MLM Glossary

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

Back office:The virtual portal that MLM companies provide for their distributors in order to access critical business information.

Bonus pool:An income fund that is set aside from global sales or sales during a specific period that is distributed as a reward for qualified leaders.

Business presentation (bp) or business opportunity presentation (bop):A formal meeting or business presentation that takes place in a formal set up or informally in a coffee shop, restaurant, home, or hotel conference room with an intention to invite others to become independent distributors or product customers.

Buyback policy:It is an official agreement by a company to buy back sold products from distributors at its current price whne it is returned within a specified period of time.

Business volume or bonus volume:Often referred to as BV, it is the real value a company uses to assess payable commissions which could vary with varying wholesale dollar values from company to company.

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

Cross selling:It is selling of additional or subsidiary products or services according to customer interests while purchasing any of the company's products.

Related words : Product

Cybersecurity:Cybersecurity is the practice of protecting assets that companies and individuals adopt to safeguard their critical systems and sensitive information from digital attacks.

Conversion rate:The rate at which leads are converted to customers or distributors.

Related words : Network marketing leads,Distributor

Coding bonus:Coding bonus is what companies pay their distributors based on their downline performance. When distributor’s downlines make sales, they are coded so that the original distributor is paid a bonus on their initial order, over and above their ongoing sales and personal orders.

Compression:Compression is a type of compensation plan that compresses downline by one level if a distributor quits or is terminated.

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

Duplication:The system through which new distributors are trained to duplicate or replicate the success of their upline.

Eg : Duplication of business ideas of successful uplines is a key factor for team success in network marketing.

Related words : Sponsors, Uplines, Team, Network Marketing

Digital transformation:It is the process of transforming a business with innovative digital technologies by creating new business processes, culture, and customer experiences to meet changing business and market requirements.

Depth:It is the number of levels in a personal network.

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

Enrollment package:The initial package a distributor has to buy in order to join as a distributor for an MLM organization.

Eg : Each enrolment package has unique prices, and benefits vary accordingly.

Related words : Distributor, MLM, Organization

Enterprise management:An Enterprise Management System (EMS) is a software package that supports the various requirements of complex organizations.The software allows personnel to manage multifaceted companies whose infrastructures are often scattered geographically.

E-pin:E-Pin is an innovative payment system that allows MLM recruits and businesses to enable a highly secured option to gather payment.

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

Frontline:A distributor who is directly under a specific distributor in the downline.

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

Related words : Upline

Forced matrix:A Forced Matrix is a system where the marketer limits the number of referrals their affiliates can refer.

Fast start bonus:The initial bonus paid as an incentive to a distributor when a particular level of sales or recruitment goal is achieved in the initial month with the company.

Funnel:A structure through which leads could be guided to becoming customers or distributors.

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, Unilevel, Matrix plan

Headhunting fees:Commission paid for recruiting new members to the network.

Eg : Some organizations stress on recruitment with a headhunting fee for each new recruit the distributor brings in.

Related words : Commission, Network, Organization, Distributor

Heavy hitter:A leader who generates large sales volumes and creates bigger teams consistently.

Home meeting:It is a meeting held at distributor's home to create new opportunities. This would be the first presentation for new distributors to family and friends.

Hotel meeting:It is a meeting held in a hotel room to create newer opportunities.

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

Inventory loading:Purchasing of stock initially as enrollment packages by distributors which cannot be sold out completely.

Eg : Inventory loading is a mandatory rule set by MLM companies to clear off their inventory by dumping it on the distributors.

Related words : Enrollment packages, Distributors, MLM

Infinity bonus:An incentive paid to distributors when they achieve a level of success and maintain the same for a longer time period.

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

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

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

Leverage:The combined effort of a network of members that creates a positive impact on the network marketing business as a whole.

Eg : Levarage in MLM is what can make or break the business.

Related words : Network marketing, MLM, Network

Leadership bonus:The bonus paid to a distributor who attains a particular leadership position within the company.

Lead: A prospective customer or recruit for an MLM company.

Landing page:A webpage that a lead will be redirected to when they click on a particular ad or a link.

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

Multi-level marketing:See MLM

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

Related words : Network marketing, Compensation plan, Bonus

Matrix:A matrix is a pyramid structure where employees/team members are arranged into a fixed number of rows and columns.

Related words : Pyramid Scheme

Matching bonus:The bonus paid to a distributor depending upon the sales and commissions earned by their downline.

Momentum:It is the rapid growth period where sales and the introduction of new customers and distributors accelerates rapidly.

Monthly volume requirements:It is the manadatory sales volume that a distibutor has to produce inorder to reach a commission milestone.

Network:Group of members working under the same upline or sponsor or those promoting products for the same organization.

Eg : Smart and reliable MLM network is a key factor that contributes to the growth of an organization.

Related words : Upline, Downline, Sponsor, MLM, Organization

Network marketing:See MLM

Eg : Network marketing is also referred as MLM or direct selling business where a network of distributors bring business and earn benefits.

Related words : MLM, Compensation plan, Bonus

Network marketing leads:The active members who have a great interest in network marketing and consider this as a good business opportunity and will have much interest in products and services.

Eg : Good network marketing leads will bring you good results enhancing earning opportunity.

Related words : Leader, Opportunity meeting

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 : 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

Onboarding:Getting a distributor on to your team.

Eg : Distributor onboarding in direct selling should be done strategically.

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

Prelaunch:A period of months during which a company sets itself up and creates a major marketing push prior to its official launch.

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

Rank:The position given to a distributor in the company structure based on their sales and downline volume.

Rank advancement:The process by which a higher rank is achieved in the company hierarchy.

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

Salesforce:A distributor network working for an MLM company.

Sponsorship:The process of roping in new distributors into an MLM company.

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

Tele conference:A conference held over the phone with distributors dialing in from any location. Teleconferences are often used when relaying major news or creating a major push to bring in new team members and customers.

Three way calls:Used as a training method and prospecting technique, a three-way call allows a team member to bring a more experienced colleague into a conversation with a prospective team member. The experienced team member explains the business and answers questions, which helps instill confidence in both the new distributor and the prospect.

Unilevel:Unilevel 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

Upselling:A sales technique where a seller invites the customer to purchase more expensive items, upgrades, or other add-ons to generate more revenue.

Unjust enrichment:An unfair trade practice that pays unlimited levels of commissions to distributors benefitting those at the top.

Eg : Unjust enrichment leads to the collapse of the business resulting in financial loss for those at the lower levels.

Related words : Level, Commission, Distributor

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

Warm list:A list of contacts that includes your friends, family, and close acquaintances that is used to determine which ones can be approached regarding your business, product, or service.

Webcast or webinar:An online presentation that distributors, prospects, and customers can view live online instead of having to travel to hear the presentation. Many webcasts are also recorded, making them a valuable training tool.

Width:The number of people that your company compensation plan dictates you can have on your first level. In some cases it is limited to two, and in many there are no limits.