Commonly referred to as multi-level marketing, network marketing is a
concept where individuals come together with a parent company and act
as independent contractors in the sales of a product or service. In
return for helping to promote and sell the parent company's product or
service, individuals are financially compensated in an amount that has
already been determined. The actual amount of compensation will vary
from one network marketing opportunity to another and will be strictly
dependant upon the company's policy.
A legitimate network
marketing opportunity will not grant money for recruiting new members,
which are required to pay sign-up fees. Instead, they should be paid
based on the commissions that they earn from the sale of a product or
service. One of the main problems that many network marketing companies
face is their comparison to illegal pyramid scams. However, there are a
large number of legitimate network marketing companies that operate
regularly in every state and in dozens of countries. Today, they are
commonly referred to as affiliate marketing or programs.
The
best way to distinguish a legitimate network marketing program from a
fraudulent operation is through the company's policy. First and
foremost, questionable operations will require high entrance fees
and/or the requirement for members to purchase expensive products.
Typically, these types of companies fail rapidly when the merchandise
cannot be resold for profit, which leaves the members in financial
distress and the founders with a large bank account
With the increasing popularity of the internet, it is important that
entrepreneurs be able to recognize the differences between a legitimate
and fraudulent company. As a general rule, affiliates should never have
to pay a sign-up fee in order to help a company sell it's products.
Simply put, it makes no sense to pay money in an effort to help someone
else promote and sell their products. Instead, it is more realistic
that the sign-up be free and the individual be paid based on the sales
that they generate for the company.
The majority of large
internet retailers offer affiliate programs, which allow members to
track their commissions and log in to their account at any time. One of
the best ways to ensure a network marketing opportunity is legitimate
is to know the parent company's reputation by checking with the Better
Business Bureau and through speaking with other entrepreneurs and
gaining feedback on their experiences. Every day, individuals find
great success or simply a way to earn extra cash through a combination
of the internet and a legitimate network marketing opportunity.