One found most work at home or online business opportunities are some kind of network marketing or affiliate marketing. Some people associate both terms with multi level marketing, which has a bad reputation. The two terms are actually different: Networking marketing resembles more like mlm (multi level marketing) versus affiliate marketing is more like commission based sales. Some affiliate companies have levels, but they don’t exceed more than five layers. This article explains the differences between the two kinds of marketing.
Affiliate marketers of online business programs get their commission on each transaction. Customers usually make one time purchase. Thus affiliate marketer has to sell in volumes to make a profit. The compensation plan in affiliate marketing is usually based upon some performance benchmarks. The requirements for the affiliates include making sales, getting click throughs and registrations. There is a set compensation contract between the affiliate and the marketer.
Network marketers make a referral fee when they recommend somebody to join the sponsoring company. Sponsoring company may pay the network marketer from several to unlimited levels. However, the original agreement will outline the restrictions in the maximum amount of payment as well as the maximum number of levels the payout can reach. Agreement and contracts differ from one company to another. The compensation plan in network marketing is quite similar to affiliate marketing. Upline network marketers collect a leverage fee from his or her downlines when they refer their friends to join the network.
The main differences between affiliate marketing and network marketing are summarized below:
Layers: There are several layers or mountains of people and recruiters in a network marketing system. Each network marketer has two downlines. Then these two downlines have two downlines under them, and it can go on and on. Affiliate marketing usually does not have layers of compensation scheme, although some affiliate companies has layers up to five levels.
Effort: Affiliate marketers have to put in continuous effort to produce desired income. Network marketing usually requires more efforts initially, and one can build residual incomes from the network of the recruits, and work less as time passes.
People skill: The way network marketing work is by recruiting people and building downlines; therefore they need to have strong interpersonal and recruiting skills. Affiliate marketing is more an individual effort through different attempts.
Repeated Sales: Network marketers usually sell consumable products that result in repeated sales. Affiliate marketers usually market products that are needed one time only.
Ease of selling: It is more difficult to sell in a network marketing system because the existence of many layers and recruiters trying to sell the same thing. And the supply is usually outweighs the demand. As the layers start to increase, sales would go to stagnation. Affiliate marketers can diversify the business by selling multiple products and companies at the same time; that reduces of the risk of doing business with only one company. Affiliate sales could be sluggish in the beginning, but it could take off exponentially as a matter of time.
Hopefully this article helps to clear the cloud for the terms “Affiliate marketing” and “Network marketing.” There are people who are making a living doing either one or both at the same time. There is no way to get rich quick; Some efforts are required for any program. Above all one has to select a marketing company carefully and be sure to analyse all the compensation plans.