• Active

    The status that many multi-level marketing companies require in order to maintain their title as an independent distributor. They must generate a minimum monthly personal volume, which can be achieved by personal purchases, customer purchases, or a combination of both. The amount of personal volume needed to remain ‘Active’ will vary based on the company.

  • Affiliate Marketing

    Another form of performance-based marketing that is commonly confused with multi-level marketing. In this model, a business rewards affiliates for each visitor or customer brought by the affiliate’s own marketing efforts. Unlike MLM, affiliate marketing is tied entirely to the amount of traffic driven and does not offer the opportunity to build a team to increase your income.

  • Autoship

    A program designed to ensure that a selection of products of your choice is automatically shipped each month. Many companies encourage theirdistributors to enroll in an autoship program to ensure they remain active and qualified each month. Most companies allow autoship orders to be changed, modified, or cancelled at any time.

  • Binary

    A type of compensation plan, which allows distributors to have only two front-line distributors. If a distributor sponsors more than two distributors, the excess are placed at levels below the sponsoring distributor’s front-line. This spillover is one of the most attractive features to new distributors as their upline is consistently placing new distributors in their shared leg. The primary limitation to the binary compensation plan is that distributors must “balance” their two legs to receive maximum commissions. Balancing legs typically requires that the number of sales from one downline leg constitute no more than a specified percentage of the distributor’s total sales. Distributors will often refer to their teams as their strong leg and weak leg based on its current production.

  • Bonus

    An amount of money added to typical commission as a reward for good performance. Many multi-level marketing companies offer bonuses such as electronics, cars, vacations, and even houses for reaching predetermined goals of building their mlm business. The specific qualifications for obtaining a bonus will be detailed within a company’s compensation plan.

  • Compensation Plan

    The details of how the commission of distributors in a multi-level marketing company will be determined on their personal sales revenue and that of their downline. Also abbreviated as a ‘Comp Plan’, this document also specifies incentives for recruiting, bonus structure, and necessary qualifications for generating income with the company.

  • Compliance

    Refers to the policy, or compliance policy, that defines the standards with which distributors are expected to comply. This policy often includes regulations for methods of advertising, marketing, and otherwise promoting the offerings of the company. Often detailing governance over making exaggerated income claims, false product testimonials, and other mistruths a multi-level marketing company’s compliance policy protects the company unfavorable actions that may be initiated by an individual distributor. This policy communicates what behavior is expected of representatives of the company and can be used to revoke one’s distributorship if ignored.

  • Conference Call

    A telephone call in which a host invites people participate and commonly used to engage large groups of distributors. Conference calls are most often designed so that all parties of the call can listen to a few key speakers. Many mlm companies organize conference calls on a regular basis to teach, engage, or inform their distributors throughout the world. Products such as Skype, GoToMeeting, and FreeConferenceCall are most commonly used.

  • Consumption

    Refers to the personal use of the companies own products by the distributor. Consumption is most commonly used when referring to nutritional, health, or household products.

  • Convention

    A formal meeting of the independent distributors within a multi-level marketing company. Often occurring on an annual or biannual basis these meetings often last several days including trainings, corporate announcements, and festivities. The education, training, and connections that mlm conventions offer are known to be one of the best ways for a multi-level marketers to grow their businesses.

  • Crossline

    A distributor of the same MLM company but who is not connected structurally or within the same line. Distributors that are crossline, also called sideline, are typically in the same geographical location and will often work with one-another as they are “on the same team.” Team in this sense meaning, they are in the same MLM business promoting the same products.

  • Customer Base

    Is the group of customers that an mlm business serves. This can also be used to describe the customers generated by the independent distributor directly.

  • Distributor

    One that markets or sells the products or services of a multi-level marketing company. Distributors, often called Independent Distributors, are independent business owners operating in partnership with their chosen mlm company. In the United States, distributors operate under a 1099 Tax Form that is used to declare various types of income other than wages. Distributors are also referred to as Representatives, Reps, Partners, and Independent Distributors.

    This term refers to a representative of an MLM company who sells the firm’s products or services. This representative is also encouraged to build his own team/organization by recruiting and enrolling additional sales force known as downline/members. These members may also be called distributors and may sign up their own members who will also form part of the team or organization.

