Published: Jul 12, 2019
The first step to finding your niche in the business world is by… knowing what niches there are.
Luckily for those enamored with network marketing, there isn’t just one route into the business opportunities presented by this modern sales approach.
In fact, there are many routes.
And while that means more options, it can also mean a lot more confusion.
Read on to become an expert in network marketing structures so that you can make the most informed decision about your first step into the business of direct selling.
The Basics of Network Selling
Broadly broken down, we can easily identify at least three major approaches, each used by the network selling industry to sell a product or service:
Traditional “door-to-door” direct sales, predominantly done in person
Online network marketing, through social media, blogs, distributor-run websites, or over the phone (“telemarketers”)
Party plans, where a brand consultant and “hostess” associated with their supplier will host parties and events to sell their product in a certain atmosphere, often accompanied by hands-on demonstration of the product line
The more specific we get, though, the more nooks of direct selling we discover. Direct sellers can also host, or attend, so-called “catalog parties,” operate solely on 1-to-1 sales, or organize fairs and shows to interact with numerous and diverse leads in one go.
Some direct sellers begin with MLM to build a downline organization. Others, simply to earn extra cash without fleshing a network of sellers to be their industry contacts.
Whatever the case, most of these extreme niches won’t have a well-known title, like Party Planner or Telemarketer, to accompany their approach. For those that want to truly personalize their approach to direct selling, simply know that what matters is what works.
While the model you choose or craft for yourself might not command the keynotes of every MLM convention, crafting a selling model that is sustainable, fun, and profitable is by far the most important resolution you can make.
That in mind, the tenets of your personal Wheel of Professional Success should be ever present in your mind. Use the example below as the model to create your own:
Reappearing Steps to Success
For anyone that wishes to start in network marketing, there are three pervasive layers to founding an MLM-based business and supporting its success:
Lead Generation: Constantly identifying new prospects
Recruiting: Adding customers and/or business partners to the network
Education and Management: Methods you use to train, motivate, and manage your recruits to become active in network marketing; or, the methods you use to educate your consumer and encourage their use of the product and its complementary products
What combination of these layers the marketive prefers and how far he or she wishes to go with each will determine what network marketing formula they should begin with.
Before you settle down into an MLM, however, remember that what you think you want out of this business, with only big-print knowledge to inform that perspective, will never give you the crucial why behind your motivation to become an entrepreneur. The most important step to success isn’t a desire for “money on autopilot,” but a desire that is totally personal to you.
Many people want to start network marketing to make money, work from home, etcetera, but give up or burn out because their only had these motivations: they had a rationale, but no emotional cause to reflect on and keep them focused.
Do you want to start a new career? To establish yourself as a voice of hope in your community? To look back, knowing you were a founder in the passive earning economy? To extend your social life in a new, rewarding direction?
Figure out your Why, and you’ll never forget that you’re doing what you love.
Choosing Between Product and Services Sales
Whether the prospective marketer is more comfortable selling a product or a service also comes down to personal preference.
Some sellers appreciate the direct selling model for the exponential growth that it outlines, but the same seller is less comfortable demonstrating a tangible product.
For that individual, a better direct selling model might be the sale of a service, such as insurance. In insurance sales, the seller is typically only responsible for conveying information, which makes for a far less intricate, prop-heavy presentation.
Network Marketing: Not Just for Corporations & Their Recruits
Looking at the different layers, however, it’s important to make clear that despite what the corporation-saturated network marketing world may imply, network marketing isn’t a sales funnel used exclusively by established companies, deferring to their recruits.
Network marketing is a tactic used just as frequently, if not more frequently, by autonomous entrepreneurs.
Consider the 19th century so-called Yankee Peddler: a common sight across the eastern-U.S. countryside in the mid-1800s, Yankee Peddlers lumbered from town to town to sell anything from pots and pans to knick-knacks and spices.
Their success allowed the selling model to prevail through the ages: rather than require a customer come to the product, the peddler brought the product to his consumer.
Today, the internet and social media sales points present sellers with the opportunity to put their unique product in front of a prospective consumer, without the need for in-person contact -- not to mention, without need for costly and often exclusive brick-and-mortar shelf space.
