Network Marketing, also known as Multi-Level Marketing (MLM)
is a legitimate business model that uses direct selling and
relationship referrals as a method of selling a company’s products or
services. In a typical networking model, individual associates (often
referred to as distributors) essentially contract or act like a
franchisee to the parent company and are paid a commission based on the
volume of product or services that are sold as a result of their own
organisation’s efforts.
To fully appreciate this home-based business opportunity, we
encourage you to look at it from the perspective of both the company as
well as that of the business operator.
Why Would Companies Choose to use the Network Marketing Distribution Model?
Just like any other company that sells goods or services the ultimate
goal of a network marketing company is to make sales and increase its
customer base. In a traditional manufacturing company who sell their
products to the general public there is normally a large amount of costs
associated with advertising and distributing their product (ie the
middleman is responsible for a lot of the cost), before it is then sold
at a retail outlet who again add a profit margin.
Instead of using the traditional method of manufacturing and
delivering their products, MLM companies choose to bypass the middleman,
selling direct
to the customer. They use referrals and a word-of-mouth approach to
develop their customer base as opposed to a large advertising budget and
as such the money that would normally go to the middleman and
advertising can now be used to reward business operators (distributors) a
commission for helping the company to make a sale.
There are a number of reasons why many companies are now choosing
to use this increasingly popular business model. Firstly, it allows
start up companies to build a customer base through referrals without
having to try to outspend their competitors advertising budget.
Essentially network marketing levels the playing field and allows small
businesses the same opportunity as their competing international heavy
weights. It also allows the manufacturing company to build a
relationship direct with their customers creating better customer
satisfaction and loyalty. Selling direct to the customer and bypassing
the middleman also helps the customer to save money (without
compromising quality), which additionally makes their products more
appealing.
What Makes MLM Attractive to a Home-based Business Operator?
There are a number of
benefits
to operating a networking business, many in which are discussed in
detail throughout this webpage. Arguably the biggest attraction to
joining the industry is that in return for a
low risk investment
you have the potential to earn a very rewarding
residual stream of income
whilst enjoying the
time freedom
to significantly improve your quality of life.
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