The terms network marketing and multi-level marketing are often used interchangeably, but there are distinct differences between the two business models.
Network marketing, sometimes referred to as direct sales, does away with the middleman. The manufacturer markets products directly to the consumer by using independent distributors to promote its products at the distributor’s own expense.
Multi-level marketing, also known as MLM, is network marketing on steroids. It works the same way, but the independent distributors are encouraged to build their own sales force of people who will also promote the products.
Multi-level marketing is the best business model for individuals who want to achieve financial freedom and a better quality of life with the lowest financial investment.
Remember, in network marketing you get paid every time someone you refer to the company becomes a customer. The MLM companies take this concept further. You not only get paid when you personally refer a customer, but you are also paid when that customer refers a customer, and when that customer refers a customer, etc.
How many levels down you get paid depends on the individual MLM company and its overall compensation plan.
In a real sense, with MLM companies, you are allowed – no, rather, you are encouraged – to build your own sales force and then teach and help them to do the same.
If you believe the old adage that it is better to be paid a percentage from hundreds of individuals, rather than just being paid 100% from your own efforts, you will understand the power of MLM companies.