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Network Marketing: What Is It? Is It The Right Option For You?

Network Marketing

Network Marketing is a type of business model that constitutes a group of people forming a network to earn from sales commissions, as well as through new joinings to the network. This system creates a flexible approach to the business, where a new member (as a salesperson) also becomes a business owner. The system has been in existence for many decades and has evolved multiple times since.

In this article, you will learn the essential details about network marketing (also known as multi-level marketing). You will also learn how network marketing works, as well as the types of network marketing options with the help of which businesses operate. Finally, we will also look at some of the major advantages and disadvantages of network marketing for businesses. Hence, to learn more, read on through to the end of the article.

What Is Network Marketing?

According to Investopedia,

Network marketing is a business model that depends on person-to-person sales by independent representatives, often working from home. A network marketing business may require you to build a network of business partners or salespeople to assist with lead generation and closing sales. There are many reputable network marketing operations, but some have been denounced as pyramid schemes.

The network marketing businesses that run through pyramid schemes focus more on the recruitment of salespeople. This is because new salespeople are required to pay upfront for expensive starter kits. For these payments, the people up the order in the pyramid get commissions.

Most companies that you will come across run through pyramid schemes. Hence, if you are looking to join a network marketing company, make sure that it is not a scam. Most companies with pyramid schemes have been banned due to running scams. Therefore, research is essential before you are looking to join a network marketing business.

Some of the most famous network marketing companies are Amway, Avon Products, Tupperware, Herbalife Nutrition, etc.

Read More: Market Segmentation: Definition, Types, Benefits, And More

How Does Network Marketing Work? – Types Of Network Marketing

Every network marketing business focuses on sales as the most important factor. In such a business, a core sales team specializing in sales starts selling products and brings in new salespeople.

Here, each of the salespersons in the core team brings in new salespersons, thus creating a new tier. Each of the salespersons in the new tier creates another tier in the same way. This is how the team takes the shape of a pyramid as the tiers increase. With more tiers, the team gets more salespeople, who add to more sales of the business.

The salespeople earn commission based on the number of items they sell. however, there is an interesting catch in this business model. With each sale, the people up the order get commissions based on their rank. However, this feature is different in many companies. 

Types Of Network Marketing

The following are the major types of network marketing options:

1. Single-Tier

Here, the salespersons in the team earn based on direct commission. Getting another tier of people is not compulsory. Here, affiliate marketing strategies come into play.

2. Two-Tier

In this case, apart from earning direct sales commissions, salespersons also earn through commissions for new recruits.

3. Multi-Tier Marketing

It consists of more than two tiers of people. Both direct sales commissions and indirect recruitment commissions are available in this case.

Network Marketing – Scam Or Legit?

Many network marketing businesses had their rise during the COVID-19 lockdowns. As people were locked in their homes, they were looking to make more money. Since the internet was a huge relief for many, and social media users grew, many people started online counterpart to advertise their products and brands.

This led to many such businesses getting bigger. However, there were many scams as well.

According to Wall Street Mojo,

By recognizing the potential for such gig works, many businesses exploited the people looking for jobs by making them pay upfront for training materials. Their objective is to earn money from people in the name of a business. Thus, the pyramid schemes focus not on customers but on workers who become the bait.

What Are The Advantages Of Network Marketing?

Here are some of the major advantages of network marketing that you will benefit from:

  • It helps to bring together people who are sales enthusiasts.
  • For many people, it offers a secondary source of income by acting as an affiliate.
  • They only pay those who contribute to sales, which is a gain for the business.
  • The company does not need to think about recruitment or providing additional benefits to employees.
  • In most cases, the business supplies quality products.

What Are The Disadvantages Of Network Marketing?

According to Entrepreneur.com,

Things can get sticky when a network marketing network compensates participants primarily for recruiting others rather than for selling the company’s products or services. A network marketing system in which most of the revenue comes from recruitment may be considered an illegal pyramid scheme.

The following are a few disadvantages of network marketing, which you must be aware of:

  • It is difficult to predict the production targets for the business.
  • Manufacturers have a limited role in facilitating the distribution of the products.
  • Too much focus on creating a pyramid of salespersons and earning through commission leads the business to trouble.
  • New distributors have to spend a lot at the start.
  • Many businesses are found to be scams.

Read More: Micromarketing – What Is It? How Does It Work? Pros And Cons

Wrapping Up

Hope this article was helpful for you to get a better idea of what network marketing is and how it works. You might have already understood that it is mostly suits those people who have high energy and top-end sales skills. If you are confident about building a profitable business with a modest investment, network marketing can be a good option for you.

