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Network marketing simple explanation
How do you explain network marketing to a brand new person?
Years ago I was interviewed in the Wall Street Journal and a Washington D.C. magazine, and what they wrote about Network Marketing was very confusing.
I remember reading it and I was trying to keep up with it and I thought, “What?”
But it is not complex at all.
There is a very simple explanation of Network Marketing. For somebody who’s been in it and made millions, trust me, it is this simple. It really, really is. The goal should always be that we’re trying to reduce it to simplicity instead of make it more and more complex.
I’ve used a lot of different explanations over the years, but I believe I’ve simplified it down to the basics. Here’s how I’m now explaining it.
Business Categories
I want to start with orienting you on different categories of businesses.
In my last video I talked about all my side hustles, and I really wish somebody had shown me this chart way back then, because it would have been able to put everything into perspective for me.
Back then I just thought of business ownership as one of those stores in a strip mall or a restaurant or something like that. When we’re talking about a product-based company, a business that you might own, I want to show you the big categories. This is the way you look at it and evaluate it all.
First, there is the raw resources category of business, which includes things like sand and concrete and soil or metals, oil, gold, diamonds, trees, animals, water, all of these things have to be pulled from the earth. You could have a resources business. You’re going to be dealing with tractors and bulldozers and backhoes and things like that.
Then they go to the manufacturer and when you’re making glass for cell phones, for example, it comes from either granite or it comes from sand or something like that. Then something’s going to be made out of the raw resources, like bottles and jars. Milk and cream are from animals. Lavender, herbs, veggies, vitamins, things like that. That’s the manufacturing category of business.
Then there is branding, which is legal work, the licensing, the packaging, and the countries.
Then it has to be stored somewhere. And that is where the warehousing is. They pick the product off the shelf, and they charge you for that. Then they pack it. They charge you for that. And then they ship it. They charge you for that, and also for the storage inside that warehouse, the space that you occupy.
Then it goes to be sold. This is customer acquisition. This is where I play the game.
The last category of business is customer service. Not necessarily serving the customer, but returns, complaints, restocking, shipping, and handling multi-country orders.
That’s the big layout. When you’re looking at wanting to own your own business, you can step back and say, “Where do I want to play the game?”
For me, in particular, I chose sales and customer acquisition because of what I said in my last video, Side Hustles That Made Me a Millionaire, I mentioned a professor who made a statement that to make real money, you either have to own it or sell it.
At the time I couldn’t view myself owning a business. I felt as though that was for somebody a lot smarter than me. I just wanted to acquire customers. I didn’t know a thing about acquiring customers, but I still wanted to do that as opposed to being a business owner.
Customer Acquisition
What does Customer Acquisition entail? Well, you acquire customers and you service the customers. It has the highest margins with the most security. The person closest to the customer is the person who makes the most margin.
As an example, consider Walmart. They get the most margins compared to these other categories.
I want the highest margins and I want the most security.
I want you to think about something for a minute. A lot of people put a lot of emphasis on the CEO or the CFO or COO. But every bonus, every dividend that is paid out into a stock, every employee relies utterly on the sales acquisition team.
If you want security, don’t go work for a big company. Know how to get customers.
There will never be a business that doesn’t need to get customers. That is where you really start thinking about this concept: Where do I want to play the game?
And if I’m in any of the other categories of business, then I’m reliant upon the people who are getting customers and the raw material people digging stuff out of the ground.
When I’m in customer acquisition, I’m closest to the customer. That is where you have utter security. Because at the end of the day, that is who gives you a dollar. It’s the customer who gives the company a dollar that ends up being split up into the various different employees of the company.
I don’t want to do all of the other business categories. I choose to find a partner to manage all of these categories, so that I can just focus on this little part of acquiring customers.
Network marketing simple explanation
The Simplicity of What a Network Marketing Company Is All About
Here is the simplicity of what a network marketing company is all about: It is a partnership. Period.
That’s the first thing you have to look at. It really is. When you sign a partnership agreement, you’re choosing a company based on:
- the products
- the compensation that they offer
- their policies
- their procedures of doing business
- the culture
- the training
- countries that they’ve opened or are opening
- the life-cycle of the products
- and the life-cycle of the company.
That’s what you’re choosing. And you need to evaluate all of those.
Most people that I’ve witnessed, when they join a network marketing company, someone shares the business with them, and then they look at the product and they say, “You know what? I think I could sell that.”
