You might not have heard of affiliate marketing or network marketing before. You might think that they’re similar because they’re both ways to promote products and services, but in reality, they are very different things. In this article, we will explain the differences between network marketing and affiliate marketing so you can choose the opportunity that is best for you.
Importantly, whether you choose to pursue one of these business models or follow another path entirely is up to you. These are simply explanations of what each business model offers so that you can make an informed decision about which direction feels right for you.
What is Network Marketing?
Network marketing, or multi-level marketing (MLM), refers to a business model where independent contractors sell a company’s products and services through a network of other independent contractors at lower rates. The person who recruits others into the company and is then paid based on the sales of their “downline” (their other recruits) is called an “independent contractor” or an “affiliate”.
The products or services sold by network marketers are typically related to some aspect of self-improvement. They may be things like health and beauty products, household cleaning products, or even financial services like insurance or pensions.
Network marketers earn commission from sales, and their business model relies on recruiting a large downline of independent contractors whom they then direct to sell the company’s products or services.
What is Affiliate Marketing?
Affiliate marketing refers to a type of internet marketing where you promote other people’s products via your website or social media accounts in exchange for a commission. You essentially become a middleman between a producer of a product or service and a consumer who wants to buy it.
The key difference between affiliate marketing and network marketing is that the middleman in affiliate marketing is an independent contractor, while in network marketing it is the company itself.
Affiliate marketing is a great business model for people who want to earn money passively because the work is done once and the income continues to roll in month after month with very little effort on your part.
Why Network Marketing Doesn’t Feel Right For Most People
Network marketing is a form of direct sales that relies on a company’s independent contractors to earn money by selling its products or services directly to consumers. In this model, the company itself does not sell to the end customer. Rather, independent contractors sell the product or service and earn a commission for each sale.
The problem with this model is that the company’s interests are not always aligned with their independent contractors’ interests. This can lead to problems that negatively impact the independent contractors’ relationship with the company, as well as their customer relationships.
There are two particular issues that arise in most network marketing companies.
The first is a lack of training. Network marketing companies rely on their independent contractors to generate leads and sales, and to do this, they need training and support. However, many network marketing companies spend more time and resources on recruiting new affiliates than they do on training their current ones.
This means that new contractors may struggle to learn how to sell, while experienced contractors may feel frustrated by the lack of resources available to help them succeed. This lack of support can erode contractors’ confidence and lead to an increased number of sales that result in no payment. The second issue is a lack of transparency.
This can arise in many ways, but a common example is when an affiliate’s customer contacts the network marketing company for any reason, such as a question about the customer’s account, a request for a refund, or a complaint that their product is defective. In these situations, the customer contacts the network marketing company directly, expecting them to solve the problem.
However, if the company has no relationship with the customer, they have no incentive to help the customer and may not respond at all. This lack of transparency can undermine the contractor’s relationship with their customer and lead to long-term problems.
Why Affiliate Marketing Doesn’t Feel Right For Most People
Affiliate marketing is a relationship between a product or service provider and an independent contractor who promotes their products or services for a commission. A common example of an affiliate relationship is someone who earns a commission by promoting and selling books on Amazon.
Affiliates may be bloggers who write book reviews, post Amazon links on their site, and earn commissions when people buy these books. They may also be social media influencers who earn a commission when they post a product link on their Instagram page and people click through to buy the product.
Affiliate marketing is not without problems, however. For example, many affiliate marketers struggle to understand why their conversion rates are so low. The reason may be that their customers are not motivated to buy the product or service they are promoting.
Another challenge is that affiliate marketers are often evaluated based on their conversion rates and profitability, which can cause them to prioritize the quantity of sales they make over the quality of their relationships with customers.
The biggest difference between the both
Affiliate marketers make money by referring customers to other companies and receiving a commission for any sales their referrals generate. This is different from network marketing where your income is based on the sales of your downline (your other recruits).
Many people assume that these two models are the same, but they are actually very different. In network marketing, the company that you’re promoting is your customer. They buy your services or products and become your customer. In affiliate marketing, you are promoting other people’s products and services, but you are not their customer.
You are an independent contractor who does not have any kind of contractual relationship with the product’s owner.
Hopefully, this article has helped you understand the differences between network marketing and affiliate marketing and which one is right for you. Choosing the right business model is extremely important because it will impact the kind of work you do, the people you work with, and how much you earn.
You should choose the business model that appeals to you the most and feels right in your gut. Although they are very different things, there are certainly aspects of each business model that can be beneficial to someone who wants to work for themselves and earn money in the process.
There are benefits to both, but they are very different businesses. You will need to understand, at a fundamental level, how each business works before you can decide which one is right for you.