Is Network Marketing worth it? Out of 5 people in the US 2 has been involved in Network Marketing.
More people see this business model as a way to make additional income or escape the employment slavery or the rate race of the 9 to 5 job.
Network Marketing is also referred to as Multi-Level Marketing, Referral Marketing or Direct Marketing.
Many people are confusing Affiliate Marketing with Network Marketing.
Both of them are marketing strategies the difference is Affiliate Marketing does not involve building a team (Network) to earn money.
Affiliate Marketing has a single-tier commission unlike Network Marketing also known as Multi-Level marketing.
I will explain the difference between Network Marketing vs Affiliate Marketing late in this post and you will learn which one is the best business model you can start today.
There is a lot of buzz on the internet about Network Marketing and I have seen companies like Crowd1 and Solmax Global breaking the internet.
People who rushed to invest in those companies without doing proper research lost a lot of money.
Many people are wondering if Network Marketing is a good business model to invest in or it is just a business model full of scams.
In this very detailed post, I will cover the 9 Things Distributors MUST know before starting a Network Marketing Business.
You will learn:
- How Network marketing works
- Is Network Marketing worth it in 2022 and beyond
- Is Network Marketing safe
- Can you make money with this business model
- The alternative to Network Marketing
- and more…
Without further ado let get started…
1. What is Network Marketing all about?
Network Marketing is a business model in which a distributor network is needed to build a business.
Usually, Network Marketing companies are also referred to as Multi-Level Marketing in nature in payout is occurs on more than one level.
Network marketing is a business strategy some companies implement to make sales and increase revenue without spending money doing marketing by themselves.
First, those companies are always looking for distributors also known as Sale Representatives or Independent Business Owners to sign up with them and start selling their products.
As a Distributor, before you sign up you need to buy a starter kit (products or marketing materials).
They have different starter kits from a low price to every expensive one. After that, you will have access to buy the company products at wholesale price and sell it at the retailer price.
The more stocks you buy the more you will earn Personal Volume (PV) bonuses and qualify for other discounted prices. That is not the only where to earn money with Network Marketing.
As a Distributor, you are allowed to build your team by recruiting more Distributors and earning commissions from your downline team sales.
The more you recruit and your team recruit the more money you make. As a team leader, you can also earn Group Volume (GV) bonuses, Organizational Volume (OV) Bonuses and Commissionable Volume (CV) bonuses.
2. Network Marketing commission rates
The commission rate of Network Marketing also known as Compensation Plans differs from company to company.
Some of those companies have complicated compensation plans.
- Unilevel MLM compensation plan – It is a compensation plan that has only one business level, and all the recruiter members of a distributor are placed directly in the first level
- Binary Compensation Plan – It is a compensation plan that consists of two legs (left leg and right leg) or subtrees under every distributor
You can earn commissions and bonuses at different levels. This is how the Network Marketing bonuses is been structured:
- Sponsor Bonus/Referral bonus:
- Pairing Bonus
- Level Commission
- Matching Bonus
- Position Bonus
- Forced Matrix Bonus
- Fast Start Bonus
These are the common commission rates and bonuses you will get from most of the Network Marketing companies.
3. Does Network Marketing really work?.
According to the FTC Study, the success rate of MLM or Network Marketing is only 1% and 99% of the people who participate in this business model lose money.
Zig Ziglar said: “ Building a successful network marketing business takes more than just hard work and enthusiastic attitude.
Before you jump into any of the network marketing companies or start this business journey you need to analyze your goals and missions.
Ask yourself this question:
- Do you want to be a salesperson?
- Do you have a solid sales plan?
- What are your income goals?
- Can you afford to risk the money and time?
The risk of losing money or not making any money in network marketing is very high.
By joining a Network Marketing company you may think that you are a business partner in reality you are just a potential client and salesperson.
- Potential client – You buy products from the company at wholesale and sell them a the retailer price. Even if the products do not sell well you oblige to buy more to qualify for other bonuses and discount prices.
- Salesperson– You are involved in marketing the company and recruiting more people and earning commission from them.
This video below will explain in more detail what you need to expect as a distributor.
4. Network Marketing is a pyramid scheme
Network Marketing is not a pyramid scheme although they have a similarity in the operation.
In both Network Marketing and Pyramid Schemes, you will need to recruit more people to join the scheme and earn commissions from the people you recruit.
In addition to Network Marketing, you are involved in selling real products to the public while in the pyramid scheme is not actually any real products.
Your earnings are based only on the people you are recruiting in the scheme. The Pyramid Scheme is very illegal in most countries.
But some Pyramid Schemes have become very smarter nowadays they operate as Network Marketing (MLM) to hide their scheme by coming with a new product that does not add value to the public.
Their emphasis is to recruit more people in the scheme.
That is the reason some countries like Bangladesh, China, Saudi Arabia, and many other countries also made Network Marketing illegal.
5. What is the benefit and risk of starting Network Marketing?
Network marketing is very popular due to it is low entry cost and income potential. These are the main benefits people are jumping in this business model.
