Any business model that has
achieved this kind of success probably has lessons that all business people can
learn from. We define this family of business models as a method of
distribution in which people are paid for sales volume generated by people they
have recruited into the distribution network. 20% of American adults reported
they are now (6%) or have been (14%) a direct selling representative, defined
as "the sale of a consumer product or service, person-to-person, away from
a fixed retail location." In 2000, 55% of American adults reported having,
at some time, purchased goods or services from a direct selling representative.
A significant number of
network marketers have negative experiences with the industry. That is why 70%
of all people who have ever been a direct selling representative are no longer
in the industry. For the purposes of this column, we will not go into the
challenges and problems in the network marketing model. There are plenty of Web
sites on that topic.
We all work for ourselves. Gone are the days of being a
"company man” - your career is your business. Multi-level marketing just
makes that explicit.
Yet one of the things that
makes the sector most attractive, the low barrier to entry, also creates some
its greatest dangers. Many people get into it without the necessary skills to
run a successful business.
We are primarily interested in what lessons all business people
can learn from successful network marketing practices. We recently interviewed
some of the industry's top experts and found seven lessons that all sales and
marketing professionals can use to be more effective, regardless of their
industry:
Every business is a
relationship-based business
You cannot sell an inferior product or service with a superior relationship,
but you need at least a functional relationship to sell your product. That is
particularly apparent in multi-level marketing, an industry built around
belly-to-belly sales.
Think analytically about your network
The Case of Network Marketing, reports that the fastest-rising group of entrepreneurs, were those who had initial weak ties to dense networks. In other words, successful salespeople penetrate an untouched market, and then work to gain a high market share in that market. This is easier to do if that untouched market is highly dense; everyone in it knows all the players. Why? Because word of mouth in that type of network will spread more rapidly about the value of your product or service. This principle is particularly evident in network marketing, an industry where "networks go to work." However, the same idea applies to almost any business.
The Case of Network Marketing, reports that the fastest-rising group of entrepreneurs, were those who had initial weak ties to dense networks. In other words, successful salespeople penetrate an untouched market, and then work to gain a high market share in that market. This is easier to do if that untouched market is highly dense; everyone in it knows all the players. Why? Because word of mouth in that type of network will spread more rapidly about the value of your product or service. This principle is particularly evident in network marketing, an industry where "networks go to work." However, the same idea applies to almost any business.
Create a community around your product or service
One of the great ironies of the software business is that not only do many
software companies outsource their development off shore; many also outsource
their customer support to their own customers! When Best Software encourages
you to visit their user forums to discuss your issues in using Act! software,
that is a very cheap way for Best to support their product. Multi-level
marketing companies rely almost exclusively on their communities for sales,
support, follow-up, and recruiting.
Leverage the unleveraged
In 2002, 79.9% of the direct selling sales force was female. 56% completed only a partial college education, technical or trade school, or have only a high school education. This sales force looks very unlike the traditional American corporate sales force, which typically is much more male and has a higher level of education. However, the direct selling sales force looks just like their customers. People can be very effective salespeople when selling to their own community, because the common culture and interests create a foundation to build strong relationships more quickly.
In 2002, 79.9% of the direct selling sales force was female. 56% completed only a partial college education, technical or trade school, or have only a high school education. This sales force looks very unlike the traditional American corporate sales force, which typically is much more male and has a higher level of education. However, the direct selling sales force looks just like their customers. People can be very effective salespeople when selling to their own community, because the common culture and interests create a foundation to build strong relationships more quickly.
Build a relationship first
"Internet marketers and network marketers share a common, terminal disease,"
"Internet marketers and network marketers share a common, terminal disease,"
One of the delicate aspects
of network marketing is that people leverage their personal relationships to
sell a product. Although that leverage makes some people queasy, the success of
the network marketing model shows that many people do comfortably build
multiplex relationships: Their friends are their customers, and vice versa.
With delicacy, you can do the same thing.
Not everyone is a prospect
One mistake some network marketers make, as do many other sales people and marketers, is thinking of everyone they meet as a prospect. In network marketing, this is known as the "Three-Foot Rule", i.e., anyone within three feet of you is a prospect. But top network marketers don't do this.
One mistake some network marketers make, as do many other sales people and marketers, is thinking of everyone they meet as a prospect. In network marketing, this is known as the "Three-Foot Rule", i.e., anyone within three feet of you is a prospect. But top network marketers don't do this.
it's not just about figuring out when to make
your pitch, but even if to make your pitch. "You just build relationships
with a lot of people. Some will become prospects and some won't,"
"There's no timetable.
If the time is right, you'll know."
Use online networks
The network marketing industry is a particularly good industry for leveraging
online networks. UConnective teach people how to "make the world your warm
market," specifically by using online networks. More and more sales and
marketing professionals will use online networks to accelerate their sales.
What else can traditional businesses learn from the best
practices of successful network marketers? We welcome your comments and
feedback.
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