We all know the importance of networking in business. But, can networking be a whole new business philosophy?
Definitely! ‘Network Marketing’ is the way to go.
Today’s business includes a new innovative chapter. This chapter is called Network Marketing. Gone are the days when marketers used to spend huge funds on appointing salespeople and running marketing campaigns.
With Network Marketing, business can save the advertising, promotion, and recruitment cost. But, you must be thinking how? You will get your answer by reading further.
Lets us first understand the meaning of Network Marketing.
What is Network Marketing?
Network Marketing is a method of marketing that relies on individuals harnessing their personal networks to grow a business or sell a product.
It is a business strategy that creates a chain of networkers where all the members in the chain are determined to sell business products and earns a commission by the following two methods:
- When they sell the products of the business;
- When the people they appoint in this network make sales for the product.
So, this business model relies on a network of distributors to grow a business. The chain works in the following manner:
Firstly, the business appoints networkers and ask them to sell the products. Then, the networkers become the independent owner of business products and sell them. Finally, they form a network of interested people and make them sell the products and so on.
This creates a network of salespeople who sell business products and keep including more and more people in the chain.
Let’s make it easy for you to understand Network Marketing.
Think of ‘heard through the grapevine’, which means to hear news from someone who heard that news from someone else. Similarly, in Network Marketing, the company appoints networkers, and they further appoint sales representatives, and it goes on and on, whereas in gossip, all you get is social satisfaction by sharing the rumour. Conversely in Network Marketing; the networker gets a commission for every sale made by the network established by them.
That’s how a large chain of distributors/networkers sell products and earn commission by including more and more people in the chain. Network Marketing is all about creating tiers of distributors. It is a concept that makes every person an independent business owner who represents the brand as they own it.
So, Network Marketing is about networkers, distributors and sales!
Characteristics of Network Marketing
The representatives who sell the product in Network Marketing, associate themselves with the brand they represent.
Every person who is selling under this strategy becomes the brand ambassador and promotes the product as they own it. That is why it works like wonders. The distributors become independent business owners.
The Selling Concept
Network Marketing is a selling concept, and all you do is a lot of sales. In this approach, people sell more and more to earn a commission.
No Promotional Tools
When everything is about sales, then no promotion and advertising can come in between. The companies don’t need to advertise much because the representative sells directly, and they do their part in convincing.
It is easy to persuade someone when you tell them that they will earn by appointing someone that drops the idea of advertising when the distributors are enough to create the buzz.
In this strategy, the sales are made directly, as there is no well-defined distribution network.
Networkers make their distribution network where they sell immediately to their customers. There is no retail environment in Network Marketing as the non employed representatives sell and earn a commission.
Network marketing has a pyramid-like structure. There is a hierarchy in which people sell. One person designates another, and this keeps going.
Let’s take an example, X appoints Y as a distributor. So whenever X sells something, he will earn, also he will get a commission when Y makes a sale. To earn more Y will do the same thing and appoint a distributor Z so that he can earn whenever Z sells. This forms a hierarchical pyramid structure.
In Network Marketing, there is nothing such as fixed salary. Every candidate gets a commission for every sale he makes.
The only rule here is to keep selling and then get paid for sales made.
Sales and Earnings go hand in hand.
How does it work?
Network Marketing is a strategy that involves the word ‘Marketing’ in it, but it does not include its prominent tool that is advertising. But still, it is a powerful strategy. What makes this strategy powerful are the three basic rules:
These rules are:
So, the first rule of Network Marketing is generating sales leads. In sales, everything starts with generating sales leads and convert them into customers.
It is about finding more and more clients whom you can sell and also make them your distributor. Leads can be your friends, family members, or work people. It all focusses on people who can become a part of the network.
In Network Marketing, the word network refers to the person to person chain that forms when a person appoints another.
The whole strategy works with this rule.
Every person in this network is an independent business representative of the brand and sells it further to customers and appoints more representatives. This strategy is all about growing the business by recruiting more and more people.
Manage your Network
Last but not least is managing the network. If you think that it is all about appointing more people, then that’s not it. It is more than just asking people to be a member and sell. It also includes motivating them to sell more and recruit more.
The network of people are not actual salespeople, but they willingly become a member with no experience of selling. They become part of this network, and the immediate recruiters take the responsibility of training the representatives.
Companies that use Network Marketing as their business strategy
Amway was started as a family business, and now it is among the top direct selling companies. It offers a wide range of products like beauty, nutrition, and personal care; it has so much more to offer to its customers. The company turns its customers into its brand representative so that they refer and earn by purchasing as well as selling the products further.
Avon is another company that adopts multi-level marketing for its beauty, wellness, and personal care product lines. The target market of this company is women living in urban and rural areas. The business philosophy of this company is ‘beauty empowers women to empower others’. The distribution network of Avon is so strong that it gives competition to brands like Lakme, L’Oréal, etc.
Oriflame is another leading company from Europe that sells directly with a community of over 3 million sales representatives across various countries. The company products are available in more than 60 countries. It explains how strong Network Marketing can be to spread its connections around the world.
Some similar examples are The Body Shop, Tupperware, etc. that adopt the Network Marketing strategy for selling its products.
Why Network Marketing is a win-win for companies and their representatives?
No need to hire employees
Companies recruit many employees to run a business. They hire salespeople, marketers, and many more agents to run their business. But in Network Marketing philosophy, there is no need of hiring employees. The representatives promote and market the brand like their own, and this benefits the manufacturer.
Save advertising cost
We have already discussed earlier that Network Marketing does not require advertising. The representatives do their part in promoting and advertising on digital media. They treat the brand like their own and promote it and convince more people to become a member of the company network.
We know that the distributors in Network Marketing are like independent owners. They promote the product with enthusiasm and create excitement about their product. They are self-motivated to sell the product because the more they sell, the more they earn. Motivation comes from within due to the monetary benefits.
Work hour flexibility
The best part about the Network Marketing business model is that there is no predetermined; rigid work schedule. The representatives can work from anywhere and anytime. The business representatives can even work from their homes and this gives them the flexibility to handle the work.
We know how the representative gets a commission every time their sub representative sells something. Suppose there are a group of 10 people under one distributor, then imagine when these ten sub-distributors sell, how much the distributor gets. The wider the network, the more they earn.
Network Marketing explains how a group of like-minded people can come together and take a business to greater heights. The network clusters that they form are complex, but the idea is simple, to keep selling.
With network marketing, it is also about finding salespeople with enthusiasm.
When you hire people who are excited about your business and product, they will share that enthusiasm with others. An enthusiastic salesforce leads to more sales and recruits into your marketing network.
Tell Us What You Think!
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