The Theory of Network Marketing by David Nelson

David NelsonTo ensure financial success, part-time network markers must choose a network marketing program wisely. The principles of the theory of network marketing provide critical guidelines and appropriate direction in making the right choice. An understanding of the theory of network marketing assists distributors and prospects to minimize their risk and maximize their rewards. The common risks are loss of irreplaceable time, energy, reputation, and financial resources. The benefits are financial success, residual income, time freedom, individual development, and personal satisfaction. Most of us have heard the familiar stories from aggressive recruiters about how easy it is to “make BIG money fast” in network marketing. Many recruiters want prospects to believe that success is automatic. Most participants in the industry, sooner or later, realize that it takes work, time, and commitment to obtain success in network marketing — it doesn’t “just happen.” Common sense tells us that network marketing is not a “get-rich-quick” system.  NULL It certainly is not a “free lunch” program.

Successful networkers get paid for the work they do in establishing a customer base and building a distributor organization in a network marketing company that has a sound compensation plan, quality products, as well as stability and longevity.

There are many network marketing opportunities from which to choose. Each one is not suited for everyone. Internalize the principles of the theory of network marketing and how they compliment each other and work together in harmony to ensure the financial benefits and minimize the risks. Combine that understanding with an evaluation of your own skills, talents, desires, financial resources, and time commitment in choosing a suitable network marketing program to promote. “Theory” is a body or set of accepted principles or systematically organized knowledge presenting or explaining a clear view of a subject.

Network marketing is a powerful system of distribution and an outstanding business opportunity.

The theory of network marketing is comprised of six interdependent elements or principles. You have most likely heard of each of them individually in your networking experience. If not, you need to become familiar with them. Few have considered them together as a theory and how they synergistically work together. The principles are 1) circles of influence, 2) part-time residual income, 3) a lot, doing a little, 4) geometric progression, 5) duplication, and 6) attrition. Circles of Influence Network marketing was built upon the idea that we all have “circles of influence” or existing networks of people. These are established and developed as we go through life. Some people have large circles, others small ones. Some people have many different networks, others only a few. Examples are family, friends, neighbors, fellow workers, career-related contacts, school classmates, and community or church associates. Those of our circle of influence with whom we have frequent contact are referred to as our “warm market.” But you must realize that your circle of influence networks are much broader that just your warm market. These networks are assets to us in many ways. Network marketing uses the connection of one person to another.

It maximizes the concept of people sharing ideas and information, as well as products and services.

As we associate with others, we get better acquainted. We share interests, values, and experiences. We visit about what we like and don’t like. We refer and ask for referrals about movies, doctors, schools, dentists, restaurants, books, and other products and services. In network marketing, we are paid for making the referral and sale of our product or service within and throughout our circles of influence. When properly understood and applied, this truly is referral marketing. In network marketing, it’s important to work within your circle of influence. It allows new networkers to develop experience and expertise in the early stages of the business when so much is new. There is a greater comfort level and sponsoring success rate when working with contacts who we know and/or they know of us. If an individual feels uncomfortable about approaching circle of influence contacts, a serious evaluation must be made to determine if network marketing is really for that person. A strong belief level is obviously missing. Newcomers to network marketing owe it to themselves and to others to contact people within their warm market and the broader circle of influence. The major portion of success that a part timer experiences comes from circle of influence contacts. Many are developed on a local basis, but there is usually a “circle of influence” relationship prior to the partnership in the business.

Of course, full-time networking professionals know the importance of circle of influence contacting. They do it!

As a part-timer networker who is seeking financial success, you must have the courage to accept this reality. Part-Time Residual Income What motivates people to take the time to refer products and build a distributor organization is the opportunity to generate part-time residual income. Most network marketers start out part-time with the hope of supplementing other sources of income. Retail profits are the result of developing a customer base. Override commissions are the result of building a downline organization of distributors. As the business grows and develops, a stream of residual income is earned as a direct reward of selling products and managing a distribution system. The vast majority of participants in network marketing are part-time distributors — approximately 90% to 95%. The theory is that you can network in addition to your regular work.

If you are a part-time participant either by choice or because you have no alternative, choose a program that makes it possible to achieve financial success on that part-time basis.

Not all programs are alike. With some compensation plans, a part-time distributor is very, very unlikely to ever earn “part-time residual income.” These compensation plans demand full-time effort. Some distributors have developed their network organizations to the point that it has become a full-time, professional career. If this is your goal and it happens, that is wonderful. Nothing is more appealing than to live the lifestyle of a full-time network marketing professional. But you must remember that the industry is an industry of part-time participants. The principle of the theory is “part-time residual income.” The industry was created to provide an additional or alternate source of income to people. For the majority, it is to create a part-time homebased business. When you speak of “business,” obviously the bottom line if to make money. So, the people who work the business part-time must check out the compensation plan to ensure that it will enable them to make a positive cash flow on their part-time efforts. The most simple and effective way to do that is by doing some traditional cash flow analysis. The fact that an individual can make consistent, part-time income is very encouraging. To make it residual over the long term is the objective. Learning proper methods and skills enables network marketers to learn and teach the concepts required to successfully build a downline organization. But, the theory informs us that you must be working within a program that accommodates part-time workers. Since the majority is part-time, doesn’t that make sense to you? A Lot, Doing A Little Network marketing theory is also based upon the premise of a lot of distributors each doing a little. This is why it’s so attractive to people who want a part-time business. Any one distributor is not required to have a huge retail business to be successful. A retail customer base can be developed through pure
networking (referral marketing). Most people believe they can sell a little retail product through their networks. They are usually dealing with friends, associates, neighbors, or others in one circle of influence or another. They also become their own best retail customer by using the products. They love the products and are driven to share them. As these satisfied customers also see the opportunity to do “a little,” then a lot of people start to accumulate together.

It is necessary that each “do a little” on a consistent or monthly basis.

When someone perceives that there is a requirement to do a lot of individual product placement or retail selling or massive recruiting, it becomes threatening, creates anxiety and stress, causes failure, and is not part of what the theory suggests.


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