More importantly, while the foundation laid by the Yankee Peddler helped found network marketing, it also illustrated the kind of success a “lone-ranger” seller can expect. Namely, a personalized and convenient shopping experience, but not one that necessarily allowed the seller to maximize his profit.
Network marketing has “network” in its title for two reasons: because you network with your customers, and, network with fellow entrepreneurs to benefit from their sales as they benefit from yours.
No successful person is entirely self-made. Grow and utilize your network to truly know the cascading power of multi-level marketing.
Alternative Approaches to and Philosophies in Direct Selling
More casual (and less profitable, or entirely sans-direct personal profit) utilization of network marketing appears in less recognizable forms. As such, they’re often forgotten, even as they present valuable insights into the approaches we can take to our own practice of network marketing.
Ambassador programs, for instance, have had huge success in companies like Red Bull (Wings Teams), and Yelp (Yelp Elite Squad). Countless more companies use independent influencers on social media to promote their products to the influencer’s personal network of friends and followers.
These employees, contractors, along with the occasional unpaid volunteer, sell awareness of a product and strategically distribute vouchers, special deals notices, or, in Red Bull’s case, free product to the public at special events, as well as across their individual communities on a daily basis. They, like the Yankee Peddler, bring to consumers, rather than wait for consumers to come to them.
GoPro, Apple, and any major media outlet we could name utilize yet another form of network marketing, interchangeably known as “user-created” or “user-generated” content: UCC or UGC.
UCC/UGC channels allow consumers to feature themselves enjoying one of the company’s products, or employing a special service (such as Reuters’ user-generated video creation and upload channel) as a compelling testimonial to the product’s or company’s excellence.
Simultaneously, the company acknowledges and commends the user by featuring them on their site, even prominent advertising campaigns. Perhaps the most iconic example of this niche is Apple’s “Shot with an iPhone” campaign (and ongoing submission funnel), which sought to sell consumers on the pro-grade quality of iPhone lenses by highlighting excellent, but often amateur, iPhone photography.
Through this method, Apple incurred only the cost of the advertising space, while encouraging others to spread the word about Apple cameras simply by taking photos themselves, hoping to be included in the next campaign.
Building a Team of Unpaid Network Marketers
To start a network marketing company, these UCC/UGC methods are particularly attractive because they are both the cheapest, and often the most effective, awareness-creation methods available to entrepreneurs.
Nevertheless, the catch is obvious: most people aren’t willing (nor are they often able) to give away substantial amounts of their time for free, particularly under the call to action that they are making you money in the process.
To successfully create an unpaid marketing network, you need to leverage your volunteer’s intrinsic motivation: motivation to perform acts or to behave in ways that are naturally satisfying to the volunteer, rather than done simply because—under different circumstances—they are being paid to do so. (Further reading: The Four Intrinsic Rewards that Drive Employee Engagement)
This is where the quality and pervasiveness of your company culture plays its most crucial role.
Above all, you must remember to treat anyone who works for you or beside you as a fellow entrepreneur -- not an employee. That said, you can attract unpaid volunteers and retain them by doing the following:
Emphasize, and painstakingly elaborate, that joining your company will provide a valuable opportunity for hands-on experience
Offer flexibility in the work environment and time commitment
Incentivize with non-monetary monthly rewards, such as free product or a letter of recommendation
Connect them with influencers in your network
Offer college credit, if your business would be well represented by students
Despite doing all of these things, and more, the controversy surrounding unpaid labor is immense, and growing. Understand the full implications of advertising and accepting unpaid labor before you decide to build an unpaid employee base.
You may find that, aside from a difficult program to create, recruiting people to work under you, before you’re able to pay said people, may conflict with certain morals or ethical standards you want as a part of your company’s culture. Or, simply want to practice as a boss.
In that case, waiting until your company is financially strong enough to pay employees can be the best decision in the long run. Otherwise, paying an annual stipend that is within your means can soothe guilt (if you have any), not to mention make it easier to attract more people to your company.
How “Word-of-Mouth” Factors In
Most basic of all in the network marketing sphere, though, are the word-of-mouth messengers not directly affiliated with a brand, nor necessarily distinguished by it.
