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 in charge of bringing the product or service to their own network of contacts to sell them and take them 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 between the same acquaintances (friends, neighbors, colleagues) of the distributor, and not between the wholesalers of a department store or distributor who 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, depending on your availability and preference.
You progressively increase your income. Your profits are proportional to your sales and those of your network. The more you sell and the more people you recruit, the more you will earn.
You don't have a boss or stressful work environments. You are your own boss and you work from home or wherever you want. You don't have to report to anyone or endure 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 into your network. This way, you can create a source of recurring income that does not depend only on your effort.
You have more time with your family. By working from home and having flexible hours, you can dedicate more time to 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 constantly 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 products or services you offer, and sales and persuasion techniques.
You must have social and business 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 entrepreneurial and self-taught . You must have initiative, creativity and learning ability. Don't expect 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 constant and focused on your goals.
Be sociable and outgoing . You must be easy to relate to others, make contacts and create links. 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 the relational marketing?

How to start doing network marketing: steps and tips

If you have decided to try network marketing, these are some steps and tips that can help you get started:

Choose a company that you like and inspires confidence in you. Research their track record, reputation, products or services, compensation plan, support and training. Look for testimonials or references from other distributors or customers.
Know well the product or service you are going to offer. 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 provide with your offer, what differentiates you from the competition, what benefits you can provide, etc.
Create your contact list and start prospecting. Make a list of everyone 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 networks, 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. Don't 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 so that they sell and recruit more people. Offers information, advice, resources, motivation, recognition, etc. Create a relationship of trust and collaboration with your network.

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 enhancing 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, at MHA you will find the solution you need. Schedule a call.