How I can make money through networking

Pros and Cons of Network Marketing

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Before I started my own business almost a year ago, the term “network marketing” came across only fleetingly. Maybe I read it in a newspaper or magazine article, but never dealt with this topic. What for?

That has changed in the meantime. For about 12 months now I've been surfing the internet ten to twelve hours a day, mainly earning my living as a web designer, but am also open to other sources of income, if only because of my online blog for money. ;-) And so you inevitably come across a lot of network marketing concepts, especially through aggressive Internet advertising.

I looked at a few, decided on a few and then applied for them - with poor success. And like me, it happens every day to other people who believe that they can make money with network marketing and fall on their faces in the process. On the other hand, there are also real success stories with this marketing strategy.

But why is it that most fail to build their required downline and a few downright swear by network marketing?
Before I go into the pros and cons of this form of distribution, the first question is what exactly is network marketing. Here is a brief explanation of MLM:

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What is Network Marketing?

Network marketing - other names for it are multi-level marketing (MLM), recommendation marketing or structured sales - is a form of sales in which a company sells its products to customers through independent sales partners as intermediaries.

In most cases, the future sales partners are customers first and then switch to sales partner status or have to buy the product to be sold themselves in order to be able to become a sales partner.

The distribution system is based on a matrix that runs vertically from top to bottom. So you often have to recruit three more sales partners and these in turn three in order to fill your downline to a certain number of levels. The remuneration plan usually looks like that the promoter or sponsor of his subordinate sales partners earns a percentage of their sales.

Obviously, it is becoming more and more difficult to acquire partners at the lower levels, because at some point the market will also be saturated. Network marketing is often equated with an illegal pyramid scheme, but this is incorrect. A pyramid scheme is an illegal variant of MLM, in which only the recruitment of new partners or members is in the foreground, the product or service to be sold does not exist.

Network marketing is also often defined in terms of comparison with direct sales. In direct sales, products are sold by a manufacturer directly to the end customer without involving resellers or intermediaries. In network marketing, on the other hand, sales are carried out via independent consultants. In addition, network marketing sales partners are only paid if the sale is successful, while direct salespeople always receive a wage.

Successful network marketing also includes successful teamwork. Each sales partner supports his structure or downline as best he can. Because the success of the others in the network is also his own. Most of the time, new partners are recruited and trained with the help of online presentations and training.

In addition, many network marketing concepts offer their sales staff tools such as websites, download areas with advertising banners, ready-made e-mail texts or demonstration material. The products sold in network marketing are mainly vitamin and dietary supplements, cosmetics, jewelry, textiles, telecommunications and travel.

The pros and cons of network marketing

Pros / advantages:

1. Low investment: With network marketing, you can start your own business with minimal financial outlay. Depending on the company, this effort is between just a few euros and a four-digit amount. These costs are only a fraction of the costs of a business in the classic sense. Network marketing therefore offers a simple and low-risk way of becoming self-employed.

2. Part-time entry: In the beginning, you can also do this job as a part-time job alongside your actual job. In this way you can determine without financial pressure whether you are even suitable for such a full-time sales job.

3. Involve circle of friends: Having a large circle of friends and a well-functioning network of colleagues and friends is also an advantage. Then you can acquire your first sales partner from the closest environment, which is certainly easier than “cold” customer acquisition. You can also gain valuable customer acquisition experience for your future advertising and sales activities.

4. Income opportunities: Successful middle-level network marketing employees who have 100 to 500 sales partners in their downline are expected to achieve six-figure gross annual income. However, it is far less realistic.

5. Great chances of success when starting an MLM: If you are part of a new MLM from the very beginning, you have the best chance of making a good profit, as the sales structure must first be set up and partner acquisition is easiest in this phase.

Cons / Cons:

1. Underestimated time factor: Anyone who wants to be successful in network marketing should not underestimate the time required for this. And here the failure of many lies buried: Because most MLM newcomers think that if they invest two to three hours a day in their work, they can already be successful. This attitude completely ignores reality.

If you are to have real success you need to spend at least as much time in the MLM business as you do as an employee, and that is at least 40 hours a week. In addition, you should concentrate on a maximum of two structural sales and not grind yourself into ten or more network marketing concepts. Most of the time, you don't earn anything.

2. Harassment of friends and acquaintances: Often, personal relationships of trust are used to sell the products. This can lead to stress within the circle of acquaintances or friends.

3. Lack of specialist knowledge: Many who get into MLM do not have the necessary commercial knowledge or the necessary sales talent. But that is how success also stands and falls in structured sales. Because after all, goods are sold.

4. Bad image of MLM: The generally poor image of MLM among the population is also responsible for the failure of many structured sales organizations. The vague and often unspecified advertising for such activities also contributes to this. Wording such as “self-employed work from home”, “high income with free time management” etc. is often used for advertising. At the same time, exaggerated and sometimes unrealistic salary promises are made.

5. Opacity of the structure or matrix structure: As an MLM employee, you rarely have an insight into which level of the structure or matrix you are at and how many sales partners are already present in the concept. And the more employees an MLM has, the more difficult it becomes to attract new partners, as the market will eventually be saturated.

6. No regular earnings: You only earn money once you have recruited additional customers or employees for sales. This means that you also have to put a lot of unpaid working hours into this activity without knowing whether the success will actually come.

Conclusion

Network marketing concepts cannot be blamed right from the start. You can certainly make money with it. However, the lax expectations of the employees that they are dealing with a casual job must also change.

However, some MLMs are poorly designed because they are only aimed at building sales and do not make extensive efforts to attract end customers, which should ultimately be the goal of every successful business. So I can only advise you to take a close look at each concept.

Product quality and sales methods are also important in this type of distribution. If you recommend good goods to others, that is already half the success.

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