Before going into details, let me answer one of the most frequently asked and probably the most basic question of all: “What is Network Marketing?”
In 2009, my mentor, the one and only Mr. Jopet Pedroso taught me the definition of the subject. He said:
“Network Marketing is a system of moving products from the factory to the consumer and through an organization of users, retailers, and network builders.”
Let us break down the definition. First of all, Network Marketing is a system. A system is nothing more than a standardized set of tools and instructions that you must follow in order for a business to run properly. A very good example of this is a company named McDonald’s. People eat at McDonald’s not because of the burgers and fries alone. People eat there because of the predictable experience, speed, and prices. That is the system of McDonald’s. Ray Kroc perfected and sold that system to franchise owners that will consistently turning beef into cash. After all, franchise owners didn’t buy the business because they have a mission to serve the best burgers and fries in town. They bought the business to make money. In Network Marketing, you sell a proven money-making system to new distributors, then, the marketing system will move the company’s products. Thus, our job is to market a system to new distributors that move the company’s products and then teach them leadership and skills for them to also market more money-making system to future buyers (distributors).
The second thing we’re going to talk about is the product. The product is the backbone of a Network Marketing company. The product is the source of income of all the distributors. However, product has to move or nobody gets paid! A Network Marketing company is considered legal if it has a product to market to people. If a company does not have a product, then, it is considered illegal, most famous to people as Pyramid Scam. Products will come from a product provider partnered by the company. Usually, the products they sell are highly consumable because people buy this products in a weekly or monthly basis. Example of these are food supplements, beverages, soap, shampoo, toothpaste, and cleaning detergents. These products are sold by a consumer (distributor) directly to consumer. Compared to traditional businesses, this kind of business doesn’t need to go to a middle man, then to a wholesaler, then to a retailer, then to the end consumer. The money that should cover the cost for advertising are given to distributors who successfully made sales transactions by himself or by the people under his organization. The money they earn here is often called commissions. These distributors often use word of mouth advertising to market their products and the business itself.
The third and last thing we’re going to discuss is that Network Marketing is an organization made up of three types of people. They are:
Users – These are people who regularly use the products. They might be a warm list of customers from distributors or distributors that use the products themselves in a regular basis. The most likely reason why they will join your organization is to buy products on wholesale (price discounts). At least 60% of the organization consist of users. We must keep in mind what we talked about awhile ago that products are the backbone of the company. However, it has to move or no one gets paid. Users are very important part of the organization. Users enjoy the benefits of the product but not usually the monetary rewards of the business. They are the type of people who earn the least in Network Marketing ( earns approximately $50 – $100 per month).
Retailers – These people makes up 30% of the organization. These people are the “sales person” under your group. Although you don’t really have to be a good sales person in Network Marketing, you will encounter people who really loves to sell anything under the sun. Retailers also help products to move. These people earn from profits and commission from the sales they make (earns approximately $ 500 – $ 1,000 per month).
Network Builders – These are people who earns the BIG CASH (earns at a maximum of $20,000 – $ 100,000 per month!) in Network Marketing because, unlike the first two, they build an organization that consist of the three types of people in Network Marketing. It only makes up 10% of the organization for the reason that becoming a network builder is not that easy. More people fail than succeed just to become one. Network Builders are made through extensive training and exposure in the business. They are often called LEADERS. They are the ones that believe they can reach their personal dreams and earn big in this industry. It is not easy but it is rewarding. These are the people who enjoys both FINANCIAL AND TIME FREEDOM. These are the people who inspires a lot of people to become one of them.
The next question will be, which of the three will you want to become in this industry?
Now you know something about Network Marketing. Network Marketing has a system that will help you from start to finish to become successful. Always remember, the product is the backbone of the company. The product has to move or nobody gets paid! You know now the different types of people in the industry. It’s up for you to decide which one of the three types you wanted to be.