Multi level marketing, or MLM, is a form of direct sales home business in which independent representatives sell products or services from a company to an end consumer. The multi-level aspect refers to each representative’s ability to recruit and train other representatives to start their own business, and earn a commission on their reps’ sales.
The Plan: Most MLM reps refer to their program as “the plan,” which outlines the company’s marketing and compensation (how you earn money) plans.
Sponsor: The sponsor is the representative who directly recruits another person into the business. For example, MLM member A recruits member B into the business. Member A is the sponsor and is responsible for training member
Downline: Your downline contains the recruits brought in below you. This can include members you’ve recruited as well as those your recruits have brought into the business.
Upline: The upline consists of the representative sponsors who came in before you. For example, if rep A recruited rep B, who recruited rep C, who recruited you, your upline is C, B, and A.
Compensation Plan: Similar to the plan, this outlines all the ways reps earn money. To be legal and not a scam, the focus when it comes to earning money needs to be on the sales of products and services, not on recruitment of new members. Along with commissions on sales made by you and your team, many companies pay bonuses and increase commission splits based on volume of sales.
Network Marketing: Multi-level marketing is sometimes referred to as network marketing as well.