So is there really a difference in MLM and Network Marketing? People in and out of the business use these terms interchangeably. The short answer is yes, there is a difference. So how did MLM and Network Marketing come to mean the same thing?
Definitions Of MLM And Network Marketing
The definition of Network Marketing is pretty simple. Marketing is done through a network. Wow. Pretty profound, right? You market your product or service through a network of friends and contacts. That’s really all there is to it. Would you encourage referrals? Of course. Might you pay someone for a referral if you make a sale? Sure. Nothing illegal, no scam, everything is above board. If you have ever been to a networking event or been a member of a networking group, you were a network marketer. Whether you were a successful network marketer is another question. Many people who market this way expect results very quickly. It doesn’t usually happen like that. Results are based on relationships. Trust takes time to build. The basis for this marketing model is the fact that people buy from people they know and trust. Any successful sales representative knows this as well as he knows his own address. So what about the MLM part of MLM and Network Marketing?
MLM stands for Multi-Level Marketing. This is where sand can get thrown into the gearbox. Although the number of legal and ethical MLM companies far outnumbers the number of MLM scam companies, it is the MLM scams that people hear about. MLM actually refers to the compensation plan. The marketing is done through a network, and people are paid under an MLM compensation plan. An MLM company will have several levels in its compensation plan. By reaching various sales and recruiting benchmarks you move up in level. Usually, your compensation percentage will increase as you move up. Although most MLM plans allow for upfront income from signing people up, the real wealth comes from residual income. Residual income comes from the sale of the company’s products or services. The most stable MLM businesses have many customers outside the company. Distributors can come and go, but good customers will tend to stay. This is what you need for long term, reliable residual income – good customers throughout your downline team. That is the difference in MLM and Network Marketing.
MLM and Network Marketing Pyramid Schemes
Many people’s opinion of MLM and Network Marketing is about the same. It doesn’t really matter what you call them. This brings us to the difference in ethical MLM and Network Marketing companies and a scam. The scam is probably a pyramid scheme. All business, MLM or not, is shaped like a pyramid. But a pyramid scheme is a multi-level company that does not offer a product or service. Or it could possibly be an MLM company whose products are so overpriced that only the members of the MLM will buy them so they can move up in level. Both of these models are illegal and are targets of government regulators. However, there are always more bad guys than good guys chasing them, so people do fall victim to these MLM and Network Marketing schemes.
Even though there is a difference in MLM and Network Marketing companies, most people use both terms to mean the same thing. Most Network Marketing companies have an MLM compensation plan. But not all of them. However, MLM and Network Marketing have come to mean the same thing through popular usage. Rather than being hard-headed, most of us will use the terms interchangeably. You can ride the wave or fight it. At least now you know the difference.
If you are in MLM and Network Marketing, you will need to market them correctly. The 21st century marketing model is Attraction Marketing. This targets qualified people who are interested and leaves the others alone. A top Attraction Marketing System can show you how to get the most out of your MLM and Network Marketing opportunity.
