Network Marketing: The New MLM?

If you spend any time in Internet Marketing, it won’t be long before you hear about it’s cousin, “Network Marketing”.  Network Marketing is often thought of a a new “MLM” construct suited for those who would prefer to market via the Internet instead of marketing face-to-face.

Despite the title of this article or the thoughts of many, neither Network Marketing or MLM (Multi-Level Marketing) is “new”.  Both have been around for years, and the popularity of such programs tends to increase over time as more and more people search for ways to generate additional or alternate income streams.

So, what is Network Marketing?

Network Marketing appears to be synonymous with MLM.  If you look up Network Marketing on Wikipedia, you are likely to get a return of the description of MLM:  “a marketing strategy where you are compensated for sales you not only personally generate, but also the sales of other salespeople that you recruit.

Though MLM has originally been thought of as face-to-face sales/presentations, the concept has graduated to Internet sales and virtual recruitment with a name change to boot! 🙂Questions about network marketing and MLM

Network Marketing has its own terminology related to the how various programs are setup.  You will hear of “downlines” and “uplines”, “spillover”, Matrix systems, (interestingly) Leadership.

A “downline” represents the people who have been recruited from the perspective of those who were recruited earlier.  So, 99% of the members of a network program are in someone’s downline because everyone (even “Leaders”) are recruited at some point in time.  This means that an “upline” represents the person who recruited you in the program, those who recruited that person, and so on….

I have discovered that a “Leader” in the context of Network Marketing is normally defined as someone who either has, or has the ability to bring in, a large downline of recruited members into the Network Marketing program.  As to the leadership qualities of the “Leader”, it varies and is often reflected in the loyalty of the downline.

Though it is always possible to terminate your membership and re-join under a new “Leader”, this practice doesn’t seem to be encouraged–possibly for a program to maintain goodwill with Leaders who can bring in thousands of new members.

How Profitable is Network Marketing?

Much of it depends on the compensation plan.

A “Matrix” compensation system seems to be the most popular, even though the viability of most matrix compensation plans is questionable and has a less-than-steller track record.

A Matrix compensation system is often expressed in formats such as “7 x 2” or “3 x 10” or something similar.  The first number represents the “width” of the matrix, while the second number represents the “depth” of the matrix.

Here is a video that can help you visualize the construct of the matrix:

 

 

The deeper and wider your downline, the higher profit potential you have.  Your success really depends on your recruitment efforts, which goes back to how well you market the opportunity…and yourself, as someone who can be trusted.

The income dollar figures that are advertised are almost always exclusively based on how many people you can bring into your “organization”…and sometimes how quickly.

Yes, the operators of Network Marketing programs always refer to themselves and their prospective offering to recruits as a “business“.  They state that all activities should be conducted as a business endeavor as well.  This is good for the company’s well-being and yours, too!

The last term you will ever hear a Network Marketing company use to describe themselves is as an “investment”.  This word carries much more significant weight with the SEC and some tax-interested government agencies.  An entirely different set of rules and numerous regulations apply to investment companies, and Network Marketing companies can get into big trouble if they do not go to great lengths to distinguish themselves from investment companies.

Zeek Rewards

Zeek Rewards Network MarketingI would be remiss if I did not mention the potential risks associated with any network marketing endeavor.  Indeed, there are quite a few risks, as can be seen with the most recent public downfall of a network marketing program:  Zeek Rewards.

The downfall took the form of SEC action being applied against Zeek Rewards for running what appeared to them as a Ponzi Scheme.

A Ponzi scheme can be simply defined as a payment system whereby the investment/dues of the newly recruited members goes toward paying the compensation of pre-existing members.  The problem with this is that there is no real viable product or service being offered or maintained by the network marketing program.  This spells doom for the longevity of the company, leaving the newly joined recruits left “holding the bag” with no profits and a lost investment.  The only “winners” in the Ponzi scheme are the “Leaders”, the ones at the top.Ponzi Scheme in Network Marketing

Though the case with Zeek Rewards is still in dispute, other Network Marketing programs have made adjustments to their compensation plan in an effort to forgo any similar SEC or other government agency scrutiny.

Here are some of the more popular Network Marketing programs I have heard of or been exposed to:

  • Banners Broker
  • Alive Matrix
  • Ultimate Power Profits
  • Primus Hub

This is by no means an endorsement of any of the above programs!  Network Marketing and MLM CautionIf you discover the urge to join any of these programs, you should perform your own due diligence through thorough investigation.  However, I will be reviewing a few of these programs in the future. 🙂

The world of Network Marketing is a compelling lure for people that do not wish to travel the traditional Internet Marketing route of product creation, sales, and affiliate marketing.

Though many of the same concepts in Internet Marketing apply to the recruitment process for successful Network Marketing, Network Marketing is often seen as an “easier” way to establish a passive income–although, I would be tempted to say that the potential risks are significantly higher.

As with any new endeavor, the best and quickest way to success is to learn from someone who is already successful doing it.  Finding a mentor and a coach can go a long way toward helping you to avoid many of the pitfalls that most new Network Marketers face.

Know that it will take some effort–especially in the beginning.  However, establishing a passive stream of income (small or large) could have that work paying off for a long time to come without much additional effort.

Enjoy! 🙂



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