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Business Glossary

Active

The status that many network marketing companies require in order to maintain their title as an independent distributor. They must generate a minimum monthly personal volume, which can be achieved by personal purchases, customer purchases, or a combination of both. The amount of personal volume needed to remain ‘Active’ will vary based on the company.

 

Autoship

A program designed to ensure that a selection of products of your choice is automatically shipped each month. Many companies encourage theirdistributors to enroll in an autoship program to ensure they remain active and qualified each month. Most companies allow autoship orders to be changed, modified, or cancelled at any time.

 

Bonus

An amount of money added to typical commission as a reward for good performance. Many network marketing companies offer bonuses such as electronics, cars, vacations, and even houses for reaching predetermined goals of building their network marketing business. The specific qualifications for obtaining a bonus will be detailed within a company’s compensation plan.

 

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 Network Marketing company rewards the production of getting customers and recruiting others who get customers.

 

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

 

Distributor Kit / Starter Kit

Is the kit required for purchase in order to enroll as a distributor. Distributor kits are often available in different sizes and price-points, but selection depends primarily on the ambition of the enrolling distributor. These kits often include training tools, marketing materials, branded apparel, and samples of the company’s products. While many people skeptical of the industry wonder why you must purchase products in order to sell them, the product included in the kit is best utilized for sale or demonstration, thus growing the distributor’s new network marketing business. It is advantageous to partner with a network marketing company that will drop-ship any physical products to customers. This negates the need for distributors to invest any significant amount of money into stockpiling inventory of products.

 

Downline

1. Any person you recruit to join your Network Marketing Company. “Chris is in my downline.”
2. Any person recruited by someone you have recruited. “John has sixteen people in his downline.”

 

Earnings

Proceeds derived from products or services sold. In network marketing, earnings may come from commissions, bonuses, incentives and residual income. Earnings may be based on the compensation plan of a particular network marketing company. This means that earnings may vary depending on the company and the input of the members or entrepreneurs.

 

Enroll

Enroll refers to the signing up of new members in the network marketing industry. Leads or prospects who are joining the business typically sign up first before they can be recognized as members or part of the company. Sponsors earn residual commissions out of those enrollments in exchange for goods or services of the network marketing business. The new enrollee may go forth and enroll new members under him or her.


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.

 

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.

 

Genealogy

In a network marketing business, genealogy refers to the list of members in a downline. All members are working towards a common goal to promote the company’s product or services, but members don’t always interact with each other. Genealogy includes your recruits (team) and the people your recruits have enrolled. It’s structured like a family tree. Network marketing companies typically keep records of their members to keep genealogy reports ready anytime a member requests for his downline list. It may include names and contact information of all the registered downlines of a particular member. In network marketing, the more members in a genealogy, the better and the more profitable for a networker. The leader (upline), earns commissions and residual income from the products the downline members buy and sell. The list can go on and on as members continue to enroll new recruits.

 

Goals

Goals are what an individual strives to achieve over time. Short-term goals are ones that can be accomplished quickly, while long-term goals will take more time. Goals that are set by the company or leader can keep a business on track towards a common direction. In network marketing, sales goals are set to keep members on a track to maintaining a successful business.

 

Group Volume (GV)

Volume which is generated by all purchases throughout the organization (team) of an independent distributor.

 

Incentives

Rewards provided by network marketing companies to motivate their distributors and increase the downline’s enthusiasm. The goal of incentives is to excite members about selling the product or service, to offer rewards for performance, and to develop a fun culture within the network marketing organization. Incentives are often provided to distributors who have the highest volume, the highest increase in volume, or the highest increase in volume percentage. Other factors that determine who gets the incentives include the amount of retail products sold, the number of new distributors recruited per week, month or quarter, the total number of guests at network marketing conference calls or opportunity meetings, and completion of training.

 

Lead Generation

A network marketing term which simply means generating leads or prospects, or potential members of a particular network marketing business. Lead generation methods used are diverse and include referrals, advertisements, list purchases, cold calls, telemarketing, search engine results, webpage visits and demographic statistics. The goal of generating leads is to convert prospects into consumers.

 

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. Network Marketing companies reward leaders highly because of the value they bring to the company and the people they recruit.

Note: A leader in Network Marketing 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.

