Affiliate Marketing Versus Network Marketing (MLM): Income formula Revealed! - Let's now go...
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Let’s now go on to talk about what network marketing is. In the network marketing model, the compensation plan works in a similar fashion, except that compensation by the 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 the arrangement offered. As arrangements can vary from one company to the next, this makes comparisons of the various compensation plans available out there difficult. So be sure to read all the fine print!
At any level, a network marketer has the potential to earn a direct referral fee for directly recommending someone and a leverage fee when one of his/her “downlines” is successful for referring friends to the same network. In the popular binary plan adopted by many network marketing companies, each person in the network has two “legs” or “downlines”. If more people get referred to the network, they automatically go below the “legs”.
Ongoing customer use is what creates the real residual income in network marketing. The MLM business can generate earnings for a very long time even after the initial years of hard work and investment. With a solid network, residual income is assured at each renewal period of a “downline”. If the product or service involved in is one that has to be reordered at each renewal period, income should just keep coming in like clock work.
How does the difference in affiliate marketing and network marketing translate into in terms of building your customer relationships and your earnings power? In the network marketing model, to ensure that your “downlines” renew at each period, you must ensure that you build up a good relationship with them. It is essentially a people-build-people and a leader-build-leader business.
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