Multi-level marketing (*MLM*), also known as
Network Marketing, is a marketing strategy that compensates promoters of direct selling
companies not only for product sales they personally generate, but also
for the sales of others they introduced to the company. The products
and company are usually marketed directly to consumers and potential
business part
Independent, unsalaried salespeople of multi-level marketing,
referred to as distributors (or associates, independent business
owners, dealers, franchise owners, sales consultants, consultants,
independent agents, etc.), represent the parent company and are awarded
a commission based upon the volume of product sold through each of
their independent businesses (organizations).
Independent distributors develop their organizations by either
building an active customer base, who buy direct from the parent
company, or by recruiting a
downline of independent
distributors who also build a customer base, thereby expanding the
overall organization. Additionally, distributors can also earn a profit
by retailing products they purchased from the parent company at
wholesale price.
Distributors earn a commission based on the sales efforts of their
organization, which includes their independent sale efforts as well as
the leveraged sales efforts of their downline. This arrangement is
similar to franchise
arrangements where royalties are paid from the sales of individual
franchise operations to the franchisor as well as to an area or region
manager. Commissions are paid to multi-level marketing distributors
according to the company’s compensation plan. There can be multiple
levels of people receiving royalties from one person's sales.
Hope this helps
