Earning extra money is a dream for most. However, most people do not know ways and means to boost their existing income. The most common refrain in India is lack of time.
Understandable, since commute time between home and office takes two or more hours daily for working persons.
Unless employed, housewives in this country are saddled with domestic chores including maintaining the house, cooking and raising kids.
For such persons, network marketing can help augment a regular source of income with little effort. It involves very simple tasks and socializing.
Understanding Network Marketing
Network marketing is also called Multi-Level Marketing (MLM) and is often mistaken as Pyramid Selling or Ponzi schemes.
The two are very different. Network marketing or MLM is a small home-based business.
To enter the field, you have to register with any of the top network marketing companies in India. Network marketing involves selling products.
This business is legal in India and lot of MLM companies in India are in profitable business these days.
MLM companies are allowed to operate in the field of herbal and organic healthcare and beauty products. Hence, you can operate legally as MLM associate.
Pyramid Selling or Ponzi schemes are generally frauds. It also involves signing up with a company as a seller by paying a huge amount of money as an entry fee.
Upon enrolling, you have to sell the scheme to three or more persons in your social circle. You get money when they pay membership fees to the company.
You also get commissions for any new members that persons you enroll have brought. Pyramid Selling or Ponzi schemes involve financial product.
The Indian government strictly prohibits selling financial products through Pyramid Selling and Ponzi schemes. Violators are liable to stiff jail terms.
Now that you know the basic difference between Network Marketing and Ponzi, let us learn how MLM companies really work.
How Network Marketing Works
In modern times, Network Marketing or MLM was pioneered by David McConnell when he opened a drugstore in 1886 in New York that sold cosmetics under the brand Avon.
Rather than depending on walk-in customers to buy these cosmetics, he enlisted the help of women who wanted to earn extra money. The revenue model continues today.
1 – Membership
Every network marketing company works by enrolling people interested in making more money as members of its MLM community. Generally, this is done online but at some locations, registrations can be done at brick-and-mortar stores or offices of network marketing companies. Anyone wanting to enter network marketing has to provide basic details including age, contact details, gender, and qualifications.
Often, network marketing companies deny or put applications on hold when someone applies from a geographical area. This is because they have the required number of persons already covering the market. They cannot enroll more because it can disrupt the market since newcomers will try and undersell products to bag customers.
Once a person has been accepted as the member, they are entitled to receive a small number of free samples. These freebies are given only when a new network marketing associate places the first order for goods.
These samples are meant for use by prospective customers the network marketing associate will approach for selling the products. A few companies ask a network marketing associate to pay a small deposit.
This deposit is refundable when an associate opts out of the scheme. The money is taken to enable network marketers to buy products needed for their home-based MLM business.
Some companies may charge a refundable security deposit if the product they give is a consumer durable. Cutco brand of kitchenware takes a deposit from network marketers because it gives them a complete set of cutlery and other kitchen implements for demonstration purposes. The deposit is returned when an associate opts out as network marketer.
3- Participation in Events
All network marketing companies have large advertising and publicity budgets to support their MLM associates. This means, whenever a network marketer is participating in a private or public event, the company will provide banners, leaflets, and a few samples.
However, request for participation has to be made well in advance of the event. It is evaluated by persons at the network marketing company for relevance and to find if participation can actually help to boost the business.
A few network marketing companies will also sponsor a private or public event. This can be by donating money in return for space to display banners and set-up a small stall to publicize its products.
For private functions, a network marketing company can sponsor some freebie like ice-cream, provided its banners and promotional material is displayed prominently at the venue.
Very often, network marketing companies also hold recruitment drives for new members. At these events, seniors from the company and existing MLM associates will discuss products and show ways and means to earn money through the home-based business.
4- Marketing & Sales
This is the most important feature of a network marketing company and depends upon the MLM associates. Generally, network marketers will popularize the company’s products within their social circle and family.
They have to buy these products directly from the company, which eliminates the need for distributors and retailers. Network marketing companies sell the product at rates that are 10 percent to 30 percent below the tag price to their associates.
The associate has an option to fix the sale price, which should not exceed that printed on the label or fixed by the network marketing company. The MLM associate can decide on how much profit they want from any particular sale.
Once a sale has been made, network marketers send details of the customer to the company for follow-up and feedback. This is part of customer engagement and efforts to develop brand loyalty. Network marketing or MLM associates also have to follow-up a customer to ensure repeat orders.
5- Product Range
Network marketing companies operate by manufacturing and selling products that are rare and not available from stores. These include various types of nutritional supplements made of herbs, roots, fruits, and plants, among others.
Beauty, skincare and hair care products, cosmetics, toiletries and dental care products offered by network marketing companies are unique and have distinct health benefits. These are prepared after extensive research into medicinal properties of various natural products.
Generally, every network marketing company will package its products very attractively. Exclusive packaging is meant to attract customers and lend uniqueness to the product.
Instead of conventional PET bottles, network marketing companies will package their products inexpensive, attractive looking and odd shaped flasks. Labeling is attractive and conforms to international standards.
This means the label will feature detailed information about the nutritional value that a health supplement delivers or how a product works miracles for hair or teeth.
Network marketing companies follow the simple advertising strategy: word of mouth. This means a satisfied customer will spread the word to others and entice them to try a product. They also operate referral programs.
This means each time an existing MLM associate enrolls a member, they get a small commission and are entitled to a portion of the earnings on sales made by the newcomer. The extra money is paid by the company and does not affect the income of the newcomer.