Before starting, a quick glossary of network
marketing terms for beginners and the more experienced alike:
Network Marketing and MLM (Multi
MLM is similar to network marketing in that anyone you sponsor/sign-up
to an opportunity becomes your 1st level member. Anyone your 1st level
member sponsors becomes your 2nd level member, anyone your 2nd level member
sponsors becomes your 3rd level member. And so on...
The difference between the two is that with MLM you only earn from enrolling
new distributors/affiliates, with Network Marketing you can earn an income
just from selling the products and earn from a combination of your sales
and your downline's.
This is the network family tree of your sponsored members and their sponsored
members and their sponsored members etc etc.
This is the family tree going backwards showing the person who sponsored
you, then the person who sponsored them and so on...
Commission Plan or Pay Plan
The important factor with network marketing is the structure of commissions
earnt at each level of your downline. eg 10% of 1st level sales, 40% 2nd
level sales and 10% 3rd level sales. This will then be followed by various
bonuses based on total sales volumes etc, eg 2% of total business sales
divided amongst qualifying members.
Bonus Value. A reference figure relating to the amount of sales made.
Commissions are paid based on BV. Think of BV as business volume where
1 BV point usually equates to just over $1 of sales. Sometimes called
PV or LP.
An insurance policy. Commissions are usually only
paid if you meet minimum BV requirements. So, if you don't sell enough
product (or any at all) autoship automatically orders the minimum requirement
for yourself. The reason for minimum order requirements is for both business
and legal reasons - if you are not an active representative, you are not
entitled to commissions (stops people just promoting the opportunity and
never selling/using any product!)
WARNING - This should only be used as an insurance policy. If you aren't meeting your minimum sales regularly then it is unlikely that your downline will be able to either - not a sustainable business model.
These are some of the many terms you will
come across when reviewing any business opportunity. Now, back to finding
the right path for you.
An Internetwork Marketing path is in fact
the method used by a business opportunity, or its structure. Depending
on your current circumstances, skills, time constraints etc you will choose
the path most suited to your situation. Here are summaries of the main
methods/paths you will encounter:
1) Network Marketing or Direct Selling
This is the deep end of the business opportunity pool. You must often
invest a lot more time and money into these opportunities, receive training
and work as a team. Can be a lot harder to get sign-ups and even harder
to teach your sign-ups to get sign-ups. You will find commission plans
paying most on 2nd and 3rd level sales for obvious reasons, it promotes
growth. Potential earnings are also far greater than any other method
and is also the only method that has true 'residual income'.
However - it is not always as hard as it first seems with the right support
systems and training in place (more on this later!)
2) MLM Cyclers
Usually your first steps into MLM. These are the ones to be very careful
with. Consider these as Network Marketing for beginners. You pay one initial
sign-up fee which should actually buy you something (if it doesn't it
may well be a scam). When you have signed-up a fixed number of new people
you get a payout, some more product and re-entry into the system (hence
a cycle). These are the cheapest way to get involved in an MLM Business
Opportunity. The only flaw with these systems is that because nobody is
buying a regular BV, commissions are only generated from new sign-ups.
And you will need more sign-ups every time you cycle. And don't expect
most cycler programs to still be around in 5 years time! These are
3) Associate & Affiliate Programs
The most basic of business opportunity methods. A simple system of selling
other companies products by directing them to your associate website.
Straight commission per sale, sometimes 2 tier (2 level - earn from signing
up other associates). If you have a popular website this is the easiest
way to generate short term income by selecting a related product of interest
to your current website traffic. i.e. don't promote beachwear on an Eskimo
More recently these have become the most profitable and sustainable opportunities as the market becomes saturated in MLM. If they have a multi tier commission structure they can be considered sales focussed network marketing.
It may all seem a little too much to just
jump in and setup your own business, but you have The Internetwork Marketing
System to help. Most of the hard work and skills needed can be reproduced
and automated via computer, using what we call a front-end system.
Front End Systems
A front end system provides all the information on the opportunity, answers
your prospects questions, helps sign them up and makes sales of your products and duplicates to give them
the same tools. Better front ends will also have member areas with training
guides and numerous tips. Some may also contain chat rooms, forums and
downline viewers, totally free of charge! A lot of existing front ends
get prospects to join to gain access to the Member Area before actually
joining the core opportunity.
You will find that the best opportunities
combine numbers 1 and 3 above using a front end system that handles everything
for you, from sales to recruiting.
So whatever path you decide is right for
you, the secret of the whole system is to join a front end system based
on that path to handle your prospects, optimise commissions and introduce
the opportunity. Or, more importantly, a system that provides you and
your future sign-ups a simple marketing plan, trains you on how to use
it and therefore trains your sign-ups to do the same.
The secret to success in network marketing
is a simple duplicable system that anyone can follow, not just experienced
networkers. Both online, offline and a combination of the two, for both
part-time and full-time participants. PLUS a product you truly believe
in AND a product that is easy to sell.
No sensible networker will ever advise you
to rely 100% on the systems, and with very good reason. The systems assist
you in every aspect of your business, but the power of network marketing
only begins to multiply when you keep your downline growing too. This
can only be done by building relationships with your team, no computer
can do that!
Selecting Your Core Opportunity
Picking your core opportunity can be a very
personal thing. You may have had previous experience in a particular industry
for example, but eventually it will come down to one key decision - what
you are selling/promoting.
The tip here is to realise that every opportunity
has three facets.
1) Retailing. This is just focusing on selling
a product to a customer to earn a commission.
2) Customer Lead Marketing Plan. Although
it is business builders that will make you the most money, every opportunity
will have a marketing plan to follow up with your customers to convert
them into business builders. This is a very powerful marketing plan since
customers make the best distributors of products, having a personal story
3) Business Lead Marketing Plan. This is
the same for every opportunity although not many people realise it! By
learning basic network marketing techniques and perfecting them, they
are then easy to share with your downline. This is the key to a successful
network marketing business. You are in the people business, your core
opportunity is just the vehicle.
Please note, just relying on number 3 below will not build you a sustainable business.
Onto the next
chapter: Front End, Back End or Dead End - The Scambuster...