Cost of living is on the upswing, regardless of which part of this world you live. Everyone from governments to citizen is locked in this centuries old battle of combating inflation.
Of course, some degree of inflation- or price rise- occurs naturally due to our dependence on imported or expensive stuff. Market factors including demand-and-supply dictate inflation indexes worldwide.
The best way to battle inflation is by increasing your personal and family incomes. Of course, there are various options available should you decide to boost your regular earnings.
However, in recent years, network marketing is fast becoming popular as an excellent source of extra income.
I have over 15 years experience in network marketing and was associated with dozens of good and bad MLM companies. I have recruited thousands of people in my downline and made excellent income from many of the companies.
So today, I am going to share you all my experience about network marketing business and how can you become successful if you want to work in a MLM company.
Understanding network marketing
The term itself is self explanatory. Network marketing simply implies marketing- or promoting and selling- a product within your own circle of family and friends.
You can extend it to include colleagues, neighbors, business associates and anyone whom you can network with effectively.
And if you want to make it big then you can promote to strangers through offline advertisements like newspaper, pamphlet ads etc. and online marketing like blogs, Facebook, WhatsApp etc.
Advantages of network marketing business
- You can do it part time.
- In my 15 years career, I have seen hundreds of people who earn more income from MLM than their full time job.
- I have seen many people become wealthy including me during the same period.
- MLM business provides ample opportunities for students, housewives, retired persons, senior citizens as well as people with special needs to earn a decent income.
- You can start network marketing business without investing much money or even zero investment.
- You don’t require infrastructure such as a dedicated office for network marketing business.
- Academic qualifications are not important for network marketing; just anyone can do it.
- Network marketing effectively utilizes the society to introduce new products and concepts within a specific geographical area or demographic group.
- Products and services offered by network marketing tend to be lower priced than same stuff available at stores.
And the best thing I like about network marketing business is meeting new people & travelling to different locations around the world.
Other names for network marketing
Network marketing is known worldwide with myriad names. These include
- Multi Level Marketing (MLM).
- Direct Marketing.
- Pyramid Schemes/ Pyramid Marketing.
- Direct Marketing.
- Ponzi Schemes.
However, it is worth noting that the terms ‘pyramid’ and ‘Ponzi’ have negative connotations. They refer to scams.
Direct marketing refers to schemes where you are the sole supplier of goods or services provided by a company. It explicitly implies, no agents or third parties are involved.
This means, the consumer does not pay unnecessary intermediary commissions.
Skills required to work as network marketer
Frankly speaking, your academic achievements and qualifications are irrelevant for network marketing. You could be a medical professional or a reputed architect or even an illiterate.
However, you can sell mundane daily objects such as herbal soap or food supplements as network marketer. Regardless, here are some skills that can help you become a successful network marketer:
- Excellent communications and interpersonal skills
- Patient listener
- Pleasant personality
- Convincing talker
- Astute judgment about money and finances
- Great organizational capabilities
- Friendly and gregarious
- Willingness to exert extra efforts
- Open to new ideas and concepts
- Skills to develop and consistently maintain network of contacts
- And most important, helping their team members to grow their network
Additionally, if you are a native speaker of any particular language, this ability can help you develop a network within an ethnic community.
There are no empirical studies to contradict this statement but generally women and senior citizens make better network marketers.
However, this can be attributed to more time they spend on this work, compared with men and youngsters.
Evolution of MLM in India
Network marketing or MLM companies entered India in late 1960s and early 1970s. Mostly, they offered small savings schemes with large returns. Foremost among them were chit funds.
Other schemes would promise anything from stainless steel utensils to saris and jewelry as rewards for members who enroll more people.
Sadly, these indigenous schemes became extinct within a few months. Inability to sustain the schemes was the main reason, as people balked at these offerings. Indians were not as affluent then and hence, reluctant to invest in such schemes.
Tracing history of MLM
Interestingly, network marketing is not a new concept worldwide.
- The accolade of the world’s first network marketing firm goes to Avon, which began its business in New York in 1886 with fragrances and beauty products for women. Despite its impressive history spanning over 130 years, Avon continues to sell its products through network marketing. Today, this firm has annual turnover exceeding US$ 10 billion. Avon is also the world’s second largest network marketing company.
- In 1922, Kleeneze, a UK based firm began its humble business of garden, home and body care products. This firm also operates till date with network marketing as its backbone.
