What is Network Marketing? Step By Step MLM Guide (2023)

Step-by-Step Network Marketing Guide!

Since then, Network marketing becomes the industry that creates the maximum number of Millionaires compared to any other industry. There are 10,000’s MLM companies in the world, but few of them are reliable and trustworthy. The Multi-Level Marketing Company is also one of the most misunderstood forms of marketing and many times people consider it a scam.

Network Marketing can be quite confusing for people who are new to the industry and especially because of the MLM reputations made by scam companies. Everyone comes to this industry with much expectation to make money working from home part-time. So let’s get to know the reality of this multi-level marketing concept.

How Does Network Marketing Work?

Network marketing operates through a network of independent distributors who are motivated to sell products & recruit others to do the same. Distributors are trained & supported by the company. They receive a commission on the sales they generate, as well as on the sales of their downline. As a distributor grows their network, they earn residual income from the sales of their downline, which can provide a long-term source of income. The success of a distributor in network marketing depends on their ability to sell products, recruit new distributors & support their downline.

How To Start Network Marketing?

Network Marketing as the name suggests is about creating a huge network of people to do marketing for a business or a product. In a traditional business, the manufacturer of a product distributes its products to the suppliers, wholesalers, retailers, and then consumers. However, with Network Marketing the idea of a middleman between the manufacturer and consumers is eliminated.

This also leads to a huge benefit to the companies by saving a large number of investments in advertising and promotions. The products are made available to the consumers directly from the manufacturer hence it is also called direct selling. A survey indicates that more people are likely to buy a product or service if it’s recommended by someone they know.

The reason behind the huge success of the network marketing industry is that they always have an army of distributors to advertise and sell products on the company’s behalf. Since it eliminates the middlemen the profit margin with each sale with direct selling can be very extremely high compared to normal retailing.

Network marketing uses the power of the Duplication formula, which is the most powerful concept for building a residual income. The more people you help to achieve success, the more you will become successful which is a great concept of a win/win situation.

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What is MLM (Multi-Level Marketing)?

MLM or Multi-Level Marketing and Network marketing are referred to as the same concept. When we say Network it refers to the network of people who are involved with actively marketing the products or services. And the term Multi-Level marketing refers to the strategy used by direct selling companies to encourage the distributors.

Network Marketing Tools

As the name suggests it normally goes in levels of recruits or new customers brought to the company by each distributor. When you as a distributor bring a new consumer or a member that will be referred to as the first level. Then the new one brings other people into his team & will be referred to the 2nd level. And the hierarchy goes on from there which will, in turn, bring in a huge network of people to the company.

Because of this level of structure, the MLM industry is also considered one of the most controversial marketing concepts by new beginners. The Multi-level marketing concept is completely legal and is an extremely powerful concept if you know what you are doing.

It becomes illegal when a company or manufacturer doesn’t abide by the terms and MLM Guidelines set by the FTC in the US(Federal Trade Commission). Every country may have different laws on companies and especially in the MLM industry. Make sure to check the government guidelines of your country if you plan to join an MLM business.

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Network Marketing or MLM Compensation Plans:

Types of MLM Compensation Plan

MLM compensation plan plays an important role in the success of the network marketing business. Even though there are several comp plans for Network Marketing or MLM, Here we are going to see the 4 most popular payout plans. The more rewarding the compensation plans are the more distributors are motivated to perform better thereby increasing overall business revenue. The 4 most popular MLM compensation plans are:

i) Binary MLM Compensation Plan:

Binary-compensation-plan in MLM as the name indicates is about having two down-line legs, which are left and right. The commission that a distributor will be calculated based on the volume of business comparing the left and the right leg. 

Normally in most MLM compensation plans, the payouts are based on the percentage of the volume. Every new person is directly sponsored by you after the left and right legs are automatically spilled over below, either to the right or left.

