of all the people you know or who might be interested in your product or service. Rank them according to their level of interest, trust or influence. Contact them by the means you prefer (phone, email, social media, etc.) and present your proposal in a personalized and attractive way.
Sell and recruit people for your network. Once you have captured the attention of your contacts, close the sale or recruitment. Use persuasion techniques, resolve objections, offer guarantees, create urgency, etc. Do not pressure or harass your contacts. Be natural and sincere.
Train and support your network. It's not enough to recruit people for your network. You must train and support them to sell and recruit more people. Offer information, advice, resources, motivation, recognition, etc. Create a relationship of trust and collaboration with your network.

You can boost your strategies through campaigns on Facebook or Google.

What is direct marketing?

Examples of successful companies that use network marketing

There are many companies that use network marketing as a business model. Some of the best known are:

Amway : It is an American company founded in 1959 that is dedicated to the direct sale of health, beauty and home care products.
Herbalif e: It is an American company founded in 1980 that is dedicated to the direct sale of nutritional products, food supplements and weight control products.
Avon : It is an American company founded in 1886 that is dedicated to the direct sale of beauty, cosmetics and perfumery products.
Tupperware : It is an American company founded in 1946 that is dedicated to the direct sale of plastic products for the home.

Written by Moises Hamui Abadi : I am an entrepreneur, founding partner of Viceversa and SoyMacho. After leading several digital businesses and advising several other businesses, I decided to form MHA Consulting, a digital marketing consultancy dedicated to growing and empowering digital businesses in more than 7 countries and generating more than 1,500 million pesos.

If you want more information on this topic or are looking for other options to profile your ideal client, you will find the solution you need at MHA. Schedule a call.