    Independent distributors are not salaried employees of the company but rather profit from the sales of a particular network marketing company’s merchandise. These distributors may also earn a certain percentage from the sales their downline makes. This type of marketing setup requires training, support and cooperation within a particular organization to succeed and realize unlimited income over time.

    Becoming a distributor requires an interested party to enroll in his preferred network marketing company and pay a corresponding fee. He then receives a starter product kit equivalent to the amount he paid upon enrollment.

  • Distributor Agreement

    A contract governing the marketing of an item of merchandise within a multi-level marketing company. This document often includes the code of conduct, compliance policies, and other behaviors expected of distributors.

  • Distributor Kit

    Is the kit required for purchase in order to enroll as a distributor. Distributor kits are often available in different sizes and price-points, but selection depends primarily on the ambition of the enrolling distributor. These kits often include training tools, marketing materials, branded apparel, and samples of the company’s products. While many people skeptical of the industry wonder why you must purchase products in order to sell them, the product included in the kit is best utilized for sale or demonstration, thus growing the distributor’s new mlm business. It is advantageous to partner with a multi-level marketing company that will drop-ship any physical products to customers. This negates the need for distributors to invest any significant amount of money into stockpiling inventory of products.

  • Downline

    Refers to the members distributors have recruited or who have joined the organization after their enrollment and whose sales or referrals also generate income for that distributor.

  • Drop-Shipping

    A supply chain management tactic in which the distributor does not keep physical goods in stock, but instead transfers any customer orders and shipment details to the multi-level marketing company with which they have partnered, who then ships the products directly to the customer. As in retail businesses, the majority of distributors make their profit on the difference between the wholesale and retail pricing but some earn an additional percentage of the sales in commission, paid by the multi-level marketing company.

  • Duplication

    The process of taking knowledge from previous experience and showing others how to do the same. Often said to be one of the keys to building a successful multi-level marketing business, it is where a successful distributor teaches a new enrollee how to duplicate their efforts and their success. Distributors are often reminded to “keep it simple” as it is more easily duplicated amongst their downline.

  • Earnings

    Proceeds derived from products or services sold. In network marketing, earnings may come from commissions, bonuses, incentives and residual income. Earnings may be based on the compensation plan of a particular network marketing company. This means that earnings may vary depending on the company and the input of the members or entrepreneurs.

  • Edify

    Edifying is the process of offering satisfactory remarks about another member or the company. The goal of edifying is to attract potential prospects. The aim of edifying is to elevate a member, either on the upline or downline, by offering positive information regarding the member’s past successes, background information, and earnings history, and thus earn the trust of prospects in order to convert them into consumers.

  • Enroll

    Enroll refers to the signing up of new members in the network marketing industry. Leads or prospects who are joining the business typically sign up first before they can be recognized as members or part of the company. Sponsors earn residual commissions out of those enrollments in exchange for goods or services of the MLM business. The new enrollee may go forth and enroll new members under him or her.

  • Financial Freedom

    Refers to the financial state where an entrepreneur is debt-free and able to enjoy unlimited earnings. In network marketing, this is typically achieved when a member has established an MLM business and sustained more than enough active downline/recruits. In network marketing, earnings may come from commission, bonuses and residual income. Financial freedom can be earned through innovative marketing techniques, high sales volume of product/services, appropriate compensation plans, and maintaining a dynamic team and downline.

  • Follow-Up

    Follow-up refers to the process in which a distributor contacts a prospect after the initial meeting or presentation in order to continue interest in the company. The goal of a follow-up is to address any questions or concerns a prospect may have, to re-inform them on the company’s products or services, and to convert prospects into consumers.

  • Front-Line

    Front-line refers to the members in your downline that are personally enrolled by you. Usually you will benefit the most percentage residually from your front-line members. MLM companies generally build their compensation plans to reward you most for obtaining front-line members. In general, front-line members are like any other members of your downline, but closer to you (directly below you) in your genealogy tree.

