Residual Income is the second of the three major components of network marketing.
Residual Income is the ability to get paid over and over for the work that you do only one time. It's also called royalty pay. There are very few businesses or industries today that pay residual income. Musicians, authors and insurance agents are a few professionals who do earn a residual income.
If you were to write or record a popular song, each time that song played on the radio or a CD was sold, you would receive a commission, or royalty payment. Conversely, should you choose to record a song written by another, you would pay them a royalty out of what you receive for each sale or play.
Residual income in network marketing is income you continue to earn based on efforts you put forth initially. This income is based on the sale of products and services. And these products must continue to generate repeat sales. This is one reason why "consumable" products are the most effective in network marketing. Consumable products are those items that are bought, used up and then replaced over and over again. If you are marketing a product that is a one time purchase product, you will have a harder time generating residual income.
Residual income is desirable in network marketing because this is what allows you to put forth a lot of effort in the beginning and reap the rewards of that for months and years to come! And by building an organization of people working toward a common goal, you can ensure a strong residual payout that will last for years. This is why it is important that you understand this pay advantage and invest your effort, energy and time in other people.
Earning residual income requires a few things—first that you take action to get momentum going in your organization. Second, you continue building on that momentum, and teach others to do the same. Finally, you learn and develop leadership skills that will provide the foundation that supports your entire organization.
Finally, we arrive at the System of Duplication, a concept that works on geometrical growth. Geometrical growth is a system of doubling as opposed to arithmetical growth which is a simple system of addition.
For example, if you start with a penny and double that the next day, you will have two cents; the next doubling will give you four cents, then eight cents, sixteen cents, thirty-two cents, and so on until Day 30 when you have $5,368,708! If you find this hard to believe, try it yourself with a calculator. This is the power of geometric growth and duplication.
Duplicating yourself means teaching someone else to do what you do. When the two of you each teach another person, you duplicate it again, only twice. And so on, and so on, and so on.
That's network marketing!
Combine the three strengths, and you've got a remarkable system for success that anyone can do if they choose.
Study these concepts and learn how to explain it. Then watch your business grow.