Understanding Network Marketing

Network marketing – it’s a massive subject, where do I start?

High on the list is understanding the income model and your role as an agent/affiliate/distributor etc.

When first exposed to Network Marketing / MLM, many people simply do not grasp the fact that they are looking at a completely different way of earning money. The conventional way is to work for your income, a simple linear scale of effort and reward. The ladder is all about gaining skills that are in more demand and exploiting your position in the skills marketplace for more money. Those who are not working for a boss are generally the entrepreneurs who employ you to create something and sell at a profit or they simply buy and sell. Everyone understands these income and business models – it’s the way it has always been.

In Network Marketing you do not create a wage for yourself, you create wealth. You invest some effort in finding a customer for the main company, the customer buys a product or service (preferably on a recurring basis) and the company pays you a slice of the resulting revenue. So the customer is your asset and the residual income is the return on your investment. It may not be much income but it is paid every month for the life of the customer with little, and often zero, further input from yourself.

Learn from wealthy people

Residual = Wealth

Taking an average of current bank interest rates and average commissions per customer it is possible to attach a cash value to each customer. You can liken this to having that much spare cash available to invest in a savings account.

For example – every $10 (or GPB or EUR) per month you earn in residual income (getting paid over and over) is the equivalent of putting $4000 in the bank and earning interest at 3%.

That’s $4000 surplus cash that you do not need to spend on other things. How long would it take you to save a spare $4000? For most people, finding a customer or two is far easier!

In other words, each customer represents a sum of wealth. Repeat this process with enough customers and you will amass a sizable residual income which, again, would represent a significant sum of money on deposit in a bank.

For your average Jack or Jill it is easier to find a customer than it is to work in a conventional job and earn the spare cash to invest. Happily, this wealth creation can be done in your spare time – and there’s more! Finding others who wish to join you in creating wealth for themselves will bring yet more customers into your network and their numbers will grow in a viral fashion. Obviously the income from other agent’s customers will be less than from your personal customers but, as the numbers begin to multiply, so does your overall residual income. It’s a win-win for everyone involved.

But there are some subtle concepts here and they are not always easy to convey, especially to people who are only familiar to the more conventional ways of earning extra money. If you are already into Network Marketing then you probably understand these matters but, honestly, did you really “get it” within the first few minutes of being shown the business?

Many presentations still revolve around – “do this and earn that” just to simplify matters and make it easier for newcomers to make a decision, but it is crucial to instill an understanding of this income model with new recruits as soon as possible so that they fully appreciate the potential of the business they are in.