MLM Glossary

  • ACHIEVEMENT LEVEL :Reaching or achieving a target level by recruiting a certain number of distributors, or by selling a certain quantity of products within a fixed time period.

    Eg : Meeting the target sales and recruits, a distributor reaches the achievement level.

    Related words : Bonus , Incentive

  • ACTIVE :On generating a target personal volume by a certain amount of sales or by recruiting a certain number of new distributors, a distributor can maintain a title ‘Active’. The sales can be customer or distributor purchases or personal purchases.

    Eg : When the downline team becomes active, the whole team will be benefited.

    Related words : Downline, Distributor

  • AFFILIATE :A marketing strategy letting third parties or affiliates to bring an increase in the sales of products or services by adopting own marketing techniques and get paid a commission.

    Eg : Through affiliate programs, direct sales will get enough boost to maintain good business.

    Related words : Commission

  • AUTOSHIP :A process of shipping a selection of products automatically with the help of a software. This will help a distributor to maintain his/her personal volume and remain active.

    Eg : Autoship is the best way to improve your revenue and create a more effective business process.

    Related words : Product

  • BINARY :A popular compensation plan where a distributor can have only two front line distributors. The excess recruits are placed under the sponsored distributors as spillover.

    Eg : Only two members are recruited under a distributor in a Binary plan.

    Related words : Active, Spillover, Strong leg, Weak leg

  • BONUS :The extra benefit in addition to the commission given to a distributor by a business owner considering his/her performance. It may be in terms of money or in the form of any rewards.

    Eg : The sales representative in an MLM company will receive a commission or bonus for the new business or for adding new recruits.

    Related words : Commission, Infinite bonus

  • BREAKAGE :Breakage is the unpaid compensation. It is the difference between the total or maximum percentage of payout of a plan and the actual payout.

    Eg : Breakage is when certain rules are imposed to qualify for commissions.

    Related words : Compensation plan, commission

  • BREAKAWAY :A popular MLM compensation plan, also known as the Stair step plan. When a distributor reaches a breakaway rank, he/she can break away from the existing group and can make an own group independently without depending on the upline.

    Eg : The volume generated by the breakaway team will be part of that breakaway’s group.

    Related words : Stairstep breakaway, Upline

  • BREAKAWAY LEG :The downline under a breakaway distributor, on achieving a certain level, can break away from his/her upline or sponsor.

    Eg : When one of your recruits breaks away and forms another team, you will no longer receive the commissions from this breakaway leg.

    Related words : Stairstep breakaway, Upline

  • BUSINESS BUILDER :Instead of buying products in wholesale rates for personal use, the distributor actively prospects and gathers customers.

    Eg : Adding new prospects and customers, a business builder builds the team and brings business.

    Related words : Prospects, Team

  • BALANCING LEG :Only by balancing the volume in the two downline legs and by maintaining equal volume, one will get the maximized payout. This leg used to balance the volume is referred to as a balancing leg. Otherwise, the commissions will be paid considering the shorter leg i.e. the weak leg.

    Eg : The balancing leg determines the maximized payout of a distributor.

    Related words : Strong leg, Weak leg

  • COLD MARKET :People outside your friend circle or family who may become a sales person’s future prospects. With social media and other ways of networking, we can make the cold market into a warm market.

    Eg : Talk with people around when you go out and approach them with proper confidence and get those cold market prospects.

    Related words : Prospects, organization

  • COMMISSION :The amount or percentage paid to a distributor for the efforts rendered or by considering the sales volume of your organization.

    Eg : Distributors receive a commission for their sales efforts or for the number of recruits they enroll.

    Related words : Bonus

  • COMMISSIONABLE VOLUME :Companies pay commissions considering the price of the items with certain conditions. Only a percentage of the total price or a value is used to calculate the commissions. This amount is referred to as commissionable volume.

    Eg : Commissionable volume is calculated by considering a member's or his/her downline's purchases.

    Related words : Downline, Group volume

  • COMPENSATION PLAN :It refers to how commissions are paid to distributors which are determined by considering the personal sales volume and that of downlines.

    Eg : Based upon the chosen compensation plan, the commissions or payouts are paid to distributors for their personal sales volume and that of their downlines.

