12 Pros and Cons of Network Marketing

Many people may not be familiar with the term “network marketing,” but they do know this process by another term: multi-level marketing, or MLM for short. With internet saturation ever increasing and the chance for representatives to build up a global presence that can create a profitable downstream, many are evaluating the pros and cons of network marketing to see if it could be a viable business opportunity for themselves. If you’re thinking about it right now, then here are some of the key points to consider.

The Pros of Network Marketing

1. It is a way to share a product or service that people are truly passionate about.
A good example of this is Plexus, or the “pink drink.” Social networking is filled with success stories of people who have lost weight and experienced more energy with this product. They love it so much that they become representatives of the product. There is no ignoring the fact that when people are passionate about something, they are able to sell it more effectively.

2. It can be an easy way to start a business opportunity.
If a person’s hours are getting cut back at work or unemployment is happening for a prolonged stretch, then network marketing provides an opportunity to help keep making ends meet. Many opportunities come with a low-risk investment into the first products or services that are going to be sold and this lets individuals start earning money right away.

3. It provides people with more time at home.
Working from home is the dream of many in the world today. Network marketing provides this opportunity and does so typically with products that have already been established. There are no costs that must be paid up-front to develop a personal product or service and no real marketing that needs to take place outside of establishing a personal reputation as a good representative. In other words, your family becomes your co-workers.

4. There is a chance to leverage your income through network marketing.
Most opportunities involve earning money through direct sales commissions, downline commissions, and bonuses that are earned when performance goals are met. With the right group of people who are self-motivated working with you, it becomes possible to have ongoing profits coming in from the same initial efforts that were made to create the team and begin selling products to customers.

5. The wheel doesn’t have to be re-invented to make money.
Network marketing utilizes preexisting systems to sell products and develop team members. These are best practices that have been developed over time because they have been proven to work. In return, using them allows representatives to begin fueling their own personal development and growth, including leadership skills that some may have never known existed. In return, making people happy from what you do can make you feel happy too.

6. Mentorship is often a key component of the network marketing experience.
The theory of network marketing goes something like this: you sign up to be a representative. You’re assigned to a sponsor, who helps you begin building your reputation. As you increase sales and earn commissions, your sponsor earns a portion of the commission as well. Everybody wins, including the customer who gets a product they want.

The Cons of Network Marketing

1. Most people don’t get rich through network marketing.
The truth is that most people don’t even make a part-time income through network marketing. The problem is that there are no territorial restrictions with most MLM organizations. If you want to be a representative, then pay the fee and you become a representative. This creates competition pockets that saturate markets with the represented goods or services and limits profitability.

2. Most network marketing sales are face-to-face.
Less than 6% of MLM sales occur on the internet. In comparison, about 80% of sales happen on a face-to-face meeting. Many people who enter the network marketing field for the first time aren’t used to being able to talk to strangers or discuss the pros and cons of their product. That’s why a majority of representatives sell to their families and no one else.

3. It takes time to grow.
Network marketing might seem like an easy way to make money, but as an independent representative what you’re basically doing is creating your own business without it officially being your own business. You get promotional materials, access to an experienced team, and maybe even a customized website, but the best product in the world won’t sell if people don’t know about it. It takes time to grow a network marketing presence just like it does any other business and that is time some people may not have.

4. There is a lot of rejection involved.
Many people will tell you “no” when you first start network marketing. That negative response is going to continue on and on… and on. The average person who is first getting started with this challenge may have a conversion rate of 1%. That means out of 100 people who are approached for a sale, 99 of them are going to turn the opportunity down. For those who get discouraged by such negativity, the rejection can cause a good network marketing opportunity to go away.

5. There are many network marketing scams.
It can sometimes be difficult to determine when something is real or if something is just a scam with modern network marketing. If there is a tangible product or service being sold, then the opportunity is usually safe. If investments are being requested for no real return at all except for “information,” then that is something to be avoided. Alienation is easy with any network marketing opportunity and being involved in something that has any appearance of a scam will ruin this business opportunity.

6. Sponsors aren’t always good mentors.
It’s a dog-eat-dog world out there and any new blood coming into a network marketing opportunity is a potential threat. If you’re good at sales and are proceeding up the chain of command with your own downline, that sponsor who helped you when you first got started may no longer want to be your mentor. Some sponsors don’t even bother with mentorship at all. You don’t often get a choice in your sponsor either, which means the success of your business may hang on uncertainties that are outside of your control.

The pros and cons of network marketing show that it can be a potentially profitable experience, but it usually takes more work that most people anticipate it taking to create that profit. If you love a certain product, love talking with people, and can handle multiple daily rejections of your sales pitch, then this could be the right type of opportunity for you.