However, in the binary structure, it will be calculated based on the activities left and right, which are required to have a balance. This Binary plan is the most famous and the most rewarding plan compared to other MLM payout plans. It is easy to understand and most people are attracted to it because of its simplicity in structure.

ii) Unilevel MLM Compensation Plan:

Unilevel compensation plan as the name refers to UNI – which means one, is a single-level MLM structure. This probably is one of the simplest MLM compensation plans and is extremely easy to make people understand. There is no spill-over or volume percentage calculation as every new recruit brought by you will be directly placed in the first level under you.

It has unlimited width and most Network marketers prefer this structure because it’s really simple to understand. Not only the direct referral bonus but you will also benefit from approximately 5-10 business levels in many ways.

iii) Forced Matrix MLM Compensation Plan:

The Forced Matrix compensation plan restricts a member to have a limited number of direct referrals in their first level. Let’s say you have an 8*10 forced matrix MLM plan, which means you can have only 8 people on your first level and will be paid up to 10 levels deep.

Those network marketing companies that allow Forced Matrix will pay you for direct sponsor commission, level commission, and Matrix commission. This type of compensation plan also allows the distributor to focus on fewer people and help them to succeed.

iv) Party Plan MLM Compensation Plan:

Party-Compensation-plan is a new concept implemented by many network marketing companies for promoting their products by organizing social events. This type of MLM compensation plan is more popular among products like kitchen and cosmetics which involves women.

Those independent contractors or distributors who are organizing such events will be paid a percentage of total sales generated through such events. Most of the time such live events prove to be very effective in promotions as people can get more product info through several presentations.

Top Network Marketing Companies

There are also many other MLM compensation plans implemented by hundreds of network marketing companies across the globe. Some of those plans are:

• Straight-line MLM compensation plans

• Stairstep MLM compensation plan

• Generation MLM compensation plans

• Board MLM compensation plans

• Gift MLM compensation plan

• 'EmGoldex' MLM plan

• Australian X up MLM compensation plan

• Hybrid MLM compensation plan

• Australian binary MLM compensation plan

Network Marketing Vs Pyramid Schemes:

Pyramid-scheme is one of the most controversial business models that recruit new members with a promise of a payout rather than the sales of products or services. The pyramid schemes as the name indicate look like a pyramid structure, where someone at the top gains benefits from all new recruits or members.

Such schemes are more focused on recruiting more new members and mostly don’t have a product or services involved in them. The network marketing industry has got a false impression from many people because of fraudulent companies operating in such plans. You need to read the FTC guidelines on how to identify such illegal schemes in the first place.

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Such companies are in the 1000s operating all over the world taking advantage of new beginners and investors who lack knowledge. A legitimate Network Marketing or MLM makes money by selling a legit product or services and an illegal pyramid scheme is based on new recruits.

What is a Ponzi Scheme?

Ponzi-Schemes are one of the most cunningly crafted illegal schemes that lure investors and pay commissions with the revenue generated from new recruits. This is also much similar to the pyramid schemes and totally depends on new recruits or members to make the business move.

Eventually, when the new streams of fresh members stop, the business also stops, and the scammer who starts the business runs away with all the money. People who are less educated, Naive, or a beginner often fall victim to such con artists who try to manipulate people with false promises.

It’s like robbing John to pay Mike, and the trend continues where more and more new members who join become victims of this scam. You need to learn to identify the Red Flags while joining network marketing, such as:

• High & unreasonable return on your investments with no risk whatsoever

• You will see an Over promised consistent return irrespective of market situations.

• Unregistered and illegal without disclosing proper company details.

• They will never have proper legalized paperwork

• You will have a lot of issues and delays in payments.

Network Marketing Vs Make Money Online Business:

Network Marketing Vs Make Money Online

When we talk about Network marketing it is considered one of the most effective ways to create a passive income for life. If you are involved with the right company and do things in a proper way, you have a great chance of success.

The best part of the 21st century is the invention of the internet and after it, everything becomes a part of the online community. Many make money online business has started using the concept of Network Marketing or MLM using the power of the internet.

When you use the technology in addition to the Network Marketing concept, it may give you exponential results. Most of the Make money online businesses are also based on selling other people's or company's products through affiliate marketing.