    Related words : Marketing plan

  • DIRECT SELLING :Direct selling refers to the selling of products directly to the customers usually without any specific retail locations. The seller purchases the product from the direct selling company and sells them to the customers.

    Eg : In direct selling business model, companies sell their products directly to customers in a non retail environment and a commission is paid to the distributors.

    Related words : Network marketing, MLM

  • DISTRIBUTOR :The person who markets and sells the products of an MLM company and he/she receives commissions for it. This distributor can recruit or add more people and make a team and their sales will also be considered for commissions.

    Eg : Distributors buy products of an MLM company at a wholesale rate and sell them to the customers and earn commissions.

    Related words : Marketing Materials

  • DOWNLINE :The members who join the company or recruited under a distributor, whose sales or efforts will also be considered for paying out the commissions of their upline.

    Eg : The network of members who are recruited by you becomes your downline.

    Related words : Genealogy

  • DROPSHIPPING :A distributor need not have to maintain a physical stock of products as in a retail shop. The distributor can transfer the customer’s order and shipment details to the MLM company where he belongs and the company can send the products directly to the customers.

    Eg : Distributors can take advantage of dropshipping as they need not have to physically stock the products.

    Related words : Products

  • ETHICAL BUSINESS :Doing business, following ethical business standards is referred to as an ethical business. A distributor should not make fake promises or false statements that mislead the customers or sales prospects.

    Eg : Ethical business is staying away from unethical business methods.

    Related words : MLM, Network marketing, Marketing materials.

  • E-COMMERCE :A business model for buying and selling goods with the help of the internet. Individuals or companies can list their products and conduct business.

    Eg : E-commerce business model helps to gain good profit margin as it focuses on making user interaction easier.

    Related words : MLM, Products, Marketing Plan

  • ENROLL :Enroll refers to the adding or joining of new members into the MLM industry. Each new enrollee can enroll or add new members under him/her.

    Eg : When a new member is enrolled, he/she can sell the products and services of the belonging company.

    Related words : Recruit

  • FOLLOW-UP :It is a process of taking continuous effort to bring a prospect into the business convincing them about the company and its benefits.

    Eg : Educating the prospects and follow- up them with best presentations and unique methods will bring more prospects into business.

    Related words : Prospects

  • FRONT-LINE :The personally enrolled downlines are the front line members. These front line members and their business will also be counted for a distributor’s commission according to the compensation plan of the company.

    Eg : MLM companies reward the distributors for recruiting new members in the front-line.

    Related words : Upline

  • GENEALOGY :Genealogy is a tree-like structure to represent the downline members under a distributor. It includes the members you recruit and the ones recruited under them. A distributor can get the details regarding the enrollees from the genealogy also they can have a calculation about the commissions too.

    Eg : Genealogy is a graphical representation of the member structure from sponsor to the downline members in an MLM company.

    Related words : Strong leg, Weak leg, MLM

  • GROUP VOLUME :The total sales volume or all purchases generated by a distributor’s whole team is termed as group volume.

    Eg : A distributor's and the team's total purchases or business is considered as group volume and commissions are paid based on it.

    Related words : Personal sales volume

  • HYBRID :A compensation plan that has the features of two or more plans. As this plan provides the benefits of more plans, the Hybrid plan offers high-income opportunities to the members.

    Eg : Hybrid plan allows the MLM company to make high benefits as it is a combination of different plans.

    Related words : Compensation plan, Binary, Uni-level, Matrix plan

  • INACTIVE :The enrolled or recruited members who are not making enough effort or not bringing enough sales can be called as inactive members in MLM.

    Eg : If the team under a distributor is inactive, it will also reflect in the distributor's income.

    Related words : Active

  • INCENTIVE :For motivating the distributors for more business, the companies give special rewards or bonus considering their increase in the sales volume and the increase in the number of new recruits. This is referred to as incentives. This will help the distributors to bring more business

    Eg : Incentive will encourage the distributors for bringing more business by increasing the sales volume.

    Related words : Bonus, Commissions

  • INDEPENDENT DISTRIBUTOR :A distributor who introduces the company’s products to the people through proper marketing channels and finds the customers to buy the products directly are independent distributors.

    Eg : Independent distributors sell products and services through the marketing approaches followed in MLM industry.

