There are thousands of different legit ways to make money online. You want to be 100% sure that the business model you enter is a legit way to make money online. Many people confuse Affiliate Marketing with Multilevel Marketing (MLM). Affiliate Marketing is entirely different from MLM.
MLM businesses have been in existence for a very long time. My mother has been a part-time MLM marketer for a beauty product basically my whole life and she has made money with it.
Also consider your expectations, the risk of possible loss or failure. The lower your cost of entry and the cost of failure the lower the risk.
How exactly does MLM businesses operate and what is the difference between MLM and Affiliate Marketing?
The scope online
Traditional marketing efforts are not sufficient anymore to grow a business. Businesses need to be active in the places where their market is active. With audiences being constantly online there is a shift of businesses to also operate in that sphere.
It is definitely possible for MLM’s that are invoved in direct selling to promote their products to the public online with various platforms like
- Social media
- and video
Affiliate Marketing comparison to MLM’s main promotional efforts are focused online. This offers large scope because a much bigger marketplace is available online for entrepreneurs.
How do MLM's work?
Multilevel Marketing is also referred to as “network marketing” or “direct selling”.
A legitimate MLM business is where a business follows a strategy whereby it recruits independent sales people to distribute the company’s product directly to consumers in the community. These non-salaried sales people earn commission on their direct sale of products to the public. These products are mostly sold by word-of-mouth or direct sales.
Commission is also earned on the sales of people they recruit to sell . A layer of commission is then earned as you earn a percentage of the commission “down the line” from sales of the people you have recruited. The people higher up in the pyramid earn the most of the commission.
How do you start an MLM business?
In most cases MLM’s starts with by buying a “starter kit” from an existing member. You can only become a member by buying these products. You then register as a seller.
You generate sales and income from orders that are placed by you. As a distributor you are encouraged to recruit as many other sales people as possible. This is achieved by giving you a percentage of the commission from the sales of the sales people you have recruited. In theory you can earn sufficient commission from your recruits without having to sell the product.
In many cases you need to sell a certain quantity of products or recruit a certain amount of successful sellers. If this is not achieved you can lose your status as a re-seller.
Some MLM’s also work on a point systems where you earn a certain amount of points dependending on how many sales people you have recruited, which is then converted into a commission amount.
Is MLM a pyramid scheme?
Almost any product can be sold with Multilevel Marketing and there are some really good legitimate MLM businesses that delivers quality products or services to consumers.
It may be a pyramid scheme or it may not. According to the USA Federal Trade Commission (FTC) some Multilevel Marketing are not legitimite when it is a pyramid scheme. The FTC define a pyramid scheme as
To distinguish between a legitimate Multilevel Marketing business and pyramid scheme is to apply the test as to whether the plan’s rewards for recruiting new distributors is more than it is for selling products to the public.
Also consider other aspects such as:
- The product is more expensive than it should be;
- Unproven, unwarranted claims of making quick and easy money;
- The product is of low quality;
- High starter kits to get into the business;
- The company’s reputation for positive customer satisfaction;
- Training and seminars are more about motivating to recruit more hopefuls rather than the aspects and quality of the products;
- Sellers join or form groups with a hidden agenda to rather recruit more people into the business than selling the product;
- The business has been sued for deceptive business practices;
- People have already lost large amounts of money by investing into this “business”;
- Unclear and complicated system of earning commission;
- Continuous attempts to up-sell (upgrade) your commission level by your investment without any product delivered or real value being given.
Examples of MLM businesses
Here is a list of some of the most known MLM businesses. You might have been approached by someone selling products from some of these companies.
- Nu Skin
- Usborne Books
- Mary Kay
- Forever Living Products
- Juice Plus
- Tropic Skincare
- Utility Warehouse
- Nu Skin
- Color Me Direct
- Total Life Changes
- Beachbody Shakeology
What is Affiliate Marketing?
Wikipedia defines Affiliate Marketing as:
“Essentially affiliate marketing involves a merchant paying a commission to other online entities, known as affiliates, for referring new business to the merchant’s website. Affiliate marketing is performance-based, which means affiliates only get paid when their promotional efforts actually result in a transaction.”
Do you see the difference? Affiliate Marketing is not direct selling nor is it recruitment of sales people from whose efforts you will receive a commission.
Millions of companies embark on a strategy of partnering with individuals for referring readers or visitors to a business’s particular product or service and in return pays a commission on a successful sale.
This has become one of the most successful ways for individuals to earn an income online. Many large successful corporations has affiliate programs and has grown exponentially from the efforts of affiliate marketers.
It is a win-win solutions for many individuals and companies.
How do you start an Affiliate Marketing business
You start an Affiliate Marketing business by following these 5 steps
- You choose your niche of interest and opportunities
- You build a website with the goal to attract visitors to your website
- You build relevant content that provides information to your visitors
- Your visitors become customers when they buy the products you promote by using your affiliate links
- You earn commission from the retailer whose products you promote and you make money.
As you can see affiliate marketing is a totally legit way to make money online. Millions of companies trust affiliates to market their products online.
What distinguish Affiliate Marketing from MLM
The differences between Affiliate Marketing and MLM and why you might rather choose Affiliate Marketing over MLM as a legit way of making money online. Is laid out below:
Multilevel marketing (MLM)
There are legit ways to make money online. We have looked at two possible avenues you can follow with a MLM business or as an Affiliate Marketer. Both can work depending on your circumstances. There are definitely risks involved with a business where you mainly recruit people to sell underneath you.
In my opinion: if your business has a website, you have an online business. If your business has a Facebook page or Instagram profile or you promote your business via Email or Online Classifications you are then involved in a business online.
Are you aware of the vast opportunities online? and what you could achieve with your business if you know how to use the online space to leverage your efforts to make profit or extra income?
With the right method and the application of appropriate knowledge, a business can be promoted online resulting in much more revenue with lower input.
At the Wealthy Affiliate “University” there are plenty of people that make a living online. Those people post their achievements on a constant basis. You can be rest assured to know that the question of whether people make money online is true and well documented.
Then the most important question is: “how?” The “how?” requires a set of integrated, constant, knowledgeable activities. It is without doubt possible and there is definitely a recipe to follow with specific ingredients that ensures success online. A program like Wealthy Affiliate gives you the recipe and the answer to the “how”.
I, for one being in favor of simplicity, am regularly testing, trying and contemplating what the next move is with my ventures online.
To “make it online”, requires the right quantity, of the right ingredients to make that wonderful business tick like clockwork online. Simply put, you need the knowledge and then you need to start applying that knowledge.
Any experience with a MLM or an Affiliate business? I would love to hear your story, please comment below.
About Louis Munro
Louis is the founder of Infinite Affiliate Marketing. Louis is a qualified Chartered Accountant (SA) and an entrepreneur for more than 16 years. Louis is passionate about helping people to become successful online entrepreneurs.