In my first post on this topic, we established the importance of creating positive cash flow if you are going succeed in your network marketing business. In that post we used the hypothetical illustration of Joe and Sally, who have just launched their new network marketing business endeavor. In our illustration, we took into account the expenses they would incur each month for things such as autoship orders, training materials, travel to company meetings and client contact meetings. We found that Joe and Sally needed $540 per month to operate their new network marketing business.
Continuing with our illustration, Joe and Sally need to create sufficient cash flow to cover this monthly expense or they will be forced to dip in to their own personal savings, or even worse, forced to take on debt. Today I want to share with you a widely underutilized strategy for creating positive cash flow for your network marketing business. This strategy is the simple addition of affiliate marketing to your network marketing lead generation process.
Let me explain how this tactic works.
Lets assume that Joe and Sally’s network marketing business is built around a company that markets nutritional supplements, and the core product is a $150/month full nutrition package. If we follow commonly stated statistics we would expect that five out of every 100 people that Joe and Sally present their product to are going to purchase. If Joe and Sally are making $75 per sale, they will need approximately 7 sales per month to cover their cash flow requirement of $540 per month. This will statistically require them to present their network marketing business to a minimum of 140 times each month, simply to break even. No wonder so many wash out so quickly.
Now let’s look at this same hypothetical with the addition of an affiliate marketing component to the network marketing business model. Joe and Sally do some research and they find a video series on the role of nutritional supplements in promoting overall health. This video series sells for $39.95, with 50% going to Joe and Sally. Joe and Sally also begin to market a healthy living cookbook that retails for $29.95 with 50% going to Joe and Sally. Joe and Sally’s marketing efforts bring 100 people per day to each of their affiliate pages, where they experience a 5% conversion rate. Here is what now happens to the cash flow in Joe and Sally’s network marketing business:
Video Series – $99.88/per day x 30 days = $2,996.25 per month
Cookbook – $74.88/per day x 30 days = $2,246.25 per month
Total affiliate marketing revenue = $5,242.50 per month
Even after subtracting the $540 per month for their network marketing business expenses, Joe and Sally now have a positive cash flow on their business of $4,702.50 that can be reinvested into their business, put away for savings, used for debt reduction or even to take that long awaited vacation. This whole amount was generated without one sale from their network marketing opportunity.
Here is the thing that really should get you excited. Joe and Sally have now also generated a marketing list of 300 people per month who are warm towards their niche and have already said yes to Joe and Sally. Joe and Sally now have placed these 300 people into their sales funnel and can begin presenting them with their primary network marketing business.
Cash flow can be a network marketing business killer, but making a simple addition to your business, can not only meet, but far exceed this need, giving you additional capital to work with as you build your network marketing business.
