Affiliate Marketing vs MLM – What’s The Better Business Model?

affiliate marketing vs MLM

Each and every day more and more people are looking for ways to make money online.

Some people are just looking to supplement their income, while other people are looking to break away from their jobs and are focused on making a full time online income.

And in the pursuit of sourcing out legitimate ways of making money online, chances are you’ve been introduced to an MLM business opportunities. And quite possibly you’ve heard of making money online with Affiliate Marketing.

Which brings me to my post today. In one corner we have MLM business opportunities and in the other corner we have Affiliate Marketing. So, it’s affiliate marketing vs MLM.

So, which one is better? Which one should you use for making part-time or full-time money with?

The reality is, whichever business model you decide to use to make money online with, really makes no difference.

What’s important is you use what method you feel is best suited for you and your skill set. Just because one method is suited for one person does not mean it’s suited for another.

Because between the two, affiliate marketing or MLM it’s the person that fails. It’s not the business model.

Now what I’m about to share with you are my experiences with both MLM and affiliate marketing. And for me, out of the two, Affiliate Marketing is the business model that works for me.

Okay, let’s start with MLM…

So, What Is Multi-Level Marketing?

Multi-level marketing is a form of direct sales where you as the representative sell products to the end consumer. It’s also known as Network Marketing, Social Selling, Referral Marketing and Direct Marketing.

Now, MLM started in 1945 by the California Vitamin Company which became Nutrilite which is now owned by Amway and since then there have been all kinds of MLM companies representing all sorts of products. We’re talking hundreds and hundreds of MLM’s.

The MLM part comes from representatives (distributors) of the mlm company recruiting other people into their downline and training them to sell the company’s products and/or recruit others.

But here’s the thing. Yes, you can make money by just selling the product through retail sales.

But you’re not going to make life changing money doing just that. The real money to be made in MLM is in recruiting people into the business. That’s known as building your downline.

And by doing that you can now earn a commissions from each person that sells product or from the people they recruit into the business.

And as you climb the ranks within a company’s compensation plan you become eligible for whatever bonuses are at each rank with the compensation plan.

ow when it comes to MLM and the products they offer. These companies can operate in any market. However, the market that most people are familiar with is the Health and Wellness market.

Which includes everything from supplements to weight loss and everything in between. So you need to enjoy selling if you want any shot of success in MLM.

So, What’s The Success Rate In MLM?

When it comes to the success rate of people with MLM business opportunities, it’s not that great. In fact, it’s absolutely horrible. Yes, there are people that are very successful with MLM. But most people will see little to no success what-so-ever.

And I’m not just saying that. There have been many, many studies, and reports of how high the failure rate is in MLM.

In fact, a study done by Jon M. Taylor, MBA, Ph.D., Consumer Awareness Institute concluded that 99% of people that get involved with MLM will lose money.

Consumer Awareness Institute
Consumer Awareness Institute

Not only do the majority of people lose money. Many (most) people end up being in more debt after being involved with an MLM business. Then they were before they got involved with an MLM.

Another study done by the AARP, their report shows that two thirds of the people that it got involved with MLM said if they knew what they know now they would’ve never joined an MLM.

And it goes on further to say in their report that 62% of those people who did get involved with an MLM company, said they will never get involved with another MLM ever again.

And the top 3 reasons for leaving an MLM were:

  1. 39% of people found it uncomfortable (awkward) pitching to friends and family.
  2. 36% not making as much money as they were told (expected) they would make.
  3. 35% not liking to sell to people all the time.

So, Is MLM A Pyramid Scheme?

Because the MLM business model does have an element that pyramid schemes have they can be cast in the light of being a pyramid scheme. But NO, multilevel marketing as a business model is not a pyramid scheme.

You see with a pyramid scheme there is no real product being sold. Instead, the whole thing operates on constantly recruiting people into the scheme. And by doing that you make money.

There is no other way to make money other than recruiting people. Eventually the pyramid will collapse. With the majority of people losing money.

With an MLM business opportunity you have 2 ways of making money.

First is you can sell the products the company has. So, you get wholesale pricing for the products and you sell them at retail and the difference is your profit.

The second way is by building your downline and this is done by recruiting people into your business. But you can’t make money just by recruiting people like in a pyramid scheme.

As with all MLM compensation plans when you recruit people into your business you make yourself eligible for the bonuses that are within the companies MLM compensation plan.

Such as:

  • Fast start bonuses.
  • Team commissions.
  • Global pool sharing.
  • Check match, etc.

