I may earn a commission from the companies mentioned in this post. Regardless, I only recommend products or services I use personally or believe will add value to my readers.
Why Network Marketing?
It’s one of the most controversial of all types of marketing and yet it keeps being used as a business model by business after business. So we are going to answer the question of why network marketing. What is it that people see in this area that makes it contain the potential for success.
This is the first thing that anyone who wants to sell something has to know. When you have a product, you have to figure out the best way to market it. Different types of products require different types of marketing tactics. You create the product, figure out the market or users of the product, and then choose the best type of marketing tactic to reach them.
A product can be marketed in a few ways. Some will be marketed in retail channels, some in direct sales, some in network marketing. Each has its own strengths, weaknesses and has some to do with cash and how much you have to get your product before its potential customers. Other times its is via the affiliate marketing channel.
The types of network
I hear all kinds of people say that network marketing doesn’t work. They say its just a pyramid scheme and pretty much just a way to scam people out of their money. But if that the case, then why is it used so much? Why after there has been many lawsuits about it do people still use it? And here’s a better question, why do people get involved with it if it is just some kind of scheme?
Even businesses use the network marketing structure. I remember there was a company that used a network marketing campaign where they would offer you something like a $50 dollar credit for every person you refer to them. They could potentially lose $50 every month with each referral each and every month. Why did they do it? They did it because of how much money they knew they would make.
So they recognize that there is money in it then, but how much?
I want to share something with you that’s been around since the late seventies and was used as training materials for those entering the field of network marketing. It was a tiny book called The 45-second presentation.
What does the Math Say?
So what makes people think it works then? What draws people in to it with the lure of making loads of money. What kind of figure would make it look so appealing? Well, its the amount of customers needed to be successful in it. Now, before I show it to you I want you to know it can take a while before you find these customers, it just doesn’t happen right away.
The first thing a person is told to do is to calculate out 2×2 like this:
What this is showing is that if you get 2 people interested in joining your network and then getting 2 people within 3 generations of people you will have 16 people in your organization. You will have 16 regular customers. I have read that the conservative estimates for what people buy per month is $25.
That means here you have a potential income of $400. But what does the rest of the lesson show? It shows this.
2 3 4 5
x2 x3 x4 x5
4 9 16 25
x2 x3 x4 x5
8 27 64 125
x2 x3 x4 x5
16 81 256 625
I know this looks like a bunch of mumbo-jumbo but its the most important numbers you need in figuring out why network marketing is so effective. You remember that we had originally 2×2 on up to 16? Well, then we had 3×3 which is simply adding 1 more person to the network. But look at how your final number grows? This seems like it should just be simply math and one person added to a network or 3 generations doesn’t seem like it would make that much difference. But it does.
In fact, if you add just 3 more people to that network of 3 you will end up with a total of 625 people rather than 16. Just compare the number 16 with 625, its astronomical compared to 16. And yet, each person only contributed 5 people. This simple contribution multiplies our original number by almost 40 times.
Lots of Money with Very Little Work
That’s the draw of network marketing or any online marketing in reality. Any time you have the possibility of doing something more efficient than exchanging dollars for hours it is crazy in not taking advantage of it. This lesson is always ended by letting people know that all of those figures on the end are your customers. So you actually have like 978 customers. When you take that with the lowest average customer purchase, you will have $15,978. That’s a lot of income.
I wanted to show you one of the things that makes people interested in network marketing. When people spend so much of their time working to support their families and they find it doesn’t meet their expenses. They look for anything to find a way to fix the problem and when they see numbers like that related to just talking to 5 people, it sparks a hope they once had within them. They think maybe I can get out of this rat race.