So in both cases, you are selling something, to the consumers. Why not use the technology to do the multiplication of your results? However, if you are a beginner, the make-money-online world is also full of scams and con artists trying to rip you off.

Always look for a legit training program before you start with anything new. Education and proper knowledge is the key to success in your online marketing or network marketing career.

Top 10 Network Marketing Companies In The World:

Top 10 Network Marketing Companies

Time and Time again, 1000s of Network marketing came, lasted for a few months or years, and then vanished due to dishonest or illegal business ethics. Below we have listed the Best Network marketing that has lasted for decades.

If you are seriously considering joining a Network marketing company or an MLM, you need to study the Big Players in the market. No matter what many have said about these MLM companies, they have proven themselves to be the best in the industry. So here are the Top 10 Best MLM Companies:

i). Amway: $8.8 Billion Per Year:

Amway is primarily considered the first Multilevel Marketing who started the wave of MLM business in the world. The company was first started in November 1959 in Michigan USA and it's having the highest turnover with close to $9 Billion US dollars annually. Amway deals with FMCG products which are Personal care, Home Care, Nutrition, and Beauty.

ii). Avon: $5.7 Billion Per Year:

Avon is one of the oldest companies that were founded in 1886 by David McConnell & is headquartered in New York City. If you love the beauty industry Avon might be the best choice for you in terms of quality and a trusted reputation. They manufacture beauty products, Fashion, and home care products with a turnover of close to $6 billion annually.

iii). Herbalife: $4.5 Billion Per Year:

Herbalife healthcare items are Top of the class and have assisted millions of health-conscious consumers since 1980. The company is one of the Industry leaders in Network marketing which has more than 2.5 Million distributors in close to 100 countries worldwide. Herbalife nutrition also offers one of the highest profit margins for each sale up to 25% for distributors.

iv). Vorwerk: $4.2 Billion Per Year:

Vorwerk is a German Based Network marketing company offering Hi-Tech kitchen appliances like TM6, Thermo Mix Cooking appliances, and vacuum cleaners. The well-designed German engineering makes it extremely popular which leads to a global turnover of $4 billion annually.

v). Mary Kay: $3.5 Billion Per Year:

Mary Kay is a US-based cosmetic MLM Company that was first started in 1963 by Mary Kay Ash. The company is an industry leader in producing cosmetic products and distributing them through Network Marketing. Mary Kay is the only MLM company that calls its distributor Beauty Consultants and requires a $100 start-up cost to join the company.

vi). Infinitus: $3.4 Billion Per Year:

Infinitus is another famous Network Marketing company based in China that manufactures products to help people with a healthy lifestyle. The company was first started in 1992 with health products made with Pure Chinese herbs and hit a turnover of close to $4 annually.

vii). Perfect: $3 Billion Per Year:

Perfect MLM Company is another Chinese-based Network marketing dealing with Health care, Beauty, Skincare, and Personal Care products. The company was established in 1994 with Headquarters in Guangdong Province in China and has a turnover of $3 billion annually.

viii). NaturaBrasil: $2.26 Billion Per Year:

NaturalBrasil is another Famous Network Marketing company based in Brazil that sells skincare products and spa-like soaps. It was first started in 1969 with just one product that is soap and since then became an industry leader with a $2 Billion annual sale.

ix). Tupperware: $2.2 Billion Per Year:

Tupperware was first started in 1946 by Earl Tupper and is one of the biggest companies dealing with Innovative Kitchen products. The company was made famous with the promotion of Tupperware parties. Airtight sealed containers are quite popular all over the world and Tupperware is the best in that niche.

x). NuSkin: $2.2 Billion Per Year:

Nuskin is another US-based MLM Company dealing with lotions, Spa Tools, and Supplements with a Turnover of $2 billion yearly. The company was first started in 1984 in UT, USA, and has its foreign operation based in Canada. Their main manufacturing units are NU skin Korea and Pharmanex.

Top 20 Income Earners in Network Marketing Business:

Top Network Marketing Earners in the World