What Exactly Is Network Marketing?


Many people are scared of pursuing network marketing and that’s because of misconceptions surrounding this type of business. Also known as multi-level marketing or MLM, some people automatically think that it’s a pyramid scheme because of all the myths and misunderstandings surrounding network marketing. It’s important to understand that network marketing works in the same way as other businesses. It’s not a pyramid scheme and it is not destined to fail any more than a regular business.

If you want to succeed in network marketing, first you need to understand what it is all about. When it comes to network marketing, success comes from the work you put in—so it’s not any different from any other business endeavor.

What is Network Marketing?

Network marketing goes by a variety of names such as multi-level marketing, affiliate marketing, cellular marketing, consumer-direct marketing, and referral marketing. This business model is defined by its person-to-person sales.

A business that operates this way may require independent representatives to build their own network of business partners or salespeople to close sales or find leads. Despite its reputation, there are actually plenty of reputable network marketing companies that operate legitimately.

If you don’t want to get roped into a pyramid scheme, you need to know the difference between that and a network marketing operation. A pyramid scheme will be focused on selling expensive starter kits for new recruits instead of actually providing a profitable business opportunity. It also helps to work with a company you are already familiar with or one that is well-known.

In essence, a network marketing company is made up of non-salaried representatives who sell products and services or recruit more representatives to earn a commission. The earnings of salespeople depend on product sales and commissions from recruitment.

The main appeal of network marketing is that people who have great sales skills are able to create a profitable business even with a modest investment. Generally speaking, single-tier network marketing operations are more reputable than multi-tier schemes, but it doesn’t automatically mean that a multi-tier operation is a pyramid scheme.

How Did Network Marketing Start?

Network marketing has been around for a long time. It began in 1934 when California Vitamin Company developed the concept of multi-level marketing. In 1943, the company changed its name to Nutrilite Corporation, which implemented the first compensation plan for MLM. This means members of the company got paid on multiple levels of sales made. The idea behind this is that the salespeople who sold more products successfully should earn more for their hard work. This is in contrast to the traditional sales jobs where workers only got paid once even when the company continued to profit.

This new mode of compensation sought to reward salespeople based on how much they earned for their company. Now there are plenty of examples of network marketing companies that follow this same principle.

Examples of Successful Network Marketing Companies

Don’t fall for the myth that all network marketing companies are running pyramid schemes. Most of them run a legitimate operation, and some of these examples are really popular. You may have heard of companies like Amway, Avon, Herbalife, Mary Kay, Coway, Nu Skin, Forever Living, Primerica, Tupperware, Young Living, Rodan + Fields, Atomy, Oriflame Cosmetics, and Ambit Energy.

These are some of the most successful network marketing companies out there, and later on we’ll discuss the top 5 most successful companies in this industry.

How Much Do People Make from Network Marketing on Average

But before we get into the best of the best, let’s take a look at the average earnings of salespeople in a network marketing company. According to one article from Inc.com, the average sales rep makes about $2,400 per year selling products. It could definitely work in addition to your day job. It can be a nice boost to your salary if you can manage it.

But the thing about network marketing is that you get more out of it the more you put in. So for those who are willing to work hard, this number can go up significantly. In fact, that same article from Inc.com said that someone could earn $300,000 per year through MLM. Although this may be inspiring, you should keep in mind that this is the exception and not the rule. But it’s definitely a possibility.

Top 5 Most Successful Network Marketers

To be successful in the network marketing business, you can go for a company that is already well-established. The top 5 most successful network marketing companies as of 2021 are the following: Amway, Herbalife, Avon Products, Inc., Vorwerk, and Infinitus. Let’s take a closer look at each of them.

Amway is an MLM company that was founded in 1959 and now has an $8.40 billion revenue. This is one of the most profitable direct sales companies of all time, and yes, it is a network marketing company. Amway is a makeup and nutrition company. It owns brands such as Nutrilite, iCook, eSpring, and more.

Herbalife is a popular nutrition and supplement company that has a $4.90 billion revenue. Avon is another well-known company that is popular for its cosmetic products. It was founded in 1986 and now has a revenue of $4.76 billion.

Vorwerk is a German company  that offers products like cooking appliances and vacuum cleaners. It is ranked fourth in the list of highest earning network marketing companies, with a revenue of $4.23 billion.

Finally, we have Infinitus, a Chinese company that also sells herbal health solutions. It has a revenue of $4 billion. These are a few examples of companies that made network marketing work for them. It only goes to show that this type of business is legitimate and it can lead to success for a lot of people.

How to Start a Successful Career in Network Marketing

To succeed in network marketing, first you need to set the right expectations. This is how you stay away from pyramid schemes and other scams. You need to arm yourself with knowledge. While you can get rich with MLM, it’s actually not that common—so don’t expect it to be easier than running any other type of business.

Learn about the industry standards and research MLM companies carefully before you join one. Sometimes even legitimate companies may not be a good fit for you and your personal goals. Find a company that offers a product or service that you love.

You will be able to sell things more efficiently if you actually care about the product. Not only will you know more about the product you are selling, but you will also exert more effort and passion into selling them.

Don’t just jump on the opportunity to potentially make big income. Pay attention to what the company is asking you to sell. Having pride in what you’re selling can actually improve the way you sell it.

With that in mind, don’t annoy your friends and family by constantly pestering them about your business. While it’s okay to let them know what you’re doing and seeing if they are interested, don’t push it if they say no.

A lot of your friends and acquaintances will come to your business once they’ve seen your success. It’s actually a good idea to start with strangers instead of going for your immediate circle right away. Treat it just like any other business and identify your actual audience. Knowing your target audience will make selling a lot easier. For example, if they don’t care about vitamins, fitness, or health, then you’re not going to convince them to buy your product.

A lot of network marketing companies provide scripts to help you sell the product or service. But don’t rely on these too much. They are supposed to serve as a guide, but at the end of the day, a genuine conversation will help you sell more than a scripted sales pitch. Listen to your customer and sell the solution instead of the product. Understand their needs so you know how to help them. Do your research, pick the right company, and get started on your network marketing journey today.

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