- The third oldest network marketing company is Betterware that sells household and beauty products.
Other notables in the network marketing industry include:
- Wachter’s Organic Sea Products (founded in 1932)
- Tupperware (1946)
- Cutco Cutlery (1949)
- Jewels By Park Lane (1955)
- Shaklee Corporation (1956)
- Golden Neo Life Diamite, famous as GNLD (1958)
- Amway (1959).
Further, these companies are flourishing till date. Clearly, this indicates that network marketing is a success. Millions of people worldwide have become rich fast selling products of these firms.
Notably, several companies also lost business and had to close doors during this era. However, their failure was due to various reasons ranging from World War-I from 1914, Great Depression of 1929 and World War-II from 1939.
Mainly, economic uncertainty during these intensely difficult times this planet has seen, led to failure of many network marketing companies.
A unique system at work
Understandably, network marketing is a unique business model in its own right. Here, the company does not open its retail showrooms or sell its stuff through other stores.
Instead, people who wish to capitalize and make money on a company’s good reputation, buy and sell its products for a small profit. Usually, these products are sold by network marketers within their personal clique.
Steps to Become a Network Marketer
Obviously, there are several benefits of becoming a network marketer, full or part-time. Should you meet the above criterion and have great life skills, you can easily enroll for network marketing and get rich quickly.
Remember, network marketing, by no means, is a cakewalk, as one could get deceived into imagining. Instead, it requires extra efforts.
All your interpersonal skills and social contacts will undergo rigorous tests when you enter network marketing.
Step-1: Study the market
Firstly, find out which exclusive products can be useful in your community or neighborhood. This can indeed be very tricky.
Remember, a majority of successful network marketing companies operate in rather avant-garde domains of healthcare and beauty.
Meaning, the products will most likely be untested for results are based on traditional or shaman recipes. However, the biggest challenge is selling financial products or schemes that offer high returns for low investments.
Here, network marketing is at severe disadvantage for several reasons.
For one, investors prefer conventional offerings such as bank deposits, mutual funds and insurance. Especially since the network marketing industry as a whole continues to reel under various major scams involving investment schemes.
Secondly, selling financial schemes often involves excruciating efforts. Obviously, nobody wants to part with money to invest in dubious sounding schemes by nondescript companies. Meaning, you will waste precious time on convincing someone without prospect of a sale.
Thirdly, you will require astute and excellent mathematical and financial skills to convince a buyer to take your investment product.
Step-2: Determine affordability
Regardless of whatever product or service you intend to promote through network marketing, affordability matters. Meaning, your target clientele should be able to buy your stuff easily.
I started MLM business in 2001 and my first company was Japan Life. I attended their seminar in Mahim, Mumbai and was very much impressed with the overall presentation of the product & the earnings of MLM leader present there.
The product offered was a magnetic bed. You won’t believe, but the price of this magnetic bed was around Rs 90,000.
It was not affordable to me but still managed to buy it. I worked very hard for 6 months, tried to convince each of my friends & relatives but not able to sell even a single product.
The reason was “It was very expensive”.
Expensive or high-risk offerings have fewer takers. Affordable product means you attract more people. This directly translates into higher or lower income for you.
Generally, reasonably priced products stand a better chance of success in network marketing. For example, nobody will buy a shampoo for Rs.500 or toothpaste worth Rs. 300 unless they have proven miraculous predications. However, a product that costs reasonable for its quality and ingredients will sell faster.
Step-3: Scout network marketing companies
Once again, this is a very essential element of entering the network marketing business. As mentioned earlier, several fraudulent companies continue to mar the market almost daily.
I joined Speak Asia Online in 2010 and recruited few of my relatives & friends in this MLM company but soon I begin to doubt about the authenticity of the company.
Thank god I did not promote it heavily because the company proved to be a biggest fraud of that time.
Therefore, you need to be extra cautious in selecting the company you wish to represent in your social network. Associating with perfidious companies can tarnish your family and your social and financial standing.
Further, you also need to ensure the company you wish to represent has limited presence in your target market. It is easier to build on a reputed, established brand but returns can be lower due to tenacious competition from existing network marketers of the same company.
Step-4: Identify your targets
Upon completion of the first three steps, you need to identify your target market. This involves compiling a list of your closest people who can afford the product or service. Additionally, you can also determine popularity of your target customers in the society.
