What is Network Marketing?

Network Marketing, Multi-level Marketing, MLM, Relationship Marketing... These are buzzwords weve all come across over and over again - but what exactly do they mean? How do you market a relationship or a network - and would you want to? And how do you market on multiple levels?

Network Marketing is known by a number of other names, probably the most well known of which is MLM or Multi-level Marketing, closely followed in popularity by Relationship Marketing. A new term which has come into use recently is Referral Marketing.

Although all these terms refer to the same activity, they each tend to emphasise different aspects. By looking at each name in turn, we can build a fairly complete picture of what network marketing is all about.

Since all of them include the word Marketing, this is probably the best place to start. So what is marketing? The Compact Oxford English Dictionary defines marketing as: "noun, the promotion and selling of products or services". Not just sales, then, although these are obviously the main purpose, but also promotion, which could include advertising, direct selling and websites, amongst other things. There are famous marketers who handle brands and famous people, often arranging press coverage or television appearances, which may provide good brand-awareness at no cost (in terms of money) at all.

Network Marketing

The word network is defined by the Compact Oxford English Dictionary as: "noun, 1 an arrangement of intersecting horizontal and vertical lines. [...] 5 a group of people who interact together. verb, 1 connect as or operate with a network. 2 Brit. broadcast on a network. 3 interact with others to exchange information and develop contacts". So Network Marketing is promoting and selling products by interacting with others and developing contacts. This is a very good definition. The essence of network marketing is to develop a network of contacts, and this network will ideally develop both horizontally (people you know) and vertically (people who know people you know).

MLM or Multi-level Marketing

The multi-level aspect of network marketing is its most powerful attribute. You only have so much time in a day, and you can only meet so many people in that time. Even if you were to stand in the middle of Piccadilly Circus and talk to a new person every few minutes, you are still only scratching the surface.

Advertising suffers from the same problem. Its true there may be more people seeing the ads, but most of us cant afford a nationwide campaign.

This is where the multi-levels come in. Instead of you working your butt off trying to talk to as many people as you can, you recruit others and show them what to do, thus automatically increasing your pool of potential customers.

Suppose you talk to 20 people, two become customers, 11 are not interested, and you recruit one to your team. At this point, you have doubled your possibilities. Teach that one to do the same thing as you are doing, help them get customers and recruit others. Things can really start to speed up for you.

Its true that your MLM will probably pay you less for customers recruited by your team, but they will pay you something. You can still carry on gathering customers yourself, recruiting other networkers as the opportunity arises. What you are doing is building a multi-level network. The recruits you get for your own team are your top level, and the ones they recruit are the next level, and so on.

Suppose you recruit three networkers to your downline (another word used to refer to your team). Work with them, and show them how to do the same. If each of them recruited three people, you would have a team of 12 people: three in your top level and (3x3) nine in your next level. If they then go on to recruit others, teaching them to do the same, pretty soon you have a really big team, many of whom you would never have met if you had just been recruiting for yourself. Its important, though, that you teach all the members of your team to gather both customers and recruits, as your income and theirs comes from the sales made to the customers, not from pure recruiting.

Relationship Marketing

The Compact Oxford English Dictionary definition for relationship is: "noun, 1 the way in which two or more people or things are connected, or the state of being connected. 2 the way in which two or more people or groups regard and behave towards each other. 3 an emotional [...] association between two people". This points up the way in which relationship or network marketing works.

Network marketing doesnt work like old-style direct selling. Although different people have different styles, in general, network marketing is much more focused on building a relationship with your market. Most MLMs encourage their new recruits to build what is called an EYK (Everyone You Know) list. The idea is that people you have a relationship with are much more likely to listen to you when you recommend a product or service than total strangers. Its true that you may have to expand your field of operations once you run out of people you know already, but the primary way of doing this should be by meeting new people and forming a relationship with them.

Referral Marketing

This final term includes the word referral because the main activity involved in network marketing, the main purpose of the network you are building, is referring products to people, and hopefully getting them signed up for whatever you are selling.

So thats it. Network Marketing is about building a customer base of people with whom you have a relationship, creating a multi-level network of others and teaching them to do the same. Such a simple concept, but the power behind it is awe inspiring. It is no accident that fully 10% of all new millionaires made their pile from MLM. Could you be the next?

What Next?

Your next step, if you are interested in making serious money, is to find a good company to sign up with.