Making quick money has become the daily business in human life. Although money can’t buy everything, it can buy you many things. This is the reason why no matter how much money you earn, you will still have the urge of making more money. In the quest of getting extra income most of us have about various business models that aid in making extra income. Among these businesses are Network Marketing and Multi-Level Marketing. Most of us tend to confuse the two businesses. Here is a comprehensive analysis of the two businesses.
What is network marketing?
This is a type of business model where an independent agent serves as a distributor. In this business model, there is no intermediary or wholesalers who distribute the products and services. The manufacturer sells products directly to the customer without struggling to advertise or making a train of sales distribution force. The manufacturer can contact independent marketers at their own cost.
What is MLM?
This is a business model also known as referral marketing. In this model, products and services are being sold and offered through the use of sales personnel who get paid from the profit made from the sales. The distributors are allowed to get more distributors and manage them with a promise of getting a percentage of the recruiters’ sales profit. The distributors in MLM are allowed and encouraged to build a sales force of people who can promote the products.
Difference between Network Marketing and MLM
In the Multi-level marketing, the company sells products that are restocked regularly using the network marketing format where you are also paid regarding how many people you have recruited. In network marketing, you have to create a chain of representatives who sell the same products. Network marketing deals with multiple types of products both cheap and expensive.
Income in MLM is primarily generated from recruitment of people who can sell the products you are also selling. You will have to get a larger number of people under your chain for you to have a good income. The commissions are too small because of the type of the products being sold and the fact that you have to be paid from what your recruiters have sold. Network marketing compensation is based on a direct sales policy where you are compensated for what you sell. The commissions here are high because of the kind of products sold and a huge percentage of profit being shared.
Build up Timeline
MLM takes a lot of time to build up since it will need recruitment of more people to make the selling effective. In network marketing, however, the time take to build up will depend on the marketing strategies used and how fast the products are sold. It also depends on the goals set by the manufactures.
In MLM commissions given are always smaller than Network marketing. This is because they don’t focus too much on the number of the product you have sold but how many recruits have you brought on board. The actual percentage of the commission paid depends on the number of upline distributors. In network marketing, the distributors get the same percentage of commission calculated from their sales.
The number of people involved
Network marketing is a wider marketing structure than MLM. Network marketing has no limit on how many people can be on each level. It also has no limit on how many levels one can have. Therefore people here can be more successful than their recruiters.
Understanding the two can be confusing, and all it takes is massive research. If you want to make big from the two, ensure you carefully study the compensation plan before making a sign-up.
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