How Network Marketing Works!!
The Internet eliminates much of the hard
work formerly associated with the operation of a Network Marketing
Business where product distribution is the objective.
A
product order will be submitted online directly to the
distribution warehouse, in much the same way that a high street
store or restaurant will order the products which they sell.
The fundamental difference is with the way in which
customer satisfaction is achieved. With
the High Street Business Model (HSBM), location of the
retail premises will influence a customer's buying decision.
Whereas, with the Network Marketing Business Model (NMBM), timing is
the critical factor influencing customer satisfaction. Both
models are dependent on customer preference.
Both models employ a
similar back-office system, differing only in how sales' costs
are allocated and customer relationships managed.
With
the HSBM, products are displayed and advertised to maximise the
attention of potential customers, whereas, in the NMBM, users of a
product will deliver testimony of product effectiveness in
such a way as to attract the attention of potential customers.
For
both models, there is a clearly defined cost of customer
acquisition, whether this is the cost of premises and
advertising or the independent agent's sales commission.
With
the HSBM, many of the costs will need to be paid in advance of
sales being generated, whereas, in the NMBM, sales costs are
incurred at the point of sale to the independent sales agent.
With
the NMBM, there is a risk that the independent agent will be
encouraged to purchase more product from the company than s/he
can easily sell and it is this element of the process which
has attracted criticism in the past that
this business model is flawed.
An
independent agent will be wise to only consider involvement
with a company employing the NMBM if they find the product
particularly appealing, otherwise, enthusiasm for the business
might be difficult to maintain.
This
is in contrast to an employee of a business where the HSBM is
being employed. The purchaser will need to
satisfy him/herself that a product is fit for the intended purpose
prior to concluding the purchase.
Network
Marketing, as a type of Direct Selling, works best when there
is a personal relationship between the customer, the
independent agent and the person who is doing the recruitment.
i.e.
People join People rather than companies... START
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