And these bonuses become available as you build your business and climb the ranks within the company’s compensation plan.

understanding mlm

Let’s take a look at what’s involved when it comes to building a business with an MLM company.

The Sales Pitch

If you talk to anyone who was in an MLM company, they got involved because they got pitched on the idea of being able to make life changing money by building a sustainable business with that MLM company.

And more often than not they were told they don’t have to sell any products if they don’t want to. All they need to do is recruit people into the company. And people love hearing that because most people hate to sell. I know I do.

Because pitching the idea of building a business is far easier to do, then selling products, right?

Wrong? You’re still selling, you’re selling the idea of building a business.

Recruiting

In order climb the ranks and be eligible for the bonuses within an MLM’s compensation plan you’re going to need to recruit people into your business (downline). And this is something that you’ll constantly have to do.

And that’s because over 50% of the people you recruit will quit within the first year. (Source jobsinmarketing – section 15)

So, that means each and every day you’re constantly selling people on the idea of joining your team and build a business with whatever MLM company you’re with.

Let me ask you a question and be honest with yourself.

Does the thought of having to constantly be recruiting and selling people on the idea of joining your business sound like a fun way of making money online?

Does this sound like a fun way of building a business?

If you’re like most people it’s not.

But if you get involved with any MLM that’s what you’re going to have to do.

And if you do start with an MLM, the first people they tell you to approach are your…

friends and family

Why?

Because this is known as your warm market. These are people that you know and have a relationship with so approaching them with your business opportunity is going to be a little less stressful and awkward.

But you’ll find like most people, you’re not going to get a warm reception from your friends or family regarding your business opportunity.

Like most people you’re going to be told by your friends and family that they don’t want to get involved in a scam. Because that’s the perception most people have about MLM companies.

And now that you’re done pitching to your friends and family. You now have to go into what’s called the “cold market” and start pitching your business opportunity to people that have no clue who you are. And now building your business has just become 10 times harder.

And I’m speaking from experience.

I got lured into the MLM company Melaleuca. And it happened because I was told what I wanted to hear. And that was how easy it will be to build a business and make all my financial dreams come true.

And it sounded so good I jumped on it. And the first thing my sponsor told me to do to build my business was to approach my friends and family, so that’s what I did.

Well after I pissed off all my friends and family, and then after working in a cold market for just over a year trying to build my team. It became clear that this team building MLM thing was not for me.

Everyday trying to convince people to join my business was not fun at all. I hated it.

The So-Called One Of A Kind Magic Products

Like most people I fell for their sales pitch when it came to their products. They made them sound like they had these secret formulas that made their product better.

But the truth is their products are no better then what you can find at your local grocery or health food store. The only difference with products that come from MLM companies is they’re just more expensive.

And they have to be. And that’s because they need that extra mark up so they can payout on their compensation plans.

Often Required To Buy Products

If you to think of the costs when it comes to joining an MLM. First there is typically a registration fee. And then there’s usually a starter kit fee. And this starter kit is usually a bundle of products from the MLM company.

Now the registration fee and the starter kit fees can vary but in most cases it’s not uncommon that you’re going to have to spend over $100 or more just to get set up.

But it doesn’t stop there.

As a partner of an MLM company you have to sell or buy a certain amount of product each month in order to be eligible for your monthly commissions and/or bonuses. (though not always).

You may have seen or heard the term “PV”? That stands for Personal Volume. And it’s this minimum personal volume that’s required each month to keep you qualified.

And that qualification makes you eligible to earn commissions. And if you haven’t sold enough product to qualify. You’ll end up doing what many distributors end up doing. And that’s buy products so you meet your qualifying PV (personal volume) for the month.

Now one way of being sure you’re always eligible for commissions the company or your recruiter recommends you should place yourself on a monthly auto shipment of products so you never miss being qualified.

And for doing so, in many cases, you will also get a discount. That’s the other incentive for being on auto shipment.

So now being on autoship every month you’re going to be charged on your credit card X amount of dollars. And for me when I was with Melaleuca that auto shipment cost me just under $150 per month.

And it made no difference if I needed or wanted the products. If I wanted to be eligible for my commissions and bonuses, I had to meet my monthly minimum personal volume requirement. Auto shipment or not.

Now autoship is a non-issue if you’re selling enough product each month to meet your minimum monthly quota. But the reality is the majority of people don’t meet the minimum quota each month.

