From the beginning of humankind, we try to create relationships with others, we interact, we form networks, we create societies. We are all interconnected in a huge web where social networks collaborate and evolve. Within these networks, all individuals’ behaviour, and consequently, their consumer behaviour is shaped. How is network marketing connected to that?
Every business expects to expand its circle through the positive comments of its existing customers, through recommendations and word of mouth.
This is network marketing and is definitely not something new.
Network marketing has always existed as a feature of human behaviour. However, as a marketing strategy it has mainly developed in the last decades. In recent years it has experienced great growth while the digital tools offered are being used.
If you are setting up your business or you want to increase your sales, network marketing is a strategic approach that you should definitely consider. But in order to be successful, you should first understand some of its basic tools and how they would suit your needs.
Network Marketing through Affiliate Marketing
Affiliate marketing is still the most classic way to create a network marketing strategy in the digital environment. Affiliate marketing could be considered as a one-level network marketing. There is a business which needs to be advertised and there is a network of affiliates, just below the business.
Affiliates are somehow the advertisers, the sellers of the product, if we could say that. Their aim is to sell and get a commission on sales / bookings. So they are usually paid for a successful conversion.
There are obviously countless ways online for affiliates to sell the products they want to advertise. Each affiliate has a separate network, whether it is social media, a website or a newsletter. A good affiliate practically works as a good proxy that tries to help the business succeed, for mutual benefit.
For your business, this scheme can prove extremely beneficial and can help you reduce advertising costs. You may need to advertise in the beginning in order to establish your brand, but then affiliates take over. You can then invest more in your product and its optimisation, for the benefit of your clients.
Something similar to affiliate marketing is occasional intermediation. In this case, the proxy informs you about possible sales opportunities, and is paid a commission for the sales that will actually be achieved.
Intermediary marketing is highly recommended if you provide customised B2B products or services and you want to expand at a new geographical market. Α proxy can help you create networks with local entrepreneurs but will also suggest adjustments.
Network Marketing through Referral Marketing
Referral marketing is an alternative approach to what we have been discussing. It is a process that helps us grow our network or increase our sales through word of mouth. Referral marketing is not based on professional affiliates that advertise for money. It is based on our product / service customers.
Although there can be free referral marketing through social media strategies, the most common method is rewarding. For example, Dropbox has been able to speed up its subscriptions by giving extra storage space to those who invite their friends. In a similar case, Uber gives you coupons for your friends to sign up and use the service, and you win a coupon once they complete their first trip.
In the two preview cases there is a main difference: in one case only the referral wins while in the other everyone wins. In referral marketing strategies there is even a more… altruistic model where only those referred by the referral win.
Referral Network is not just a quick way for a business to grow its network. Referral Networks can be maintained with additional marketing efforts and continue to perform even on an already established network. For hundreds of businesses, referral marketing is the ultimate network marketing model to evolve. It is a win-win action that can help in an effective word of mouth.
The Case of Multilevel Marketing
Ιt is impossible not to mention the disputed MLM (Multi-Level Marketing) or Multilevel Marketing model. Here, the seller’s goal is not only to sell but also to include new sellers in the scheme. This creates different levels and affiliates get a commission not only for their own sales but also for sales made by affiliates below them (down-line). Of course, the higher you are in the scheme the more likely it is to make a profit.
If you are planning to start an MLM business, make sure that your initial partners are reliable and capable salespeople. That’s how your network’s first level will be solid. On the other hand, if you are thinking of working in an MLM network you need to know extremely well the business you will be working in, as well as the existing levels.