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Network Marketing: An Introductory Guide

Want to build a business around selling products you believe in? Learn how network marketing can be your pathway to success and explore how to get started.

Are you the go-to person among your friends and family for product advice? Do you enjoy recommending products and services that you love? This might be your cue to kick-start a network marketing company.

Using this business model, you can work from anywhere, set your own hours, and build a company that reflects your values. However, while network marketing offers great opportunities, it’s not a guaranteed success story for everyone.

So, if you’re toying with the idea of diving into network marketing, it’s crucial to go in with your eyes wide open. To get started, read this guide on what it truly takes to succeed in this business model.

The network marketing business model

Network marketing is where you sell products and may recruit others to sell, too. You make money from your sales and from sales made by people you recruit, known as your downline. This is often called multi-level marketing, although there are several different types of network marketing.

Here’s how it usually works. A company makes products. You, as an independent distributor, buy these products at wholesale prices and sell them at retail prices or above. You can also build your own team by recruiting others as independent distributors and having them recruit people. When people in your downline sell something, you get a sales commission.

Network marketing companies started in the 1930s. The California Vitamin Company (Nutrilite) and the California Perfume Company (Avon) were pioneers. Over time, network marketing expanded globally. It’s now a multibillion-dollar industry, with companies selling all kinds of products from jewelry to energy drinks.

Network marketing companies come in various forms. Each one has a distinct method of selling and recruiting. Understanding these differences can help you decide which type might suit you best. Here’s a more detailed look at the most common types.

Multi-level marketing

Multi-level marketing is the most popular type of network marketing. You earn money from what you sell and from your team’s sales. The more effective your team is, the more you earn. It’s a mix of selling products yourself and helping others do the same.

Direct sales

In direct sales companies, you sell products directly to customers. A classic example of this is the Kirby vacuum. You might go door-to-door or host product demonstrations in someone’s living room. Your income comes solely from the products you sell. You don’t build a team or earn money from your downline.  

Consumer direct marketing

Consumer direct marketing is when you encourage people to buy products directly from the company. It’s also known as referral marketing. With this model, you’re not selling the products but guiding customers to the company to complete their purchase. Your earnings come from the actual sales made through your referrals.

Step-by-step guide to building a network marketing program

To succeed in network marketing, you need a good plan. Follow these steps to lay the groundwork and steadily grow your small business.

Step #1: Choose a reputable company that aligns with your passions

Start by picking a company with a good reputation and products or services you’re excited to share with the world. Research their track record, read what customers say about them, and check for legal troubles. It’s important to believe in what you’re selling, as this belief will shine through to your customers and team.

Step #2: Research the compensation plan and startup costs

Make sure you know how you’ll make money. Look closely at the company’s payment plan. Learn about the different ways you can earn, such as from your own sales, bonuses, or your team’s sales.

Also, look at startup costs. Some companies require you to buy costly starter kits, pay for training, or maintain a large inventory. This can leave you operating at a loss before you know how well the products will sell.  

Step #3: Develop a targeted marketing strategy and SMART goals

Come up with a plan for how you’ll reach the people who might buy your products or join your team. Consider selling:

  • In person at events, parties, and gatherings
  • Through social media
  • By email

Create SMART goals for your marketing plan. For example, you could plan to increase your social media followers by 25% within the next month. Or you might want to aim for 100 sales by the 3-month mark.

Step #4: Recruit people to join your team and provide training

A big part of multi-level marketing is building your team. Look for passionate people who are excited and ambitious. When they join, help them learn how to sell and be successful. This is a win-win because when they sell well, you do, too.

Step #5: Create an online presence on social media platforms

A strong online presence can make a huge difference when building a network marketing company. Make profiles on platforms like Facebook, Instagram, and LinkedIn. Attract followers by encouraging social media shares, chatting with people at in-person events, and through email marketing. 

Step #6: Build relationships with potential customers and team members

Aim to build personal relationships with potential customers and team members to create a thriving network. You can do this by using attraction marketing tactics to talk about your products and how they improve your life. Additionally, provide value and support to your network by sharing helpful insights and resources. The sales and team signups will follow as you foster trust with your audience.

Step #7: Monitor your progress and adjust your selling strategies

Keep an eye on how you’re doing and be ready to change your selling methods if needed. If you have a downline, check your team’s progress and see where you can provide support. This may include providing additional training or resources to ensure everyone’s success.  

FAQs on selling products through network marketing

Network marketing can be a bit puzzling, leaving many people wondering how it works. This FAQ section addresses the most common queries to help you learn more about this business model.

How do you know network marketing is right for you?

Network marketing may be the right choice if you believe in the product line, are passionate about sales, and enjoy building relationships. It’s also important to have an optimistic attitude and willingness to learn.

Is networking marketing the same as home-based business franchising?

No, they’re different business models. Network marketing is about promoting products or services, while home-based business franchising means owning and running an established brand’s franchise.

How much does a network marketing business opportunity cost?

The exact costs vary by company. For example, Mary Kay Cosmetics is at the low end of the range, promoting startup costs between $45 and $90. LuLaRoe is one of the most expensive at $499 for their basic starter package and over $6,000 for their largest kit.

Is it possible to earn a lot of money with network marketing?

Although there’s potential, most people who build network marketing businesses work hard and don’t earn much. Some people even lose money, especially when chasing rewards tied to buying inventory.

Can you do network marketing on a part-time basis?

Many people begin their network marketing journey part-time. This approach allows them to keep their primary job and gradually build their person-to-person sales business.

Achieve financial independence with network marketing programs

Network marketing programs provide an opportunity for financial freedom through flexible work and earning potential. It’s a popular choice for those who want to be their own boss, but is it the right path for you? Use what you’ve learned about this business model to make an informed decision on your journey toward financial independence.

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