  • Garage Qualified

    Distributors who stockpile products in large amounts and store them are considered garage qualified. This is typically done in order to receive large incentives or rewards from the company. It is usually the intention of the garage qualified distributor to sell or use the products at a later date, but the sale of the product is not guaranteed, and the distributor can be left with large amounts of the product without a sale. The term “garage qualified” derives from distributors who store the products in their own garages.

  • Genealogy

    In a network marketing business, genealogy refers to the list of members in a downline. All members are working towards a common goal to promote the company’s product or services, but members don’t always interact with each other. Genealogy includes your recruits (team) and the people your recruits have enrolled. It’s structured like a family tree. MLM companies typically keep records of their members to keep genealogy reports ready anytime a member requests for his downline list. It may include names and contact information of all the registered downlines of a particular member. In network marketing, the more members in a genealogy, the better and the more profitable for a networker. The leader (upline), earns commissions and residual income from the products the downline members buy and sell. The list can go on and on as members continue to enroll new recruits.

  • Goals

    Goals are what an individual strives to achieve over time. Short-term goals are ones that can be accomplished quickly, while long-term goals will take more time. Goals that are set by the company or leader can keep a business on track towards a common direction. In network marketing, sales goals are set to keep members on a track to maintaining a successful business.

  • Group Volume (GV)

    Volume which is generated by all purchases throughout the organization (team) of an independent distributor.

  • Home Meetings

    A home meeting is when a distributor meets face-to-face with his or her prospects and presents information about the company and the products or services. Home meetings are considered a vital part in the recruitment process, where marketing materials are presented and compensation and earnings are discussed.

  • Hybrid

    A type of compensation plan that is a combination of the unilevel, binary or matrix compensation plans that lead to a development of a new plan design. It can also be an old-style plan but with a twist or significant improvement. The goal is to increase the compensation of everyone in the distributor base, while setting aside enough working capital to help the company operate profitably. The advantage of this plan is that it increases the income opportunities of the recruits because it has the benefits of more than a single compensation plan. Its downside is that the recruits need to understand two or more compensation plans. The commissionable funds are often directed toward a single plan or divided between plans. Two example hybrid compensation plans are a variation of the unilevel plan, with most of the compensation directed toward the first two levels of the structure and the matching matrix, with the rep only focusing on building two legs and the group volume will be paid with a commission percentage.

  • Incentives

    Rewards provided by network marketing companies to motivate their distributors and increase the downline’s enthusiasm. The goal of incentives is to excite members about selling the product or service, to offer rewards for performance, and to develop a fun culture within the network marketing organization. Incentives are often provided to distributors who have the highest volume, the highest increase in volume, or the highest increase in volume percentage. Other factors that determine who gets the incentives include the amount of retail products sold, the number of new distributors recruited per week, month or quarter, the total number of guests at MLM conference calls or opportunity meetings, and completion of training.

  • Independent Distributor

    See ‘Distributor‘

  • Inventory Loading

    Also called front-end loading, it refers to forced personal purchases of a particular distributor in large quantities in order to achieve sales goals and qualify for bonuses as well as retain a particular network marketing organization’s level or status. A distributor who makes these purchases is better known as garage qualified. In the MLM industry, this is perceived in both a positive and negative way. While this approach may benefit distributors in as far as bonus and leadership ranking are concerned, this may increase the risk of considerable economic loss over time, particularly when the stored products are not sold quickly. This process may encourage distributors to purchase the company’s products that may not be sold, returned, or consumed. While it is perceived in many different ways, inventory loading is widespread in the industry.

  • Lead Generation

    A network marketing term which simply means generating leads or prospects, or potential members of a particular MLM business. Lead generation methods used are diverse and include referrals, advertisements, list purchases, cold calls, telemarketing, search engine results, webpage visits and demographic statistics. The goal of generating leads is to convert prospects into consumers.

  • Lead Prospecting

    Lead prospecting refers to connecting and building relationships with potential recruits of a particular network marketing business. Lead prospecting is a method of growing the qualified prospect list and getting people interested in the company. The purpose of lead prospecting is to inform people about the product or service being offered and interest them in purchasing the product or becoming a member. Lead prospecting can be done offline at events or conferences, or online on social networking sites such as Facebook, Twitter, LinkedIn, etc.

