‘NETWORK MARKETING’ AN INTERESTING OPPORTUNITY TO EXPLORE
‘Your network is actually your net worth’, during my interaction with trainees during training and counselling sessions, I often use this phrase. It is indeed true in all aspects of life, whether personal or professional. During one of my sessions, a trainee asked me, how he can actually convert his existing network into his actual net worth? By this he meant that can he convert his existing relationships into business opportunity? I told him about the concept of Network Marketing or multilevel marketing.
There I realized that I should pen down my views on network marketing and how it can be an excellent opportunity for all those who are proud of their personal relationships and can be used for earning anything between a few bucks to lakhs. The history of network marketing dates back to 1934, when California Vitamin company adopted the network-based marketing model for the sale of their products. In 1943, this company changed its name to ‘Nutralite’ and became the first company to implement a true network marketing compensation plan.
Figure: The relationship between network marketing channel members and how some act as recruits or business owners while others are clients or customers
WHAT IS NETWORK MARKETING AND HOW DOES IT WORK?
Network Marketing is an innovative, interesting and impressive business model. This model work’s in form of a Pyramid that consists of people selling a company’s products. Network marketing is also known as multi-level marketing. The best aspect of this model is that here the company whose products are being sold, neither has to pay for the recruits nor has to arrange for the distribution of its products. Both these activities are carried by the network marketing channel members. The remuneration given to the participants of this network, is usually in form of commission. So, every time a member performs a task i.e. sells a product or their recruit makes a sale of the product, the pre-decided percentage is credited into the account of that recruit. Amazing, isn’t it? Win-win situation for company as well as its network marketing channel members.
HOW WOULD YOU UNDERSTAND A COMPANY?
A company working on network marketing or multi-level marketing model can be involved into any kind of product. Ranging from cosmetics to home and personal care products, companies like Avon, Oriflame, Tupperware, Amway, Herbalife, oklifecare, Mary Kay are some of the popular firms adopting direct selling business model through network marketing.
A business has to entail a huge expenditure in recruiting, training, developing and maintaining the sales force. The same goes for acquiring and managing the distribution channel members. Employee related and channel related issues can be a pain in the neck for companies, especially start-up firms. A good company using multi-level or network marketing model should have the following characteristics:
a) It should have a clear vision and mission statements with clarity of ethical code of conduct and values.
b) The company’s ownership, product range, product development process, financial strength and relationship management process, should be clearly defined.
c) The principles of working should be based on integrity and honesty.
d) The marketing system of the firm should be simple and easily duplicatable, so that every member should be able to understand and follow it.
e) All recruits should be given training about product knowledge, selling tactics and additional support from the company management, as an when required by the network members.
f) A fair compensation plan and transparency in disbursement of payments.
g) Products should be authentic in terms of quality, reliability and marketability.
HOW TO START NETWORK MARKETING?
Anyone from a housewife to an entrepreneur can start their network marketing business. In order to do so efficiently and effectively the beginners should follow certain steps that will not only ensure their success in network marketing, but also maintain sufficient returns by investing their time and money wisely.
- Understanding the process and prospects of network marketing business
- Knowing the benefits of entering into a network marketing model of revenue generation
- The skills and abilities required to be a successful network marketer
- Ways to using personal networks for making your business pick up in the beginning itself.
- Methods of using convincing skills to add new recruits to one’s network.
- Building, motivating, directing and coordinating with one’s own network so as to build upon the mutual revenues for network growth
- Using right customer identification and product pitching strategies for self and discussing the same with your network members. Also providing them support and training if required in customer handling and relationship management.
TYPES OF NETWORK MARKETING?
There are different types of network marketing plans. Each plan has its own advantages and disadvantages. They are mainly divided into three categories:
1) Single-Tier Network Marketing- Herein a recruit joins a company’s affiliate program to sell its products. In other words, the recruits are not required to add more of their kinds into their networks. The complete commission to a direct recruit comes from direct sales. For example: Avon is using this type of network marketing. There are many online affiliate programs, where the recruits are paid for the traffic they generate for affiliate’s website. Such types of network marketing are called pay-per- click (PPC) and Pay-per-lead (PPL).
2) Two-Tier Network Marketing – in this case a recruit is allowed to add more members under his/her network. An individual gets paid for direct sales done as well as the sales done by the members under his/her network. For example: Ken Envoy’s site Sell.
3) Multi-Level Network Marketing- This type of network marketing model uses two or more tiers of network. It is more of a distribution-based marketing network, wherein the recruits can earn from four to five tiers deeper into their network and will get incentives too for recruiting more members into their networks. For example: Amway and Oriflame are using this type of network marketing model.
NETWORK MARKETING SUCCESS
The success mantra in network marketing business is, “Master the art of converting your social, personal and professional relationships; either into a customer or into a recruit”. Apart from this single mantra, one can also achieve success by inculcating the following skills, abilities and tactics:
1) Decision making ability- decide whom to recruit and whom to prospect.
2) Develop the tactic to recruit- use techniques of conviction and motivation to attract people into your network.
3) Relationship building skill- develop the habit of being friendly and increase your friend circle
4) Develop the habit of connecting to at least 1-2 new people daily. You would be amazed to see the results in your personal life and network marketing business, too.
5) Take a proactive stance- be prepared with your business folder, catalogue, brochures etc. You don’t know, when you may need them.
6) Learn the tactic of story- telling- people love to hear stories. Stories of success with your products. Stories of satisfied customers can serve as testimonials for prospective recruits as well as for direct sales.
7) Inculcate active listening skills- keep an ear open for people’s problems. Focused listening to their problems may help you propose products that they actually require and if you are successful in doing so, they will become your permanent customers.
FUTURE OF NETWORK MARKETING IN INDIA
The past decade has seen an unprecedented success in the business of network marketing in India. The trends continue and it is expected to grow many folds in the coming years. Many Indian start-ups, are opting for this business model because of the cost saving in terms of employee recruitment and management, promotional expenditure and distribution channel management. According, to a report published by Assocham the networking marketing business will touch a record figure of 159.3 billion by the end on next year. In next few years network marketing is likely to create immense opportunities for: women empowerment, passive income generation, employment generation, SMEs, initiated social responsibilities and even contribution to government sector in terms of taxes paid.
WHY MULTILEVEL MARKETING HAS A NEGATIVE IMAGE?
Despite of so many opportunities and advantages, with a huge group of Indian society members, MLM still carries a negative image. The major reasons for the same could be:
1) The deceptive recruiting practices adopted by some companies.
2) People are given big dreams but in reality, selling is not an easy task.
3) Members are added just to add upon the network, once recruited they are not given any kind of support either from company or from their network members.
4) Compensation plans are often very flimsy
5) Since its very easy to quit, new recruits often prefer to drop rather then to try and sell.
6) The image of companies involved in MLM model of business is not very good and people often doubt the quality of these products. As a result, they are hesitant to buy.
7) Social media and internet have contributed a lot in creating a negative image about the MLM model of marketing.
In the end I would like to say that network marketing model itself is great. If dealt with properly and if right marketing skills and tactics are used by the network creators and their affiliate members, then this can serve as a good source of income or additional income. If you are interested to start your own MLM/network marketing business, check out for my behavioral and communication skills short term training program for new and existing network marketers.
Happy Reading!
