MLM Industry Terms and Lingo
Educate Yourself!
As with any industry, not knowing the lingo is a quick identifier of a 'Green
Horn' and often leads to being taken advantage of.
On this page, I will attempt to add terms, and explanations, in order to provide
a good resource for the industry. This particular page will be a work in
process, as I am often busy with clients.
Affiliate Marketing: Refers
to the method of marketing a company's products or services through a sales
channel or network of individuals. Most companies that state they are an
Affiliate Marketing company utilize a multi-level or DownLine levels for
calculation of commissions.
AutoShip: Refers to
an automatic re-purchase of a company's product or service, according to a
schedule. Normally, an identified Product, Price, and Date of regular
re-purchases is defined.
Bonus Pools (BP): Please see MLM Compensation Plan Bonuses.
Customer Acquisition Bonus (CAB): Please see MLM Compensation Plan Bonuses.
Cold Market: Refers
to persons who you have no direct contact with, or knowledge of how to build a
line of communication with.
Commissions: Refers to an earned benefit from Sales
Performance, often within your Sales Team.
Compensation Plan: Refers
to the Model/Payment Schedule, used for identifying, calculating, and
demonstrating Qualifications, Rank Advancement, Bonuses, or Commissions based on
Sales Performance.
CrossLine: Refers to
Income Centers located Beside you. They are neither in your UpLine or
DownLine. (Please see Relationships)
Distributor: Refers
to individuals who affiliate themselves as Independent Representatives, with the
Goal to market a company's products or services to end consumers and with the
Hope of earned benefit for Sales Performance.
DownLine: Refers to
Income Centers located Below you. Normally making up your Sales Force or
Sales Team. The Sales Performance of these Income Centers is often used
for Rank Advancement and/or Commission Calculations. (Please see Relationships)
First Order Bonus (FOB): Please see MLM Compensation Plan Bonuses.
First Order Bonus Tier 2 (FOB T2): Please see MLM Compensation Plan Bonuses.
Fast Start Bonus (FSB): Please see MLM Compensation Plan Bonuses.
Fast Start Bonus Tier 2 (FSB T2): Please see MLM Compensation Plan Bonuses.
Generational Bonus (GB): Please see MLM Compensation Plan Bonuses.
Income Center: Refers to a position in a DownLine or
Compensation Plan Structure, representing the Independent Representative and the
Customers belonging to that Independent Representative. Important to note
is that Customers and the volume of those customers is represented within the
Income Center of the Independent Representative. Customers are not
represented in that Independent Representative's DownLine is made up of the
Income Centers of other Independent Representatives making up the Sales Team.
Independent Representative: Refers
to an individual who chooses to Independently represent a company's products or
services, according to the company's Terms and Conditions, as well as Policies
and Procedures. Normally, earnings are reported via 1099.
Infinity Bonus (IB): Please see MLM Compensation Plan Bonuses.
Legs: Legs are mostly, but not exclusively used, when
speaking of a Binary Compensation Plan Structure.
In a Binary Structure, you visualize Two Legs, a Left and Right. Some
companies refer to each person on your frontline as a leg. Thus, even a
UniLevel or Matrix may refer to Legs. In this case, they would not be Left
or Right, but Numbered.
A Leg Methodologies Examples follow:
BINARY
You
/ \
(Left Team) Left Leg
Right Leg (Right Team)
UNILEVEL/MATRIX
You
|
| |
| |...etc.
Leg1 Leg2 Leg3 Leg4 Leg5
Genealogy: Refers to
the downward progression of Income Centers, beginning with your Income Center.
The Genealogy may be demonstrated with as Limited or Unlimited, in either Width
or Depth. Fundamentally, the Genealogy is made up of Income Centers who
market a company's products or services to end consumers. These Income
Centers make up your Sales Team and their volume may be used for determination
of your qualification, rank advancement, or commission calculations.
Matching Bonus (MB): Please see MLM Compensation Plan Bonuses.
Multi Level Marketing: Refers
to the method of marketing a company's products or services through a sales
channel or network of individuals. Most companies that state they are a
Multi Level Marketing company utilize a multi-level or DownLine levels for
calculation of commissions.
MSRP: Refers to
Manufactured Suggested Retail Price. Often used to demonstrate the
promoted value of a product or service by a manufacture and often separate from
the actual Retail or Selling Price.
Network Marketing: Refers
to the method of marketing a company's products or services through a sales
channel or network of individuals. Most companies that state they
are a Network Marketing company utilize a multi-level or DownLine levels for
calculation of commissions.
Pyramid/Pyramid Scheme: Refers a
business structure which is unethical, immoral, and probably illegal.
Important is that a structure is not so much illegal, as the methods, actions,
or activities employed. The structure may resemble the structure of
traditional business CEO, President, VP 1, VP 2, Sales Managers, Sales Agents,
etc. This comparison has been performed many times to justify the
structure. The problem is not so much in the structure, but the actions
Specifically, most countries impose laws against an 'Endless Chain of
Recruiting", as there is normally no clear business model of selling to end
consumers.
Recruit: (verb)Refers
to the Action of Sponsoring new Independent Representatives to your Sales Team.
(noun)It may also refer to the new Independent Representative.
Residual Income: Refers
to regular earned income from the Performance of your Sales Team.
Retail: Refers to
the Selling Price to End Consumers, either Person to Person, or from a website.
It is normally intended to be the price a Customer pays, which often separate
from the Distributor/Independent Sales Representative Wholesale Price.
Relationships: "UpLine"
refers to those income centers above you. "CrossLine" refers to income
centers beside you. "DownLine" refers to income centers below you (Your
Sales Team).
UpLine
/\
|
CrossLine <--- YOU
---> CrossLine
|
\/
DownLine
Sales Force/Sales Team: Refers
to your DownLine or Genealogy of Income Centers who sell the company's products
or services to end consumers.
Spill/SpillOver: Refers
to the automated placement within a Limited width organization, such as a Binary
or Matrix.
Sponsor Bonus (SB): Please see MLM Compensation Plan Bonuses.
UpLine: Refers to
those Income Centers Above You. In some Compensation Plans, your UpLine is
your Sponsor, and then his Sponsor. Not every Compensation Plan is based
on a Line of Sponsorship, thus a Binary and Matrix are seldom represented with
your UpLine immediately being your Sponsor. (Please see Relationships)
Warm Market: Refers
to those people which you know and may be able to reasonably contact to discuss
the products or services you sell.
Weak Side/Weak Leg: Refers
to a the Front Line Leg with the Least Sales Performance. Example: 10%
Weak Side Binary refers to a compensation plan that offers a potential earned
benefit equivalent to 10% of the Sales Performance of your Lessor Leg.
Wholesale: Refers to
the Distributor/Independent Representative Special Pricing.
Wholesale/Retail Bonus (WRB): Please see MLM Compensation Plan Bonuses.
Regards,
Scott H Leonard
- Consultant
- Speaker
- Trainer
- MLM Software Provider
- Guerrilla Marketing Expert
- Web Services Provider
MLM Software Central - San Diego
121 Broadway St, Suite 347, 348
San Diego, CA 92101
1-888-221-0106