Multi-level marketing (MLM)
MLM also known as Network Marketing is a business distribution model that allows a parent multi-level marketing company to market their products directly to consumers by means of relationship referral and direct selling.
Although each MLM company dictates its own specific "compensation plan" for the payout of any earnings to their respective participants, the common feature which is found across all MLMs is that the compensation plans theoretically payout to participants only from the two potential revenue streams. The first stream of compensation can be paid out from commissions of sales made by the participants directly to their own retail customers. The second stream of compensation can be paid out from commissions based on the sales made by other distributors below the participant who had recruited those other participants into the MLM in the organizational hierarchy of MLMs, these participants are referred to as one's “downline” distributors.
MLM salespeople are, therefore, expected to sell products directly to end-user retail consumers by means of relationship referrals and word of mouth marketing, but most importantly they are incentivized to recruit others to join the company as fellow salespeople so that these can become their downline distributors.
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