  • Leader

    A leader is a distributor who takes responsibility for those in his downline and ensures they are well trained to sell products to consumers and recruit others. MLM companies typically reward leaders highly because of the value they bring to the company and the people they recruit. A leader in MLM is not based on a resume (as in traditional business), but on production only. Leaders can be found or they can be developed.

  • Level

    In an MLM organization, level means the vertical placement of a distributor or member. New recruits placed under him or her belong to the first level while their recruits will be assigned on his or her second level. New sign ups from the recruits’ recruits will be on the third level, and so on. The more levels an independent distributor has, the bigger the organization, which can bring in increased sales and higher earnings and commissions. Building active levels within a team may guarantee a stable business and passive income over time.

  • Marketing Materials

    Promotional tools that can help a particular MLM business in disseminating information about their products or services. Marketing materials bring awareness to consumers and people looking for viable business opportunities. They may include brochures, flyers, manuals and videos about the company. These may also include seminars, training videos and company websites where people can go for detailed information and product literature.

    In starting a network marketing business, marketing materials are crucial tools in company and product promotion as MLM doesn’t involve costly advertisements. It depends solely on the hard work of the members in the organization through effective marketing strategies such as training, conferences and distribution of marketing tools.

    These marketing materials are the members’ “weapon” in motivating consumers to utilize the company’s products or services as well as encourage prospects to join the business. New entrepreneurs/members are usually provided with marketing materials they need once they sign up as members.

  • Matrix

    A matrix is a system used in the network marketing industry where members are restricted to a limited number of members on a downline on each level of their organization. However, it doesn’t necessarily limit the number of recruits a particular member can have. In this case, when a member has fully filled-up his downline, a spillover takes place, wherein new recruits will be assigned to the downline to complete the matrix.

    In a 5 x 5 matrix system, a distributor has to complete 5 direct downlines. These 5 downlines have to complete 5 members each to complete the 2nd level and the succeeding levels have to do the same until the 5th level to complete the matrix plan. A completed matrix system can guarantee continuous income.

    In the event of enrollment of new members after a distributor has completed his level, new recruits will be placed under the downlines with incomplete level to fill out any blank space in the entire team and qualify for residual income.

  • Multi-Level Marketing (MLM)

    Multi-level marketing (MLM) is a business opportunity that enables people to make money outside of a conventional job. Multi-level marketing, also called network marketing, is a strategy by which a company markets their products through a network of independent distributors. Instead of being paid for the hours they work, each of these MLM distributors are paid on the production of their efforts, usually through a compensation plan. Distributors are able to make money for the sales they personally generate, but also for the sales of the distributors that they recruit.

    Organizations often choose the MLM business model as a means to promote a product or service to markets that otherwise would have been unreachable through traditional methods. Most commonly, distributors are encouraged to promote the products and services directly to consumers by means of relationships, referrals, and word-of-mouth marketing.

  • Network Marketing

    See Multi-Level Marketing (MLM)

    Also referred to as MLM (multi-level marketing), referral marketing and pyramid selling, network marketing is a type of a marketing plan in which the company’s members act as the sales force and sell the firm’s products or services. It’s a recruitment-based form of marketing where consumers are recruited to become members, thus linking these end users to the MLM company. The members, in turn, buy the products or services directly from the company at wholesale price and resell them with profit. All members enrolled under one distributor form a team. This type of marketing products/services requires the firm’s members to reach out to consumers, as opposed to consumers seeking out the product.

  • Objections

    Refers to a feeling or statement of disapproval in the industry or company, typically from potential customers or prospects. Objections can be common in the network marketing industry, but the term does not necessarily mean rejection. Effectively addressing the prospect’s doubts and concerns and informing the prospect of the company’s objectives and products or services can diminish some of the doubt.

  • Organization

    (See Downline)

    More popularly known as Network Marketing Organization (NMO), it refers to the entire team including the leader. It is a network marketing company’s retailing channel in which independent distributors or members buy the products at retail price for resale to consumers. These distributors also recruit new team members, and these members can do the same until it forms a large network or organization. A particular organization is composed of different levels, leaders (distributors) and downlines (members). The network starts from the distributor’s recruits placed under him or her down to other recruits enrolled by members assigned below each other. The vertical positioning of the members makes up the levels in the organization. The sponsor’s recruit takes level 1 while level 1 recruit is assigned to level 2, and further on. The concept behind this organization is the larger the organization, the higher the sales of the company and the higher the earnings of the members.

