How Does Network Marketing Work

So how does network marketing work?

On the face of it, Network Marketing is a very simple business model to understand and execute...

The Company

Let’s start with the Network Marketing Company itself… they buy in or manufacture a product or service and choose to market it through the medium of Network Marketing.

They create a Compensation Plan, legal framework and develop suitable systems and marketing collateral for its future Distributor base.

They set up a Distribution Channel and invite people to join them as Independent Distributors to market those goods and services across and throughout their sphere of influence.

The Distributor

People like you and I see adverts from a Company and make a decision to join as Distributors. We sign up online and sometimes purchase a Business Kit.

We buy a small amount of product from that which is available and consume it within the month (this is part of the qualification process to earn money); then continuing for as long as we/they remain distributors, often replenishing via a process of Autoship.


(Did you know that Autoship must always be optional and not a condition to qualify for bonuses, as this is illegal?).

Recruiting and Sponsoring

Finally, we follow the Training provided by the Home office or an Upline sponsor (often making lists of prospect's to consider) and then we begin to promote our chosen solution to Retail Customers and other prospective Distributors who we think might want to use or consume those goods and services.

As befits a global Industry and every other business model, the motivation for Distributors and other end user Retail Consumers buying product must always be one that is product benefit-centric as opposed to a motivation that pays lip service to sales i.e. the buying of unnecessary or unused products simply to satisfy a requirement in order to earn an income for themselves or uplines. (After all, who would do this in a real business!).

Product Delivery and Consumption

Today, there is no need to hold stock as most Companies deliver direct, however one might wish to hold samples to offer to prospects.

Over time, the goods and services consumed by many individuals provide benefits to each and all of those Distributors, e.g. an improvement in health or well-being and it is this is noticed or explained in meetings or parties or via the internet to other interested parties at both the micro and macro level.

Make Money

When retail sales are made to non-Distributors or to a personally signed Distributor or to someone in their downline, revenue is generated; and if compensation plan qualification requirements are achieved then income is earned.

It’s this process that continues up and down and across the breadth of Distributor organisations the World over as each person sponsors other people and sells to customers just as their compensation plan describes.

Of course, it doesn't always go to plan and it does have its challenges. These challenges often make people question whether or not network marketing is legal. Is network marketing legal >>> we discuss here.