You can choose a single-tier, two-tier, or multi-tier approach based on what you are comfortable with. However, research well before you join a network marketing company. Do you think this can really help in achieving financial independence? Share your thoughts on the matter in the comments section below.

Read Also:

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Soumava Goswami

Inspired by The Social Network, Soumava loves to find ways to make small businesses successful – he spends most of his time analyzing case studies of successful small businesses. With 5+ years of experience in flourishing with a small MarTech company, he knows countless tricks that work in favor of small businesses. His keen interest in finance is what fuels his passion for giving the best advice for small business operations. He loves to invest his time familiarizing himself with the latest business trends and brainstorming ways to apply them. From handling customer feedback to making the right business decisions, you’ll find all the answers with him!

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pay-per-click advertising

4 Benefits Of Using A PPC Agency For Your Business

Paid advertising, also known as pay-per-click advertising, is among the most efficacious and efficient methods of directing traffic to your website and acquiring leads for your enterprise. However, managing a PPC campaign can be a daunting and intricate task that demands a considerable amount of time and expertise. That's where a PPC agency comes in. What does PPC stand for pay per click? Only you can see the dollar amount, but what are the benefits of havening these? Only dollar signs and amount does not show the actual advantages of having the PPC. What Are The Benefits Of Using The PPC Agency For Your Business? The PPC agencies are offering all types of PPC advertising forms which are beneficial for you. They will keep the PPC marketing effort under the same umbrella. These are beneficial when you are set up a long journey and also want to encompass all types of PPC marketing channels. Through the PPC optimization report, you will get an insight into whether you will get the PPC account and its performance. If there have been any dips or massive spikes in the performances you can check the PPC report and know where you will require the corrections. That’s all. Doing all the analytical work on your own is a little bit challenging, So if you want fast analytical reports, it will be better to take the help of paid search analysis business agencies. Here are four benefits of using a PPC agency for your business. 1- Expertise And Experience One of the primary benefits of working with a PPC agency is the expertise and experience they bring to the table. PPC agencies, like PPC Geeks, specialize in managing and optimizing PPC campaigns and have a team of experts who are up-to-date with the latest trends and strategies in the industry. When you work with a PPC agency, you can be sure that your campaigns are being managed by experienced professionals who know how to maximize your return on investment (ROI). They have a deep understanding of how to target the right audience, craft compelling ad copy, and optimize your campaigns for better performance. 2- Cost-Effective Many businesses are hesitant to work with a PPC agency because they assume it will be expensive. However, working with a PPC agency can actually be a cost-effective option in the long run. This is because a PPC agency has the expertise and tools to optimize your campaigns for better performance, which can lead to a higher ROI. When you work with a PPC agency, you can expect to see better results for your advertising spend. They can help you identify areas where you may be wasting money and make adjustments to improve your campaigns. This can lead to a significant increase in your ROI over time. 3- Time-Saving If you lack familiarity with the nuances of the platform, managing a PPC campaign can be a time-intensive endeavor. When you work with a PPC agency, you can save time and focus on other important aspects of your business. Why make the strategies for PPC campaigns when you can take help from the agencies? A PPC agency can take care of everything from keyword research and ad copy creation to campaign optimization and reporting. This allows you to focus on other areas of your business, such as product development, customer service, and sales. 4- Better Results Ultimately, the goal of any PPC campaign is to generate leads and sales for your business. When you work with a PPC agency, you can expect to see better results than if you were managing your campaigns on your own. PPC agencies have the tools and expertise to optimize your campaigns for better performance. The better results mean when you already have the written whole reports, you will know where the loose loops are and how to get over the situations. They can help you target the right audience, craft compelling ad copy, and make adjustments to improve your campaigns over time. This can lead to a significant increase in your conversions and ROI. Conclusion In today's digital age, PPC advertising is an essential part of any successful marketing strategy. However, managing a PPC campaign can be a complex and time-consuming process. By working with a PPC agency, you can take advantage of their expertise and experience to improve your campaigns and generate better results for your business. Are you thinking of taking the services from the PPC agencies? Then comment back to us and let us know about your experiences with the services. Read Also: What Are Social Media Apis And Why Do They Matter? Does More Censorship Guarantee For A Safer Internet Connection? How To Run A Social Media Campaign At A Low Budget For An Aspiring Entrepreneur?