    Related words : Distributor, Product

  • INFINITE BONUS :Considering the total group volume of the team or organization, an additional commission is paid to the distributors beyond the normal commission paid as per the compensation plan. This bonus structure is good to get help from the up lines and one needs to provide help to the downlines.

    Eg : Infinite bonus is paid to distributors in MLM industry for their higher rank and on total group volume.

    Related words : Upline, Bonus

  • LEADER :A top achiever /distributor who recruits new members into his/her team or organization, and ensures they are well trained about marketing and product selling are made leaders by the company. These leaders are motivated by the company through rewards.

    Eg : Leader trains and supports the members in his/her team , talking to new prospects about the products and services and build the team.

    Related words : Team, Upline, Sponsor

  • LEG :The downline under one of the downlines headed by a frontline distributor is referred to as a leg.

    Eg : MLM plan structure begins with legs, right and left legs.

    Related words : Strong leg, Weak leg, Downline

  • LEVEL :When a new member is enrolled, he/she will be vertically placed under you in the first level. These new enrollees can recruit more and can be placed under them. They will become your second level.

    Eg : The distributor network in MLM is expanded to different levels and payouts or commissions are paid according to the levels.

    Related words : Commission, Downline

  • LEAD GENERATION :The process of generating leads by converting prospects into new potential members through different methods

    Eg : Lead generation helps a distributor to contribute more in the business.

    Related words : Prospects, Prospecting

  • MARKETING PLAN :MLM business follows a plan to make the business established. It is according to this plan the distributors add new members and bring new business. It is otherwise known as a compensation plan.

    Eg : It is the chosen marketing plan that decides the commission or bonus to be paid to the distributor.

    Related words : Compensation plan

  • MARKETING MATERIALS :In order to bring awareness about the company and the products, certain promotional tools need to be used. These include brochures or any kind of training videos which clearly detail all the information about the product and services.

    Eg : Marketing materials are the tools that help to grow an MLM business.

    Related words : Compensation plan

  • MATRIX PLAN :Matrix plan is one of the popular compensation plans where a limited number of members can be recruited at each level. But it will not restrict the number of recruits a distributor can totally have. The additional members can be added to the next level and complete the matrix.

    Eg : Compensation in Matrix plan is calculated with a formula of width *depth.

    Related words : Hybrid

  • MLM :A business opportunity that helps people to earn a good income apart from traditional jobs. MLM is a marketing strategy where the company can sell the products and services to the customers through word of mouth marketing with the help of distributors who gets a commission for the business they do. The distributors get a commission based on the compensation plan opted by the company. Network marketing is the alternate term used for MLM business.

    Eg : MLM is a marketing strategy where the ones enrolled in to this marketing can earn profits based on the efforts they make.

    Related words : Network marketing, Compensation plan, Bonus


    Eg : Multi-level marketing companies sell goods and services through a network of distributors.

    Related words : Network marketing, Compensation plan, Bonus

  • OPPORTUNITY MEETING :A business meeting to make the people aware of MLM business opportunities and give a chance to have a better understanding of the company, its products, and its services.

    Eg : Hosting opportunity meeting in a well organized way considering the cold market and warm market prospects will results good.

    Related words : Prospecting, Prospects

  • OVERRIDE :The monthly commission one receives from the business of the breakaway legs.

    Eg : The sponsor or upline can receive an override commission on the sales efforts of the downlines.

    Related words : Breakaway, Stairstep breakaway, Breakaway

  • ORGANIZATION :Organization refers to the team of members including the leader and the downlines in a network marketing business. We will be able to receive the commission from the downlines business.

    Eg : The team of members including the leader put enough efforts to build the organization strong.

    Related words : Team, Leader

  • PASSIVE INCOME :The income earned by a member or a distributor for the effort of the downlines where the member doesn’t need to put much effort. The income is based on how bigger he/she build the team. Passive income is also known as residual income.

    Eg : MLM business is one of the best ways to earn passive income.

    Related words : Residual income

  • PAYOUT :The distributors receive commissions and bonuses for their and their downline’s business. These commissions are paid out by the company by sharing a percentage of the company’s total revenue.

    Eg : The distributors will get a share or percentage of company's profit as payouts when they bring business to the company.

