Categorized | Affiliate Marketing

Network Marketing and Affiliate Programs

These are two terms that are floating around and I sometimes get asked what is the difference between the two. The answer is simple in one way and yet complex when we start looking into the details. One of the confessions arises because some MLM companies try and escape from the "MLM" stigma and start calling themselves something else. Some call themselves "referral networks" or "direct sales" and call their enrollments "affiliates". Sometimes the term "direct selling" is used for both MLM and Affiliate programs. So what is the difference and is there any synergy that can be created between the two?

Most network marketing companies have a compensation program where the majority of the potential income will be attained by building a large network of associates. You then earn "overrides" on the activities of your team, which invariably becomes more lucrative than the money you make from selling the products or services yourself. These "overrides" produce the awful income that many big MLM'ers enjoy and often come in several ways. It is not uncommon that an MLM company gives you 5 -7 ways to earn income, only one of which is your sale of the products themselves.

In a true Affiliate Program you make money only from the direct product sales you make and not from any "downline" activity. In fact most affiliate programs do not allow a downline and if they do it is often no more than two levels. The responsibilities you make from your product sales may be as high as 75% so if you create a good volume it can be very lucrative. The types of products you see being sold through these programs are often eBooks and other forms of "information". Here the margins can be high as the cost of the product is virtually zero. Downloadable software is also often sold through Affiliate programs for the same reason.

Nowadays, Affiliate Programs are very broad and are being used by even the larger, well-known corporations to extend their sales reach. Google, Amazon.com, Wal-Mart, Best Buy and many more all have Affiliate programs where you can earn commissions just by selling their products online. In fact when you visit any of the major retailers' website, scroll down to the bottom of the page and you will be sure to find an "Affiliate" link somewhere.

This is a very convenient way these companies can tap into the strength of word-of-mouth advertising without actually running an MLM organization. In fact in this economic environment many of these retailers are finding this to be a much more effective way of distribution than the costs of a local store, distributed inventory and local personnel. The advantages can be clearly seen by comparing the price of a popular LCD TV on Amazon.com compared to the store price at Best Buy. It is often 15 – 20% cheaper. Amazon is not having the carry the same overhead as Best Buy.

During my research it became clear there is an advantageous connection between being involved in an MLM company and also being an Affiliate in others. As people join an MLM company they are going to need certain things to start their new business. Anything from computers to training to domain name registration, websites and business cards can all be offered through Affiliate programs. So if I sign you up for my MLM deal I will give you all my affiliate links to purchase these items you will need anyway. Now I can create an instant income long before you do (or do not) get active in the MLM Company. This is what the smart recruiters are doing. They then use this additional income to help promote their main MLM products.

This is one of the reasons I preach that getting involved with any MLM venture requires a strategic plan and careful preparation. I believe this plan should include getting involved with several, complementary products and / or MLM companies together with a whole list of Affiliate programs that are relevant to those businesses.

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