What's the difference between a matrix, an MLM, and other business systems?

Apr 11th 2011 at 1:16 PM

Okay, so you're ready to start making money online.  Or maybe you've been at it for a while, but you find many of the terms and definitions somewhat confusing.

Maybe this will help clear things up...


An affiliate program is one where a company allows you to sell its product or service.  An affiliate program is usually free.  When you make a sale, enroll a subscriber, refer another affiliate (and so forth - affiliate programs vary widely), you earn a commission.  Those commissions can take on many forms, from a percentage of the sale amount, to free company products, to a flat rate payout (and so forth - again, affiliate programs vary widely).

Advantages of joining an affiliate program are many.  Usually, such programs are free.  You don't have to possess the ability to write code (referral links and websites are normally provided to you by the company).  And in most cases you can simply leave the program if you are dissatisfied or simply wish to stop marketing for the company.

Like anything else, there are also disadvantages.  Because the referral links and websites are normally provided to you, there is little or no customization and personal branding available.  Many affiliate programs do not offer a referral system - and of those that do, many are only 1 level deep (direct referrals).  You must advertise and market your product/service in order to generate sales.  Finally, affiliate programs rarely offer a huge, maybe-you-can-quit-your-job level of income.

The bottom line on affiliate programs:  If you're relatively new to internet income programs, have little programming knowledge, and are looking to make a few dollars (versus a living), then an affiliate program may be perfect for you.

An example of a free affiliate program:



Multi-level marketing programs are a variation of the standard affiliate program.  Multi-level marketing (or MLM) is a referral-based system whereby you earn commissions based on your own personal sales, as well as your referrals' sales.  Some of these MLM organizations have a 3, 5, or even 10 level referral organization.

MLMs usually offer a lucrative compensation model, especially for those who generate a large volume of sales and/or referral sales.  Some MLMs are free, but most charge an enrollment fee of some kind.  Some of those fees are recurring, and are charged once a month or once a year.

Advantages of MLMs include "synergy" - whereby a large referral network can multiply earnings.  MLMs also provide training.  Some even provide marketing materials.

Two disadvantages are cost (remember many MLMs have enrollment or subscription fees) and the time required to build and nurture a referral team.

The bottom line on MLMs is that you can make money - lots of it - when you combine personal effort with teambuilding, and a little bit of patience.

An example of an MLM / affiliate program hybrid:



A matrix program is basically a variation of a multi-level marketing system.

The key difference is that a matrix program usually has a primary end-goal of "filling up the team" in order to receive a maximum reward or compensation.

A 3x3 matrix system, for example, means that 3 direct referrals, 9 second level referrals, and 27 third level referrals (39 total referrals) are required for a "full matrix" or team.  Some matrix programs are driven off personal referral activity only.  Others place new members into one single, company-wide matrix (in the order they sign up).  This is also commonly referred to as a "forced matrix."

Most matrix programs charge product/service/subscription fees.  You earn percentages of the fees collected in the applicable position levels below yours.  Some matrices pay as you build (and as you sell).  Some provide payout only after your matrix is full.

A matrix program can be lucrative.  Most matrices also provide you with free referral links and websites.  Explaining a matrix is simple.  You refer 2 who refer 2 others (and so forth).

There are challenges with matrix programs also.  One of the biggest is the fact that your referrals may not be as capable of getting referrals as you are - thus, your matrix takes time to fill up.  There is also the issue of timing.  It is usually easier to fill a matrix when the program is new, as there is only a finite number of interested prospects for any given opportunity.  But this is generally the case for all business models.

The bottom line on matrix programs is to only join what you are truly excited about, as you must refer others in order to receive or maximize benefits.  Also, be patient, as cycling (or completely filling up) your matrix may take some time.

An example of a matrix program:



There are many, many different ways to make money online.  You must decide if you want to be responsible for yourself only, or also responsible for building a team in order to increase your earning potential.  You should also weigh the investment.  Never spend money you can't lose - start free or with a low fee program if a $30 or $100 membership fee is simply out of the question for your current circumstances.  Keep in mind that the earning potential usually increases with the cost of the product or service (you'll make more from each sale of a $199 product than you will from the sale of a $29 product).

OTHER THINGS TO KEEP IN MIND (questions to ask)

1.  Is there a minimum activity or sales level required for commission eligibility?  In other words, must you sell at least X units before you can get paid for any or all of your sales?

2.  Is there a minimum commission required for payout?  Do you have to accumulate at least $50 or $100 in commissions before you can receive your payment?

3.  Can you accumulate commissions - or is there an automatic weekly/monthly payout regardless of how much you've earned?

4.  In a matrix-style system, is there periodic compression (or re-ordering) to backfill vacant positions?  What happens when your matrix is full?

5.  Can you as a sponsor place referrals in certain positions within your team (applies to MLMs)?

As you can see, there is much to know and learn about online income opportunities.  There is also much to earn.  Thousands of people just like you and me are doing it every day.

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