Do Business Well

The first use of network marketing is generally credited to Nutrilite, a direct sales company in the United States selling food supplementation products which, in 1943, instituted a marketing and compensation programme that encouraged each of its sales people to build up an independent team which sold and distributed products.

In terms of this programme, the original sales person not only earned a commission on every product she sold, but Nutrilite also gave the sales person a two per cent bonus commission on the sales of every new distributor (sales person) she had introduced. Therefore, the more distributors the sales person introduced, the more money she made.

From this early beginning, the growth of network marketing (sometimes called multi-level marketing or MLM) has been explosive. In 1959 two sales people in the Nutrilite stable, Richard de Vos and Jay van Andel, split with their parent company to form Amway, now the largest network marketing company in the world. They focused on household cleaning products. Another exNutrilite distributor, Dr Forrest C. Shaklee, formed Shaklee which was also a tremendous success in the food supplementation business.

With success following success, dozens of network marketing companies have sprung up throughout the world, including South Africa.

Network marketing consists of two powerful words which, in combination, have more strength and meaning:

n Networking is the linking together of large numbers of people. Think of any organisation you know and all the interacting lines of communication. Think of a social group and the web of human contacts; a telephone system with its network of exchange lines; the ‘old-boy’ network (old school chums). Whenever a number of people with a common interest get together to share information and resources, a network forms.

Marketing is concerned with the promotion, sale and distribution of goods (and services) from producer or manufacturer to the end consumer on a profitable basis.

The principles underlying the success of network marketing

What has made network marketing such a powerful business? Here are the ’secrets’ that drive this business forward:

Power of personal contact Network marketing uses the most powerful means of advertising known to the world, namely word-of-mouth contacts:

• Read a good book lately? How did you hear about it? In all likelihood a friend told you how much she enjoyed the book.
• Seen a good film? How did you hear about it? From a conversation with someone who had already seen it or perhaps from a radio review.
• Been to a new restaurant recently? How did you know where to go? You probably received a solid recommendation from a friend whose opinion you trust.

Networking is simply about using the power of personal contact to grow your business.

Leverage

In a normal selling situation the amount of business a sales person writes up is determined by the number of customers she sees. Time is the limiting factor. No matter how effective that sales person is, there are only so many hours in a day and so many people she can see.

But now imagine if every time you made a sale, that person became your sales person and every person she sold to became your sales person — in a glorious never- ending network. Well, that’s the way it is. You get others to work for themselves and their own good and, at the same time, for you. The end result is a large number of people each selling a relatively modest volume of products. J. Paul Getty said words to the effect: ‘I’d rather have one per cent of the profits from 100 men than 100 per cent of the profits from one man.’ When you get others to work for you, that’s what happens.

The concept of leverage is an enormously powerful tool. Archimedes, the Greek philosopher and scientist, said: ‘Give me a lever long enough and I can lift the world.’

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