Understanding Network Marketing: The 3 Types of Systems
If you’ve ever heard of Avon, LuLaRoe, Amway, Mary Kay, or Tupperware, you’re familiar with multi-level marketing companies, also known as network marketing. Despite the negative connotation surrounding network marketing, comparing it to pyramid schemes (it can be difficult to differentiate, although they are not the same), it is actually a highly lucrative career path in a multi-billion dollar industry. In difficult economic times, many people choose to pursue network marketing and partner up with an affiliate company to become their own bosses, work on their own time, and sell a product they resonate with. For many successful network marketers, it can become a full-time job matched with a high salary.
At its core, network marketing is a form of sales or lead generation. The goal is to sell a product or service and recruit others to work under you, who sell the same product or service. New marketers start out by connecting with people in their immediate networks, but over time, it’s possible to branch out and connect with people around the country or even around the world. Successful network marketers, like Toni Vans, become globally connected, growing their network far beyond their immediate personal networks.
Network marketers are compensated by the affiliate company whenever they make a sale or when their recruit makes a sale. Similar practices are used by many companies that aren’t considered multi-level marketing (MLM) companies – if you’ve ever received a referral bonus for getting a friend to sign up for a service, you are probably familiar with this concept.
Network marketing companies work with uplines and downlines. An upline consists of anyone working above you, including the person who recruited you and the owners of the company. A downline is anyone beneath you who you have personally recruited. The difference between an MLM company and a ponzi/pyramid scheme is that a pyramid scheme will only benefit the uplines, not the downlines. Furthermore, the products that are sold to marketers are useless, overpriced, and often dangerous to your health, whereas MLM company products are not overpriced, are widely used and are safe.
There are three types of network marketing systems that you should learn if you are interested in joining an affiliate company.
- Single-tier
Single-tier network marketing is the simplest system. You sign up with an affiliate program to sell a product or service and are not required to recruit anyone to work beneath you. You only get paid if you make a sale or, in the case of online affiliate programs, for traffic you refer to their website. The earnings at this level are minimal and solely dependent on how well you can sell.
- Two-tier
In a two-tier network marketing system, you sign up with the affiliate program and recruit others to sell and recruit under you to create a maximum of two downlines. You are paid for any direct sales or traffic referred to their website as well as whenever anyone recruited by you makes a sale or traffic referral.
- Multi-tier or multi-level
Multi-level marketing is any network marketing system that runs three or more tiers deep. You can recruit as many people as you like to work under you, creating an unlimited number of downlines. This is the most lucrative kind of network marketing system with an unlimited earning potential.
