MLM Glossary

Buy back policy: the manufacturers rules concerning the return of unsold products for a full or partial refund.

Benefits: all types of compensation including mark-ups, commissions, bonuses, overrides, and perks such as insurance, travel, and vehicles.

Consultant/distributor: an adult who completes an agreement, pays an enrollment fee if required, and is eligible to represent the manufactures products as an independent salesperson and recruiter.

Direct sales/ direct selling: a method of selling in which manufacturers or marketers of merchandise reach consumers with their products through a personal sales contact. All MLM business opportunities employ direct selling, but not all direct sales firms employ multi level marketing.

Downline: the line of sponsorship between a particular distributor and all sponsorship levels below.

Dual marketing: used by Mary Kay Cosmetics to refer to the fact that the corporation itself does not recruiting for their opportunity.

Front loading/ front-end loading: an illegal practice that pressures new distributors to purchase products in order to take advantage of an opportunity. While most professionals agree that it is a good idea for newcomers to purchase enough products to become familiar with the company’s product line, no reputable firm will require or pressure new distributors to invest hundreds or thousands of dollars in products to get started.

Generation: all distributors in a leg after reaching a certain level; usually refers to breakaway legs (see stairstep/ breakaway)

Leg: a line of distributors which begins with someone you personally sponsor and continues below that distributor.

Level: generally refers to who sponsors whom within a distributors network. Someone personally sponsored by a distributor is referred to ask first level. Someone sponsored by the first level distributor becomes second level to the original sponsor and so on.

Matrix: a type of compensation plan which creates an organization of a pre=determined size and structure. For instance, a distributor might be allowed to sponsor no more than a set number of individuals and each of those distributors would be allowed to do the same. Any person sponsored above that number would automatically fill and open space in the downline.

Network marketing: a synonym for multi-level marketing.

Overrides: money paid on the production of breakaway legs.

Pyramid or Ponzi scheme: illegal businesses superficially resembling legitimate network marketing companies which generate income solely from recruiting new members and charging them fees, with no actual product or service being moved.

PV, BV: point volume or business volume. Used by many MLM’s to calculate commissions and overrides instead of using dollar amounts.

Renewals: many MLM’s require that a person recommit their desire to be a distributor every year or in some cases month by signing and paying a small fee. This process eliminates drop outs from the companies roles.
Saturation: the point at which all potential prospects have been converted. Extremely unlikely.