There’s still a debate between direct marketing and network marketing. Despite the confusion, experienced marketers would phrase these definitions this way.
Experienced people would comply with the definition that network marketing is part of the idea that goods and services are provided via 1v1. It is also sold directly by a salesman to the customer. The two different techniques have different rewards for the person using them.
Companies that employ direct sales techniques are commonly known as “seller based.” This means that the company makes more money to the distributor of the item when making a sale. These companies target high end, single purchase items. An example would be: knives, blenders, and AC filters. With this particular technique of selling the bulk of the profits goes to the person who actually sold the item. This designated usually earns more money than the person who hired him.
If they’re not manager of sales, good direct sales people are compensated on their own sales compared to organizing and cooperating with other people. Since most products that are directly marketed tend to be goods that don’t perish, it’s common to not make any residual income from the sale. There are of course exceptions to this rule like anything else (like insurance.) Usually, when something is sold and used the seller moves on to the next target. You get more money in direct sales so that’s your best bet if you’re looking to make some extra cash.
However, if you want to create income that is residual – you should highly consider the power of network marketing. Yes, there’s significant earnings behind network marketers but you have to be comfortable with selling to friends and family. Commissions are usually lower since the bulk of the money is usually given to the top.
There’s also an upside to this feature. You can create a network of people under you that sell and consume your product. If the business has a lot of good products that are priced well – you have an opportunity to building a long term client. A regular customer creates a lot of residual income. What this means is that you earn money from the first sale and the reorders from that customer. You earn even more money if you recruit people and from the ones that they recruit. This mechanism will keep on making you money even if you stop working because your recruiters are still generating sales for you. An example would be the HerbaLife model or any investments that throw off income like stocks or bonds.
A significant portion of my life has been spent through alternating between these techniques. I’ve found it much easier within a network marketing system then a direct sales one. Here are my reasons:
- Costs are less to get involved. There’s little to no investment needed upon your part. Any orders made can be drop-shipped by the main company. Through the use of a website you can get a customer to reorder thus giving the person more money who made the original sale. This means you don’t have to take the risk of carrying a lot of inventory.
- Lots of people can be involved in your network.
- Opportunity for lots of growth. You can train a small amount of people who will also do the same with their recruits.
If you are a people person, can communicate well, and work hard – both of these techniques can do well for you. It really depends on your preference of how you want to make your money.