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Network Marketing Economics

Updated on July 10, 2014

No mumbo-jumbo here, just simple facts

In business there are some basics for anticipating success or failure for any new business idea. Network marketing is not different. If you want to succeed with network marketing you need to understand some simple, yet very important facts about your business.

In each business model, no matter what it is, there is selling involved. This is what makes money; you have something that others need, and you give it to them for a price they pay.

For any selling there are three major parts: a seller, a buyer, and something to sell or buy.

Makes sense?

Other factors, like advertising (to let the buyer know about the seller and the product), brokering (to facilitate the selling process), technical or customer service (to help the buyer use the product) ... etc, are all facilitating factors. They help the main process to take place: the selling.

[Image source: www2.hoover.k12.al.us/schools/CRS/faculty/kmclain/Pages/default.aspx]

Learn to Do it Right!

Hundreds of thousands graduate every year with degrees in marketing. It makes no sense that you go out trying to do as well as some of them without having the proper education they had. Seminars and 3-way-calls are not enough to teach the science of marketing if you don't have the basics.

Time to take control of your network marketing and succeed. Learn it from the source:

How to Study Network Marketing Economics?

To study network marketing economics you need to identify the main elements and the facilitating factors involved in the sales process. This is mandatory in order be able to anticipate success or failure for any particular network marketing business opportunity.

The seller is the company, common sense, right?

The product is, well, the product :-)

The buyer is YOU and YOUR PROSPECTS.

The advertiser is YOU and your team (you're taking all the risk here).

The broker is YOU (still you're taking all the risk).

So .. before joining any network marketing opportunity ask yourself these questions:

1. Would I buy this product if there is no opportunity attached to it?

2. Would people I know buy this product anyway?

3. Would I feel good recommending it to my MOM?

Sometimes our thinking process is not clear enough to answer very simple questions like these. Sometimes we confuse our willing to buy a product because we like it, and our need to get our hands on such a product.

I'll give you a measure. Is the product is something you buy anyway from the grocery store? Can you identify this product on your weekly or monthly shopping list? Is there a similar item on the shelf in the grocery store?

If yes, then you can answer yes to the above questions. Yes you would buy it without business opportunity, and people would buy it anyway, and if it's good enough you'd recommend it to your mom.

It means: yes, there is a market for this product, and it wont be hard to sell.

You Don't Have to Lose Your Friends to Build Your Network Marketing Business

The first thing you learn when you join a network marketing opportunity is to build a list of your friends and family and everybody you know and start contacting them to tell them about this business. Before you know it those people start to avoid you because you are bringing this unwelcome issue.

It's time to learn how to build your network without having to lose your friends and family over it.

Maximize Your Residual Earnings From Network Marketing

Now that we have a seller, a buyer, and a product that sells, we have a network marketing opportunity that is expected to work for you. All what you need to do is to switch a portion from your existing monthly expenses from your grocery store to the network marketing company to get the same stuff.

Perfect. This is part of the expenses that's not going to be out of your pocket because you spend the same amount of money on buying the same items anyway.

The rest of the expenses to run this business will be in spreading the word; aka advertising. After you know the cost of advertising to acquire one referral your job is to make sure you're at least breaking even on the front end (the sign up), and making as much as possible on the back end in the form of residual income.

Now how to make sure you'll get the most out of each sale you facilitate for your network marketing company? Remember, in network marketing you get commission on purchases made by your referrals and their referrals and their referrals ... and so on for as deep as your company decides.

As we agreed above, if the product is something you would otherwise buy weekly or monthly it means you have a market.

What are the things that you buy frequently and almost every time to go out for shopping?

Consumables, right.

Toothpaste, soap, shampoos, conditioners, creams, dish-washing detergents, laundry detergents, cleaners, shaving creams, lotions, make up, perfumes, cookies, chocolate, coffee, and tee are a few examples of consumables that you buy regularly.

The best network marketing opportunities out there sell consumables that people buy anyway and don't need any convincing to add them to their shopping list.

You see ... it's all about the product, not about you as some marketers want you to think.

It's never been you. It's always the product. You could be the best marketer in the world, but with a product that doesn't meet the buyers expectations or is not recurring in nature you can't go far.

Makes sense?

Watch out! Working from home could be dangerous ...

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