Network Marketing is another form of direct marketing. It is primarily more concerned with the organization of a sales network than with the sale itself.
The networker mostly starts to build up its own business before helping then other business partners to build their own, similar to a franchisor.
In difference to franchising where only one company opens new branches, in Network Marketing each independent business owner can open new network businesses, but with low financial investigations and without risk.
A networker undertakes the task to organize the network, to get paid for the sales qualified for bonus within that branch network.
Another feature of Network Marketing is to build up an transnational business by sponsoring international partners. Especially in Europe, Network Marketing represents one of the best examples how to make use of a single European market place.
A report from Prof. Dr. Michael Zacharias, University Worms, in 1996 has shown, that the total revenue in Germany made in Network Marketing is still very low (approx. 300 million EUR p.a.), but it will be fast-paced.
In the Ukraine the market has just started (Nov. 2003), and the market in Russia will start 2004 too. So in these countries we will see incredible and surpassing business growth in the next years. If you are from the Ukraine or Russia, or you know people from there, then you can directly benefit from it. You can offer them an opportunity to build their own business.
This was just an example, there are more exciting success stories from other countries as well, e.g. Sweden, Korea etc., and the opportunity is identical in all supported countries.
In Europe the Network Marketing business is still in its infancy. Only 0.7% of trading are currently made with Network Marketing.
So this distribution channel has a huge potential for growth in future all over the world.
The Three Pillars of Success in Network Marketing are:
1) Residual Income
2) Leverage (of Time and Money)
Network Marketing, ‘MLM’, and Multi Level Marketing are all terms that refer to the same type of business model. While many close-minded people outside the industry (and others who’ve tried it and failed), have biased or negative wrong impressions, and despite the fact that it is used and abused by many crooks and con-artists, this business model has exceptional performance potential.
There are bad apples in every bunch, and this industry has more than it’s share. But it can produce outstanding results if you know how to find the right company. And to maximize your potential, there are a few simple concepts whose understanding is critical to your success.
Unlike franchises or conventional businesses, Network Marketing, MLM, and Multilevel Marketing are the only business models that take advantage of all three of the important, yet misunderstood principles of:
Passive Residual Income – Leverage – and Geometric Growth.
And the combination of all three of these elements is what gives the Network Marketing business model it’s synergy and exceptional performance potential. In fact one outstanding company I’m aware of has actually built designed synergy into their business model.
Whether it’s a franchise or conventional business, both require major investments of time and money, and special skills if you hope to be really successful. Even the relatively small percentage who achieve true success usually take years just to break even.
On the other hand, with the advent and popularity of the Internet and the rampant quest to “Get Rich Quick for Doing Nothing”, many people have gotten all excited about affiliate, associate, referral, or co-op programs as they are sometimes called. But very few of the thousands of these being promoted have any real chance of making any significant money for the vast majority of people who get involved.
A perfect example is an email that was recently received from one of these programs who claim to be ‘the best’. They bragged that they were paying “over $400,000 in commissions each month!” and have “now grown to over 650,000 affiliates!”
Those are interesting statistics some might get excited about. Let’s see… if they’re true… They’re paying an ‘average’ of $.61 per affiliate… That’s sixty one cents ! Wow! How would you like to retire on that?!
They claim later in their letter that some are making $10,000 a month. If that’s true, then to come up with an ‘average’ of sixty one cents each, the vast majority have to be making absolutely nothing.
There is a much better way to achieve your dreams!
But you have to:
1) Take the time to understand these three critical principles –
PASSIVE RESIDUAL INCOME – LEVERAGE – GEOMETRIC GROWTH
2) LEARN TO ASK THREE SIMPLE QUESTIONS! – so you can teach what you know to others.
If you’re even moderately successful in networking, you undoubtedly understand and believe in the three principles above. If you haven’t yet had the success you desire, you may not completely understand these principles, or how to get them across to others. Highly successful networkers have learned how to ask the right questions, then help others understand and take advantage of these important and powerful concepts.
Unfortunately these principles are not well understood by the majority of the population. And that’s just one reason why so many fail at network marketing. There are lots of other reasons, and it would take a book to cover them all. But this is one of the more common ones. Because if you don’t understand or believe in these principles, it’s impossible to help others fully comprehend and appreciate them.
Let’s face it, our educational system trains (or brainwashes) us to be conformists, to do what others tell us to do, and to prepare for a JOB, not an entrepreneurial business opportunity. So those of us who crave our independence and freedom, head in that direction in spite of our education, rarely because of it.
And even though many people claim they’d like to be their own boss or own their own business, only a small percentage of the population possess the necessary desire for success to risk stepping out of their ‘comfort zones’ to pursue their dreams.
Most people are afraid of failure, and for them it may be better and easier to live life in a rut. Others are satisfied or even happy with their jobs, incomes, or lifestyles, and that’s great for them. But if you’re one of millions who yearn for more freedom and control in your life, you must understand the following three principles to achieve True Success in Network Marketing.
1) RESIDUAL INCOME:
Residual income is recurring income that continues to come to you long after the work you’ve done to produce it has ended. There are lots of ways to produce residual income. But many people don’t understand it. Others have never thought about or been exposed to it. And unfortunately, many ways of producing it are out of reach for ‘average’ people.
Successful authors, actors, musicians, and insurance agents are some of the more familiar avocations that produce residual income. Probably the simplest and best example of passive residual income is interest earned on money in the bank or other investments. It gets paid or credited to you without you having to invest any more time to produce it.
Using the “virtual millionaire” concept I will explain below, if you had a million dollars in the bank earning 6% interest, that would produce about $60,000 of annual income (before taxes). So if you have any source of passive residual income producing $60,000 or more a year, you are a “virtual millionaire”.
