What is Network Marketing and Why Does it Work?

Are you interested in exploring different ways to make money and earn a living independently? If so, then network marketing should be on your list of avenues to pursue. In this post, we’re going to look at what network marketing is and why it works.

What is network marketing?

First, let’s explain network marketing by defining those two words.

A network (in terms of people) is an association of individuals having a common interest, formed to provide mutual assistance, helpful information, or the like.

Marketing is the action or business of promoting and selling products or services, including market research and advertising.

If you mesh those two definitions together, you have network marketing. The action or business of promoting and selling products or services with an association of individuals having a common interest, formed to provide mutual assistance.

In simpler terms, it’s promoting your business with a group of people. When you think about it, there are many, many types of businesses that rely on network marketing.

What are some forms of network marketing?

Now that we’ve defined network marketing, let’s look at the different forms of network marketing businesses, most of which you have likely encountered in your day-to-day and professional life.

Referral Marketing

Chances are, you have been offered referral marketing opportunities by businesses you have made purchases with in the past. For example, when you bought your last new vehicle, did your salesperson hand you their business card and encourage you to send your friends their way for a $100 referral fee? That’s referral marketing.

When you signed up for your gym membership, did they offer you a gift card for each new member who you refer to their gym? That’s referral marketing.

Have you ever given your DIRECTV account number to someone so you could earn a credit on your next bill? That’s referral marketing too.

Referral marketing is a form of network marketing that most people are familiar with. Many professionals and businesses use referral fees and incentives to ensure that their customers spread positive word of mouth recommendations to their friends and family. Their goal is to use your personal network to increase their sales.

If people are always asking you for your opinion on who you recommend for something specific, then take advantage of that by connecting with professionals and businesses in your area to find out who offers a referral fee or incentive. You could easily generate income by simply recommending your favorite car salesperson, chiropractor, realtor, accountant, gym, salon, or other local business.

Direct Selling

Direct selling is one of the most popular forms of network marketing. It involves a business that uses independent salespeople to sell their products face to face with their customers. Avon, Herbalife, and Amway are a few of the most well-known direct selling companies, as well as the most profitable.

Direct selling is just that – directly selling a product to other people.

  • You can do it by going door to door in neighborhoods or office places to demonstrate the product based on whether you are selling vacuums or office supplies.
  • You can do it by inviting people over to a party at your house where people will be entertained while getting the product demonstration.
  • You can do it online by connecting with people through private messages and groups. Many network marketers use Facebook to connect with a large network of people directly as friends and indirectly through Facebook groups for direct selling.
  • You can do it by partnering with local businesses and leaving your business card at their establishments. This will give customers of that local business a chance to learn more about you and the product you are selling.

For those who love selling and would prefer to do so outside of a corporate or retail environment, network marketing in the form of direct selling is the ideal career path.

Multi Level Marketing

Multi level marketing is direct selling, but instead of just making money by selling a product, you make money by recruiting others to sell a product. So instead of you going door-to-door, hosting parties, or connecting with customers online, you train people on how to do that for you. Those people will either do the direct selling or recruit people to sell for them.

Either way, you get a share of the commissions from the sales made from those you have recruited. In addition to allowing people to generate income through direct selling, companies like Avon, Herbalife, and Amway allow people to generate income by recruiting others to sell products under their supervision.

This is a much more ideal form of network marketing because of its scalability. While there are many successful people who do direct sales, earning an income from direct sales will always require that you are out selling. With multi level marketing, you can ultimately achieve the dream of passive income, as your income will grow with every sale made by those you have recruited.

The goal is to recruit people with a passion for a particular product who love to sell and preferably have a large personal network of family, friends, coworkers, colleagues, and other people that they can ultimately either sell to or recruit to sell under them. The more drive the person has, the more income you will likely make off of them in the long run.

Affiliate Marketing

Affiliate marketing allows you to promote products created by others online through the use of affiliate links. When you promote a product and someone buys it after clicking through your affiliate link, you receive a commission.

Amazon is one of the most recognized names that allows anyone to join their affiliate program and promote their products for a commission. Considering Amazon sells just about everything, it’s a winner with most affiliate marketers in any niche and in any industry.