Remember, network marketing depends heavily upon the proverbial word-of-mouth publicity. Hence, the better connected your target customers, higher your chances of promoting the stuff to a wider clientele.
Step-5: Invest cautiously
Frankly speaking, every network marketing based company brazenly brags about its popularity. This will be evident from their promos on the internet, mailers and other literature.
Undoubtedly, there would be several rags-to-riches stories that a company highlights. However, you also need to determine whether there are any riches-to-rags stories among the company’s network marketers.
Usually, glamour of network marketing promos tempts a beginner to invest heavily. We recommend you assiduously resist such allurements. Remember, a reputed brand means intense competition, little known product means slower progress.
Therefore, be cautious when investing in network marketing products and schemes. Further, never empty your coffers or bank balance to invest on network marketing.
Step-6: Approaching the MLM company
Like insurance, “Network marketing business is sold not bought”. Someone will knock your doors in the form of relatives, friends or colleagues offering you a great-sounding scheme..
But if you have already decided to join a particular company, then easiest way to join it through an existing network marketer working in that company.
Just Google “Company Name” + leader or associate or distributor and you will find ads from network marketers in various classified sites.
Now contact each of them and find the best network marketer who can provide you complete help for growing your network.
Network marketers are desperate to join such people. You have good chances of negotiation. Now you decide what you want from them.
Step-7: Get your credentials
As soon as a network marketing company welcomes you onboard, get yourself the necessary credentials. This involves getting company brochures, flyers, promotional material, samples, testimonies of satisfied users and other similar stuff.
You can also have a small signboard at your premises and posters/ banners on streets stating your network marketing business, products, services and contact numbers.
Further, you will require business cards and some basic stationery including invoices, cash receipts, quotation books and letterheads. This can cost a small fortune. However, investing on these will impart a professional tinge to your network marketing business.
Step-8: Identify opportunities
Immediately upon establishing your network marketing venture, you need to look for clients. For starters, begin with the list of target customers you made and approach them with your offerings.
Further, you can request them for referrals, regardless of whether these initial targets culminate into successful sales. Furthermore, you can promote your business during fairs and fests, at religious shrines, sports and community clubs and social events.
Look for opportunities to set up a small stall or showcase your products and services wherever people will attend in large numbers but will have ample time to speak with you.
But if you need quick results then I will highly recommend you to promote your network marketing business on internet.
From 2001 to 2009, I promoted all my MLM companies offline only. I would start with all my contacts and then with pamphlets distribution and newspaper ads.
But when I started online promotion, I got more members in just 1 year than what I got in 8 years of offline marketing.
Network marketers in Thailand and the Philippines serve as excellent examples about how Facebook can be effectively deployed for network marketing.
They post excellent pictures and videos of their products, complete with testimonies and pricelist. These network marketers not only attract clients within their country, they frequently bag foreign customers too.
So I will highly recommend you to start promoting this online through blog, social media and many other ways explained on MoneyConnexion.
Step-9: Help your downline for duplication
One of the biggest mistake most of the network marketers make is not helping their downlines to grow their team.
You need to invest part of your earning to provide training & other help to your team members. Each and every member in their team will give you same earning as your direct members.
You can take separate meetings of your team in a nice hotel and provide them all the support & training they needed to expand their MLM business.
Remember, other network marketers are also active. You need to develop your own tactics to keep your contacts and network loyal. This can be done by hosting occasional parties to celebrate an achievement or family outings.
Often, you may have to part with freebies to ensure your customer, contact or network remains loyal.
Insight into workings of network marketing
Understanding how network marketing works is rather simple. Once you enroll with a company, you become their associate. You do not represent this company. Simply put, you are selling stuff produced or offered by that firm as your business.
Meaning, you buy from the company and sell to the end user. There are absolutely no intermediaries like distributors or agents who get commissions. Usually, you will have to place an order for the stuff you wish to sell.
This can be done before or after getting orders from your customers. The company will send you its products through appropriate channels such as road, rail or airfreight.
For smaller packages, the company can use the postal service or a good courier. Once you have received the ordered stuff, you sell it to the consumer.
The difference between your buying and selling price determines your profits. Often, companies give incentives such as freebies that can also be sold to consumers. This money is also your profit.
Further, you can increase earnings by enrolling more network marketers for the company. Your new recruits have to submit completed forms to the company, clearly indicating interest in promoting its products and services.