  • Passive Income

    Also known as residual income and leveraged income in the network marketing industry. Passive Income is a type of earnings received regularly by a member with little effort needed to sustain it, and is a result of earlier work to establish a constant income-generating MLM business. As opposed to a regular income, passive income is continually received even after the member lessens his or her workload. A regular income, on the other hand, is fixed and received for the work done for a particular period. The member earns passive income from his downline members by receiving commissions from their sales of the business’ products or services. He or she can also earn from direct customers who regularly buy products or services.

  • Personal Volume (PV)

    Personal volume is generated by a distributor’s personal purchases, retail customers’ purchases, or a combination of both.

  • Policies and Procedures

    A set of rules, principles and guidelines designed by a particular network marketing company or organization for the interest of both the company and the members. These usually include goals, protocols and methods that bind the business and its sales force. Once a prospect joins a particular organization, he is expected to accept and comply with the policies and procedures that the company has outlined.

  • Prelaunch

    A term used when a new MLM business is introduced to the market. During a prelaunch, the company and its products or services are introduced, informing prospective distributors what to expect if and when they join the company. Prelaunch publicity is meant to excite potential consumers or members into becoming a part of the company. It can act as an opportunity for entrepreneurs to build their team before the official launch.

  • Presentation

    A presentation is the method of displaying and explaining a company’s profile, compensation plan, and products or services. It may be on a one on one, webinar, group setting, or a crowd presentation via a convention or conference. Presentations typically contain information regarding business opportunities and are aimed to attract prospects to enroll in a particular networking business. It usually includes tools such as videos, brochures and other materials that show how the business works and the benefits offered to members.

  • Productivity

    Productivity is defined as the ratio of output to inputs in production. The higher the output, the better the productivity. The success of a network marketing business is measured through productivity. The continuous building of an efficient and dynamic team plus constant movement of the company’s products through retailing can significantly contribute to the positive productivity rate. This is achievable through the efforts of both the company and its members.

  • Products

    Refers to the merchandise or goods a multi-level marketing company offers to consumers. Products may come in various forms such as cosmetics, food supplements, clothing, toys and other marketable goods that cater to a variety of markets. Legitimate MLM businesses normally provide their new members a starter kit which contains products equivalent to the signup fee the members pay upon enrollment. The kit may be sold, used for personal consumption, or used for presentation purposes when encouraging prospects to join the company. Commissions and revenues come from the proceeds of products sold by the distributor and his members (downline).

  • Profit

    Profit refers to the net proceed a distributor or retailer receives after the sale of goods or services. In network marketing, products/services are sold to distributors or members at wholesale prices. On top of the wholesale price, distributors add a recommended markup for retailing to end users. Whatever proceeds from the sale of products (minus the wholesale price) becomes the profit of the distributor who sold the goods. Profit may also come from distributors’ team members who duplicate the efforts of their leaders by increasing the productivity and revenue of the entire MLM business. For network marketers, the life of an MLM company lies on its members and their active participation in realizing earnings.

  • Profitable

    Profitable refers to a business endeavor that is bringing in more returns than the investment. MLM businesses are profitable in two ways – retailing and sponsorship. A distributor or member can earn revenue by buying and selling the products or services of the company in the same way that he can also profit from the efforts of his members/downline. The more people a distributor has in his downline, the higher the earnings. To be profitable, a network marketing firm should have qualified members that keep the products/services moving.

  • Prospect

    A potential customer or a potential distributor, or lead. A customer prospect is a person that is interested in purchasing the product, the distributor prospect is a person that is interested in joining the company and becoming a member of the downline.

  • Prospecting System

    A prospecting system refers to the method of marketing towards potential customers or distributors, otherwise known as prospects. This may involve creating a prospecting list, writing and sending emails or any form an introductory letter to prospects, and cold calling and making follow-up calls. The goal of a prospecting system is to convert prospects into customers or active members.

