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| | Is a 2-Tier Program Affiliate or MLM?Written by Clay Mabbitt
What is an affiliate program? An affiliate program pays a sales-based commission to participants when they attract paying customers to business. Such a program is free to participate in as an affiliate. If you bring in sales, you will receive income from program. If you fail to bring in sales, you have only lost whatever money you may have spent in your unsuccessful marketing attempts. What is MLM (Multi-Level Marketing)? Multi-level marketing (also known as network marketing) programs operate on a similar principle of paying people who are not traditional employees of company to drum up business. Although offline world of MLM has programs with varying reputations and degrees of success, online MLM industry is reputed to consist mostly of scams. If you introduce someone to business as a seller (as opposed to a customer) you can earn money either directly for referring them or indirectly as commissions for sales that they make. Depending on number of levels in program, you may also earn money when one of your referred sellers introduces a new seller to program. Sounds pretty clear, right? Time to add another layer of complexity. A 2-tier program rewards you for customers you attract and customers that are attracted by any seller you directly refer to program. If based on definitions above, you're thinking that a 2-tier program sounds like an MLM with 2 levels, you're absolutely right. Unfortunately, definition of MLM with which we're working doesn't tell whole story. What is MLM really? Much of negative reputation that both online and offline MLM programs have earned can be attributed to fact that most require a fee to participate in program. The fee may be one-time or (more commonly) ongoing, but to participate in program you must pay this fee regardless of whether or not you earn any money. Since vast majority of people who participate in these programs never see a profit, someone pursuing this type of marketing can and usually does actually lose money in attempt.
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