Starting a business like McDonald require too much money.
But to start a Network Marketing you just need to sign up with a company and buy a starter kit that you can afford and start making money.
You do not have to deal with the invention of the product and other overhead costs.
The idea behind Network Marketing is very good but the problem is the business model the way is being structured has a high risk of losing money.
With Network Marketing you have financial and social risks.
- Financial Risk – Stocking up products just to qualify for other businesses
- Social Risk – If you are too aggressive in selling products and you are targeting your friends, family and your community you might end up ruining your relationship.
If your target market is only your friends, family and your community are already setups to fail.
6. Is Network Marketing worth it
According to the Small Business Administration, the success rate of small businesses is only 20% that is 20 times the success of starting a Network Marketing business.
The chance of succeeding in Network Marketing is only 1%.
Many people who invested in this business model has lost a lot of money and the business as a whole is set up to make those Network Marketing companies a lot of money than the distributors.
Avon made $9.1 billion in revenue in 2020 and Mary Kay made $3.1 billion in 2020.
If you search more on the internet and watch youtube videos you will understand that this industry has a bad reputation.
Network Marketing companies are here to dry people finances. More and more people do not believe that network marketing is a legitimate business model due to the damage those companies has done to the community.
7. Is Network Marketing the future of business in the 21st century
Unfortunately, network marketing is not the future of the business in the 21st century. But my answer can be debatable and it also depends on what people think about network marketing.
If you analyse the success rate and how many people are losing money in this business model you will wonder why other people are saying network marketing is the future of the business in the 21st century.
For me, the future of the business is the internet and affiliate marketing and with the internet and your laptop, you can reach anyone around the world.
You do not need to recruit or buy expensive products.
You just need to find your target audience and reach out to them. With the internet and affiliate marketing if you try it and it does not work out the only thing you will waste is time, not money.
Therefore people fail with Affiliate Marketing for lack of training. If you need to know how to reach your target audience.
How to sell them the product that they are already looking for and you make a lot of money online.
You need to learn The #1 Secret To Build A High-Ticket, High-Profit Business Online and make passive income from the comfort of your home.
8. Network Marketing vs Affiliate Marketing
Many people are always confusing network marketing or Multi-Level Marketing with Affiliate Marketing.
As you can read by the name network is involve networking with people and your earnings comes within the network you are building.
The picture below explains in million ways the difference between Network Marketing and Affiliate Marketing.
There is no join free or starter kit to sign up with any Affiliate Programs or to start an affiliate marketing business.
You just need to find products that you are interested in and choose a platform to reach your target audience and earn commission from every sale you make.
With Network Marketing you need to buy your starter kit, buy products at wholesale price and sell it at the retail price.
The more product you buy you qualify for other bonuses and move to different ranks.
Most of your earnings come from recruiting other people to join the scheme and you also earn commissions from people your recruiters recruit.
It is about building your network.
Network Marketing has been designed for people who are at the top of the hierarchy are the ones who make more money than others or are the downline.
If you want to make money from home I will advise you to start an Affiliate Marketing business and stay away from network marketing.
You can also learn how to start High Ticket Affiliate Marketing and make up to $1,000 commission with your laptop and internet connection.
9. Is Network Marketing Risky?
One of the riskiest things with Network Marketing is to join the Network Marketing company without evaluating if the company you want to join as a distributor is legit or not.
There are good Network Marketing companies and they are also fraudulent ones.
Some are operating as a pyramid scheme and they are very difficult to identify if they are a pyramid scheme or not.
But there is always warning signs that can tell the company is a pyramid scheme. You need to analyse where the focus of the company is relying on.
If the only focus is on recruiting people vs selling products that must be a sign that the company is a pyramid scheme.
As I said before pyramid scheme is illegal and being a member of a pyramid scheme company you might also face legal action.
The other risk is to listen to what your recruiter is telling you or feel that you have invested enough into the business and you can not quit now.
That is a very good way of losing more money. You need to know when to exit if things do not go the way you have planned.
Some recruiters their job is to keep you along for as must as they can. You will be hearing to make more money or you are failing to make money is because you have not bought the “formula for success”.
You have not attended some convention or bought some marketing training.
The more you listen the more you spend in the business and the more money your recruiter make.
You can also find more information related to Network Marketing risk on The United States Federal Trade Commission and The competition Bureau of Canada
Is Network Marketing Worth it – Final Verdict
Anyone who starts a business is looking to make money. Before entering any business or partnership you analyse the potential of the business to bring you revenue and the risk involved.
When you analyse the Network Marketing industry there are too many warning signs of losing money or ending up in a pyramid scheme company.
The success rate in the Network Marketing industry is only 1% this is an alarm to tell you this is a high-risk business model and it is not worth any of the investment.
I know you still do not want to trade your time for money and you are looking for a way to make more money and have some financial freedom.
I will recommend checking My #1 Recommendation to learn how to make money online with the internet and affiliate marketing.
If you have been involved in Network Marketing or MLM please share your experience whether good or bad it does not matter as long as is good to my readers.
Thank you for your support…