Rather, these consumers are enthusiastic about the product and happily “seed” a message in their networks by encouraging other consumers to try it out. Making that recommendation is often attractively incentivized by the company in exchange for a special discount of their service: “Invite a friend to try this product and get $15 off your next order.”
Of course, just because the individual appears passionate with alterior motive doesn’t guarantee a pure rationale: he or she could simply be hoping to draw attention to themselves in order to receive complementary product. Alternatively, he or she might be looking to jumpstart an ongoing business relationship with the company, one which would be directly compensated.
“Word-of-Mouth Marketing” (WoMM) is another avenue for those interested in network marketing. While their frameworks are very similar, WoMM is different from NM as it operates on a far more low-key basis.
Regarding social media influencers, WoMM sponsorships are often peppered in, sometimes even without a vocal recommendation.
An influencer with a Nike sponsorship, for instance, might be paid just to feature a photo of themselves wearing Nike-brand shoes. The shoes won’t be the focal point of the image, but nonetheless assist in the brand’s pervasiveness, “cool factor” and relevance. All without an obvious “pitch” that might turn followers off of the product, or from the influencer as a perceived sell-out.
Different Compensation Plans
For those that are hoping to take in compensation immediately, however, that don’t have 100,000+ followers to initiate a relationship with Nike, sales network marketing is, without a doubt, the most solid guarantee for fast monetary reward.
And, in doing due diligence before selecting a network marketing model, the compensation plan you settle on is one of the most important decisions to get right.
Network marketing opportunities offer numerous compensation plans, depending on the industry and company you enter as a distributor, but the most common are the following four:
This is the most popular compensation plan, used by companies like the networking cashback app Fluz and the lifestyle brand Total Life Changes.
Categorized as a “2-wide, infinite depth” compensation plan, the binary plan consists of a two-leg structure where the commissions and resultant profit are calculated by the volume of your sales and the volume of sales of your download. Once a sellers reaches a defined number of product sales, their paid a percentage of the volume — not a commission of the sales.
This is also called residual income: if, for instance, you sell $2000 (retail-price) in product volume, at your company offers a 10% residual income on volume, you would earn $200. (A more detailed explanation of binary compensation, with diagram illustrations, can be found here).
Unilevel or Single-Tier Plan
(Read about this plan’s off-shoot, the “Hybrid Unilevel Model” here)
Categorized as an “unlimited width” compensation plan, recruiter zero in a unilevel compensation can sponsor as many people as they wish to. In a unilevel plan, distributor zeros sponsors only one line of distributors. In contrast to a matrix compensation plan which will cap out the number of associates in your network, there is no "width" restriction to the frontline distributor network in a unilevel plan.
This compensation plan is utilized to sponsor large numbers of frontline distributors. The overall company seller network grows when others develop their networks in the same fashion.
Categorized as a “fixed with, fixed depth” compensation plan, this strategy is typically described in the following, recognizable language: “You get X recruits; then your X recruits get X recruits; then those recruits get X recruits, and so on.”
When you get to your seventh level, your parent company will pay X% for all of the all customers at that level. This compensation plan is best explained visually. For that, check out this YouTuber’s matrix compensation plan breakdown.
The breakaway compensation plan is one of the so-called “gimmick” compensation plan. Though less common than the first three described, this plan comes into play when a distributor “breaks away” from their upline to becomes a sales leader themselves, and builds their own sales team. The breakaway team pays salespeople on a differential bonus, and sales leaders on a generation bonus, defined by generations (also called “levels”) in that distributor's downline.
With each compensation plan, many MLM companies will also offer “personal generation commission” rewards. Additional commissions are paid to members who achieve a higher selling rate, based on sales volume tiers that the company has already established.
Understanding the Bonus Compensation Plan
Bonus compensation plans are common incentive-based programs that MLM companies put in place to encourage their distributors to make more sales, as well as to gamify the business venture. A bonus compensation plan characteristically includes:
Defined requirements to achieve those ranks
Defined rewards to be given once a member achieves one of those ranks
The company you choose, assuming they offer a bonus compensation plan, should have a properly documented, easy to understand pamphlet elaborating the bonus plan. For those hoping to start a compensation plan within their own network or company, that document should include:
An explanation of every rank outlined
Every requirement to get to that rank
Every reward when they reach that rank
Examples of how a certain rank is achieved, in a full breakdown
Check out the MLM company YoungLiving’s rewards compensation plan here.
