group“…between 50% and 65% of all goods and services sold in this millennium will be through network marketing.” It is a business model that is perfectly suited to the “information age.” The Wall Street Journal recently did a 40 page spread on the direct selling industry. Have a look at the articles HERE.

Pyramid scheme,  get rich quick,  and marketing hype.  Some will make millions and some will make nothing.  It is much harder work than they tell you.  There is only a small percentage of people in the industry who are truly successful at it.

All of these things are true about network marketing.  And all of these are true about every other job you will ever have.

But the difference is that the network marketing model has the ability to be the great equalizer.  Perhaps Robert T. Kiyosaki, author of the Rich Dad, Poor Dad series, said it best. “The richest people in the world look for networks. Everyone else looks for work.”

Let’s compare network marketing to the traditional corporate world.  For the most part, every company is structured like a pyramid with a few at the top who have been around longer and have more experience.  Some people ARE able to get rich quick in network marketing, and some are able to successfully start new companies and make loads of money.  There is tons of marketing hype around network marketing, but how many times have you started a new job to find out it wasn’t exactly as you thought because you didn’t do your homework?  Just like any job, it is tons of hard work and only a few can truly become ridiculously successful, but there are many people who make a comfortable living as well.

The trick is to be a realist and know what you are getting into. 

Network marketing requires you to become a business owner.  You are in complete control.  And if you have never owned a business,  worked from home, or set your own schedule, you will have to quickly learn a new skill set.  You will need to set goals, and you will need to manage your time effectively.  You will need to deal with rejection and keep a level head.  And you need to NOT QUIT.

Regardless of what company or product you are promoting, you need to understand that the number one thing you should be promoting is yourself.  Build YOUR brand, and your presence.  You will need to learn the skill of attraction marketing.  People need to like and trust you.  And you need to believe.  Treat your business seriously and with respect, and you will have an opportunity.

Traditional Company Structure

The Network Marketing Business Model

Let’s go back to business basics and try and keep this simple.  Traditional marketing costs are typically fixed, meaning they are already pre-established and paid up front.  Companies try and guess how and when their customers will buy and carefully craft messages to get them to buy into their brands – and this is very expensive.  Then the company will compare their marketing costs to their revenue and determine their average cost for customer acquisition.  Compare that to network marketing.  all of the marketing costs are paid AFTER- once sales have been made by a distributor through word-of-mouth advertising.  These marketing costs are now variable and very controllable as you only incur expenses when you obtain customers.  Customers are the lifeblood of every business and the two hardest things to manage are customer acquisition and customer retention.  With the network marketing model, you acquire customers you would not normally get through traditional advertising, and you retain these customers because of their relationships with your distributors. 

In North America, the network marketing/direct selling industry may seem new to many people, so let’s discuss a scenario that may shed some light on why this business model is so solid:

Suppose you start a restaurant in a downtown location.   You would advertise through flyers, newspaper ads, and maybe TV and radio.  You would also tell all of your friends to come and try it out.  You open your doors and hope for the best!  Each month, you continue to advertise in the various sources, maybe making some tweaks and doing some promotions.  “Free Appies!”  And each month you spend a portion of all of your revenue up front to hopefully entice new customers.  Epecially because there are so many other options for restaurants in your neighborhood, you find it hard to get people to even try yours.  As a new business owner, it becomes very tough to eat those costs up front.  But now you try something new.  You talk to a firend who is lokoing for an opportunity to make a bit of extra cash outside of what they are currently doing.  You offer them a percentage of every customer they bring in to eat at your restaurant.  They bring you five PAYING customers and you pay your friend accordingly.  You can even make a deal that if they bring you ten customers, you will give them a bit of a higher percentage.  You are still keeping yor marketing costs low because you now set the price.  Once that starts working, you tell your friend that if they recruit someone to do the same thing, they will get the same deal as your friend.  And as a bonus for bringing on these new people, you pay your friend a little extra.  Now you have the workload spilt over a few people and you still maintain advertising control.  You have reduced your customer acquisition cost and now are creating momentum with your brand presence.  You offer this same deal to anyone who would like to make some extra money and sooner or later you have a team of twenty people promoting your business and you have to open a second location.  Each person has the exact same opportunity, it is just up to them what they do with it.

What does it take to be successful in network marketing?

There are a few key ingredients that will make people successful in not just network marketing, but in any project they take on.

1. Take Action

In any business, you must DO things.  You have to call people, you will need to get out of your comfort zone and you will need to try and learn new skills.  Action creates momentum.  And consistent action will build a long term business.  It does not matter how much you do each day, it matters that you do SOMETHING.

2. Be Coachable

The moment you think you know everything, that’s when you should realize you know nothing.  The best leaders are the ones who continually ask questions. There will always be someone who has done more than you, or knows something you don’t  And in todays information age, there is unlimited knowledge out there to tap into.  If you truly want to be great, never stop learning.

3. Don’t Stop

The only way to truly fail at something is to give up.  Did you know that it takes about 21 days to build something into a habit?  Most people stop just before that because two weeks of doing something is kinda hard.  If they had only gone one more week, it would be easier.  If you try something new and do it for 21 days consecutively, you have just built a new habit.  That means that if you started new habits every 21 days, you could build 17 new habits each year.  Good or bad – your choice.

As with any business, take a long term approach.  If you put in the hard work at the beginning, you will reap the rewards for years to come.  I am currently building a global network myself and am looking for people who are serious about creating an opportunity for themselves.  Now is the time to tap into a business model that works.  Cultivating leadership within teams is the way to build a thriving organization.  You have to find people who are ready to work and are lokoing for an opportunity.

4. Have FUN!!

In my consulting business, I tell everyone, “When it stops being fun, try something else.”  It is going to get hard, you are going to get frustrated, and you going to ride the emotional rollercoaster.  Remeber that you have a choice – CHOOSE to do the work to make it fun.  Each customer call, each team building opportunity, and every challenge you face – make them a chance for learning and FUN!  It may sound silly, but approach all the most difficult tasks with an open mind and a light heart.  Things will start to change quite quickly for you and people will have more confidence not only in you, but in themselves.

 “I’d rather have 1% of the efforts of 100 people than 100% of my own.”

J. Paul Getty, the world’s first billionaire

Image by Grzegorz Łobiński

Joe Girard
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    2 replies to "Network Marketing May be New to You, But Pay Attention To The Business Model!"

    • Joseph Martin

      Awesome Joe, This is the way to go.
      Clear, concise, intriguing and educational all at the same time. You're the man! Yahoo!!!!!!

      • Joe Girard

        Thank you sir! As with anything, you get out what you put in. Network Marketing gets a bad rap because people expect something for nothing.

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