How Network Marketing Works
Network marketing is known by a variety of names, including multilevel marketing, cellular marketing, affiliate marketing, consumer-direct marketing, referral marketing, or home-based business franchising.
The Advantages and Disadvantages of Network Marketing
There is some stigma attached to the networking marketing business, especially those with multiple tiers, which can be characterized as pyramid schemes—that is, the salespeople in the top tier can make impressive amounts of money on commissions from the tiers below them. The people on the lower tiers will earn much less. The company makes money by selling expensive starter kits to new recruits.
The appeal of network marketing is that an individual with a lot of energy and good sales skills can create a profitable business with a modest investment.
Some reputable examples of single-tier network marketing operations include Avon Products, Mary Kay, and Excel Communications.
Anyone considering joining a network marketing operation should do their research before making a decision. Consider these questions:
- Was it pitched as a chance to make money by selling products or by recruiting others?
- What is the track record of the company’s founders?
- Are you personally enthusiastic about the products?
- Are people you know enthusiastic about the products?
- Is the product being promoted effectively?
- Do you foresee a relatively fast pathway to profits or a long time treading water?