Sometimes, a small entry fee is charged for enrollment. A portion of this entry fee is paid to you as incentives.
Different Compensation Plans
Compensation plan is one of the most important thing to check in a MLM business. Better is the compensation plan, better will be your income in short time & less work.
Although there are dozens of MLM plans, but I am going to explain you only the most popular plans.
Generation Plan: This is the oldest & safest plan. Most of the big companies like Amway, Herbalife etc. use ths plan. Here you get maximum earnings from your upper levels. But as the levels go further deep, your earning decreases.
Matrix Plan: It’s one of the most popular MLM plan. You have limited width on your first level. Maximum, you can sponsor 5 people in the first level of downline. If you sponsor more members than max then it will be spillover and gives the benefit to your downline. Popular matrix plans are 3×5, 4×7, 3×9.
Binary Plan: This is my favorite compensation plan and this is also called as 2xn matrix plan. You need to recruit only 2 members, one on left and one & right. Your 2 members will recruitment 2 members each. You get same commission till unlimited levels.
Pyramid or Ponzi scheme
Invariably, companies offering financial products follow the traditional pyramid scheme. Meaning, as a new network marketer, you are at the top of the pyramid.
You are required to enlist two or more new network marketers. Once again, you are paid a commission or incentive for these new recruits.
Your new recruits get more subscribers to the pyramid scheme and get commissions or incentives too. Further, you also get a small portion of the commissions paid by your new recruits and any new members they enlist.
Unfortunately, such companies pay you from membership fees received from new recruits. These payments cease the instant any part of this human pyramid fails.
Pyramid schemes are also called Ponzi schemes. It gets its name from Carlo Ponzi, a swindler from Italy. Ponzi schemes involve paying older investors from membership fees paid by newer members. There are no legitimate business activities.
Pyramid and Ponzi schemes are destined to doom. The moment a few members cannot enroll new recruits or pay membership fees, the pyramid collapses.
Great MLM/ network marketing companies in India
- Amway: This is perhaps the most reputed network marketing companies of India. Amway offers home, beauty and nutritional products.
- Herbalife: A popular brand in beauty and nutritional supplements, Herbalife ranks as the second most popular MLM company in India.
- Forever Living: Also locked in the fray for India’s huge body and healthcare products is Forever Living. This company has made forays into rural India too, thanks to depots opened at strategic places to keep network marketers well stocked and faster deliveries.
- DXN: A South Korean company that offers exclusive, traditional products from hitherto unknown formulae and recipes. DXN has recently entered herbal beverages market in India through its network marketers.
- Avon: The oldest company and pioneer of MLM is also present in India through its wide base of network marketers. Avon cosmetics and beauty products are in great demand in the local market.
Although these are popular and recommended in India but you can join these companies from any part of the world.
Legality of MLM companies in India
In recent months, all nutritional supplements offered by foreign-based MLM companies are under the scanner of FSSAI (Food Safety and Standards Authority of India) and Food and Drug Administration.
The Ministry of Ayush plans to regulate import, distribution and sale of these products, based on proven medical values and benefits. The move comes in wake of hundreds of complaints from Indian consumers.
Apparently, some unscrupulous MLM firms had dumped substandard nutritional supplements in the local market. They are alleged to have caused varying degrees of harm to consumers.
Several Indian states including Kerala and Rajasthan have specific laws governing MLM/ network marketing companies and activities.
Also note, MLM schemes offering financial products are outlawed in India under the Prize Chit and Money Circulation (Banning) Act 1978. Offering any products that contravene Indian laws is thus a criminal offense.
Following adoption of Goods and Services Tax (GST) across India from July 1, 2017, all network marketers are mandatorily required to switch to the new taxation system. Some nutritional and beauty products from abroad offered by MLM firms have already become expensive.
India is moving towards a new Maximum Retail Price (MRP) system post-GST. Hence, all MLM firms are now required to display MRP of their products clearly on their labels.
Obviously, network marketing business is a great way to get rich quickly. However, you need to get associated with a great company. Before entering into any network marketing/ Multi Level Marketing/ Pyramid or Ponzi scheme, it is better to take a few precautions.
- Ensure that the scheme is legal in your country.
- Verify credentials of the MLM company and its officials.
- Network marketing financial schemes that offer high returns on low investments can be frauds.
- Read testimonials and reviews about the company.
- Do not invest or sell in any products offered by dubious network marketing companies.