Hidden Truth…

By the company setting a certain level of products to be purchased by everyone within the company. The company is guaranteeing they’re always making money. Auto shipments are a guaranteed income stream for the company.

First and foremost, you’re a customer of the company, then a representative of the company.

And when it comes to buying these products, do they care if you need them or can afford them? Absolutely not, they could care less. This is a business, and they are in the business to make money for the company.

And because of this auto shipment program where you’re buying products every month so you’re “eligible” for your commissions and bonuses.

People start getting into debt because the majority of people in MLM are not making the money needed to cover the costs of their auto shipment.

So, they stick with the company longer thinking that they can get this business growing and cover the cost of the auto shipment payments, as well as make the money back for the products they’ve already bought.

But more often than not most people never get ahead and they just end up more and more in debt. It a vicious cycle.

It’s just like the gambler that keeps losing and figures if he keeps playing, he can make his money back and then actually make a profit.

You Don’t Own Your Business

When you become involved with any MLM you don’t own or have control of your business. All the assets you’re using to build your business are owned by the MLM company.

And because of that your business can be taken away from you. A MLM company can terminate your business.

Like most people no one reads the TOS (terms of service) of the company and I have not come across one MLM company that does not have a clause that says to some affect, they can withhold your commissions or worse terminate your relationship with them for any reason and at any time.

Not a fun position to be in is it?

And don’t think your company is rock solid and will be there for as long as you want to build your business, because no MLM company is rock solid. Well, no company is, MLM or not.

But my point is because you do not own your business you could wake up one morning and your business could be gone and there is not thing one you can do about it.

Gone how? The company can just shut down.

And don’t think this hasn’t happened. It’s happens more often than you think. 100’s of MLM companies have gone out of business.

Case in point, WildTree a MLM company that was in business for 23 years that provided affordable meal solutions. Sent out an email to all their distributors and told them they were shutting the doors at the end of July 2019.

wildtree

And with that one email they put hundreds of thousands of distributers out of business. Poof, overnight everyone’s business and income was gone.

And there was nothing anyone could do about it. Why would you want to put yourself in that position?

It makes no difference how you decide to make money online. You don’t want somebody else to be in control of your business.

You need to be in complete control of your business from day one. And with an MLM business you’re not!

Your Replicated Website

With many MLM programs you’re given a replicated (duplicate) website. And I’m sure who ever the sponsor is for whatever MLM company you’re thinking of joining is going to tell you this site is going to help you generate sales for you.

I can assure you that this cloned site is not going get ranked within the search engines nor generate a single visitor from Google to this site and help you get sales.

So, other than this site being a place for people to buy and sign up to whatever program you’re promoting. It’s totally useless when it comes to generating organic free website traffic.

To have any chance of getting organic traffic (customers/prospects) from the search engines you’re going have to build your own unique brandable website that you own that can be ranked within the SERPS.

And then the people that come to your website you can then direct to the replicated website you’ve been given where people can buy product and/or join your business.

Unfortunately, no MLM business shows you how build your own authority website.

You’re Relying On Other People

Because every MLM business model is based on recruiting people. This means that you’re relying on other people to help build your business and create your income.

And that’s the last thing you want to do. Simply because people are unreliable and many are not willing to do the work that’s required.

So, why would you want to put the fate of your business in the hands of unreliable and sometimes just plain lazy people?

Just because you may be built for this type business, not everyone you recruit will be. And that’s guaranteed.

Because it’s been proven over and over again, the majority of people are not built for MLM. That’s why you constantly have to be recruiting people. Because people will be quitting on you every day.

And when you’re not recruiting people, you’re going to be spending the rest of your time training people and trying to keep people motivated and sticking with the plan.

It’s not your job to keep people motivated 24/7. But that’s what you’re signing up for with the MLM business model.

Becoming a serial recruiter and cheerleader. No thanks, been there done that. And it sucked!

understanding affiliate marketing

Now if you’re not familiar with affiliate marketing and how it works. It’s very straight forward.

As an affiliate marketer you’re simply promoting other companies products or services and you make a commission from any sales of those products or services.

Now let me get this out of the way right now. You’re NOT a salesperson.

Here, let me explain.

As an affiliate marketer you’re going to be building your business around an interest, hobby, or passion you have. This is known as your niche. And a niche is simply a distinct segment of a market.

So, let’s say you really love gardening. You can create a full-time income from that passion by creating a website devoted to gardening.

So, for example. On your gardening site let’s say in one of your posts you talked about the must have gardening tools. And your top recommendation was this certain set of gardening tools.

