Network Marketing/Multi-Level Marketing: How do We Earn Money?

"I would rather earn 1% of a 100 people's efforts than 100% of my own efforts." - John D. Rockefeller.

This is the principle behind Network Marketing (NM) or Multi Level Marketing (MLM). Rather than earning solely from your own efforts, by helping others to build a business you will earn a reward. Each person who joins the business is called a consultant, distributor or agent and that person is “in business for him/herself but not by themselves”. The person who introduces someone else into the business is called a sponsor. The sponsor’s role is to teach others about the business, to guide them and help them build their own business. If the downline is successful, the upline will also be successful. The company usually offers training at meetings, in printed material, in emails, online on webinars or websites.

"You can get everything in life you want if you will just help enough other people get what they want."

Ways to earn money:

1. Retail commission – the difference between the amount the distributor pays to buy the product from the company and the selling price to a customer.
2. Wholesale commission – the difference between the amount the distributor pays to buy the product from the company and the selling price to a downline member.
3. Royalties – amount the company pays the distributor as a percentage of the total business of his/her group of distributors, or downline.
4. Royalty override – amount the company pays a distributor as a percentage of the total business of his/group of distributors, or downline, paid on a number of levels deep.
5. Residual income – amount the company pays the distributor every month that a customer continues to use the product or subscribe to a service.

Although a royalty may be a small percentage, a huge monthly cheque can be earned with enough active people in the downline.

Being duplicatable is the key to success in MLM. Show others how to do what you do, Keep It Simple Stupid/Sweetheart and learn to promote.

Whilst you might need hundreds of people in your downline to earn really large monthly cheques, you do not need to recruit a large number yourself. I know one successful MLM distributor who has been with his company for 7 years, earns over €120,000 (US$160,000) per month yet has only personally recruited 54 people.

I knew a distributor whose earnings increased from £1,500 (US$2,960) per month to £37,500 (US$74,000) per month in three years. Two-thirds of her organization were overseas and as she only spoke English, she could not even communicate with her downline members. She just worked with a group of first level recruits and helped them build downline.

I knew a Dutch couple who met an English couple on a ski-ing holiday in Austria, found out about the product and introduced it to their country. Within two years the Dutch were earning £25,000 (US$49,300) per month and the English sponsors were earning £8,000 (US$15,800) in royalty overrides.

Network Marketing/MLM is about teamwork.

Together Everyone Achieves More

© Antonia Stuart-James 2007.

Some Network Marketing books I recommend from Amazon.co.uk