    Related words : Commissions, Residual income

  • PAY PLAN :The pay plan is the alternative term for compensation plans in the MLM business.

    Eg : According to the chosen pay plan, the distributors will be paid commissions.

    Related words : Compensation plan, MLM

  • PERSONAL SALES VOLUME :The total sales volume of a distributor in a month which includes the distributors' personal purchase and customer’s purchases.

    Eg : Distributor's monthly payout will be based on the personal sales volume.

    Related words : Group volume

  • PRODUCT :The goods that are offered by an MLM company for the purpose of selling it to consumers. The company offers products of different categories which include cosmetics, nutritional supplements, clothing, toys, etc. By adopting different marketing tactics the distributors make the product reach the customers and earn commissions for their sale.

    Eg : MLM companies sell unique products which are not available in retail shops through distributors.

    Related words : Distributor, Residual income

  • PROSPECT :A potential customer or distributor who has some interest in MLM. A prospect can show interest in buying the product from the company or he/she can be a part of the business and become a distributor.

    Eg : Converting prospects into customers will help the distributors to expand their team and improve their business.

    Related words : Prospecting

  • PROSPECTING :The process of finding new prospects and bringing them into the business through personalized calls and emails and follow-ups until those prospects become active members.

    Eg : Through prospecting a distributor can bring new members to his/her team and widen the team.

    Related words : Prospect

  • PYRAMID SCHEME :Unlike MLM or direct selling, the Pyramid scheme offers no actual product or services. The people who join a pyramid scheme are offered payments for enrolling new members. The people who join in the beginning make money but there is no guarantee for the money and hence it is considered as a scam.

    Eg : Pyramid scheme is an illegal way of making more people enrolled into a business through fake promises.

    Related words : Scam, MLM

  • QUALIFIED :Each member or distributor will have a target to achieve. Personal sales volume and each member needs to recruit a certain number of new recruits each month in order to remain qualified.

    Eg : A distributor who achieve the target sales will be qualified for the commissions and bonus.

    Related words : Personal sales volume

  • RECRUIT :A person who is enrolled as a member of an MLM company to sell the products that the company offers is a recruit. The recruits are paid a commission for the business they bring to the company.

    Eg : A team member in an MLM organization is recruit.

    Related words : Downline

  • REFERRAL MARKETING :MLM products are mostly marketed or promoted through word of mouth marketing. When a customer uses a product and satisfied he/she is asked to recommend the products to prospects and encourage them to become customers or join the team.

    Eg : Using personal relationships products are marketed in referral marketing.

    Related words : Word of mouth

  • REPLICATED WEBSITE :A replicated website is the reproduced website template created for business purposes. Multiple users will have the same website with the same website content and information but with different user names and profiles. This helps a company to ensure strong web presence and achieve the targeted business growth.

    Eg : Replicated website is created to give each member a personalized website to bring maximized results.

    Related words : Business builder

  • RESIDUAL INCOME :The income earned with much less effort and with less participation. The income is generated through building or expanding your team.

    Eg : Through sale of products and services and by generating repeat sales, a distributor earns residual income.

    Related words : Passive income

  • RETAIL :The distributors can buy the products for a wholesale rate and resell it to the customers taking a margin. This process of taking profit, making it an income opportunity is referred to as retailing. The distributors try to reach out to more customers so that they can make those customers buy the products and get qualified.

    Eg : The distributors get the products in a wholesale rate and resell them to the buyers in a retail rate.

    Related words : Products

  • RETENTION RATE :Retention rate is the percentage of distributors or members who continue to stay with the company as active members. If the retention rate is high, it is an indication of a profitable MLM business.

    Eg : Retention rate is calculated by counting the active members in the business.

    Related words : Active

  • SCAM :A scam is an illegal way of enrolling new members into a network without offering any product or services. The members of this scheme earn from the enrollment fees of the new recruits. Ponzi scheme and Pyramid scheme are the popular scams in the MLM business.

    Eg : Though MLM is a legitimate business, people often misunderstood it as a scam.

    Related words : Pyramid scheme, MLM

  • SIGN UP :Sign up refers to signing up or enrolling as a member of a network marketing company. While joining or signing up, the member will receive a product kit which is equivalent to the enrollment fee.

