Network Marketing is as old as "sales" itself. The concept of marketing through a network is the very foundation of grassroots marketing and the baseline by which all marketing and sales stem. In the beginning there were corporations with sales and marketing teams. Then as people got smarter and the need for more flexible work schedules became more prevalent, the "work from home" concept quickly gained steam. As "work from home" became more popular, so did "work for myself from home" and so grew the network marketing industry as we know it today.
For years, network marketing, direct selling or MLM (multi-level marketing), as people commonly refer to it has had a negative stigma associated with the concept. Commonly mistaken for a "pyramid" scheme, which is illegal due to the pyramid nature of passing money or fabricated business opportunities from one person or group to another, network marketing has been given a bad name because of the multiple commission levels that are associated with the product sales. Ironically enough, the ONLY difference between a network marketing business model and that of a standard corporation with a sales force is the ownership of the business, which in the case of network marketing lies with the individual on much smaller scale. Network marketing sales teams or "levels" typically all take part in the success of an individual business owner in their organization, also known as their "down line", which refers to a line of small businesses and individuals that are grouped together under the person or people that introduced them to the business. It's unfair to cast shadows on network or multi-level marketing simply because of the sales structure of the organization. At the end of the day when comparing apples to apples, many network marketing companies offer an incredible array of products and services that rival many conventional corporations offering similar products and services. In a lot of ways, they do it better by cutting out large, cost-prohibitive corporate budgets. Plus, the network marketing industry enables virtually anyone to own their own business with substantial back office support.
In looking at the unfair negative stigma associated with the industry, it's obvious that much of the bad feelings stem from one thing pressure. It certainly cannot be the multi-level facet of the business because; quite simply every organization with a sales force has a multi-level compensation structure in place. The salesperson gets a commission. The regional manager, directors, VPs, all get something on up to the executives -- multi-level in every sense of the phrase. Now looking at the network marketing industry, there is a distinct difference. The difference is the sales pressure. Most people starting their own network marketing business are not experienced sales people, so when put in a sales role typically they migrate to the people they are least threatened by friends and family, which is also commonly referred to as the "warm market". Unfortunately, too many people get into the network marketing world and beat up their friends and family to the point where they will make some sales but mostly out of pity, which is a horrible way to build a successful organization. To the contrary, a corporate salesperson is required to study the products as well as sales techniques to uncover the real needs of a customer. It's a huge difference and you rarely see a corporate salesperson hounding friends and family to be successful.
As with any business, a successful network marketing business relies on one thing sales. Understanding the concept of sales is a key factor to being a great salesperson. First and foremost, you have to know the product, use it and believe in it. How can you get behind a product and build a business around it if you don't use it and believe in it? You need to study and become an expert. In the eyes of the people that have little knowledge about a particular subject, someone with more knowledge will most likely be seen as a subject matter expert, and when you are an expert and people know it they come to you for solutions, which makes sales a whole lot easier. This is a perfect time for an example so let's look at the tire industry. How many normal people in everyday life really understand the tire industry and everything that goes along with it (brakes, rotors, etc.)? So when faced with a problem about tires or brakes, you tend to seek out an expert. Maybe you know one. Maybe you know somebody else that knows one. It's possible that the 21-year old that lives with his parents down the street happens to work at a tire shop, and even though he has absolutely no education or formal training, simply because you know him, he is automatically qualified as the tire expert. Let's face it, that's what he does in a shop for 9 hours a day and you may have had a conversation about tires with him one time in the past. Either way, the person with the knowledge carries the credibility and ultimately gets the sale and as demonstrated by this real-life example, the other variables sometimes don't even matter.
So first you get to know the product really well. Second you get to know the customer. Who buys the product? Why do they buy it? What will it do for them? (Keeping in mind that part of the "product" is the business opportunity itself.) When you can answer those questions, you've won the network marketing game. Your family may or may not need the products, but you cannot build a successful business by assuming that friends and family will carry you over the finish line. That being said, who else is there? In network marketing there is a term, "the 3-foot rule", which simply states that everyone within 3 feet of you is a prospect. Once you really understand people and sales, you will understand why the phrase "everyone is a prospect" is so true. You just have to use that expertise I spoke of earlier to figure out how to get that product in their hands. In the end, if you only rely on family and friends, unless you have an endless pool of friends and an absolutely huge family, your business is most likely terminal within 90 days because there is just so much rejection someone can take before deciding to move on. You may even really believe in the product and love the company but if you don't experience some success with the business, you will not continue down the path. In fact, I don't want to scare you but 9 out of 10 people will quit in the first 90 days because they get burnt out from rejection from their "warm market". My favorite quote is, "your dream and the pursuit of that dream has to be bigger and stronger than the will of the people and circumstances that will come up against you to destroy it." It is so important to make a commitment to yourself for at least 6 months to get yourself through that critical 90-day threshold. People WILL come up against you. You have to decide if you're strong enough to stick with it.
So now we know that you have to first know the product and second know the customer. So what do you need to know to get through the 90-day point? The greatest thing about network marketing is the business ownership. When done right, the freedom and financial security that business ownership can bring could be substantial. There is no greater freedom than having a strong income-producing asset like a good business. Let's look at some basic numbers with current rates on interest-bearing bank accounts and CDs around 3%; it takes $100,000 on deposit to earn $3,000 per year or $250 per month. That's $100,000 in the bank to earn $250 per month. If you have good work ethic and strong product knowledge with an excellent company behind you, you can expect to earn $500, $1,000, $2,500 or even more each month in a relatively short amount of time (6-9 months); and even those results can be multiplied depending on how you work and your success rate. Using a round number of $1,000 per month, you would need $400,000 sitting in a bank account to generate $1,000 per month in interest. In network marketing, $1,000 per month is very do-able in the first 6 months. That's a $400,000 income-producing asset in under a year. Let's say you are very good and you can get up to $2,500 per month. That's the equivalent of $1 million in the bank earning above average interest. Motivated Yet?!? You should be. In 2008 there are more people looking for outside income opportunities than ever before in history. The problem is most small business owners and network marketers will never tap into those people. Some because of fear, some because of lack of knowledge. Some simply because they just lack basic sales skills. Most network marketing opportunities average about 10% commission rates (in addition to the standard up-front bonus programs), which means that $25,000 per month in sales will yield $2,500 per month in income on average and create a $1 million asset for you. Understanding the products and how they will benefit the people you meet will help you easily reach that $25,000 goal or whatever monthly sales figure you shoot for. In a lot of cases, the product that will benefit the people you meet the most is the very same business opportunity that has you reaching out to everyone around you. Sometimes enabling someone to own and operate their own business is the absolute greatest thing you can do for them. The old adage, "if you give a man a fish you feed him for a day, but if you teach a man to fish you feed him for life" is very appropriate in network marketing as you have the gift of financial freedom and income for life to offer the people around you.
Mike Magolnick is the Director of Marketing for Goldshield Elite and can be reached at mmagolnick@goldshieldelite.com.
