Encouraging your affiliate partners to recruit new members is a great way to grow your network. However, if you're worried this sounds like multi-level marketing (MLM), you're not alone.
Multi-layer marketing may have a bad reputation, but it's possible to use MLM techniques ethically. By ensuring that everyone is adequately compensated for their efforts, you can expand your network – without exploiting your partners.
In this post, we'll discuss the potential pitfalls of MLM and how to avoid them. We'll then show you how to create your own MLM venture. Let's get started!
An Introduction to Multi-Level Marketing
MLM, or free network marketing, is a business model where unsalaried members promote and sell products directly to consumers. These marketers are actively encouraged to bring in new recruits.
Typically, members will earn a cut of sales made by everyone they've recruited into the MLM business. When a sales representative at the bottom level makes a sale, everyone above them earns a portion of their income.
This setup poses a problem for huge, bloated MLMs where the people at the top of the hierarchy make the most, while the people at the bottom earn very little:
Critics also point out that some MLMs encourage predatory recruiting tactics. The classic example is a member who is pushed to sign up their friends and family members to the network.
How to Create a More Ethical MLM
Despite the criticism, it is possible to apply MLM principles to your affiliate marketing program without exploiting your partners. The most important rule is limiting the number of levels in your MLM.
The “right” number will vary depending on the commission you offer your partners and how many sales they're likely to make. Inevitably, the people at the bottom levels will earn less. However, you can ensure that the profits outweigh the effort required to make a sale – regardless of a person's position in your WordPress MLM.
Since MLM principles can deliver many new conversions, increasing your commission rates can also help. A smaller cut of more sales can still be a big win for your bottom line. It can also ensure that your partners receive fair compensation.
With MLM, there's often the temptation to use predatory recruiting tactics. To discourage this behavior, consider focusing on the results and not the total number of recruitments.
Rewarding your best-performing affiliate partners is a great way to incentivize them to deliver better results. However, keep in mind how these bonuses can influence behavior. If you reward your marketers simply for onboarding a new member, this could drive them to view their signups as numbers.
Instead, you should consider rewarding your partners based on total sales. This setup can encourage your marketers to focus on quality rather than quantity.
How to Create Your Own MLM (In 2 Steps)
When used carefully, MLM-style commission levels can push your partners to recruit more people. With this in mind, let's see how you can add commission levels to an existing Easy Affiliate network using WordPress MLM software.
Step 1: Make Multiple Commission Levels
You can add levels to your affiliate network using our Commission Levels add-on. With this setup in place, an affiliate who recruits a new member will get a cut of this person's commission. All of the affiliate's ancestors will also earn a percentage.
To activate this add-on, navigate to Easy Affiliate > Add-ons in your WordPress dashboard. Then, find Easy Affiliate Commission Levels and click on Install Add-On:
After activating this software, navigate to Easy Affiliates > Settings. Then, select the new Commissions tab:
Assuming that you've already configured your affiliate network, this page should display the settings for all your new signups. When it comes to MLMs, one size doesn't always fit all, so let's create some additional levels.
Click on Add Level. You can now choose how much members will receive after a successful conversion:
We recommend creating only a few levels to ensure all your partners are compensated for their hard work. You can always add more tiers if your program succeeds and everyone is receiving a fair share of the profits. However, merging multiple levels into a single tier can be more complicated.
When you're happy with your commission levels, click on Update Options. You can always repeat the process to create additional tiers.
Step 2: Reward Your Best Recruiters
Even with a WordPress MLM plugin and these payment tiers, you may want to assign unique commission levels to individual users. This setup can reward your best affiliates or incentivize your underperforming partners to do better.
You'll need to enable the Commission Override setting for the user in question. Navigate to Users > All Users. Then find the username and select its accompanying Edit field:
Next, scroll to the Affiliate Settings section. If it isn't already enabled, select the Is this user an Affiliate? checkbox:
Next, click on the following checkbox: Enable commission override for this user. This adds a new section to this user's profile:
You can now change this person's commission settings by choosing between Percentage and Fixed Amount. Specify the amount to reward this marketer per sale. Once you're happy with your selection, click on Update User.
MLMs may not have the best reputations. However, when you use MLM techniques carefully, it's possible to grow a successful and ethical affiliate network. If you opt for this approach, it's essential to focus on achieving sales rather than simply recruiting as many new members as possible.
Let's recap how to create your own MLM:
- Create multiple commission levels using the Easy Affiliate Commission Levels add-on.
- Reward your best-performing recruiters.
Do you have any questions about how to create a more ethical MLM? Let us know in the comments section below!