Network marketing is also known as multi-level marketing or MLM. It is a marketing strategy which allows individuals to profit either from direct selling or the number of referrals it can accumulate. Contrary to popular opinion, network marketing strategies are not always scams established by illegal enterprises.



How Network Marketing Works

With network marketing, there are always two kinds of parties involved. The first party can be referred to as distributors. These may also be known as independent agents or business owners, consultants, associates, or franchise owners. The second party is known as the parent company or the one behind the network marketing system. The parent company rewards the other party commission-based fees in exchange of services rendered by the distributors.

These services include but are not limited to selling products or recruiting other individuals to be downline distributors of the parent company as well. In most cases, the products distributors sell are offered to them by the parent company at a reduced or wholesale price regardless of the volume purchased. Distributors are often able to receive income if anyone who's part of their downline earns as well.

Types of Network Marketing Compensation Plans

If you are thinking of joining a network marketing enterprise, you should first know the various kinds of compensation plans they offer. Choose one that best suits your skills and needs.

UNI-LEVEL plans are the most common and oldest of all types of network marketing compensation plans. They are also known as stairstep breakaway plans and they involve 2 kinds of players: managers and non-managers.

There are three ways for a person to earn from uni-level plans. Firstly, baseshop overrides are offered. These are commission-based fees earn by managers from non-managers. The second type of income provided by uni-level plans are generational overrides. These are fees collected from individuals who used to be their subordinates. Lastly, uni-level plans also offer exemplary individuals executive bonuses. These are offered to managers able to surpass their sales quota.

MATRIX compensation plans for network marketing companies place limitations on a distributor's group. Instead of allowing distributors to position their subordinates just anywhere in their network, matrix compensation plans ultimately require distributors to make a spillover effect by placing recruits over those who didn't sponsor them.

BINARY compensation plans, just like matrix compensation plans, also place limitations on network marketing strategies. Income received by distributors is cyclical. More to the point, distributors can only hope to receive income if both legs of his network are able to receive a specified sales margin or quota.

ELEVATOR compensation schemes are sometimes known as matrix compensation plans as well but this time, they make use of a list or board of product units. Distributors pay for those they wish to participate in. When a specified number of units reach a prescribed amount, distributors will receive consideration.

Tips on Choosing What Network Marketing Company to Join

Not all network marketing companies are illegitimate. Some truly offer you a genuine opportunity to earn extra money without quitting your job or neglecting your present duties. But of course, you need to determine first which companies are safe and ideal to join.

For starters, don't join network companies with compensation plans as well as conditions for joining you find unappealing. Look instead for network companies that offer products and services you believe you'll be able to sell and more importantly, trust in.