In 1946, the California Vitamin Company invented a new system called multi-level marketing (MLM) to grow their sales. Their results were spectacular and Network Marketing was born.
In the 70-odd years since, many large, successful companies used the MLM model to sell billions of dollars worth of products throughout the world. Countless individuals have created secondary incomes, full-time incomes and even multi-million dollar incomes.
Many people have created financial freedom.
It has also been used to provide false hope and broken dreams to many people who were ill-equipped and badly trained in how to succeed in the business.
Many companies started and failed. Scammers and schemers entered the space in pursuit of short-term gain at the expense of the people they brought into the business.
As a result, Network Marketing is loved by many, reviled by many and actually understood by very few.
Richard Brooke has done several man-on-the-street interviews to learn what people know and don’t know about Network Marketing. You can see the videos at SuperMLMMan.com. It’s interesting theater.
In this article I hope to provide an accurate answer to the question, “What is Network Marketing?” At the end, even if you don’t think it’s right for you, perhaps you’ll better understand that crazy thing your friend is involved in.
Network Marketing is a form of direct sales.
Direct sales means that a product is sold directly to the consumer without the use of a store. Sales historically took place in the customer’s home. Pretty much everything has been sold through direct sales through the years.
They originally called the system Multi-level Marketing because it pays commissions on multiple levels, or generations of sales reps.
What makes Network Marketing different from traditional direct sales?
Income in traditional direct sales is limited to how much product you sell. Sell a vacuum cleaner, you earn a commission. You alone are responsible for your production.
To earn a lot of money, you sell a lot of product.
Make no sales, earn no money.
You also report to a Sales Manager. Miss quota for a long enough period of time and you’re fired.
If you’re a good salesperson, you might get promoted to Sales Manager.
What California Vitamins did was to stop interviewing and hiring salespeople. Instead, anyone who wanted to sell the products was welcomed.
They also eliminated Sales Managers and instead, allowed any sales rep to recruit additional sales reps and then earn commissions on those sales, as well as their own.
This created unstructured chaos.
It also caused a dramatic increase in overall sales.
Network Marketing flips the numbers.
In a traditional sales job, you have a quota.
If the company wants $100,000 per month in sales, they might hire 100 salespeople and task them with each selling $1000 in volume. They could hire 10 sales reps with a quota of $10,000 per rep. They would then hire, train and replace sales staff until they reached the goal.
However, in a Network Marketing business, we achieve these numbers through a different route.
If you wanted to achieve the same $100,000 per month in sales in a Network Marketing business, you would simply enroll 1,000 or 2,000 sales reps who would each do $50 to $100 per month in sales. Same goal, different paths to fulfilling it. Network Marketing is a large number of people doing a small amount of volume if and when they want to.
How do you find all those people?
Where do those distributors come from?
1,000 is a lot of people. However, you don’t have to recruit them all yourself.
To accomplish that, we’ll use the “8th Wonder of the World”. But that’s a story for another day.
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