The Potential for Network Marketing
There are some very successful and established businesses that use the network marketing model to distribute their products. Kleeneze for example was established in the UK in 1937 and remains one of the most successful network marketing companies. You will know others, like Avon, Nikken, Telecoms Plus, Amway and of course Forever Living Products. Ello Vera!
There maybe one or two that you weren’t aware of: Gillette and Toyota for example.
Unfortunately Network Marketing suffers from myriad negative press in its similarity to Pyramid Selling entities. Pyramid Selling is not legal and the above high profile companies would not be still successfully trading if they were corrupt. The key difference between Network Marketing and Pyramid Selling is that, in the first instance the products or services are purchased from the manufacturer. In the second the products and services are bought from the middle men who have added their mark up.
Criticisms have also been levied on potential price-fixing of products, over emphasis on recruitment of the down-line sales team, potential exploitation of personal relationships which are used as new sales and recruiting targets. Some schemes have boasted exaggerated compensation schemes, and the cult-like techniques which some groups use to enhance their members’ enthusiasm and devotion. There will be examples that many will cite.
However, let’s just take a peek outside the box for a moment and consider what is successful about Network Marketing and what we might apply to our own businesses. Most of us believe that word of mouth marketing is the most cost effective way of getting business and have a network strategy to support that. But what else can we consider?
- First and foremost the Network Marketing company sells directly to the distributer. There are no other ‘middle men’ who add their own mark up. By cutting out the middle men’s cut they are able to offer the commissions on the sales of down-lines. A lead generator reward is another traditional networking strategy.
- Network Marketing companies have created a clear brand with a clear message that is easily duplicated. It sets clear recommended retail prices which all distributors sell at. This is not a pile it high sell it cheap operation.
- Network Marketing expects you to sell on products or services to your personal contacts. When you started out in business the first few contracts or sales you generated were more than likely to have come from people who already knew, liked and trusted you. Your business networking strategy will include the building of appropriate contacts for your business …. won’t it?
- It benefits those who struggle with the product or service development to bring to market. It also benefits those who would like to add an additional income stream to their financial portfolio. For example a Financial Adviser may wish to add PrePaid Legal Services or a Hairdresser might wish to sell Forever Living Products or a life coach may wish to add Success University.
- Network Marketing works by recruiting and training a group of enthusiastic direct sales people. The open sharing of learning and experience is essential to support ongoing business development.
Network Marketing is not a get rich quick business opportunity. It certainly isn’t any ‘easier’ building a business this way than one of your own. For those who are good at managing teams of people, training and sharing who wish to work hard may well benefit from higher earnings as any regional controller or director for example in a traditional retail company might. The training and motivating of a large sales force is not a simple job.
PS – if you are interested in some strategic networking exercises – please find a discounted link to my Udemy course Strategic Networking for the confident networker