Network Marketing vs. MLM

If you are new to the home-based business industry, or maybe even a more mature entrepreneur, one of the questions you might be asking yourself is: « Are Network Marketing and Multi-Level-Marketing the same thing or what? » I know that was one of my first questions when I started almost 20 years ago, and now I wondered about the evolution of the answer to it.

So I re-did the research and was actually surprised by what I found. There seemed to be more confusion now than several years ago. And the basic definitions appeared to have changed quite a bit. I cannot be certain of the reason for it, but my guess is that in the business world, we like to simplify things in order to make owning a business more accessible. But in this case, I find we went a little overboard.

Although opinions on this subject are very divergent, there seems to be more supporters of the theory that Network Marketing and Multi-Level-Marketing are exactly the same thing. As far as I can remember, this is the first time I disagree with the opinion found on a great site: Wikipedia. And here’s why.

I compared the Wikipedia definitions of Network Marketing and of MLM from 2009 and 2013. The older version stated that they were different, whereas the current version fused both concepts into one. I think we simply forgot where these two business terms came from in the first place. Allow me to present to you my humble opinion on the subject.

I believe Network Marketing is a marketing method. Among all that exist, this one works exactly like its name suggests. A person or a company chooses to «market», meaning transmit information about their products or services, through their «network», meaning people they can personally reach in their cold, warm or hot circles of influence.

So Network Marketing is a form of soft publicity using word of mouth to recommend a product or service, without actually selling it. If you think about it this way, you will realize that it is not directly linked to generating revenues, but is more about business development. The purposes served here are market expansion, new user acquisition, brand placement and awareness.

And I believe that Multi-Level-Marketing (or MLM) is a financial compensation structure. Many different structures exists and I will admit that the name chosen for this one might just be the culprit leading to the confusion with Network Marketing. «Multi-Level-Compensation» might be a clearer term for it. MLM exists as soon as more than one person receives financial compensation on the sale of the same product or service.

So MLM is a form of revenue system that is meant to encourage teamwork. If you have two or more people with the same vested interest, they should divide the workload and help each other out. This is actually one of my favourite aspects of MLM. Think about every kind of sale where there are at least a broker and an agent. For example, real estate is a perfect MLM model, since the broker recruits and trains several agents, who sell houses and share the commission with their broker, both of them having complemented the other’s work.

The only difference between the real estate industry and the companies that are referred to as MLM, is those companies took the basic model and «put it on steroids». Many companies’ compensation plans have more than two levels. And there are many types, such as Unilevel, Stairstep Breakaway, Matrix, Binary, Hybrids, etc. (but that is a discussion for another Phoenix Alliance business segment).

Finally, when you combine Network Marketing and Multi-Level-Marketing you get a business «rocket booster» !

I invite you to visit this page of our website and hear about Network Marketing and MLM from two of the industry’s most respected experts.

For more in depth and detailed information, Phoenix Alliance offers a FREE specialized «How to make the most of the Network Marketing – MLM combo» seminar to its registered members.

Interesting outside link: « What Is the Difference Between Network Marketing and Multi-Level Marketing? »