Network marketing is one of the most popular home based business opportunities. However, for those new to this type of opportunity, the confusing nature of this industry can leave many wondering how to earn money from it. Network marketing, also known as pyramid selling or multi-level marketing, is an advertising strategy for the selling of goods or services in which the majority of the income of the MLM business is derived from the company’s recruits. Because of the potential compensation from recruiting new distributors, this form of business has gained popularity among many people looking to earn money at home.

The basic structure of network marketing is made up of a sales team that consists of a leader and a number of recruits who are known as “levelers”. A leader is responsible for recruiting new distributors, and is paid a commission for each new recruit brought into the organization. The recruits, or levelers, go through a series of training sessions and meetings designed to help them understand the business and sell the product to others. They are then trained on how to build a relationship with their recruits by nurturing a relationship that is based on trust. These sessions often end with a closing sale.

One of the challenges that many people find when trying to make money with network marketing is the training that must be provided to distributors in order to earn commissions. Most companies that offer such opportunities will require their new recruits to attend a seminar or workshop designed to teach them the ins and outs of the business and its principles. Some of these seminars may last as little as a few days, but even the most effective seminars can take years before they yield significant results.

Another challenge that new network marketers face is understanding the multilevel marketing business model. This is a complex business model that consists of three distinct sections: recruiting, selling and compensation. The key to earning a significant amount of money with multilevel marketing programs is to build a downline consisting of distributors who recruit their friends and family into the program. The business model works because it is based upon the principle that a distributor’s success is dependent upon the success of his sponsor, who is also recruited into the business. Each level in the business hierarchy is designed to attract more distributors into the business.

In order for a distributor to become successful, he must learn how to recruit and motivate other distributors. He must be able to clearly communicate the benefits of joining the business and convincing his recruits that they too can be successful. A distributor cannot succeed unless he is selling a product or service that others want and need. In order to sell these products and services, a distributor must develop a strong selling strategy that effectively emphasizes the benefits of purchasing the product or service. A solid business plan is necessary to help a distributor determine which sales techniques to use in order to attract the most members into his or her downline.

Direct selling companies have been known to employ pyramid schemes, when recruits are encouraged to recruit other new distributors in their midst. The potential for abuse is great because of the potential for recruits to continue to be recruited into the business after joining. Although multilevel marketing has the potential to bring success, it should be noted that most people who join and become successful in this business model are able to stay involved for the long term. They have established good rapport with their team members and are making money from their downline. Network marketing should not be abused and recruited individuals should be held accountable for promoting quality products and services, while educating their recruits on how to effectively sell products and services. Direct sales reputations are everything!