People have taken to using the terms network marketing and multi-level marketing (MLM) interchangeably. This has caused a lot of confusion and misunderstanding with quite a few people.
Network marketing really is a general term for a form of marketing that is typically performed by an individual instead of a company. Network marketing refers to the use of interpersonal or social networks to market products or services as opposed to traditional advertising mediums. Network marketing can also be a part of an overall marketing strategy that could very easily include print advertising, television commercials, radio spots, press releases, press conferences, blog marketing, seminars, webinars, teleseminars and social media marketing.
Network marketing is word-of-mouth advertising. Word-of-mouth advertising is simply the most powerful form of advertising that exists on the planet today. Everyone, and I mean everyone, is a network marketer. Small babies are born natural network marketers. They will let you know pretty directly if something is good or not. Everyone is always recommending things to the people that they know. “Did you hear about the great pizza that Giovanni’s has..???” “ Did you see the latest Harry Potter movie…??? Not yet….well…let me tell you…”
In the business world, business owners understand the power of positive word-of-mouth advertising. If they are smart business people, they go out of their way to provide an extraordinary customer experience because they know that people talk to one another. This is FREE advertising for them. And because it is unsolicited, it is super powerful. On the other hand, if a customer has a bad experience, they will tell that story more quickly and to more people than can be imagined. And that is a business owner’s ultimate nightmare. More damage can be done by an unhappy customer than can be done by the lousy economy.
So…how did all the confusion between network marketing and multi-level marketing come about? In many cases a multi-level marketing structure is used in combination with a network marketing strategy, so it is possible to say that a company is using network marketing as well as multi-level marketing; however this is not always the case
Network marketing describes a particular marketing strategy while multi-level marketing is a specific business model. While the two are often seen implemented within the same company business plan, they need not be and in many cases one is used without the other.
What gives multi-level marketing its name is the unique compensation structure. In such a company, independent sales representatives (individuals who market company products) have decided to contract with a particular company in what could be considered more or less a subcontractor position and are referred to as Independent Business Owners. Because of such a relationship, the sales reps are not employees of the company, they are independent from it.
What makes this compensation structure qualify for the term "multi-level marketing" is the specification in the contract between the company and the representatives that the representatives will receive compensation (commission) for their own personally generated sales of company products as well as for sales made by other promoters they introduce to the company.
This ability to receive ongoing compensation from the efforts of others creates an incentive for the representatives to personally recruit teams of other sales representatives (who will ideally do the same), thus creating a downline of distributors and compensation based on the total amount of sales generated within that entire group of distributors.
Multi level network marketing has been around for about 150 years with a number of companies beginning in the mid 1800’s. This type of marketing was founded on integrity and the desire to make the lives of others easier and give them the ability to earn more money and work less hours. One company established in the mid 1800’s now sees billions in profit every year.
Today, multi level network marketing is still going strong and still earning plenty for those smart enough to grab the opportunity. Anyone from a housewife to a college graduate to the CEO of a Fortune 500 company can take part.
This type of business typically offers a product or information for sale. Individuals can become a part of the business as independent contractors or consultants. They get to enjoy the prestige and name of the company as well as use the advertising the company creates to reach their target audience in their own selling efforts.
Starting out, new recruits earn at a certain income level. But as they sell and give other people the chance to enjoy success too, the original recruit’s income grows. This happens because they earn a percentage of the income of the people they recruit, known as their downline.
Using multi level marketing makes smart business sense. Whenever people have a product they believe in and they know that their success rests on their own shoulders, they’re able to control their financial destiny.
Becoming one’s own boss through independent contracting is simple. And anyone (even someone with very little startup money) who wants it gets a chance. When you sell a product through an established network marketing company, the company has already provided all of the means necessary to become a success, unlike if you were to create your own product.
What about the naysayers who offer only negative advice about multi level marketing? You have to consider the source. What kind of income do they earn? The people talking negatively…did they try it and fail?
Multi level network marketing isn’t for everyone. It’s not for people who aren’t go-getters. It’s not for people who don’t believe in the product. It’s not for people who refuse to learn.
Then who is it for? It’s for people who know that the best things in life don’t just happen. You have to know what your dreams are and then go after them. It’s for the people who know a product can help its users and it’s for people who know how to make it work and are willing to keep learning how to grow themselves as people and grow their income by helping other people.