Network marketing is considered as one of the safest and most comfortable business models in Western countries. Network marketing is the unique way of distributing goods and services in the market through a network of contacts. This unique business model doesn’t require advertisement investment; instead, sales are made on the basis of recommendations made by affiliates to purchase a particular product or service. This business is entirely based on the relationship skills of the incumbent.
The experts argue that there exist multiple versions or models of Network Marketing. The exciting feature of all the models is the relationship orientation. Higher, a member is capable of harnessing the social relationships for business purposes; more will be the chances for him to succeed in this business. According to experts and prevailing trends, there are three models of Network Marketing business. They are discussed below in brief:
- One-Tier Affiliate Program: This is one of the primary forms of network marketing. A seller of a particular product gives commission to an individual for generating sales through a referral or doing a direct transaction. The seller doesn’t intend to pay more to the individual for making additional revenue by finding or referring other opportunity seekers. The individual is not even entitled to get any commission of the person whom he referred bring in more sales. This is a one-tier affiliate program that pays a member for a direct sale.
- Two-Tier Affiliate Program: This model is one level advanced to the single tier program. Under this, the program not only pays the member for bringing in sales revenue but also pays an incentive to him for the sales generated by the member whom he introduced or recommended. This program provides the scope of two-way earning in the form of commissions.
- Multi-Level Marketing: This is the most advanced form of network marketing. This model appears as complexity increases. The MLM program pays a member for the direct sales and referral he gives to the business. He can earn an income for selling the products of the MLM company and recruiting other sales affiliates. He is entitled to receive the commission on every sale made by the members whom he has hired in the program. Thus, he can increase the scope of earning income by expanding his network. A fraction of sales made by members in the downline goes to their sponsor in the form of commission.
Whatever, business model of network marketing you adopt, you must ensure that the program is legal and follows the statutory guidelines. Every program has its pros and cons. One should align with strategic goals and available resources before choosing a particular model of Network Marketing.