That’s the limited amount of evaluation that goes on. It was no different with me. That’s the way that I first came into the business. I had no idea what the products were.
It just so happened that wanted to go to settlement on a house that I’d an offer on. And I needed some extra money for the settlement. So when I answered the ad and looked at the business opportunity I just said, “Yeah, sure. Why not?” I just happened to get lucky!
The company provides raw materials, manufacturing, branding, warehousing, shipping returns, and countries to do business in. That’s their job. You choose the company.
Now what’s your part of the partnership? You acquire customers.
You own your customers, and that’s a big deal. When you look out there and you see affiliate marketing like Amazon sellers, real estate, or insurance sales , they don’t own the customer. They are acquiring a customer for somebody else. And of course, the advantage to a network marketing company is that you own the customers that you acquire.
The other part of your partnership with a network marketing company is to acquire reps, if available.
The direct sales industry is an old industry. It started back in 1897 or something like that. Network marketing is a type of direct sales industry in which you’re able to get your own reps and train them. Your reps then also get all of the things that the network marketing company provides. You are on the upside of what you and your team build.
Comparable businesses like real estate, mortgage brokers, insurance agents, affiliate marketers, and Amazon sellers – they would be most comparable in terms of the daily activities.
And that’s it. That’s what a network marketing company is, in its simplicity.
How Do You Acquire Customers and Reps?
What is this business of acquiring? How does that happen? First of all, I’ll just tell you that a lot of people, when they first look at the idea of sales, feel some hesitation. I know what I had to go through; there was a lot of noise in my head.
Every time I asked a girl to dance and she said, “No,” that thought of being rejected went through my head. I wasn’t sure I wanted to get rejected if I went into sales. There were times when I had been manipulated to buy something, and I didn’t want to be like that and manipulate other people. I had a lot of that in my head.
Are You a “Born Salesman?”
There’s a phrase out there that people say: “born salespeople,” or “born salesman,” or “born sales lady.” Let’s look at this logically. Pretend that you go to a maternity ward. Look at the babies behind that window and try to figure out which one of them is going to be the next great salesman. They’re all screaming. They don’t even know English yet.
How can a salesman be “born?” Sales skills are not something you’re born with. Sales is something that you learn.
When I was in the Navy, the last thing in the world I wanted to do was sales. There could have been a billion jobs that I’d have taken, but sales would not have been one of them. I would never have chosen that.
There just happened to be one moment in time when I wanted to earn money. I was looking for how I could earn the most money without having to go through the long route, which would have been maybe a bachelor’s degree, maybe a master’s degree, and then climbing the ladder, all of that. I wanted to do it a little bit quicker.
I remember listening to someone speaking, who was making over $80,000 a month. He was a research chemist at NIH, and he was also in a network marketing company. As I listened to him I thought, “Wow, that’s amazing that he, with all of those credentials decides to come into network marketing.” And then I calculated in my head, what does $80,000 a month equal on an annual basis? A million bucks a year!
Why would I learn any more bombs? That’s what I was doing in the bomb squad at that time; I was diffusing bombs. We would get bombs and figure out how to diffuse them. So the thought that was running in my mind was, why would I be learning that, making a really low income when, if I could learn to do sales, I could get an income like that guy?
Here Is the Simple Sequence of How to Sell
I’m a bomb squad guy. To me, everything in our world is a sequence: first you do this, and then you do this, and then you do this. You don’t ever switch sequence.
It’s the same with sales, and if you follow along with me, I’ll walk you through the sequence of steps to make a sale.
Anytime you’ve been a customer, something happened just before that. What happened before?
There was a presentation of some kind. You walk into the store, and you see the potato chips that you want to buy, then you buy them. Seeing that bag of chips is a presentation. If you go to a doctor’s office, the presentation was the doctor. If you go to an attorney’s office, the presentation was the attorney. If you went into The Gap, you walked into that store and you saw the jeans. In every case, there had to be some kind of presentation.
Half of the time that I’ve ever made a sale, I followed up with the person first. Those who see the presentation can become a customer immediately, and sometimes you need to follow up with them because they have questions; they need to talk to their spouse, or they’re not quite ready yet.
Never have I ever been a customer or had a customer that didn’t see a presentation first, before buying.
Just before the presentation, there was an appointment. It might’ve been quick. You might’ve just walked into The Gap or whatever. But in a doctor’s office, an attorney’s office, sometimes in restaurants, you have to set an appointment.