Many businesses that sell products or services online have an affiliate program. Just do a Google search for the company plus the words affiliate program to find out if a company whose products or services you like will let you join their affiliate program.

You can promote affiliate products through written product reviews, video product reviews, webinars, email campaigns, and recommendations via social media. If you have a large enough audience, you can team up with some product creators as a joint venture partner to create specialized campaigns for your audience for better results.

While most affiliate programs only offer commissions to those who sell their products through their affiliate links, some also offer the option to earn second tier commissions for people who sign up as an affiliate under you. Hence, you get to earn a commission for every sale that an affiliate you recruited makes.

Best of all, affiliate marketing can turn into a true passive income source. If you can get your online product reviews to rank well in search engines, you will start generating affiliate sales and commissions 24/7. You can also setup automated email campaigns and automated webinars to further increase your affiliate product sales and commissions.

What industries are involved in network marketing?

Once you know the different forms of network marketing that businesses use, you will realize there are many businesses across a wide variety of industries that utilize some form of network marketing. So essentially, no matter what you are passionate about, there is likely a way to earn an income off of it through network marketing.

  • Do you love beauty products? You can take that and earn an income off of it with companies like Avon and Mary Kay.
  • Do you enjoy helping others get in shape? You can take that and earn an income off of it with companies like Beachbody and itWorks.
  • Do you like candles? You can take that and earn an income off of it with companies like Scentsy and Partylite.
  • Do you have a background in finances or legal services? You can take that and earn an income off of it with companies like World Financial Group and LegalShield.

With referral marketing, direct selling, multi level marketing, and affiliate marketing, there are plenty of business opportunities available to anyone who wants to earn a living on their own.

Why does network marketing work for businesses?

Many businesses choose network marketing over traditional forms of retail sales to market and sell their products. These businesses make higher profits by cutting out a many of the middlemen costs most businesses use to sell their products and services.

  • They don’t have to sell their products at wholesale to retailers or give credits back to retailers for unsold merchandise.
  • They don’t have to worry about product loss or damage from shipping products from the manufacturer to a distribution warehouse, from the distribution warehouse to a retail store, and from the retail store to the customer.
  • They don’t have to cover the overhead of a retail store to sell their products.
  • They don’t have to spend a lot in advertising to introduce their products to their customers.

But the real reason that businesses use network marketing is the personal touch. Instead of relying on advertising and marketing campaigns, businesses can rely on people within their customer’s community to introduce and sell their product to their target market. Their product wins instant credibility through association with a customer’s family members, friends, coworkers, neighbors, and church members.

Why does network marketing work for individuals?

For those of you that get involved in network marketing for businesses, there are many benefits as well. The biggest is that because businesses are saving a lot of money in the above areas, they are able to pass that savings on to their independent sales persons and distributors in the form of higher commissions.

Equally as important in terms of the benefits of network marketing is the independence that an individual can achieve by selling products for businesses and recruiting salespeople to work under them.

  • You don’t have to commute to an office every day. Unless you just want to get out of the house, in which case there are plenty of ways to rent office spaces nearby your home to give you a private place to work.
  • You don’t have to work at designated times or beg for time off. If you hate working on Fridays, don’t work on Fridays. If you want to schedule Tuesdays for personal appointments, you can. If you prefer sleeping in every morning and working in the evening, you can.
  • You don’t have to depend on someone to deliver revenue generating work to you. You can always go out and look for new work opportunities.
  • You are not limited to one form of network marketing. You can choose to do a combination of referral marketing, direct selling, multi level marketing, and/or affiliate marketing to create a diverse income.
  • You don’t have to be limited by a salary set by others. You can make as much as you want based on how hard you work, or how hard your recruits work.

In other words, with network marketing, you get to make the rules. You get to be your own boss. You get to be the best employee for the best boss in the world – yourself!

In Conclusion

As you can see, there are many different forms of network marketing that can help you earn a living while living an independent lifestyle. No matter what your skill-set, interests, passions, and strengths are, there are likely plenty of business opportunities that you can take advantage of to start on your journey to financial freedom today!


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