Network Marketing has caught on the fancy of people across the globe and to-date there are thousands of people who have made their millions through being a part of Network Marketing. The success stories of such millionaires from US, UK, Australia, The Far East etc. are being published as a part of the case study in Universities and other Educational Institutions as well as Direct Selling Training Institutes.
Network Marketing is also referred to as Multi-Level Marketing (MLM), ‘Referral Marketing’, ‘Network Selling etc. As the name implies, this direct form of selling involves people and building network of people as sales distributors. Typically in MLM, the individuals take up distributorship from the Company in the first instance. The distributor works as a sales person too. Selling happens through identifying and recruiting a new distributor for the network. Every distributor happens to become a buyer as well for he starts using the product for self, for family and friends. Thus the sales take place through self use as well as through the distributors who have been enrolled by the individual.
In this case the distributor focuses on increasing the network of and recruiting other distributors rather than selling the products alone. Thus with extension of distributor network and the subsequent purchases as well as recruitment done by the chain the sponsor distributors earn rebates and commissions from the Company.
The income generation happens when the distributor recruits other distributors who in turn keep recruiting further thus extending the network and each distributor turns out to become a customer and thus buys the products from the Company. With every addition of distributor to the chain and additional sales, the upstream distributors gets to earn commissions, rebates and points which amount to income.
In this set up the Company focuses on providing the Products to the Distributors as well as in providing sales training and sales kit to the distributors who are the salesmen and the processing of payments from Customers/Distributors and Commissions to Distributors. The Companies spend a lot of effort in training the sales distributors and teaching them the art of communication, of building and managing relationships as well as in providing them the product training and sales training. In this effort the Companies use audio visual media, books as well as marcom materials extensively. Team meetings, conferences, seminars and membership to various achievers’ clubs are the main stream activities that help build the spirit and participation of the individual distributors.
What attracts people to MLM is the dream of earning millions as income without having to invest large sums of money but one’s efforts and time and without having to sacrifice one’s career or other priorities of life. MLM sells the concept of an individual aspiring and achieving one’s goals through additional income generation opportunity of joining and working through the network. As there are no entry barriers, it attracts thousands to take up this activity and pursue it diligently. Success stories are widely publicized and is there for all to see, for seeing is believing and this is what drives people to join the MLM networks.