The Difference
Let's look at a comparison between direct marketing and networking. The differences predominantly revolve around two issues. That is the methods of building the business, and secondly the philosophy that each follows.
The methods of direct marketing companies tend to be one of "party plan" with a consequent high emphasis on retailing products that are obtained from the company. Most of the training is therefore orientated around retailing and "closing the sale".
As a general rule, the predominant gender involved with this type of business is female. In general it could be said that it is an after-hours activity that tends to suit a wife who is not involved in a full-time job. Direct marketing is therefore, ideally suited for somebody who has the ability (because of the nature of either their employment or lack of it) to find 2 to 3 hours a day (or 5 to 10 hours a week), to do party plans in various homes.
Generally only a very small percentage of the population is comfortable with this type of approach (about 2% of people looking for a way of making additional income). The disadvantage of a business with a heavy retail emphasis is that it is predominantly an "active" income. This essentially means that if the person involved (retailer) does not continue to do what is required (selling), then their income will generally cease.
On the other hand, a person involved with networking is effectively involved with "time leverage".
Their emphasis is on teaching and training other networkers, which can establish a more "passive" (royalty) income. As well, the preference is on recruiting people. Thereby there is an enormous leveraging effect, which leads to a much higher income because it is not dependent on personal activity.
The philosophy of networking tends to be on a lower product volume per person, with higher personal consumption and perhaps only a few personal customers (generally a Mum & Dad, siblings and friends).
In general, there is usually a major difference in the method of recruitment. In direct marketing it tends to be recruitment through involvement with the products, with "one on one" (person to person) and word of mouth contact. Therefore developing a direct marketing business tends to be by personal invitation. It tends to be "party" presentations, which requires a large time commitment by the participant.
Networking uses methods, which are more technologically advanced. Some networking companies (or their distributor groups) use modern technologies to infiltrate the market place. These include audio-tapes, video's, books, 3 way telephone communication, web sites, CD ROM, etc. These tools are used for marketing to various members of the community, in order to explain the concept of networking and/or the variety of products that a particular company has to offer.
These methods are also used to train the members of the distributor network, so that they can be fully informed and confident to provide a proper franchising service, both to their own business, and also to the businesses of their associated franchisees. The advantage of this particular type of business, particularly when it uses these types of tools, is that it is possible to establish a long term, residual (and therefore passive) income.
It is unfortunate that the direct marketing industry has tainted the perceptions of the general community to the new and evolving reality of what now exists.
However, there is a very serious word of caution. Not all companies within the industry have good potential. You can run at a net loss, despite an enormous amount of effort, money and time being expended with an networking company. However, there are companies where you can develop an enormously successful and profitable business.
Careful evaluation is required
Therefore careful evaluation of:
- the company (to make sure it is structurally and financially sound),
- the product or products (to make sure that they are unique and worthwhile with a high acceptance rate - nothing less than a 50% re-ordering rate per distributor should be acceptable), and
- the compensation plan is required. In this regard it is essential, to verify incomes of distributors to insure that the compensation plan does work. Furthermore, careful analysis of any compensation plan needs to be undertaken because far too many companies do not fairly compensate distributors (at least 50% or more of the wholesale product price should be returned to the distributor).
Finally, proper due diligence should be done to ascertain whether groups of distributors in the industry make money from selling training tapes, and seminar tickets. This is unacceptable.
Any money made should be from the legitimate distribution of products from the parent company, not from selling tapes and seminar tickets for "training" purposes. People should check whether any profiteering from such a system is being made.
Join Swiftpages Now!
|