So as an affiliate marketer you can have your affiliate link in your post to the supplier of that tool set where people can buy it.

And anyone that clicks on your link and buys this tool set, you’ll earn a commission.

Remember you’re NOT a salesperson. You’re simply sharing your passion of gardening and recommending products or services related to your passion/hobby.

Here’s what I earned in 2020 with just one affiliate program I’m associated with. And I never sold anything to anyone.

2020 commission payout

And there are tens of thousands of companies with millions of products that offer affiliate programs just itching to partner with you.

The bottom line is if there’s something you’re interested in making money with online. There’s a company with an affiliate program.

Simply put, it makes no difference what your hobby, passion or interest is. You can turn it into a full time income online if you’re willing to do the work.

What’s The Success Rate As An Affiliate Marketer?

When it comes to the success rate (earnings) of an affiliate marketer. Here’s the statistics:

  • 3.2% of affiliate marketers earn over $150,000 per year.
  • 48.36%, make less than $20,000 per year.
  • 35% earn more than $20,000 per year.
  • And out of the 35% of affiliate marketers that earn over $20,000 per year. 12% of those year over $75,000 per year.

Source: 99firms points 19 and 20.

Compared to MLM, the success rate is far greater using affiliate marketing as the business model.

Now even with a better opportunity to make money as an affiliate marketer. Just like MLM. It still comes down to YOU. And the effort you put into building your business.

I’ll say it again. It’s not the business model that fails. It’s the person that fails.

differences

It’s Free To Become An Affiliate For A Company

Becoming an affiliate for a company cost NOTHING. Simply fill out the application form, and you’re good to go.

No Inventory

As an affiliate marketer you don’t have to hold any inventory. You simply have links on your website going to the product owner’s website (company). And they take care of everything.

That includes the payments, shipping, customer service, refunds – everything!

You NEVER have to deal with any customers – EVER!! 

No Monthly Minimum Requirements

Unlike being in an MLM where you have to either sell or buy a minimum amount of product each month so you can be eligible to earn commissions.

You don’t have that requirement as an affiliate marketer. You’re not stuck under the thumb of an MLM regarding those types of idiotic qualifications.

Makes no difference if you sell 1 item or a 1000 items you get paid.

No Recruiting

Unlike an MLM where you have to recruit people in order to build your business. With affiliate marketing you NEVER have to recruit anyone to build your business.

This is your business and you don’t have to rely on other people to build it.

You Can Change Affiliates At Anytime

Unlike MLM you have no choice but to sell the products that company has. With affiliate marketing you can change affiliates at any time. In fact, you can change products within a matter of minutes.

So, let’s go back to the gardening example.

Let’s say you’re an Amazon affiliate and you’re recommending a product sold on Amazon. However, maybe you’ve come across a similar product that works better and sells for about the same price but this company is giving a higher commission.

If you wanted to change affiliates, all you need to do is join that affiliate program and replace the Amazon affiliate link with this new affiliate link and you’re done. The same thing can be done if a product gets discontinued by a company.

You could never do that with an MLM company. You can only sell what they offer and earn the commission they offer. You have ZERO flexibility.

You Control 100% Of Your Business

Unlike being in an MLM. You have 100% total control over your business. Which means you can never lose your business.

Unlike when you’re with an MLM, if they decide they want to change the compensation plan and the qualifications to earn bonus, they can. And there’s nothing you can do about that.

However, being an affiliate marketer if things change when it comes to your commission. You can simply change affiliates if you’re not happy.

Case in point.

Amazon has once again reduced their commission percentages. And many Amazon affiliates got pissed off because that really affected their income.

So, what did a lot of Amazon affiliate do? They simply found other affiliate programs and joined those. And their business never missed a beat and they ended up making more money to boot.

You could never do that with an MLM.

You Own 100% Of Your Assets

The biggest asset you own is going to be your own domain and if you’re building an email list. With an MLM you don’t own anything you’re using all of the assets of that MLM company.

But as an affiliate marketer you own everything. Which puts you in complete control of your business. No one can take anything away from you. Plus, if you want to sell your business you can. You can’t sell your MLM business.

Yes, you will be using other services to build your affiliate business. This could be an autoresponder service, hosting and so on.

But your business will never be in jeopardy of being taken away from you, like it can be with an MLM.

Remember WildTree? Your business can disappear overnight. And there’s nothing you can do about it.

So, the reality is your MLM business is in jeopardy every single day because you have ZERO control over it.

