Direct sales is often done through face-to-face selling or, with the rise of internet tools, you may actually do direct selling online without having to face your prospects and customers. Usually though, products and services are presented to consumers at work or home by an independent salesperson.
Network marketing, also known as multi-level marketing is not actually marketing, but an additional technique to systematize and compensate direct salespeople. It is actually a direct selling compensation plan found in direct selling where salespeople receive payment in different ways.
A direct selling company that offers a multilevel or network marketing compensation plan pays its distributors based not only on one’s own product sales, but on the product sales of the people a distributor has brought into the business.
In direct sales, the majority of available profit is paid to the salesperson. Once the sale is complete, the direct salesperson moves on to the next customer to generate another potential sale. Although the direct salesperson earns a higher percentage than management, the potential for earning residual income is severely limited.
On the other hand, network marketers earn much lower commissions on initial retail sales, but produce residual income from their customers’ reorders. The greatest part of this commission is funneled to upper management on the network marketing distribution line.
Direct salespeople are often bound by sale territories, time and physical availability. The most successful direct salespeople only earn money on their personal sales. Growing a distribution force of other salespeople is normally reserved for sales managers.
In network marketing, distributors are customers who also recruit more distributors. This can create levels of long-term residual income with management bonuses. Recruiting is the lifeblood of MLM because it multiplies your efforts through the leveraged efforts of others. Network marketing offers independent business opportunities through building and training a distribution team to duplicate the selling process. Helping others get what they want helps get you what you want – financial independence.
In Network Marketing, you must understand the power of multiplying their efforts through others. Add the ability for residual earnings generated each time someone in your marketing organization generates a sale, month-after-month, and you can experience financial independence, or freedom.