  • Pyramid Scheme

    A pyramid scheme is an unsustainable model of business where an organization offers participants payment, primarily for enrolling other people into the scheme, where no actual product or service is exchanged with the public. With no revenue generated other than from the company’s own distributors, it is considered a scam as opposed to a legitimate form of business. In recent years, the Attorney General has been quick to shut pyramid schemes down before many members lose money, but that does not negate the need for researching a company before enrolling as a distributor.

  • Qualified

    Qualified leads are leads that are the most desirable potential members in a particular MLM business. These leads/prospects usually show interest in the products or services offered by the company by being inquisitive. Not all generated leads can be recognized as qualified. A distributor can get as many prospects as he wants from different sources, but just a few of them can be considered “qualified” and among those “qualified,” only a number may be persuaded to join the team.

  • Recruit

    1. Verb. To enroll or seek to enroll as a member. The difference between recruiting and hiring is that when one hires another it means to engage the services of (a person) for a fee; to employ. In MLM a person recruits another, or a company recruits a person but they are not hired as employees. They are paid a commission for products sold.

    2. Noun. A person who has been recruited, or enrolled.

  • Referrals

    Referral marketing is a method of promoting a product or service, typically through word-of-mouth. This is usually done through informing customers and contacts about the product and encouraging them to spread the word, to talk about the company in a satisfactory manner. Referrals can generate prospects for the business by edifying the upline or downline. Curious or interested markets may seek out the company and the products or services, thus increasing potential volume.

  • Rep

    Short for representative, rep can mean a sales rep or distributor who can effectively sell the products/services of a particular network marketing company to consumers. It is also someone who can represent the company in a positive way and who possesses a unique persuasion skill that will motivate people to become part of the company as members and retailers. Typically, new MLM businesses hire sales reps or marketing reps as leaders to help them recruit new members and spread what products/services these companies offer. Reps normally have previous experience in marketing or have undergone training before they are sent out to represent a network marketing company, particularly in the initial introduction stage of the business.

  • Replicated Website

    A replicated website is a website template reproduced for multiple users (in this case, the team members) and tailored for particular business uses. This is typically done to provide the company a strong web presence and generate targeted leads that can help in the growth of the business. The website information and contents (actual layout, logos, welcome page, colors, blog, testimonials, etc.) typically remain unchanged except for the user names and profiles, which are modified according to each distributor’s detailed information.

  • Residual Income

    See Passive Income
    Residual income, or passive income, is income received on a regular basis without exerting much work or effort to earn it. It refers to the income earned in business activities in which you do not materially participate. This is different from a regular pay, or active income, where the paycheck is based on the number of hours of work for a particular period. In network marketing, residual income is generated through building your team and growing your organization.

  • Retail

    Retail refers to the sale of products or services to consumers for profit. In network marketing, retailing is done by members who obtain goods at a wholesale price and resell them to end users at a certain markup. Distributors, or members, seek out a customer base to sell their products or services to rather than customers coming in to buy. Retailing can also bring in qualified prospects to be part of the team or company. The concept behind MLM retailing is to reach out to consumers and present business and income opportunities on a part-time or full-time basis.

  • Retention Rate

    In network marketing, retention rate refers to the percentage of people/members who continue to stay with a particular company. Members who leave the company are not considered to be retained members. A high retention rate is a good indicator of a residual income and a profitable MLM business.

  • Scam

    Also known as confidence trick, a scam is an attempt to cheat or take advantage of a person or group by earning their trust first. This has stained the MLM industry’s reputation over the years where fly-by-night companies that have proliferated tricking people into instantly earning four to five figures a week when they sign up for a corresponding fee. Typically, these schemes don’t have corresponding merchandise or services to offer in exchange for the signup fee. Members earn through the enrollment fees of new members, which is not allowed in a legitimate network marketing company.
    Two of the most popular scams in network marketing are illegal Ponzi scheme and pyramid scheme, which are scams intended to make money solely through recruiting, without offering a product. An MLM scam is simply cheating other people’s money for the personal interest of the organizer of an illegal network marketing company.

  • Shared Leg

    This involves sharing the dominant leg to the sponsor or people above a member. While the sponsor continues to place new members on a distributor’s right leg, you, as the distributor, build your left leg which is then shared to your sponsor. This is designed give assistance to members on the downline from members on the upline.

