Network Marketing, also known as Multilevel Marketing or MLM, is a business model that companies have relatively recently adopted. The basic idea is that the company relies on its customers to market its services or products instead of using the traditional media channels. In return for introducing new customers, the referrers get a commission on sales.
The company benefits by not needing an extensive marketing budget, and the customers benefit by being able to turn their association to the company into a profitable business.
Also since commissions are usually sale-based, referrers will continue to earn as long as the customers they introduced to the company continue to purchase the products or services, making networking marketing a very lucrative passive income vehicle.
From a business perspective, customers who choose to also build a business have the freedom to work that business when they feel like it, they are their own boss (essentially owning their own business), and can work from home. Often, however, there are rules governing how one may promote the parent company’s products or services.
Pyramid schemes have been associated with the network marketing model. The two are distinctly different. Businesses that use the networking model to market their products or services are genuine businesses that can only create a revenue by having said products and services. Pyramid schemes are illegal and are focused on the movement of money only, often only bringing in menial products in order to pretend legitimacy. These schemes, once discovered are often cracked down on immediately and don’t last very long. Networking businesses, on the other hand, have been in operation for many decades.
Networking is merely the model that a business has decided to use as its marketing plan. It isn’t a get rich quick scheme. Regardless of the success of the sponsoring company, building a network marketing business, like any business, requires work and dedication. In the same way that people have failed to make a substantial profit in any home-based business, so too have many been forced to give up on their networking business, often because of this initial misconception.
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