Network Marketing

All about multilevel marketing

Network marketing refers to the practice of direct selling; it can also refer to multilevel marketing (or MLM network marketing). Network marketers compensate their distributors for every product sold, while still getting commission for signing up the distributors. The products and company in a network marketing setup are usually marketed directly to customers, either through relationship referrals or through word-of-mouth advertising. Many companies use a network marketing setup to sell products.

While MLM marketing works quite well for many companies and, done correctly, is perfectly legal, companies who abuse this business strategy and encourage a "pyramid scheme" have come under legal fire for refusing to practice proper compensation practices. Other complaints include high initial start-up costs, price fixing, emphasis on recruitment over sales, exaggerated compensation schemes and the cult-like techniques that some companies use to win their recruits' devotion and encourage more "conversions." However, thinking that all MLM companies work as pyramid schemes is erroneous—many companies work perfectly legally and are consistently quite successful with lead generation.

Setup of MLM Businesses

An MLM company is normally set up by recruiting distributors who, in turn, recruit other distributors and/or establish an active customer pool based on their selling strength. Either the distributor is able to make money selling the products alone, or, more often, he or she is also encouraged to market the brand via networking, building a top-down network of independent distributors who then also create an active customer base (and perhaps also recruit further distributors).

Internet and Network Marketing

With the advent of the Internet, finding network marketing leads has become easier than ever. Instead of relying directly on word-of-mouth advertising, companies can now use their own marketing networks through e-mail, Web pages and social networking to recruit and sell products. Unfortunately, this also means that unsavory MLM companies can set up and recruit distributors in illegal ways. MLM marketing schemes are legitimate, but before setting one up, you may want to look into the legalities to avoid any trouble.

Used properly, network marketing is a great way to sell products while maintaining your own distributors and earning commission. Using this type of marketing can really help your company to become profitable quickly.

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