    Leg is basically the downline in a particular team, which starts from a sponsor’s recruit and subsequent recruits under him. Every new recruit is placed one below the other. In a network marketing binary plan, there are two legs involved, the left and the right leg.A sponsor can choose where to put a new member – either on the right or left leg. The system goes on creating a pyramid shape organization. This type of system is considered to promote team work and effort.

  • Sideline

    See Crossline
    This refers to a “member” in a network marketing team but not in a particular distributor’s sponsorship. Also called crosslines, these don’t earn revenue from one another’s sales or efforts as they are not associated structurally. However, they may work as a team since they are on the same group; they are a part of the same company with a primary goal to promote the company’s products or services.

    Sidelines are someone else’s downline and perhaps in one of the upline’s team. One can have as many sidelines as one member can get. In this case, a leader or distributor will constantly have more crosslines than downlines and uplines. Hence, team work is a crucial step to keep the business in the forefront.

  • Sign-Up

    In the network marketing industry, this term is widely used to validate or confirm membership in a particular company. This is a process a prospect or lead must go through when he or she agrees to join an MLM company. Before one can be called a member, he or she has to sign-up first. Typically the enrollment, or signing up, comes with a fee equivalent to a product kit or services the member will receive upon enrollment. While there are schemes that sign up members for a fee without any goods in return, this is not acceptable in a legitimate MLM business.

  • Spillover

    Spillover refers to a part in the binary pay system where an upline can place his or her new recruits under a particular member in the group. Since an MLM binary plan entails leg building to form a pyramid-type organization, every member has two members below him or her. If a certain upline or member signs up 3 recruits, these new recruits are assigned to other members in the team with no pairings. This is referred to as “spillover.” Members who cannot recruit a person on their leg can benefit from this system since an upline will assign almost all of his new recruits to members under him to build a balanced group/leg.

  • Sponsor

    1. Noun. This refers to an individual who has personally recruited or signed up a prospect to join an MLM business he is a part of. The newly recruited member becomes part of the sponsor’s team and form part of the downline. A sponsor may either be a leader, distributor or member of the company.

    2. Verb. To recruit someone into an MLM business. “I sponsored 2 people last month.”

  • Stairstep Breakaway

    This is a type of network marketing compensation plan that consists of representatives (usually group leaders) responsible in boosting up sales volume, whether for group or personal sales. This is done by product retailing and recruitment of new members. Once the target volume is realized (individual and/or team volumes), a group leader or representative moves one step up. This process continues until the group leader breaks away from his upline. A representative can be someone with one or more recruits in his team. Once this representative and his downline “detaches” from their upline, they no longer form part of their upline’s team, thus the term “breakaway.” This type of compensation plan is based on the highest earners. What is perceived as the drawback in this Stairstep Breakaway system is the members’ tendency to stockpile inventory just to earn ranking in the organization.

  • Strong Leg

    The network marketing industry consists of a weak leg and strong leg (left and right leg). Leg refers to the team/downline of a particular distributor, which may be formed simultaneously by a single leader or distributor. This is usually used in an MLM binary plan where strong leg is longer because all the members above a certain member are continuously adding new members under the said member. This particular member then gets free paying members below him or her. For a networker, being part of the strong leg is an advantage because as the name implies, it is stronger than the other leg. Commission wise, all the members in the strong leg will benefit from new members enrolled by the uplines of this particular leg.

  • Target Marketing

    Target marketing is a marketing strategy that focuses on a certain group of potential customers to market a company’s product or service to. The target group can be distinguished by the demographic, geographic, or behavioral makeup of the persons within the group. Identifying a specific target group is considered essential in marketing certain products and services in order to increase potential customers, or prospects.

  • Team

    see Downline
    Also known as downline, these are the people who have joined a particular network marketing business. They may be your recruits and the recruits of the people you have sponsored. Members in a certain team are not necessarily the recruit of one person but several of them. Although the upline (leader) doesn’t personally know many of his members, they are still part of the downline only because of the network marketing structural concept. A team may compose of as little as 5 recruits to hundreds of members, as it includes reps or distributors that members in the team have enrolled.