No matter how you want to make money online. You need to be in 100% control of your business from day one.

You don’t want anyone to have any influence over your business and your financial future.

Zero Start Up Cost And Very Low Monthly Overhead

Unlike MLM where it can cost you hundreds of dollars or more to get your business up and running and hundreds of dollars per month to run it.

With affiliate marketing. You can get you whole business, website included, up and running for free. And then you can operate your business for less than $50 per month.

Promote Anything You Want

Unlike MLM where you’re forced to sell whatever products the company has.

With affiliate marketing you can promote any product or service that you like and believe in, that’s related to your personal niche.

pros and cons

Multilevel Marketing

Pros:

  • You can make money right away (within 30 days).
  • Team environment.
  • Easy to start.
  • Earn money from the work of others.

Cons:

  • Startup can be costly ($100’s or more).
  • Recruitment required to build your business.
  • Do not own or control 100% of your business.
  • Limited to only selling company products.
  • Limited flexibility.
  • Must meet monthly sales quotas to be eligible for commissions.
  • Overpriced products.

Affiliate Marketing

Pros:

  • Free to become an affiliate for a company.
  • Can start your business for free.
  • No monthly sales quotas required in order to earn commissions.
  • You own and control 100% of your business.
  • Your business is not in jeopardy of being taken away from you.
  • You never have to recruit anyone to build your business.
  • You do not have to become a salesperson.
  • Complete flexibility with your business.
  • You can marketing anything you want.

Cons:

  • No control over the products prices or quality.
  • You have no control over affiliate programs.
  • Can take many months or longer before seeing any income.
  • You’re working on your own (no team, must be self-motivated).

My Final Thoughts

Here’s the bottom line. When it comes to either business model when all is said and done you have to do what you feel best works for you.

And for me, after busting my ass for just over a year with MLM it just didn’t work for me. So, I quit.

And that’s the best thing that ever happened to me. Honestly, I wish I had quit sooner. But hey, live and learn right?

Now things did not change for me right away. I spent a long time trying different ways of making money online. And yep, I got scammed more times than I care to admit. Again, live and learn.

Then I met my mentor. A man named Corey Rudl and he changed my life forever. He was my first true and honest mentor when it came to teaching me how to build a thriving online business using affiliate marketing as the business model.

He was a pioneer in online marketing and many of the most successful marketers that are online today followed his training.

For the next 18 months after meeting Corey, I was under his guidance learning all that I could from him. I was very lucky.

And within 2 months after meeting Corey I made my first commission check. It was $319.11. And 16 months after getting my first commissions check I was earning the full time income as an affiliate marketer. That was back in 2005 and that’s the same year I quit my job and I’ve never looked back.

Sadly, Cory is gone now, he passed away in 2005. I will always be grateful for everything he did for me.

Now of course I have no idea where you are with your online business. Maybe you’re in an MLM and it’s not going as you were told it would go. Or maybe you’re still looking for a way to build a thriving online homebased business?

Either way what I’ve shared with you is my story and my experiences with both MLM and affiliate marketing.

Obviously affiliate marketing was and still is my path for making money online.

But will it be yours? I have no idea.

But what I do know for sure is more and more people that have been involved with MLM or are struggling in MLM are switching to affiliate marketing.

And they’re making that switch because they see all the advantages affiliate marketing has over MLM.

Now if you want to learn more about affiliate marketing and how you will go about building your business. You have access to and in my opinion the #1 resource that can teach how to build a thriving online affiliate marketing business.

And that resource is Wealthy Affiliate.

Since 2005 they’ve been providing people with all the training, resources, tools, and personal one-on-one support using the most up to date, state of the art online training platform available.

In fact, it’s wealthy affiliate that has taken my affiliate marketing business to the next level and has helped me grow my business into a multiple 6-figure a year income.

Now the great thing is you can see everything wealthy affiliate has to offer you, absolutely free.

And once you’ve seen what over 2.2 million people (and growing) are taking advantage of. You can make a clear and informed decision as to whether or not wealthy affiliate and affiliate marketing is the path for you.

If it is – that’s fantastic!! And I will personally be there for you on every step of your business building journey. Just like Corey was for me.

And if it’s not, that fine too. You can simple walk away and I wish you nothing but success and happiness no matter what path you take for making money online.

I hope you found this information helpful. If so, feel free to share it with your audience, and if you have any questions or comments, please leave them below.

And as always if you need a hand with anything you can email me anytime.

I believe in you!!
Leo

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