The Network Marketing Direct Sales Model
Network Marketing is characterized by a number of factors that are consistent across companies. Companies using the Network Marketing model market readily consumable products like vitamins, skincare products, and subscription services that lend themselves well to auto-ship. The idea is to generate orders every single month, build income consistency and growth, and create a “customer for life.”
The emphasis in these companies is frequently on the income opportunity as much or even more than it is on the product. Because the cost of joining as a “member” is often quite low, and can be offered without a kit or product included, many people who would normally just be customers join as independent representatives, often with their first order. That means that when a product becomes popular, there is the opportunity for exponential growth in company size, team size, and income.
There can be a significant benefit to joining earlier, because the structure of the sales force can mean that you may be rewarded by “getting in first” when people who join after you are put into your team, sometimes without any effort on your part. Timing can matter in Network Marketing, and you’ll sometimes hear this “getting in first” process referred to as getting your spot or position.
Income can appear low at first because the strength of this model is in the residual income. Residual income results from repeat purchases from the same customers, often on auto-ship. These customers are sometimes retail customers of yours, as well as independent representatives who make up your team of both consumers and marketers. Due to the ongoing consumption in your network or team, your income can continue to grow even as your personal selling and recruiting plateaus or drops.
There is a strong online component with a high level of e-commerce in the Network Marketing model, so customers and independent representatives will often re-order online or stay on auto-ship indefinitely, bringing you the same income that you received from their original orders, with no additional effort from you.