The Network Marketing Business Model: Is it Right for You?
3 Different Types of Network Marketing Programs
Network marketing is a business model that relies on a network of distributors to grow a business. It typically involves using three basic types of systematic strategies to make money: lead generation, recruiting, and building and management. There are many types of network marketing, including single-tier, two-tier, and multi-level.
Single-Tier Network Marketing
With single-tier network marketing, you sign up for a company's affiliate program to sell their products or services. You do not need to recruit other distributors, and all your pay comes from direct sales. Avon, the popular beauty company, uses single-tier networking marketing.
In some online affiliate programs, you get paid for the traffic you drive to the affiliate's website. Pay-per-click (PPC) and pay-per-lead (PPL) affiliate programs are other examples of single-tier networking.
Two-Tier Network Marketing
Unlike single-tier network marketing, two-tier network marketing does involve some recruiting, but your pay isn't solely dependent on it. You get paid for direct sales (or traffic you drive to a website) and for direct sales or referred traffic made by affiliates or distributors you recruit to work under you. An example of a two-tier program is Ken Envoy's Site Sell.
Multi-Level Marketing (MLM) is a distribution-based marketing network that contains two or more tiers. Two other types of network marketing strategies are marketing-driven networks and name-driven network marketing. Some MLM programs allow you to make money five or more tiers deep, so there may be incentives for recruiting. Examples of MLM businesses include LuLaRoe, Magnetic Sponsoring, and Amway.
Network Marketing as a Business Model
If you are thinking of starting a business that will rely on multi-level marketing of any kind, be sure you have a solid marketing team at the very core of your organization. The stronger your base of marketers, the better your chances for long-term success.
Not everyone who wants to sell something will be good at it, but if you have someone excited about your business who might not be a perfect fit for your sales team, find another spot for them. Marketing is critical to the success of any business, but don't forget that sincerity and genuine enthusiasm about a company or product is a form of marketing in and of itself. If your only incentive to your sales team is money, they may cut corners or mislead others in an attempt to earn more for themselves.
You should also take the time to research your own state's laws regarding network marketing to make sure that your business is fully compliant. Deceptive marketing practices and pyramid schemes can land you in legal trouble if you are not careful.
Hire People Excited About Your Company
Marketing is part industry-driven and part creative thinking. With network marketing, it is also about finding salespeople with enthusiasm. When you hire people who are excited about your business and product, they will share that enthusiasm with others. An enthusiastic salesforce leads to more sales and recruits into your marketing network.
Federal Trade Commission. "Multi-Level Marketing Businesses and Pyramid Schemes." Accessed Jan. 6, 2021.