MLM Glossary

November 28, 2013

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

1. Those who are against MLM.
If you are against MLM, 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.

See Sideline.

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.

1. A person who has signed an agreement to distribute a product or a service for an MLM company.
2. One that markets or sells merchandise, especially a wholesaler.

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.

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.

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

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?

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.

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.

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

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.

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

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.”

(see Downline)

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.” See diagram.

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.

Tim Sales

About the Author

Tim Sales

Tim’s experience in building his own downline of 56,000 network marketers helped him develop his signature training series. A public relations ambassador for the network marketing industry, Tim has also dedicated his time to debunking the false information spread about the network marketing industry.

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Rajeev sreenivasan

Very much helpful for me this article.

david wilson

It will always be a challenge to explain the truth about MLM to those who have pre-conceived ideas but this article does help to clarify the main points that relate to this ethical industry.

Faye Clay

A brilliant explanation of MLM.

Patti Roney

With First Class MLM, you have succeeded in giving a full overall picture of this amazing industry! The more we understand, the more valuable we can be to society! This article is very helpful!

Terry Blaser

Thank you for the time and effort you put into First Class MLM. Anyone, with an open mind, can come away armed to make an intelligent decision about becoming involved with MLM.

Charlie Amos

At last! The voice of common sense bringing a balanced approach to mini-franchises / MLM / Network Marketing. Excellent. Thanks so much.

Julia Fuentes

Simple and straight answers to understand the industry. Thanks

Trry Kilburg

I just finished reading this! Very well put-together, Tim! Thanks for all your time and investigation. I think this will create a solid principle that will be carried throughout time by MLMer’s and together we will revolutionize the World!

Steve Stearns

Tim, you are always very concise and clear about how you communicate. The Glossary of Terms and the research behind some of these terms indicates your commitment to great communication. I learn by your example – Thanks.

Bill Robinson

“Making-a-positive-difference” in the quality of life of others, is a value countless MLM’ers world-wide share. Through First Class MLM, you have shown precisely, why everyone can be confident in knowing, that MLM is truly, the vehicle to make this happen!

Stephen Nott

Great work Tim, this will help many thousands of people working MLM around the world, professional and creditable.

Janet Rose Marie

Your dedication and approach is appreciated greatly. The simple, straight-forward words and explanations shines light on the credible, ethical business MLM companies offer. Thanks

Jimmy Carter

Tim,this info is the most informative and learnable ,thus enabling the beginner and proffessional with more confidence to explain our MLM business

Valencia Burton

Thank you Tim!

Jacob Camacho

Now people doing their research can understand some of the terms we use. Thank you Tim.

Chandra sekhar

Dearest Tim
Wish you a happy and prosperous new year.
I am greatly indebted to you because your teaching is very simple and amazing. I learned many and whenever I find time I am with my teacher, that is you. Million thanks to you, Tims. I only hope I will get a chance to meet you once in my life.
I am part of Quest net and your teaching is really helping me in handling objections, inviting, prospecting etc….. “When we are ready to make someones’s life better from our heart, God helps to achive our dream”. Thanks a lot, Tim.

Paul Maclauchlan

Thank you for busting the jargon barrier of this industry, Tim! Long overdue and a welcome addition to my bookmarks.



Thanks Tim! You are the best.


Green around the gills but confident with your help I could be a superstar!

Jess Aguinaga

Thanks for putting in the time and effort to put this site together. MLM is a great answer to many of the problems we see in society today and its about time someone has taken a stand.



you stand above the rest. ! ! ! !

Francis Alagbate

Dear Tim,
For people with goodwill and good faith, MLM is a wonderful,trailblazing and doable economic endeavor! In the near and distant future MLM will speak for itself and the world will gravitate around it! Tim, you are one exemplary disciple of the industry in spreading the truth about MLM! Francis

Javed from Pakistan

Hi Tim,
Few weeks ago i was planing to combine all Frequently Used Words in mlm. But now u did it, im happy to see ur work. any mlm done “professionaly” is amazing.
thnx to contributing in our lives
Javed from Pakistan

jackline from Mombasa

Hi Tim,
Thanks alot for your effort to tell world the truth of mlm .Let them know that this is a new profession and the best of all.You have made me realise that i can be my own boss without having to look for a JOB.Live long Tim and i hope to meet you one day .God bless you.

Burt Bolduc

Hi Tim

Thanks to helping so much people I appreciate that.

Asbjorn from Norway

Great stuff – great pages – great networker! Thanks Tim.


i like all,all is well explained in pictures

Azizullah Hashmi

As Salam o Alayqum,
Thanks I like your power of mind to helping so much people I appreciat that.It’s great stuff, great pages and great networker.All the members congratulation to this thanks

Kon Hofstetter, Sydney DownUnder

thanks Tim – as always short, to the point and instantly understandable.


A good glossary
Vocabulary plays a big role in people’s thoughts, attitude
and mentality. Most misconceptions are based on unrevealed ignorance. I love the way you value definitions.
Please, try and develop this glossary to cover more and explain us between systems: binary and sunflower and others.
My greatest regards


Hey Tim.
Thats really helpful to understand MLM concept.


First time in this web and I agree this is first class in MLM,



Thats really brilliant & important article of mlm .

Ninad Shirke

Dear Tim,
I am grateful to you for the MLM article,I found it exclusive in edifying the structure of MLM I can put in few words!This has still more enhanced my level of knowledge in MLM.I have been in NM business for past 6 months …I can say in MLM it’s all about to LEARN and EARN!!!!
Thank you so much and Many Good wishes to you.

William Dearth

Every profession has its terminology and we often forget that it sounds like a foreign language to those new to the industry.

Thank you Tim & your associates for this reminder, it is appreciated


An MLM is based on products or sicreves. Your income is based on a consume of yours and your referrals. In a good MLM system you can make more money than your sponsor if you work harder.In a pyramid scheme you are paid for referring people. Generally there is no product and is too good to be true paying percentage. This schemes can be recognized if you see that in the payplan you don’t have to purchase and get paid. Earlier come earn more.

charles moon

thaks tim, very helpful, now am about to start mlm, its gonna be of a great help,,,,, great job.

moon, abuja nigeria


This was very helpful

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That’s a slick answer to a chnlelaging question


MLM has both pro’s and con’s. But I believe the upside does outweigh the downsides. As you can actually chart your own course. Especially it becomes easier if you have a downline building service like this one called: mlmrc . So if you do a search you’ll find that. The point is as long as you have a good system in place you stand a good chance of making an excellent living, possibly even becoming well off in life through mlm. You can’t get fired like in a job, and if you work hard chances are good you could retire early, which is what I like about the industry. Nice website btw.

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