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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 torepparttar business. Such a program is free to participate in as an affiliate. If you bring in sales, you will receive income fromrepparttar 102417 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 ofrepparttar 102418 company to drum up business. Althoughrepparttar 102419 offline world of MLM has programs with varying reputations and degrees of success,repparttar 102420 online MLM industry is reputed to consist mostly of scams. If you introduce someone torepparttar 102421 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 onrepparttar 102422 number of levels inrepparttar 102423 program, you may also earn money when one of your referred sellers introduces a new seller torepparttar 102424 program.

Sounds pretty clear, right? Time to add another layer of complexity. A 2-tier program rewards you for customers you attract andrepparttar 102425 customers that are attracted by any seller you directly refer torepparttar 102426 program. If based onrepparttar 102427 definitions above, you're thinking that a 2-tier program sounds like an MLM with 2 levels, you're absolutely right. Unfortunately,repparttar 102428 definition of MLM with which we're working doesn't tellrepparttar 102429 whole story.

What is MLM really? Much ofrepparttar 102430 negative reputation that both online and offline MLM programs have earned can be attributed torepparttar 102431 fact that most require a fee to participate inrepparttar 102432 program. The fee may be one-time or (more commonly) ongoing, but to participate inrepparttar 102433 program you must pay this fee regardless of whether or not you earn any money. Sincerepparttar 102434 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 inrepparttar 102435 attempt.

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