The NM glossary below defines commonly used NM words. The definitions are in layman’s terms to bring about an understanding of the subject of NM. These definitions are not to be misconstrued as legal definitions.
 

Anti-NM
1. Those who are against NM.
If you are against NM, please read this.
 

Compensation Plan
1. Money received as payment for selling a product to consumers.
2. Money received as payment for a downline member selling a product.
3. The “compensation plan” is the way a MLM company rewards the production of getting customers and recruiting others who get customers.

Crossline
See Sideline.

 

Distribution
1. The process of marketing and supplying goods and services.
2. Part of the process of announcing to a consumer the existence of a product or service.

Distributor
1. A person who has signed an agreement to distribute a product or a service for an

Network Marketing company.

2. One that markets or sells merchandise, especially a wholesaler.

Downline
1. Any person you recruit to join your MLM company. “Chris is in my downline.”
2. Any person recruited by someone you have recruited. “John has sixteen people in his downline.” See diagram.

 

Ethical
1. Being in accordance with the accepted principles of right and wrong that govern the conduct of a profession.
2. Morally right or morally acceptable.

 

Ethical Business
1. A business that makes someone’s life better.

Financial freedom
1. Free from debt and having the means to buy all one desires.

 

Frontline
1. A person you have personally recruited to join your business. There is no one between you and them in the structure.

Leader
1. A leader is a distributor who takes responsibility for those in his downline and ensures they are well trained to sell products to consumers and recruit others.
2. A leader is a distributor who recruits and trains a lot of people. MLM companies reward leaders highly because of the value they bring to the company and the people they recruit.
Note: A leader in MLM is not based on a resume (as in traditional business), but on production only. Leaders can be found or they can be developed. It is the position of the author of this web site that anyone can be a leader with the correct training.

 

Multi-Level Marketing
A method of distributing a product to a consumer. See What is MLM?

 

MLM
Acronym for Multi-Level-Marketing

 

Network Marketing
A word used in place of the word Multi-Level-Marketing or MLM. Some believe that “network marketing” is different than MLM in that in MLM distributors inventory products to sell to consumers, but in network marketing distributors simply connect consumers with the network marketing company so they (the consumer) can buy direct from the company. Although this may be true in a small number of companies, it’s not being practiced in the industry as a whole - therefore the definition does not fit.

 

Personally, I’ve traced the word “network marketing” back to a group of distributors in Amway who wanted to bypass the negative media attention in the early 1980s and changed the name to network marketing. I’m not implying that this is (or is not) the origin of the word - this is just where the “string” ended in my research. In addition, I’m not finding fault with the practice of a group attempting to build a positive image. For instance, the “gaming & entertainment” industry used to be called “gambling.” In every news story there is at least one person “spinning” the story for their intended outcome.

 

Organization
See Downline

 

Pension (Lifetime)
A sum of money paid regularly as a retirement benefit.
[Section added by Tim Sales: Lifetime pension is an antiquated retirement system in the United States that is fading into nonexistence. Lifetime pension plans were a popular retirement plan in the mid 1900’s where the employer (the company) contributed 90% of the contribution amount and employees (you) contributed 10% towards a retirement plan. Lifetime pension plans are being replaced by 401(k) plans because they save corporations (on average) 50% of retirement expenses.

 

Prospect
1. Someone who is a potential customer.
2. Someone who is a potential distributor.

Recruit
1. To enroll or seek to enroll as a member. Colleges recruit athletes.
The difference between recruiting and hiring is that when one hires another it means to engage the services of (a person) for a fee; to employ.
In MLM a person recruits another, or a company recruits a person but they are not hired as employees. They are paid a commission for products sold.

 

Sideline
1. A person who is in the same MLM company but is not connected structurally or within the same line. See diagram.

Sponsor
1. The person who recruited you into your MLM business. “My sponsor recruited me last month.”
2. To recruit someone into an MLM business. “I sponsored 2 people last month.”

 

Team
(see Downline)

 

Upline
1. The person who recruited you into an MLM company. “Mike is my upline.”
2. Any person who is connected “within the same line” to the person who recruited you. “My upline put a lot of emphasis on training people right.”
 

Understanding the word “upline” is a lot like understanding the word “boss.” The person you work for is your boss - but the person he works for is also your boss. Your upline is the person who brought you into the business - but their upline is also your upline.