Figures from the Direct Selling Association show that revenue for direct sellers rose by 7.1% every year in 1993-2003, significantly higher than economic growth. The trend reflects how multi-level or network marketing has become a surging business platform over the last few years.
Among the top direct selling companies are Avon, Nu Skin, Amway, Mary Kay and Herbalife. Data from the U.S. Census Bureau show that 2003 sales by such companies surpassed $29 billion, or nearly 1% of more than $3,397 billion in overall retail sales for the country.
One key factor that makes sales and marketing professionals successful is a focus on functional relationships to sell the product or service. This approach reflects recognition of network marketing as a relationship-based business, according to Networking Times founding editor John Milton Fogg. At the very least, such functional ties cannot be replaced by a combination of a superior relationship and a poor product.
A study shows that network marketers who initially had poor ties to dense networks eventually surged as entrepreneurs, according to 'Social Capital in the Creation of Financial Capital: The Case of Network Marketing' author Shaul Gabbay. The finding indicated success by individuals who first ventured in a relatively new market and later built their share in that market.
MLM businesses are also nearly exclusively dependent on their own communities for recruiting, sales and support and follow-ups. This low-cost approach to build a community focused on the product is practiced by a good number of software makers, who turn to their own customers for customer support and tap offshore groups for software development.
Successful marketers also benefit from tapping downlines from the market segment or community they are targeting. Such sales personnel would be quite effective selling to and building relationships with their customers/peers, with whom they share mutual interests.
Network marketers should also not assume that all people they meet would make good prospects - or the so-called "three-foot rule', that is, anyone within that proximity is a prospect. 'Success Online' course maker Max Steingart notes that selling is a question not only of when, but also if one should do so to a particular individual.
Mr Steingart also endorses online networks. He has observed that about half of people who receive his instant message invites to his distribution network respond. This reflects the increasing number of MLMs turning to the internet to boost sales.
Longevity also plays a role in MLM success. An upstart with a hot product or service may initially have strong demand, but a stable company in business for at least five years is often more stable and offers continuous opportunity for growth.
Such companies are also usually backed by more than enough capital to sustain growth, ensure stability, update technology and seek talent. In the case of commission payments, publicly traded companies are preferred due to SEC and other government regulations requiring regular financial disclosures - a condition not possible with private companies.
One can also expect a successful network marketer to offer a service or product that is not easily available from competitors and in other markets. This uniqueness also guarantees consistent sales for the MLM. Such products or services should also answer an actual need and at fair terms, as consumers will always look for top value when making any purchase.
A successful marketer will generate continuous income only if the company's offering generates long-term demand - the product or service must be something that a customer will use for an extended period, or ideally a lifetime, and not just be a response to a short-term trend.
One slight deviation from the long-term requirement: the product should be strong enough to generate immediate income and steady cash flow for further expansion and marketing work.
Since uplines are also responsible for nurturing the network, those who maximize technology for remaining connected with their downlines without being too restricted to pursue more opportunities will enjoy more success than those who fail to take advantage of technology.
No multi-level marketer would be successful without the commitment to similar success for his downline. This is where the difference between recruitment and sponsorship lies: the recruiter is focused only on expanding his downline for further personal gain, often leaving his subordinates to themselves. Meanwhile, the sponsor spends time and effort to teach and motivate his downline to make them successful like himself.
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