And with the right business, that can be much easier to accomplish than trying to overcome all the roadblocks to accumulating a million dollars in the bank. Instead of Uncle Sam fighting you all the way (taxing all your income), he actually becomes an active partner by giving you all kinds of tax breaks and incentives to succeed.
There are only two sources of money:
1) PEOPLE AT WORK, and 2) MONEY AT WORK…
The simple goal of Retirement & Financial Planning is to make sure you accumulate enough money (or income producing assets), so that when you decide or are forced to retire, it will produce enough PASSIVE RESIDUAL INCOME for you to enjoy the lifestyle you choose for as long as you live.
The same concept holds true in Network Marketing. But Leverage, and Duplication or Geometric Progression, can help you build it much faster in the RIGHT Network Marketing program.
One of the first questions I often asks prospects is:
“If you had the choice of doing a job and earning $500 once, or getting paid $100/mo for the rest of your life, which would you choose?”
You’d be surprised at how many answer $500! These people either, 1) are not good prospects or, 2) need some education. That question is one quick and simple way to pre-qualify people. Those who don’t understand that principle may never achieve their true potential.
Obviously $100/mo. will surpass a ‘one time’ $500 relatively quickly. And if it lasts for a few years, or better yet – the rest of your life – it will really be a blessing. Producing enough passive residual income can make you a VIRTUAL MILLIONAIRE in a relatively short time, compared to working for someone else and scrimping and saving for 30 – 40 years.
A VIRTUAL MILLIONAIRE is someone who has enough money coming in every month, WHETHER THEY WORK OR NOT, to support the lifestyle THEY CHOOSE, for as long as they live. It’s also nice to have something SIGNIFICANT to pass on to your heirs or favorite charity.
But like everything else in life, even residual income has a downside. The biggest one is, just like compound interest or geometric progression, it normally takes a little time for the magic to start working. The POWER and BEAUTY of residual income is on the back-end, not the front!
Many people have a hard time understanding this FACT and mistakenly chase false promises of quick or easy money. That’s why there will always be crooks and con artists in the world pitching “get rich quick and easy”. Successful people ignore them. Naive or greedy people usually get burned.
Residual income is NOT about “get rich quick”, even though with the right opportunity it’s possible to produce a small fortune in a relatively short time.
If you’re especially talented or have the time and money to invest, you may have some success in less than a year. And many people do. But without a major investment of time or money it takes most ‘typical’ people a year or two of part time work to generate a decent income, and another year or two to really hit the big time. But achieving success with 2 – 4 years of part-time effort beats the widely accepted ‘standard’ plan of slaving 20 – 40 years working for someone else to make them wealthy!
Most people who fail at network marketing either choose the wrong company or just give up too soon and quit because they expect INSTANT results. But because the real beauty of residual income is on the back end, not the front, once you build it you have the financial security and time freedom to do anything you want the rest of your life!
The RIGHT network marketing opportunity allows anyone, with no prior experience, special skills, or large capital outlay, to build long term, passive residual income. If you don’t know how to choose the right opportunity, I can help.
A critical component to building long term residual income is offering high quality, high demand, value-priced, ‘consumable’ products or services that people use and re-order month after month.
Because of this simple fact, the top industry in Network Marketing by any measurable standard is Nutritional Supplements and Personal Care products. Some people refuse to consider this industry because they don’t take supplements themselves or don’t understand the ‘Big Picture’ and successful business model of this industry.
Do you think Burger King and McDonald franchise owners invest hundreds of thousands of dollars because they like to eat fast food burgers? Not hardly! They understand human nature and trends in society. We’re a convenience oriented society, and a large part of the population would rather eat low cost convenience food, even if we know it’s not good for us.
But there’s also a booming trend toward improving your health, improving your life, and developing personal and time freedom. Many ‘opportunity seekers’ completely miss or ignore these trends in society. If your business is in front of multiple long term trends, you dramatically increase your chances for success.
I’m not saying it’s not important to believe in and use your own products, because it is! But for true success you have to recognize major trends in society, and your products or opportunity must meet ALL the highlighted criteria above – high quality, high demand, value-priced, and ‘consumable’. (And in this case, ‘consumable’ does not necessarily mean just ‘edible’. It means used and/or re-ordered on a regular basis.)
And with the right business the rewards can be much more than just financial. It’s hard to put a price tag on the goose bumps you feel or tears that come to your eyes sometimes when someone thanks you profusely for introducing them to a product that has had a major impact on their health, their life, or their financial situation.
Unfortunately some people never grasp the importance of this additional benefit. Most good people want to feel they are doing something worthwhile with their life. And it’s not just about making money, even though many narrow-minded or greedy people will try to convince you it is. It’s also about helping others. And doing both, can make the right business doubly rewarding.
But your business also has to have profit potential. Some ‘price-based’ products or services have lots of competition and limited profit potential. If you choose a business like that you have to do a lot more volume and it’s hard to build loyalty, which is an important element in producing long term passive residual income.
Every successful person or business (in or out of Network Marketing) takes advantage of leverage. There’s only 24 hours in a day! And no matter how talented you are or how much you get paid per hour, if you don’t take advantage of leverage you’re limited by the number of hours in a day. By learning to leverage your time, you can also benefit from a percentage of other people’s efforts, and dramatically increase your income and freedom.
If you’re reading this article on the Internet (on my website or someone else’s), or in a magazine, that’s one simple example of leverage. I don’t have to be physically present to teach you something. I may be sleeping, or vacationing on the other side of the world while you are learning or sharing this information.