Are you familiar with network marketing? Let me ask you this instead — are you familiar with a distant cousin, an old co-worker, or that girl from high school who you haven’t spoken to in 20 years flooding your social media feeds with sales pitches for weight loss programs, chemical-free cleaning products, or essential oils? Does the phrase “Ask me how!” haunt your dreams? If so, you’re more familiar with network marketing than you thought.
What is Network Marketing?
Network marketing is also referred to as multi-level marketing (MLM) and it describes a business model where growth depends on a network of independent business owners who sell products while also recruiting other participants. Independent business owners sell products through in-home or “online” shows hosted by friends and family, or by using social media to spread their message and drive sales to a much wider audience.
To become an independent business owner, there is often an upfront cost, sometimes thousands of dollars, to buy product samples or build product inventory that can be used in the sales process. Business owners earn money through a percentage of their sales and bonuses from reaching monthly goals. They receive additional incentives for recruiting other business owners and then earn a percentage of their recruits’ sales (and the sales of every recruit that fall under them).
Examples of Network Marketing Companies
Network marketing companies have been around for decades. They sell everything from vitamins, household cleaning products, food and cooking tools, clothing, skincare regimes, and weight loss programs.
Some of the oldest names you might recognize include:
- Mary Kay
- Pampered Chef
- Tastefully Simple
But new multi-level marketing companies are still debuting. More currently, you may have started to notice some of these names:
The very latest MLM companies are now entering the world of bitcoin and other cryptocurrencies. Working with these companies, independent business owners sell a variety of digital products and then their commission is paid to them in bitcoin.
Network Marketing’s Bad Reputation
Now perhaps, you’ve been reading along and you’re thinking “oh, right, pyramid schemes!” Well, yes, and no. Network marketing companies earned the bad reputation of being tied to pyramid schemes and sometimes they are, but not always.
These multi-level tactics are a legitimate business practice when products are sold to end-users outside of the company. Money is exchanged for goods or a service, and all is on the up-and-up.
Problems arise when the business model puts more emphasis on recruiting new members, and most revenue is made from selling starter packs and goods to “owners” within the company. The fact that business owners earn money based on the sales of their recruits and everyone beneath them can be seen as controversial.
What You Can Learn from Network Marketing
While network marketing’s bad reputation is well-earned, there are some things they do well and marketing tactics that we can learn from them — and improve upon!
Social Media Marketing
As network marketing reaches a new generation, business owners are using new tools to grow sales and recruitment. More specifically, they have harnessed the power of social media to widen their audience. But while MLM participants bombard their entire list of (unsuspecting) social media followers with repetitive sales pitches, social media marketing is much more finessed.
Doing social media marketing for your company is a great way to connect with users and create a two-way conversation (this is the part that most network marketing agents miss). Your first step is to build a targeted audience of followers who fit the persona of your company and show a genuine interest in the products and lifestyle that your brand serves.
From there, don’t cram products and discount codes in their face day after day. Social media is a platform where you should be informing, entertaining, and engaging, not only selling. Follow an 80/20 rule with social media posts — 80% on sharing content and 20% on selling your product.
Many network marketing companies employ celebrity endorsers to promote their products. A famous face can make their products appear more well-respected and allow them to reach a wider audience among celebrities’ followers. MLM celebrity endorsers include Warren Buffet, Sir Richard Branson, Dr. Oz, Madeline Albright, Cristiano Ronaldo, Chuck Norris, and Hulk Hogan.
Influencers can play a big role in carrying your brand message to a new audience, but you need to approach influencer marketing wisely. It might be tempting to approach a big name celebrity with hundreds of thousands of followers, but you need to look beyond the number. Nevermind the fact that social media followers can easily be purchased, you want to be sure the influencer and his/her audience are a natural fit to your brand or the message may be wasted. For example, you’d partner with a survival expert if you sell camping backpacks, but you wouldn’t partner with a fashion blogger if you sell lawn fertilizers.
There is often some confusion between influencer marketing and affiliate marketing. Here’s a quick breakdown: influencers are paid an upfront fee to promote a product, while affiliates are paid a percentage of the sales that come in from a link they share with their followers. Influencer marketing is very similar to how network marketing business owners make a portion of their income.
With an affiliate marketing campaign, you’ll have a team of people selling for you. Typically, you share your product or service with popular bloggers or social media influencers free of charge. In return, they create content about their experience with your brand, whether it’s a blog post, Instagram story, or social media post. They then provide a link for their followers to your website. The affiliate would earn a percentage of any sales made through their affiliate link. Affiliate marketing is a great way to circulate user testimonials and user-generated content about your brand to a wide audience.