Why participate in a MLM or network marketing company then? The lure of joining a MLM has great appeal: It allows you to work part-time, gives you an opportunity to build residual income and you become a small business owner. MLMs have created many millionaires. Those who are successful testify that it is a result of hard work, continuous prospecting, motivating and training others.

The concept of MLM is simple. Instead of paying huge advertising sales and marketing costs to promote their products, MLM companies convert their loyal customers into a huge sales force. They rely on word-of-mouth to do marketing. The commission from savings on employing sales staff, advertisement and promotions is paid to you instead. It is a win-win situation for both company and MLMer.

If you decide to join one, please note that many MLMs require an initial investment. Before making such an investment, here are 10 tips on how to choose a good MLM program to promote:

1. Choose a program that you like or have some interest in. The best way to know if this is a program you wish to promote is whether you are interested in purchasing product for your own use. If so, chances will be that there will be others who will be interested in same program.

2. Look for a program that is of high quality. For instance, choose one that is associated with a top expert or many experts in particular industry.

The difference is best explained in terms of way compensation is structured to pay for performance. Because of many hybrid forms of compensation payments available now on internet, to a newbie scouting for business opportunities, it is easy to get confused over many terms and definitions used. In evaluating compensation plans, it is essential to understand subtle difference between two models. Ultimately, you want to understand…which model yields more income?

What is affiliate marketing? Affiliate marketing is usually done online. In its simplest form, affiliate marketers are compensated on a one time transaction only. Unlike products offered in a MLM business, affiliate products are often ones that a customer would only need to purchase one time. Thus, more affiliate marketer sell, more they make. This is quite akin to direct sales albeit made via internet.

Affiliate marketing has a compensation plan based on performance measures. For instance, if affiliate marketer is successful in form of sales, clicks, registrations, etc, he/she gets rewarded. The desired action as a means of compensation is already pre-agreed upon by affiliate merchant and him/her.

In a short space of time, affiliate marketing model has also evolved to a 2 level (or in some cases, up to 5 levels) compensation plan. In popular 2-tier version, for instance, you (as an affiliate of a particular e-book merchant) will earn commission when you sell a book to person A and if person A signs up to be an affiliate and manages to sell to person A1, you get compensated too, in addition to person A.

Let’s now go on to talk about what network marketing is. In network marketing model, compensation plan works in a similar fashion, except that compensation by sponsoring company can be paid up to several, several or unlimited levels. The number of levels and restrictions in terms of payout is very much dependent on arrangement offered. As arrangements can vary from one company to next, this makes comparisons of various compensation plans available out there difficult. So be sure to read all fine print!