MLM business – the whole truth about the network structure and is it possible to make money on it?
Network business in the majority causes, if not disgust, then clearly non-positive associations. Fraud, the desire to “warm-up” on gullible people, and even the common people “scam” – all these people say about the network business. And on the contrary, those who earn money on this praise this direction of entrepreneurship and promise mountains of gold.
We will further talk about what network business really is, consider the principle of network marketing and find out if it is possible to make money on it, or is advertising around us just empty promises?
What attracts MLM business?
The desire to get as much money as possible, and at the same time invest “three kopecks”, without making any physical or intellectual efforts – this is perhaps the most important factor that serves as a trigger for most network business clients.
The most striking example of a network business are cosmetics distributors: Avon, Mary key, Oriflame – these brands are well known even to those who do not use such products at all. Actually, this factor speaks about the popularity of MLM business.
The essence of such entrepreneurship is not just sales, but building a whole network – the more partners a distributor attracts, the more his income. In turn, each partner, in order to receive more income (and not just from sales), attracts their partners. These partners also do not want to live on sales alone and attract more partners to themselves – and so on ad infinitum. The main distributor who launched the chain receives x income from the entire network. Therefore, the larger the network, the better.
Visually, it resembles a pyramid – the top is the distributor, and from him there are already layers – his partners and the salespeople attracted by them. There is simply no end to such a system.
It would seem that there is nothing wrong here – sell yourself, teach others to sell and get income from it. But it is the compulsive selling process itself, as well as (in some cases) the dubious quality of the products that are “pushed” to consumers, that form a negative perception of such a business.
A person who wants to get into network marketing, as a rule, is attracted not only by the opportunity to make good money, but also by the following factors:
- Create a stable passive income.
- Flexible schedule – most combine this type of activity with the main job.
- To start, you do not need large financial investments – if you take the example of the same Oriflame and others like it, then the initial investment is the purchase of a certain set of cosmetics at a reduced price.
- To make a career – oddly enough, but the most successful and persistent networkers reach regional directors and so on.
- Bonuses, bonuses and other incentive programs – in the network business for those who sell well and a lot, they introduce various loyalty programs, which is a competent marketing ploy – this stimulates to sell even more, which means that the one at the top of the pyramid will receive more.
It seems that the essence of the MLM business is extremely clear and there is no catch. So why do the majority of entrepreneurs in this direction do not succeed and often find themselves even in debt and with a batch of a product that no one needs? It’s simple – the desire to quickly get a good income does not allow you to competently build a sales chain. Yes, and the factor of obsession also plays a role – it repels a potential buyer.
How does the American MLM business differ from the Russian one?
MLM – comes from English multilevel marketing, that is, multi-level sales.
The very essence of sales in America is no different from the one in Russia. The difference lies in the attitude towards this type of earnings of Americans and residents of the Russian Federation. In the first case, it is always regarded simply as a means of additional income. The main type of activity or such a business in which you need to invest your money and effort, in America, MLM business is not considered.
In Russia, network marketing for many is the only way to quickly make good money, according to the novice businessmen themselves. They strive to invest maximum effort, time, and even their money (often borrowed) there, but do not think that you can get a stable income only by building a competent sales chain. They are attracted by the promise of quick earnings, good bonuses, and a beautiful vacation somewhere in Bali – a standard presentation of a network distributor.
The picture is somewhat reminiscent of a donkey that runs after a carrot, not seeing that it is being held on a stick from behind and no matter how it runs, it is unlikely to get it.
There is also a striking difference between the American MLM business and the Russian one – if in the first case the activity is completely legalized, then in the second case, fraud is quite an ordinary thing.
Why don’t people like MLM?
Just three reasons why people don’t like online business make it not the best kind of activity. And it is unlikely that such a stamp will be erased in the foreseeable future.
Lure: “cheap, super cheap, next to nothing”
One of the main, but at the same time, in the long term, failed methods of salespeople in network marketing is to lure the client by promising mountains of gold and close the deal. There can be a lot of options here:
- “We have a promotion, handing out frying pans of excellent quality. But to get a set of frying pans, you need to buy this microwave.” – to lure the buyer with a profitable offer, and when he already sees how he is going home with a set of excellent frying pans and is ready to do everything to pick him up, sell him the goods.
- “We are looking for a young, promising assistant to the head of the office, the salary is higher than the market, training and recreation at the expense of the company” is a favorite topic of a network salesperson. What happens next is this: a person came for an interview, he was taken for an internship. But in order to pass the final stage, he needs to buy a set of goods that the company sells, or a course that he, in fact, does not need for nothing or is freely available on the network.
It goes without saying that there are many more schemes than we have given here. After all, it is necessary to make sales, which means that new options should be generated promptly.
Sales training in network marketing is not at all the same as that of a sales manager. Using special techniques, already avid distributors inspire the newcomer that what he sells will almost save the world. It is “the best ointment, with dragon scale extract and fern flower juice will cure all diseases.” Or “a frying pan on which you can fry anything without oil. Even a brick – after that it will be tastier than any dish. Etc…
After such brainwashing, a person is sure that he is selling the best of the best, cheaper than anywhere else, and therefore “how can you not buy it at all, but get in line, gentlemen!”. The desire to sell the product does not bypass even relatives and friends. As a result, the matter ends not with an increase in income, but with a narrowing of the circle of contacts. And this is the most loyal scenario.
This is probably why MLM business participants are often jokingly called “sectarians”.