Companies can create their own bonus tiers from scratch, but the following 16 appear frequently:
Many MLM companies will give sellers a rebate if in a given timeframe, like a month, the seller order at least X point volume (PV) worth of product. For a company with the reward structure in place, the more product you order each month, the larger your rebate will be.
First Order Bonus
The first order bonus shows up in MLM bonus structures, as well as traditional retail business or service provision businesses. For an MLM with this built in, you receive a certain dollar (or, less commonly, a percentage) amount off your first order, to make starting in the business that much more affordable.
Top Sale Bonus
A seller can receive a top sale bonus for two reasons: one, because they sold the most product in their network; company; geographical area; of a certain product, etc. Or, two, because the seller hit or exceeded a high sales quota, as defined by the company.
Certain MLM companies will reward their high achievers with tangible gifts rather than a cash rebate. As the name suggests, the recipient of a car bonus might be leased a company car for the remainder of their time at the company, or, given one entirely for their personal use.
Rank Promotion Bonus
The rank promotion bonus often comes along with a rebate or product bonus. Rank promotion simply means you’re elevated to a higher rank in the company, which can entail a larger geographic sales turf, access to more company resources or facetime with corporate fixtures, and/or other perks.
An infinity bonus is one of the most attractive and sought after MLM bonuses a network marketer can aspire to. This is an additional commission, above and beyond the company’s layman compensation plan pay structure, based upon the total group volume of your organization. The extra commission usually ranges from 1-2%.
Though it follows from the “car bonus” that a “house bonus” must mean your company purchases you a new home, the house bonus is actually a set dollar amount extra, to be paid for each month that they qualify.
Top Recruiter Bonus
Like the top sales bonus, the top recruiter bonus is awarded to the network marketer who invited and indoctrinated the most new members into their network; the company; their geographical area; within a certain genre of products, etc. Or, two, because the seller hit or exceeded a high recruitment quota, as defined by the company.
Power Start Bonus
Some MLM companies designate certain products as Power Start Bonus products. While the name may vary depending on the company, with the sale of a defined number of power start products, the seller will receive an additional cash reward from the company. These products may be higher priced, or other hard sells, that require extra effort to close the sale.
A generation bonus is given when a network marketer reaches a certain number of generations in their downline. There can be many tiers to this bonus program, wherein sellers receive a reward for every new milestone they hit.
One-tier Fast Start Bonus
A one-tier (or “one time) fast start bonus offers a cash reward, like the power start bonus, for the sale of a certain volume of products in a small time frame.
Multi-Tier Promotion Bonus
Unlike a one-tier fast start bonus, the multi-tier promotion bonus can be unlimited, as it builds on an enrolling sponsorship lineage.
Customer Acquisition Bonus
The general bonus a seller receives when, as in any other acquisition-merited award, the network marketer distributes product to a defined number of customers. This award may be enhanced in the event that the seller proves one or more of those customers will buy more, or refill their products with the seller.
Founders Program Bonus
Despite what the name implies, the founders program bonus isn’t awarded to the earliest members of a network marketing team or to the company as a whole. Rather, this award recognizes situations such as the following: “Sellers who join by September 1st,” or another specific date; “The first one hundred independent representatives who enrolled,” i.e., not as members of another’s network but head of their own; or “The first 20 people to reach the title of Director,” or any other specific other selling tier.
Level Commission Bonus
A seller typically achieves this bonus when distributors he or she has recruited has recruited a certain number of their own distributors.
Preferred Customer Discount
As the name suggests, this reward is intended for customers that purchase products regularly and/or in high volume. Still, as the distributor of the same products, a seller can earn special discounts as they buy more and more wholesale.
You can read about even more optional bonus structures here.
The Top Network Marketing Companies to Choose From
After reading and taking into consideration all of the preceding information about the structure and workings of network marketing, you may have decided that the best course for you is starting your own business, to sell your own products or services utilizing the techniques of network marketing.
But for those that are more interested in learning the field through an already established company, you have a world of different companies to choose from.
If you’ve already spelled out your Why (...you want to enter the field), or basically have in mind what you want and don’t want out of a parent company, deciding on a company will be easier.