What is Network Marketing All About?

what is network marketingWhat is network marketing, and how does it stack up as a home based business opportunity?

The answer to that depends entirely on the experience and perspective of who you ask! It is interesting how one person can take a given opportunity and achieve financial independence, while another will quit after a few weeks and talk badly about it.

If you ask the opinion of someone who is a wealthy long-time veteran of the network marketing industry, a person who started out with a vision and a dream and proceeded to dig in and work hard for success, they might say:

Network marketing is the only way I know that a person with determination and modest means can start at rock bottom and work their way to wealth and financial independence in as little as 3-5 years.

On the other hand, if you talk to a serial “opportunity seeker” who is always chasing the fastest ways to get rich, without having to put in a whole lot of work and effort, they might come up with something more like this:

Network marketing is a scam and rip off, I’ve tried several of those deals and only the people who get in at the top of the pyramid make any money.

So which of these views accurately reflects what network marketing is all about? Neither, really. What we’ve seen from these opposing viewpoints is a subjective view of the potential of the business and the financial rewards that can be achieved.

Let’s dig a little deeper here.

What is Network Marketing All About?

According to entrepreneur.com, the definition of network marketing is:

A business model in which a distributor network is needed to build the business. Usually such businesses are also multilevel marketing in nature in that payouts occur at more than one level.

That’s a basic description. Wikipedia says something similar:

Multi-level marketing (MLM) is a marketing strategy in which the sales force is compensated not only for sales they personally generate, but also for the sales of the other salespeople that they recruit. This recruited sales force is referred to as the participant’s downline, and can provide multiple levels of compensation.

Okay, so much for the academic definitions. Let’s take a realistic view, from the trenches, of what network marketing is all about.

People start home businesses for a reason. Sometime, it’s dissatisfaction with the corporate world and a yearning to find financial and time freedom. Other times, it’s all about making a few hundred extra dollars each month to help with expenses. Many moms and dads enjoy the opportunity to stay home and raise a family instead of going to work and taking the kids to daycare every day. There are lots of great reasons to start a work from home business.

What it boils down to though, is people attracted to network marketing and MLM realize they will likely never attain true financial and time freedom working for someone else. They understand, appreciate, and crave the lifestyle associated with success in this business.

  • you get to choose what hours you work
  • you can schedule your work around your family and lifestyle
  • you can enjoy tax benefits of having a home business
  • you have virtually unlimited income potential
  • you call the shots – you are your own President and CEO
  • you get paid what you’re really worth

So you understand all this, and have a desire to start your business and get something going! What’s next?

When you sign up with a network marketing opportunity, you effectively become an agent for that company’s products and services. You also have the right to sponsor others into the business. You will typically be called a distributor, consultant, dealer, independent business owner, or representative.

Whatever your title, your job is very simple. To make money in network marketing, you will do three things primarily:

1) Use your company’s product or service and sell it to others at retail.

2) Sponsor others into your business and earn a percentage of what they use and sell. You can earn bonuses and overrides on the sales of others down several levels, thus the original term for this business model “multi-level marketing”.

3) Help the people you sponsor (your downline team) to become successful.

To do all this well, you will need to be open to coaching and learning the skills you need to make it happen. This is like any business – you need to invest in yourself and learn new things if you want to achieve the best success.

Speaking of investing….let’s look now at some advantages of network marketing over a traditional business model that it’s often compared to.

What is Network Marketing as Compared to Franchising?

The network marketing business model bears a strong resemblance to franchising.

Let’s pick a well known franchise – Subway. You can find Subway sandwich shops all over the world. Some are standalone retail storefronts, while others share space inside truck stops and other retail locations frequented by travellers.

Most of these Subway franchises are owned by independent business people who pay a nice chunk of change for the right to market the brand, as well as the training, marketing, and operations system that makes it all work.

Now, let’s look at a typical franchise operation from the perspective of the home office. With any franchise, the corporation usually owns a certain number of the locations directly, and they earn income from all the food and drinks that are sold daily in those locations. But what about those owned by independent franchisees who paid top dollar for the right to represent the corporate brand and the right to run the proven system for success in that business?

The corporation also makes a percentage of ALL the sales and profits from EACH store they have licensed out. This is what we call residual or leveraged income, and it’s very much like the network marketing model. The corporate office earns substantial income from the sales and success of hundreds or thousands of independent stores.

Look at it now from a different marketing perspective.

You are hired to create a product, let’s say it’s an ebook titled “How to Get Rock Hard Abs in 10 Minutes a Day”. You are paid $1500 for this project. You pocket the money and move on to your next project. This one is done.

Now, let’s say you write the same ebook and decide to market it yourself. You set up affiliates who will advertise and market your book. The retail price is $29 and you pay your affiliates a generous 60% commission ($17.40 per sale).

Month 1: 20 affiliates sell 250 copies total of your book. Your gross profit is $2,900.00 that month.
Month 2: 35 affiliates sell 450 copies total of your book. Your gross profit is $5,220.00 that month.

And it gets better….month after month you earn this income, called “residual income”. It is leveraging your efforts into something far greater than what you started with. Isn’t this so much better than settling for that $1500 one time payment?

This is what network marketing is all about – residual and leveraged income, the type of income that can literally make you financially free in just a few short years.

What is Network Marketing? Here the Rubber Meets the Road…

People often refer to network marketing as “referral marketing” or “sharing” or “notifying” – different things to avoid using the word “sales”. This is because many people instinctively thing of “selling” as bugging friends and relatives or trying to push something on others that they don’t want.

True selling, though, has nothing to do with pushing anything on anybody. True selling is based more on understanding the art of creating relationships, building trust, marketing, and exhibiting leadership. There is no business out there that makes money unless a product or service is sold.

So, it’s necessary to get past the idea that network marketing is not selling, and just be determined to learn the skills and methods you need to do it correctly. You never have to impose on anyone – again, learn skills for creating relationships, building trust, marketing, and exhibiting leadership.

To sum it up, what is network marketing?

  • the simplest and quickest way for a person of average means to make a fortune
  • the shortcut to true financial freedom and time independence
  • a path to self development and improvement that will benefit ALL areas of your life
  • a proven home business model that works

The key to success is to find a good opportunity, find leaders that are having the success and living the lifestyle you desire, learn what they are doing, and educate/train yourself to do the same things effectively. It might require a giant leap outside your comfort zone, but the rewards are so well worth it!


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Eldon Beard, Home Business Success Coach

If you have a home business and are happy, that's good. If you are looking for the right opportunity, the right mentor, and something you can build online, I would enjoy the opportunity to share what I'm doing. Click here and let’s explore the possibilities.

About Eldon Beard

Making money with a home business should be fun! I help others create a profitable global business from anywhere using an Internet connection and a phone. Send me a message and let's talk! Connect with me on Google+.


  1. This is interesting! Well after reading this I never thought that network marketing is far more broad than marketing outside. So far network marketing is of the best way to earn more money.

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