I hear this question all the time… “Top Tier vs MLM?”. You see, when people get involved in a home business they typically either get involved in affiliate marketing, MLM or Top Tier direct sales. Each business model has it’s pluses and minuses. Affiliate marketing is a different animal all together and I don’t plan on covering that in this article but I do want to take a closer look at the Top Tier vs MLM business models.
Let’s break down each home based business model. Each model appeals to different people BUT also each business model may be misunderstood by the general public and that’s what I’d like to shed light on today.
Top Tier vs MLM
First, let’s take a look at the popular “MLM” business model. The vast majority of people who get started in the home business or network marketing industry are involved in the MLM side of the industry. These are the businesses you’re most familiar with like Amway, Herbalife, Visalus and about 4,000 others!
Traditional MLM Overview
- By definition, you get paid on building a “multi-level” organization and make more money the bigger your organization is
- The comp plans reward business builders and not product salespeople
- While many MLMs have fast-start bonuses, the majority of your income will be back-end based. You’ll earn a percentage of each of your team member’s monthly auto-ship or sales volume
PROs and CONS of MLM
- You can get started for just a few hundred bucks or less so the point of entry is very affordable.
- MLM, by definition, has a poor reputation outside of the network marketing industry.
- The average person only sticks with an MLM company for 3 months before moving on. This is called Attrition and the rate is extremely high.
- By jumping from company to company, most people end up spending a lot of money on starting these businesses.
- The fact that the MLM business model is based on a back-end compensation structure, rewarding BIG recruiters, most people who get involved don’t make much money because they do not recruit enough people.
- The MLM business has created many millionaires and if you are someone who can build a very large organization (thousands of distributors) and is willing to put in the work for 3-5 years, the income potential is very large.
Top Tier Overview
- These businesses typically either just pay on the front end (at point of sale) or have a 1-Up compensation plan where you receive the first sale of each person you personally enroll
- Your income will primarily come from your efforts
- As with MLM, you’ll make more money promoting the business opportunity than you will selling products
Pros and Cons of Top Tier
- Most people in the home business industry are not involved in Top Tier
- The cost to start a top tier business is more than MLM so your prospects are fewer. But, they’re also not the same prospects. Someone looking to start a business for $3500 is not the same type of person who’s looking to start a business for $25. It’s a more serious entrepreneur.
- The pay plan for Top Tier is based on a front-end model, similar to businesses we’re familiar with like Real Estate, Mortgage, Insurance and really any business to business sales. You’ll receive the majority of your commission right when you enroll someone.
- Because of the front-end compensation plans, you can start earning a much bigger income than MLM immediately
- Income will be less than MLM for the top producers and the leveraged income potential is not as great (although leveraged income is not something most people ever realize in MLM anyway)
- You only need a few sales a month to earn a 6-figure income
Top Tier vs MLM Summary
Really, there’s no right or wrong answer to which is better. It’s more about how serious you are about building a business & becoming an entrepreneur, as well as how you want to build your business, and how fast you need to earn. Personally, I’ve been involved in the top tier niche since 2010 and have also worked MLMs and MLM-type affiliate programs. I’ve enrolled 72 people into an MLM only to make about $8,000 over a 2 year period and obviously the people that I brought into the business made substantially less than that. That is why I recommend the top tier business model for most people. Less recruiting means more realistic income potential. Plus, the compensation plan is much easier to understand and pays you the way you should want to get paid… based on YOUR EFFORTS.