    Eg : The people or members who sign up under you in your team becomes your downline.

    Related words : Marketing materials, Downline

  • SPILLOVER :In some compensation plans, the number of members that can be placed to your frontline is fixed or limited like in Monoline, Binary or Matrix. When the upline wants to place a new member beyond that limit, he/she can place the new member under his/her downline. This process of placing new members under your downline by your upline is referred to as spillover.

    Eg : Spill over helps to develop the team with the teams efforts and the sponsor as well as the downline benefits from it.

    Related words : Binary, Compensation plan

  • SPONSOR :When a distributor or a leader who personally enroll or recruit new members to his/her team as a downline, then that distributor becomes the sponsor of the newly enrolled member or the new downline.

    Eg : Sponsor helps a distributor to build a business and will be responsible to train the ones he/she recruits.

    Related words : Leader, Upline, Frontline

  • STAIRSTEP BREAKAWAY :Stairstep breakaway is a compensation plan where a member or distributor can break away from the team on achieving a certain level. When the target sales volume is achieved the distributor moves a step up and can break away from the upline or sponsor’s team.

    Eg : Building bigger team and getting good compensation rate is the advantage of the stairstep breakaway plan.

    Related words : Breakaway, Compensation plan

  • STRONG LEG :A leg in MLM refers to the member added under a distributor. A distributor will have two legs; a strong leg and a weak leg. The strong leg will grow as the new members will be added in this leg in order to achieve more commissions.

    Eg : Strong leg generates more volume as this leg is an important factor in the long time success of the MLM business.

    Related words : Compensation plan, Binary

  • STOCKPILING :The practice of stocking products overstock than one can sell in order to achieve the target and to get qualified for more commissions.

    Eg : Without enough orders some distributors stock pile the goods which is not a recommended practice in MLM.

    Related words : Products

  • TEAM :The people or members who are recruited in a network marketing company. A team includes the members recruited by a distributor and the recruits of this distributor. An upline may not know each member of the team, as members are not directly recruited by this leader.

    Eg : As one build one's team big, bigger will the commissions earned.

    Related words : Leader, Distributor, Frontline, Sponsor

  • TARGET AUDIENCE :The group of people who might be interested in a company’s product or services and to whom one can market the products.

    Eg : Identifying the target audience and offering the product and services to fit their needs is important in the MLM industry.

    Related words : Prospect, Cold market, Marketing materials

  • TRAINING :Training in the MLM industry focuses on the overall development of distributors enabling them to achieve business by winning clients. Through training, an individual acquires enough knowledge and skills that help in the overall development.

    Eg : Proper training helps the distributors to remain active and will be able to utilise the skills to achieve more business.

    Related words : Leader, Sponsor, Marketing plan

  • UNI-LEVEL :Uni-level is one of the simple compensation plans that allow a distributor to recruit unlimited members to the frontline. Width is not limited and hence it will encourage the distributors to recruit a large number of members to the frontline and allows their downlines to do the same.

    Eg : Uni-level compensation plan allows a distributor to add unlimited members into the front-line.

    Related words : Compensation plan, Frontline

  • UPLINE :In an MLM business, all the people or distributors above you are uplines. When further explained, an upline is a person who recruits a new member as a downline.

    Eg : Uplines help the downlines to find new prospects and develop the team.

    Related words : Sponsor, Downline

  • WEAK LEG :In binary compensation plan, a distributor has two legs; weak leg and strong leg. He/she can add two members in his frontline to his right and left. The weak leg is shorter leg with fewer members than the strong leg. A distributor has to balance these legs. Otherwise, the commission is paid based on the business of the weak leg. Hence it is also termed as money leg.

    Eg : Weak leg generates less volume of sales and is considered for payouts.

    Related words : Binary, Compensation plan

  • WORD OF MOUTH :In MLM business, marketing of the products is mainly done by word of mouth. A distributor directly sells the product to the customers and when a customer uses a product and gets satisfied, he/she will refer it to his/her family and friends. This way of oral marketing is known as word of mouth marketing.

    Eg : Word of mouth marketing is one of the best ways of marketing products in MLM industry.

    Related words : Marketing plan, MLM

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