Before the appointment, there had to be a contact with something. It could have been with the presentation, the store, or a person.
Before the contact, a lead had to be generated. Sometimes that’s a little bit difficult for somebody to understand, so I’ll explain that next. A lead is really simple when you look at it and think about it.
A store in a mall paid premium real estate price so they get walk-by traffic. It’s the same with a restaurant, most often. That’s how they generate leads. Everybody in every business is going to have to do this. They may not have to set an appointment.
Online, you click on an ad on Facebook and it takes you straight to the presentation. They put a follow-up series on where they’re re-targeting you as you go across the internet. That’s your follow-up.
Every business, every politician, every nonprofit, every school, every organization that wants to expand has to do this sequence. It is not an option. These are laws. It’s not an opinion. This is how any customer is acquired.
Never Force Someone to Buy
Now I’m going to tell you about how I feel about manipulation of a person who doesn’t want to buy. I’m never going to try to force someone to buy a product I offer.. That is what Tim never does. Never. Because that’s the icky feeling that you’re going to assume is when you push too hard.
I’ll give you an example from a very unlikely situation. I had this vision, this dream of the perfect girl. It started in the first grade. That’s where I got this idea, and I just knew she existed, but somehow I kept messing it up.
I would choose the wrong girl, or I was wrong for her. One time I really fell for a girl, and then she broke up with me and it tore me up. I was in the Navy at the time, and all my buddies said, “You need to get a life. Come on, come out with us,” and I said, “No, no, no.” It really bummed me out.
I remember at one point I didn’t even know if I could try. I’d failed so many times, and I thought, “I don’t even want to look at that, and I don’t want to do that.” But I also thought I had to look at something different because I didn’t want to keep creating that same situation.
Then I had this epiphany: I knew what color hair she would have, I knew what color eyes she would have, I knew what color fingernail polish she would wear. I knew everything about this dream. But I didn’t ever put on the list that she would want me as much as I wanted her.
That’s what was missing. That has to be at the top of the list. You don’t commit until you know that. That’s the way that I build.
This is my wife.
I met her when a friend brought her over to my house for a business thing. To make a long story very short, I contacted her again and I asked her to go out to dinner. I was the presentation, and she was the presentation. I followed up, I contacted her again. I set an appointment for a movie and dinner. It went well. I followed up again, and I just kept going back and forth for three years until I absolutely knew that she wanted it as much as I did.
How I Keep It Professional
There’s one very unprofessional thing that I see in the network marketing space, and that is that there are some network marketers who don’t have that same epiphany that I had – that the customer has to want the product as much as I do before they will buy it.
If I generate a lead and the person doesn’t answer my call, it’s done. If you’re going to lose, lose fast. It’s over.
I’m good with that because I don’t want to create additional failures. If I set an appointment and the person doesn’t show up for the presentation, that’s awesome. I now know where they stand. That lead gets moved over into a column over here called “not interested,” just like that.
If they see the presentation and they say they’ll think about it, I follow up. If they see the presentation and they say, “No, thank you,” then I don’t follow up.
If the presentation is a video and they don’t even respond back, I’m going to follow up just in case they didn’t watch it. I don’t worry if I communicate with them and they don’t reply. Maybe they’re on vacation or they are tied up at work or with a family situation, so I’ll continue to follow up.
But after seven times, I don’t anymore, and the person moves over into the “not interested” category. That’s the big thing that allows me to be very professional because my job is not to convince every lead. My job is to move that lead to contact, that contact to appointment, that appointment to presentation, or that contact to “not interested.”
I just move leads across the pipeline in a very professional way. I’m looking for the person who wants it as much as I do, because if I sponsor somebody who doesn’t want it, then I’m going to have to tug and drag them. I don’t want that kind of business partner.
That’s what I’m looking for: a business partner.
I’m going to explain this pipeline to them when we do the presentation. I’m going to say, “Network marketing is where you acquire customers.” I’m not going to tell them, “It’s not sales.” There’s no business in the world that doesn’t require sales, unless you want to be an assistant or a secretary, or you want to build something. But in the sales division, this is what we do: the pipeline.
Quantity Matters
You have to generate a quantity of leads to move across the pipeline. Quantity matters most. Quality will increase your conversions between each step of the pipeline. It’s the quality that increases conversion, but you cannot get quality at it unless you do a high enough quantity. That’s really the secret.
There are no born salespeople. Don’t believe that. You’re looking instead for somebody who is going to want it as much as you, and you’re only looking for that.
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