Before getting into the details, let me answer one of the most frequently asked questions and probably the most basic 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 for moving products from the factory to the consumer and through an organization of users, retailers, and network builders.”
Let’s analyze 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 function properly. A very good example of this is a company called McDonald’s. People eat at McDonald’s not just for the burgers and fries. People eat there because of the experience, speed, and predictable prices. That’s the McDonald’s system. Ray Kroc perfected and sold that system to franchise owners who will constantly convert beef to cash. After all, the franchise owners didn’t buy the business because they are on 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 system to generate income to new distributors, then the marketing system will move the company’s products. So our job is to market a system to new distributors who move the company’s products and then teach them leadership and skills so that they also market more money-generating systems to future buyers (distributors).
The second thing we are going to talk about is the product. The product is the backbone of a network marketing company. The product is the source of income for all distributors. However, the product has to move or no one gets paid! A network marketing company is considered legal if you have a product to market to people. If a company does not have a product then it is considered illegal, more famous to people as Pyramid Scam. The products will come from a product supplier associated with the company. Usually the products they sell are highly consumable because people buy these products on a weekly or monthly basis. Examples of these are food supplements, beverages, soap, shampoo, toothpaste, and cleaning detergents. These products are sold by a consumer (distributor) directly to the consumer. Compared to traditional businesses, this type of business does not need to go to a middleman, then a wholesaler, then a retailer, and then the final consumer. The money that should cover the cost of advertising is given to distributors who have successfully completed sales transactions by themselves or by people in your organization. The money they make 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 that we are going to discuss is that Network Marketing is an organization made up of three types of people. They are:
Users: these are people who use the products regularly. They can be a warm list of dealer or distributor customers who use the products themselves on a regular basis. The most likely reason they will join your organization is to buy products in bulk (discounted prices). At least 60% of the organization is made up of users. We must take into account what we said a while ago that products are the backbone of the company. However, you have to move or no one is paid. Users are a very important part of the organization. Users enjoy the benefits of the product, but often do not enjoy the monetary rewards of the business. They are the type of people who earn the least in network marketing (they make about $ 50- $ 100 per month).
Retailers: These people make up 30% of the organization. These people are the “sales person” in your group. Although you don’t really need to be a good network marketing salesperson, you will come across people who really love to sell anything under the sun. Retailers also help get products moving. These people earn profits and commissions from the sales they make (they earn roughly $ 500 – $ 1,000 per month).
Network Builders – These are people who earn LOTS of CASH (they earn a maximum of $ 20,000 – $ 100,000 per month!) In Network Marketing because, unlike the first two, they build an organization that consists of all three types of people in Network Marketing. It only represents 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 created through extensive training and exposure in the business. They are often called LEADERS. They are the ones who believe that they can achieve their personal dreams and make a lot of money in this industry. It is not easy but it is rewarding. These are the people who enjoy FINANCIAL AND TIME FREEDOM. These are the people who inspire many people to become one of them.
The next question will be, which of the three would you like 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 be successful. Always remember, the product is the backbone of the company. The product has to move or no one is paid! Now you know the different types of people in the industry. It is up to you to decide which of the three types you want to be.
