Real Estate Brokerages Start Using Network Marketing Principles Part 1

February 8, 2010

Most people think ‘Amway’ or ‘pyramid scheme’ when they hear about network marketing or multi level marketing or direct selling.  Yet with the advent of the internet, the way direct selling is done in these businesses is fundamentally changing, adding more credibility to the entire industry.  Consequently, businesses with traditional, hierarchical structures are starting to see the benefits of adopting network marketing principles.   It makes a lot of sense to motivate everyone in your company (rather than just sales reps) to make more money for themselves for recognizing and assisting in closing sales opportunities.

One of the latest companies in the real estate business to recognize the value of network marketing principles is Exit Realty.  They’re now using network marketing principles for recruiting real estate professionals through the sales professionals they currently employ.

Direct sales is as old as the Avon lady.  A person becomes an independent sales rep for a product line and introduces it to their friends and family, helping them make a residual income that may eventually blossom into a full time endeavor.  Today, a growing number of MLM companies sell a very wide variety of products and services through individual, independent sales reps with very sophisticated selling tactics and compensation models.  Many of these companies enjoy revenues in the hundreds of millions (even billions) per year.  Network marketing has received strong endorsement from such real estate and business luminaries such as Donald Trump and Robert Kiyosaki.  Kiyosaki has written extensively on the advantages of having a network marketing business over being employed, self-employed or a business owner in his book Cashflow Quadrant.

Two things about direct selling have fundamentally changed since the Avon lady days.  First, the emphasis has shifted a focus on selling product toward recruiting new sales reps as well.  Sales reps try either selling the product or the business opportunity to prospects.  They stand to gain more by regularly recruiting successful sales reps than by just selling product.

The second change is the way products are sold in direct sales.  The traditional ways of direct selling are pitching your products to anyone who will listen.  This is really what’s given network marketing a bad name because these companies have taught its reps anyone and everyone is a good candidate for their products/services.  Obviously this isn’t true, and so about 90% of these people just make pests of themselves, lose friends and family, and leave the business with little or nothing to show for their efforts.

Filed under: Marketing Tips,Networking Tips

Tags: affiliates, branding, broker, broker of record, direct sales, downline, marketing, MLM, multi level marketing, network marketing, pyramid scheme, recruiting, sponsor, upline