Network Marketing Business & The Power Of Networks
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If you are taking the time out of your very busy day to read this post chances are you are wondering what exactly is network marketing.
Network marketing is a modern professional distribution method of products or services through a network of independent entrepreneurs. Network marketing is one of the most rewarding home-based businesses’ you can start today.
Instead of spending tons of money on traditional forms of advertising such as TV, radio, magazines, billboards and so on, which can be hit or miss, network marketing allows parent companies to market their products directly to consumers, through relationships, through referrals, and direct selling. Many traditional businesses’ use this form of marketing today. Using this form of marketing allow these businesses’ to reach customers they might not otherwise when using traditional forms of marketing. The last thing any company wants to do is spend tons of money on traditional forms of advertising and not see the type of results they wanted from their advertising efforts. So rather than spending millions of dollars on traditional advertising, companies use this form of marketing called network marketing to market their products or services. This allows independent entrepreneurs who join their company to get paid handsomely to market their products or services.
Today there are thousands of network marketing companies operating all over the world. Network marketing is reported to be a $100 billion dollar industry, internationally, made up of FORTUNE 500 and New York Stock Exchange (NYSE) companies. According to the Direct Selling Association (DSA) over 13 million people in the U.S. alone are involved in network marketing.
While doing some reading from one of my favorite author’s books I came across a law called Metcalfe’s Law. When you apply this law to a network marketing business it explains the power of networks and the power of network marketing companies. Robert Metcalfe is one of the founders of 3Com, the company responsible for bringing you the PalmPilot. Metcalfe’s law states that the economic power of a business is the square of the number in the network. In terms of network marketing businesses’ this means that the number of people you have in your network squared equals the economic value of your network marketing business, and the higher your economic value the richer you become.
For example:
If you are the only one in your network marketing business then your economic value is 1, according to Metcalfe’s law.
1:12 = the economic value of 1
But as soon as you have two people in your network marketing business, the economic value of your business increases exponentially, not linearly. This means that if you have two people in your network marketing business your business’s economic value equals 4, not 2.
1:22 = the economic value of 4
When you build your network marketing business to ten people, the economic value of your business is 100, not 10.
1:102 = the economic value of 100
When you understand Metcalfe’s Law, the law of networks, you can see the power of network marketing and why network marketing companies offer such powerful tools to the average person.
For example:
Let’s say a person decides to join a network marketing company and learns how to build their business. When they join their leverage ratio and economic value is 1, since they are the only one in their network.
1:12 = the economic value of 1
Over time this person learns how to build their business and eventually grows their business to 5 people who will also be trained on how to build their own businesses’. Now the person’s leverage ratio and economic value is 25, and looks like this:
1:52 = the economic value of 25
As time goes on this person gets really good at building their business and training others how to build their own businesses’. This person has now grown their business to 10 people, and now has a leverage ratio and economic value of 100, which looks like this:
1:102 = the economic value of 100
Now lets say that this person has made up their mind that ten people is enough and decides to only concentrate and train the ten people in his network. Over time the ten people in his network also attract and train ten people which is a leverage ratio of 1:10:10. This means that the original person now has 100 people in their network with an economic value of 10,ooo:
1:1002 = the economic value of 10,000
In just a short time this person has drastically increased their economic value and is suddenly far wealthier and has a lot more money than their peers.
This example is why network marketing companies are recommended to people who are looking for financial freedom. Network marketing companies use Metcalfe’s law, which is the law that measures the power of networks.
If you follow the lessons taught by some network marketing companies, build a solid business with solid people in your network, and truly work hard to make those in your network rich, they in turn will make you very rich and secure. Network marketing businesses’ are secure businesses’ because you are counting on the people you have grown to love, trust, and those whom you have built a relationship with, and all of you are harnessing the power of Metcalfe’s law.
In closing I would like to say that the rich, wealthy, and powerful understand and use the power of networks. McDonald’s is a network of hamburger chains, General Motors is a network of car dealerships, Exxon is an oil company with a network of oil fields, tankers, pipelines, and gas stations linked throughout the world, Safeway is a network of food stores, CBS, NBC, ABC, CNN, PBS, CBN are all powerful communication networks. Networks are powerful forms of leverage. If you want to be rich, build a network and network with other networks. If the rich and the powerful use networks, shouldn’t you?