  • Training

    Training is an extensive activity in which an individual acquires knowledge and skills through series of teaching techniques conducted by a professional. It is an organized course that focuses on the development of an individual in order for the skills to be matched with the right attitude and frame of mind.
    In multi-level marketing, the training of individuals is not only limited to the business process but on how to develop a behavior that will increase the chances of winning a client. It also includes leadership programs, paradigm shifting, team building and many more. Training is typically conducted by an expert or a credible person who can efficiently carry out a specific topic. The length of the training will depend on how extensive the course is. After training, several evaluation tools are used to measure an individual’s acquisition of knowledge. This is done through trial tests, application of learning and many others.

  • Unilevel

    Unilevel compensation plans are defined by only one line of distributors. Every distributor is on your frontline, and there is no width limitation for the frontline, meaning that you can have as many distributors as you choose. The goal of unilevel plans is to recruit a large number of frontline distributors, and then encourage these distributors to do the same. Because unilevel plans are easy to understand and require minimal amount of personal volume, they are considered basic and simple plans for getting started in network marketing. However, there are restrictions on the amount of commission a person can receive.

  • Unlimited Income

    Unlimited income is a continuous flow of money without limits. The amount of money has no boundaries and no geographic territories are required, and any business person or sales person can acquire unlimited income through high sales and large profit margins. This is also stated as the “sky is the limit” method of earning money, and it is often the phrase used by businesses in developing the marketing strategies for its employees. Unlimited income is achieved by recruiting people in a downline and by the continuous distribution of the product.

  • Upline

    The upline is the person who recruited you into an MLM company, or any person who is connected within the same line to the person who recruited you. Understanding the word “upline” is a lot like understanding the word “boss.” The person you work for is your boss, but the person he works for is also your boss. Your upline is the person who brought you into the business – but their upline is also your upline.

  • Volume

    Volume is defined as the number of items sold, or the number of recruits in the networking business. There are various definitions of volume depending on the type of business operation a company has. Some refer to volume as the number of shares a company has, when the company is involved in stocks. Others define volume as the number of markets targeted for a specific product. The volume, whether it pertains to products, people or investments, is necessary to measure the potential success of the business. In network marketing, the volume of recruits is essential to keep the commissions high. This includes finding people to join in the downline.

  • Warm Market

    A Warm Market is defined as a potential customer base that can readily agree to a sales pitch, typically a base that has previous knowledge of the business or product. Examples of a warm market include the family and friends of a business person, co-workers, acquaintances, etc. Typically, the goal of a network marketing business is to utilize the warm market and develop the cold ones into becoming warm. Sales strategies for network marketing businesses can change depending on the warmth of the market.

  • Weak Leg

    In a binary MLM pay plan, a distributor has two legs – left and right, or commonly known as strong and weak leg. The weak leg is called “weak” because it is shorter, or has lesser members than the strong one. However, in a compensation plan such as the binary, a particular distributor has to keep both legs balanced to qualify for a paycheck.

    Where the legs are unbalanced, a distributor is paid based on the production of the weak leg, thus the term “money leg” for the shorter (or lesser business volume) leg. Network marketing experts suggest beginners focus on building the money leg rather than the strong leg. Typically, the sponsors and the people above you take charge of the power leg while you, as the member, concentrate on working on your weak leg to balance both sides.

  • Wholesale

    A term used to describe the products or services of a particular MLM business. The product or service is typically bought in large quantities at low costs to be retailed for profit. In the distributors/members at wholesale price, and members can in turn sell the products or services for a recommended markup, or profit. Acquiring the merchandise at wholesale price is one way for MLM members to earn profits, aside from the commissions acquired from the sales of downlines.

  • Word-of-Mouth

    Word-of-Mouth refers to the sharing of information from one person to another through verbal communication. In the network marketing industry, it is also called word-of-mouth marketing, where the products or services of a particular MLM business are sold by the members directly to consumers via referrals, and subsequently passed on verbally until it becomes a household product name. Word-of-mouth is generally considered an inexpensive way to advertise and promote a particular network marketing business as a whole.

  • Work From Home

    This term refers to income-earning endeavors that people can do working from their own homes. Many Network marketing companies are work from home business ventures.