If you ever pop into one of the Legendary Facebook groups or tune in to Wake Up Legendary (a live daily podcast held every single weekday at 10am eastern), you might see questions in the comments like…
- Is Legendary an MLM?
- Do you have to build a team?
- Is it a pyramid?
(Quick answers are no, nope, and definitely not!)
But LOTS of people are asking these questions, not just one or two.
So to address the elephant in the room, let’s take a closer look at the differences between these two business models:
- affiliate marketing (also called freelance digital marketing).
- network marketing (also called multi-level marketing or MLM for short)
During a recent interview on Wake Up Legendary with Dave Sharpe, sisters Kimi O’Neill and Trish Verzera brought a very unique perspective.
Together, they’ve built successful businesses in both the network marketing world and through affiliate marketing.
So what’s the difference?
Let’s start with the basics.
An affiliate marketer promotes a product or service on behalf of a company.
When a customer makes a purchase through that affiliate’s unique link, the affiliate earns a commission.
The commission is sort of like a “thank you” gift from the company for generating a sale.
And it’s a win-win-win:
- For companies, there is no upfront cost – they only pay out commissions after a sale is made.
- For the affiliate, there is no inventory, shipping, or customer service – they simply share the product with their network and show how it solves a specific problem.
- For the customer who purchases the product, there is no additional cost to them, and there might even be a discount.
For example, have you ever heard an influencer say something like, “Use code ‘Laura20’ for 20% off your first purchase!”?
That affiliate is giving an added incentive to purchase through her link.
And that unique code helps the company keep track of exactly how much to pay her.
Network Marketing is great for individuals who are able to build large teams:
- Network marketing or MLM companies benefit by having sales reps sell physical products.
- Independent representatives are often required to purchase and/or keep inventory on hand.
- Customers can be recruited to become sales reps themselves, thus expanding the network.
Sales reps earn commissions from any products they sell as well as from products their team members sell.
So there are multiple people earning commissions on every sale.
The more people you recruit to join your team, the more money you can make.
What can go “wrong” within these business models?
For affiliates just getting started, it can take weeks or months to start seeing results.
There’s a heavier lift at first, and many affiliates simply lose patience and “quit before the miracle happens,” as Dave likes to say.
In network marketing, if you’re not great at recruiting people, you’ll have a hard time making good money.
Also, with a more significant investment into product and inventory, many sales reps actually lose money when they join an MLM.
Remember, any business can change structures or even close at any time…
But how you’re impacted as an affiliate versus an independent sales rep are very different.
For Trish and Kimi, they went through one of these “worst-case scenarios” with their MLM.
After building up a very successful network marketing business, the company they worked with changed their compensation structure.
The company went from being a Network Marketing company to an affiliate-based company…
Which meant overnight, the thousands of people on Kimi and Trish’s team became their direct competition just like that.
The good news for the sisters was that they happen to be mindset coaches as well.
So they didn’t view this setback as anything more than a challenge to overcome.
A learning opportunity.
What did they learn?
Ironically, they started to learn affiliate marketing!
(They also learned that they’re super resilient, capable of doing hard things, and able to achieve anything they set their minds to…all stories for another day.)
What are the benefits of each business model?
One of the main benefits of affiliate marketing is that it’s almost a “set it and forget it” type of business. We like to call it “semi-passive” income.
That’s because once your systems are set up, they run 24/7/365 in the background while you’re doing other things.
The active work is simply generating traffic to your offer, which is best done daily.
But even posting content can be mostly scheduled ahead of time.
As Trish said, one of the biggest benefits of affiliate marketing is simply “doing what you need to do and walking away.”
So how about network marketing?
Legendary CEO, Dave Sharpe got his start in network marketing because it was one of the few businesses available to him as a recovering addict with a criminal record.
It’s great that anyone can get into it.
And as the sisters experienced, network marketing can be lucrative, especially if you build a huge team.
But network marketing also requires a LOT of effort and follow-up with members, which some might see as a drawback.
In fact, Trish has to constantly check in with her team members.
The work is NEVER done, and there’s no walking away from it.
And if the company changes or closes permanently?
Let’s say a company suddenly shuts its doors, never to open again.
If you were one of their affiliates, you’d simply take your skills and apply them to a new product or service.
Build a new funnel, set up a new series of emails, and drive traffic to your new offer.
But, if you had built your entire business around that one company, yeesh.
You’d be more or less out of luck.
Yes, you could certainly apply your skills to a new company, but your team and everything you had built would not transfer over.
So, which business model is better?
There’s no better or worse here – it’s simply a personal preference.
Both affiliate marketing and network marketing are real, legitimate business models with benefits and challenges to each.
And in the end, you can be successful at anything you set your mind to!
Becoming an entrepreneur requires effort, consistency, and likely some training and support along the way.
This is true whether you build a digital marketing business, an MLM, or even a brick-and-mortar business.
Weigh your options to see what might work best for YOU in your situation.
Want to learn more about what kinds of businesses are possible?
Tune in to Wake Up Legendary live with Dave Sharpe every weekday morning at 10am eastern, or catch a replay on your favorite podcast platform.
And as always, stay legendary.