Now, this technique is not used as zealously as in the 90s, but still, a stable association has remained. An experienced networker could sell anything – from a Chinese set of knives to a miracle massager that heals everything.
Under such influence, a person could easily buy a thing of low quality and for a lot of money, which, of course, no one was going to return.
Actually, these three factors have led to the fact that many people associate network marketing with fraud, pyramid schemes and lies. In fact, this type of business can be conducted honestly, transparently and beneficially both for yourself and for your client.
How to start a business from scratch in MLM
As in any other business, before you start working and investing, you need to carefully calculate and check everything. In the case of network business, pay attention to such factors:
- The essence of the MLM business is the sale of goods, because such an offer is profitable. Everything else that managers will definitely tell you is pure (although quite the opposite) fiction.
- The quality of the product – check it yourself. If it is a low-quality product, or at a very high price, which is no longer beneficial for the consumer, then there will be no good sales. At least in an honest way.
- You must like the product or service – if this is not the case, then you will not make good advertising for it.
- You don’t have to sign anything on the first day – check everything carefully, ask for copies for more detailed study at your leisure and show them to a lawyer.
- Do not give money or buy anything until you are sure that you can work with this company.
Since there are more and more companies that are engaged in MLM marketing, carefully check all the information before you start working.
How to choose the right company and start earning?
There are only three main factors, based on the analysis of which you can make a decision about working with a company:
- Goods quality .
- Marketing plan.
Let’s consider each point in more detail.
Good sales in the network business are possible only if the product is of good quality, which must:
- Selling at a good price.
- Have a quality certificate.
- Preferably – it should be a well-known brand.
- Be in demand.
- Be understandable – the consumer must understand why it is needed and why it will be profitable for him to buy it.
A marketing plan in a network business is what system you will receive payments on, what your career will depend on and what bonuses are. Such a plan must include the following:
- The amount of starting capital.
- Volume of monthly sales.
- Loyalty system, rewards.
- Career system.
The structure of network marketing is also those who work there, so be sure to familiarize yourself with the management.
If this is a serious company, then the following information should be freely available:
- On the leader, the founders, the regional directors.
- Feedback from the distributor.
In addition, there must be:
- Company paraphernalia.
- The possibility of free education.
- Delivery of goods in the regions.
- Timely payment of commissions.
- Information Support.
And there should NOT be an obsession in the form of buying unnecessary goods.
It will not even be superfluous to get acquainted with the reviews of people, but real ones – for this, visit specialized forums, groups on social networks. You can also read reviews about the products you are going to sell.
How to earn? Three actionable tips
If you consider the network business as the main form of income, then simply selling the product among your friends is not an option. Simply because it cannot bring good profit.
The emphasis should be on building a sales chain – your partners will bring you profit. You will need about 10 people to get off to a good start. These 10 will attract their partners and so on in a chain – as a result, a good pyramid with a stable income will grow. But, one should not confuse network business with a financial pyramid – things are different.
Three fundamental factors for successful network marketing:
- The priority should not be selling the product by you personally, but building a chain of partners.
- Stand out from the competition – with a profitable offer, non-standard presentation of goods, attitude towards the client. It will not be superfluous to have a page on a social network, your own landing page.
- Sell, don’t impose. Those three points that we listed above, exclude from your work.
MLM marketing, which will be based on these “three pillars” may well be successful.
Network Internet Marketing
Doing business now without a presence on the Internet is equal to giving away your customers to competitors. The same is true for MLM business, the following advertising tools will work well:
- Groups and pages in social networks.
- Your own website, it is better if it is a landing page, as it is designed for the prompt sale of goods.
- Announcements on thematic portals and forums.
But, there is one nuance here: in network marketing, a product is often sold that the client must see, touch, check before buying. Therefore, it is still not worth betting completely on online sales. They will be as an addition, but not as a basis.
It is important to understand that the structure of network marketing implies exactly the communication of the seller with the potential buyer. Live communication, competent presentation of the product offline is important.
MLM business trends in 2019
Now a network business representative is not a merchant with a big bag of Chinese goods. The trends that are used in the sale of any business can be applied in the MLM business:
- Use of CRM-systems and chat-bots.
- Building a personal brand.
- Using a sales funnel.
Chatbots and CRM systems
Such techniques have been used in sales for a long time, and chatbots have recently become especially popular – we see them on almost every site. In the window, you can enter a question, leave your details to contact the manager, and even consult. This automation of communication with the client allows you to reduce the number of live staff and allows you to respond to consumer requests in a timely manner.
Showing your client your personal success is the best advertisement for your product. Building your personal brand should start from the appearance at a meeting with a client to your page on social networks.
The sales funnel is the longest but at the same time effective working tool, which includes the following:
- Definition of the target audience.
- Lead magnet development – this can be the same chat bot on your site, where the user describes their problem and leaves contacts.
- Attracting traffic through social networks, but this is done only after the target audience has been determined.
- An invitation to an online or offline product presentation.
In tandem, all these methods work with a bang and MLM network marketing can be considered as the main source of stable income.
And what is the result?
Network marketing is not a scam or a pyramid scheme. It differs from traditional business only in that income does not depend on direct sales, but on the number of partners – the more of them, the better for the distributor.
There is no fraudulent scheme here if we are talking about honest business. But, the start of this type of entrepreneurial activity in the 90s, when everything was based on manipulation and “pushing in” low-quality goods for fabulous money, painted a picture with a negative plot, which still causes negative associations among most people.
It makes sense to engage in network business if you sell quality goods, rely on building a sales chain and conduct an honest dialogue with your client, both target and potential.