How to Explain Network Marketing as a Business System
What is Network Marketing?
Have you ever struggled with how to explain network marketing as a business system? Without overwhelming someone? Listen up for more
Here you are. At the start of your Network Marketing journey. Or, at least, this phase of it. You may have been in the business for awhile, or you may have just started. You may also be considering your options for getting started. So, let’s start with first things first.
What is Network Marketing?
Do you understand it fully? Do you know how to explain it to others in a way that makes sense?
Most people struggle with this. I’m going to give you some simple ways to briefly explain it, and then get more in-depth so you have a better understanding.
Network Marketing is a business system; franchising is also a business system. It’s a way of moving products and services into the market place and paying the consultants or sales team, if you will, who markets and creates sales.
Sales and marketing are not the same thing. Sales is just that - the sale of a product or service. Money is exchanged for a product or service.
Marketing is creating awareness of that product or service, and ultimately leads to the sale!
As you begin to explain network marketing, avoid the temptation to get super in depth.
A confused mind says no, and this can sound confusing if you get super philosophical about it.
Also, don’t be afraid of the term “Pyramid scheme or system” when you first hear it. Some people simply use this as a way of explaining what they know already in terms of the shape of the structure of a sponsor, and then others coming into a downline.
Also, avoid using terminology that most people won’t understand such as upline, downline, sponsor (this sounds like AA) or opportunity,
Think about it like this -
How often have you recommended a show on Netflix? Something from Amazon? A movie or restaurant?
Most of us do this all of the time, in fact I just sent a link to a friend for a champagne stopper off of Amazon right before recording this.
We are paid for creating some customers who use the products/service; and also a percentage on the sales of others who we show the business side to, who join us.
In other words, we see the power in the business side of the company we are evaluating, and we would like to start our own business, so we essentially buy a licensing right and can now sell the products/services and show others the business side and bring them into the business and on to our team.
This allows us to leverage time and income potential by a collective team effort.
In real estate, two companies specifically stand out who do this - Keller Williams and EXP realty.
The idea behind the home business trend of Network Marketing, or Direct Sales, is that if you get paid for recommending things you like, use and believe in, you'll do this more and more! And, you'll probably find some others that want to do the same thing.
That's it in a nutshell.
What if you found a great product or service and you loved it so much you decided to go into business marketing it?
You earn a small commission for the ongoing purchases of those you refer to this product or service, and you're also paid a small commission when you introduce this concept to others, and they refer people.
A popular concept in the program is the ability to create passive, residual income for you and your family. Over time, you might build a team of hundreds or thousands of others, who you never even know.
Many people just don't understand the concept of Network Marketing. Let me explain the way this works and hopefully you’ll have some solid language to use as you explain the concept to others.
The concept of Network Marketing consists of three major components.
TIME LEVERAGE
RESIDUAL INCOME
SYSTEM OF DUPLICATION
Time Leverage
This is the ability to get paid month after month on the work that you do one time.
A good analogy that you are already familiar with is the franchising industry. In franchising, the franchisee, or one who purchases the rights to do business using a well-known business name such as McDonald's, pays a royalty fee every month to the franchiser, or parent company. It's always a percentage of the profits earned.
The parent company, or McDonald's, has incredible time leverage. The more McDonald's stores they have around the world, the more money they make.
But, the parent company certainly doesn't do all of the work. If they have 5,000 stores, each open 18 hours a day, 90,000 hours are worked daily on their behalf.
The concept works in much the same way with our business system, except you don't have to pay a royalty fee each month!
For instance, let's say you start your own Network Marketing business and begin by investing five hours per week into your business. You introduce your business system to Mike and begin working with him. He also puts five hours a week into his business. You now have 10 hours per week working on your behalf, although you are only putting in five hours yourself.
If you and Mike each bring in a new partner, who each commit to five hours, you will soon be benefiting from 20 hours per week. Remember, your actual time involvement is only five hours each week.
By the end of the first month, you have forty hours each week working on your behalf. At the end of the second month, over 640 hours will be invested into your business each week, but not all by you. You are only putting in five.
Do you see the beauty of time leverage?
In network marketing, we are paid for opening "outlets" and teaching those "outlets" to be successful.
Now, let's talk about residual income.
Residual income
This is the ability to get paid over and over for the work that you do one time. It's also called "royalty pay."
There are very few businesses or industries today that pay residual income.
Musicians, authors and insurance sales people are a few professions that do earn a residual income.
If you were to write or record a popular song, each time that song played on the radio, or a CD was sold, you would receive a commission, or royalty payment.
Residual income in Network Marketing is income you continue to earn based on efforts you put forth initially. This income is based on the sale of products and services. And, then, ideally, repeat sales.
This is one reason why "consumable" products are so popular in Network Marketing. Consumable products are those items that are bought, used up and then replaced, over and over again.
Residual income is desirable in Network Marketing, because this is what allows you to put forth a lot of effort in the beginning, and reap the rewards of that for months and years to come!
And, by building an organization of people working toward a common goal, you can ensure a strong residual pay-out that will last for years. This is why it is important that you understand this pay advantage, and invest your effort, energy and time in other people.
Earning residual income requires a few things - first that you take action to get momentum going in your organization.
Second, you continue building on that momentum, and teach others to do the same.
Finally, you learn and develop leadership skills that will provide the foundation that supports your entire organization.
People follow people, and leadership skills are developed. Leaders are created, not necessarily born.
In the beginning, you have the "privilege" of working lots of hours for a little pay. In the end, you have the "joy" of working little hours for lots of pay.
People ask me all of the time how much I made my first month in the business. The answer is – “I don’t know. I don’t know because I still get paid each and every month on the efforts I put into that very first month.” That’s the power of residual income!
I started sharing it with other people, I signed up a few in the business, I signed up some customers and some of those people are still active in the business!
Get started and then build on your efforts each and every month.
Be a leader of others and watch the residual income roll in.
Duplication and Geometric Growth
Finally, we are at DUPLICATION AND GEOMETRIC GROWTH.
Those are two other exciting concepts, and probably the most exciting concept! It’s kind of like compound interest.
I like to use the "Penny a Day" story, to illustrate this concept.
While it certainly doesn’t grow and multiply this quickly, you can begin to understand it better and begin to think about the power of this geometric growth.
Let's say you start on the 1st day of the month with 1 penny in your bank account. Now, you are going to double it every day for the rest of the month.
Any guess about how much you will have in your account on day 30, or, day 31?
Well, here you go -
Day 1 - 1 cent
Day 2 - 2 cents
Day 3 - 4 cents
Day 7 - 64 cents (hmmmm)
Day 14 - $81.92 (getting a little more interesting)
Day 21 - $10,485.76 (getting A LOT more interesting!)
Day 30 - $5,368,708 (I'm definitely interested!)
and you can do the math on Day 31!!
See the power of geometric growth and duplication?
Duplicating yourself means teaching someone else to do what you do. When the two of you each teach another person, you duplicate it again, only twice. And so on, and so on, and so on!
(Remember that shampoo commercial about telling two friends, who tell two friends?)
That's Network Marketing!
Combine the three strengths, and you've got a remarkable system for success, that ANYONE can do, if they CHOOSE. I’m going to be real honest here, most will not, but that is okay, you only need a few.
Study these concepts and learn how to explain it. And, watch your business grow, and duplicate, and so on, and so on.
Study this and begin to put this into your own words. Learn to simply share this in about 3-5 minutes. Don’t worry about drawing out the penny a day concept. Share that after there is some interest.
Do you have a question for me? DM me on Instagram @jackieulmer
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