 

Level

In a network marketing organization, level means the vertical placement of a distributor or member. New recruits placed under him or her belong to the first level while their recruits will be assigned on his or her second level. New sign ups from the recruits’ recruits will be on the third level, and so on. The more levels an independent distributor has, the bigger the organization, which can bring in increased sales and higher earnings and commissions. Building active levels within a team may guarantee a stable business and passive income over time.

 

Organization

The members of a Network Marketing company can be drawn as a tree. This genealogy is called Organization.

 

Parent

1. Someone who is immediately above you in the organization structure/genealogy tree.

 

Personal Volume (PV)

Personal volume is generated by a distributor’s personal purchases, retail customers’ purchases, or a combination of both.

 

Products

Refers to the merchandise or goods a network marketing company offers to consumers. Products may come in various forms such as cosmetics, food supplements, clothing, toys and other marketable goods that cater to a variety of markets. Legitimate network marketing businesses normally provide their new members a starter kit which contains products equivalent to the signup fee the members pay upon enrollment. The kit may be sold, used for personal consumption, or used for presentation purposes when encouraging prospects to join the company. Commissions and revenues come from the proceeds of products sold by the distributor and his members (downline).

 

Prospect

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

 

Recruit/Refer

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 Network Marketing 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.

 

Rep

Short for representative, rep can mean a sales rep or distributor who can effectively sell the products/services of a particular network marketing company to consumers. It is also someone who can represent the company in a positive way and who possesses a unique persuasion skill that will motivate people to become part of the company as members and retailers. Typically, new network marketing businesses hire sales reps or marketing reps as leaders to help them recruit new members and spread what products/services these companies offer. Reps normally have previous experience in marketing or have undergone training before they are sent out to represent a network marketing company, particularly in the initial introduction stage of the business.

 

Replicated Website

A replicated website is a website template reproduced for multiple users (in this case, the team members) and tailored for particular business uses. This is typically done to provide the company a strong web presence and generate targeted leads that can help in the growth of the business. The website information and contents (actual layout, logos, welcome page, colors, blog, testimonials, etc.) typically remain unchanged except for the user names and profiles, which are modified according to each distributor’s detailed information.

 

Retail

Retail refers to the sale of products or services to consumers for profit. In network marketing, retailing is done by members who obtain goods at a wholesale price and resell them to end users at a certain markup. Distributors, or members, seek out a customer base to sell their products or services to rather than customers coming in to buy. Retailing can also bring in qualified prospects to be part of the team or company. The concept behind network marketing retailing is to reach out to consumers and present business and income opportunities on a part-time or full-time basis.

 

 Sideline

1. A person who is in the same Network Marketing company but is not connected structurally or within the same line.

 

Spillover

Spillover refers to a part in the binary pay system where an upline can place his or her new recruits under a particular member in the group. Since a network marketing binary plan entails leg building to form a pyramid-type organization, every member has two members below him or her. If a certain upline or member signs up 3 recruits, these new recruits are assigned to other members in the team with no pairings. This is referred to as “spillover.” Members who cannot recruit a person on their leg can benefit from this system since an upline will assign almost all of his new recruits to members under him to build a balanced group/leg.

Sponsor

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

 

Team

You and your downline together is considered ‘Team’.

 

Upline

1. The person who recruited you into a Network Marketing 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.

 

Volume

Volume is defined as the number of items sold, or the number of recruits in the networking business. There are various definitions of volume depending on the type of business operation a company has. Some refer to volume as the number of shares a company has, when the company is involved in stocks. Others define volume as the number of markets targeted for a specific product. The volume, whether it pertains to products, people or investments, is necessary to measure the potential success of the business. In network marketing, the volume of recruits is essential to keep the commissions high. This includes finding people to join in the downline.

 

Weak Leg

In a binary pay plan, a distributor has two legs – left and right, or commonly known as strong and weak leg. The weak leg is called “weak” because it is shorter, or has lesser members than the strong one. However, in a compensation plan such as the binary, a particular distributor has to keep both legs balanced to qualify for a paycheck.

Where the legs are unbalanced, a distributor is paid based on the production of the weak leg, thus the term “money leg” for the shorter (or lesser business volume) leg. Network marketing experts suggest beginners focus on building the money leg rather than the strong leg. Typically, the sponsors and the people above you take charge of the power leg while you, as the member, concentrate on working on your weak leg to balance both sides.

 

Wholesale

A term used to describe the products or services of a particular network marketing business. The product or service is typically bought in large quantities at low costs to be retailed for profit. In the distributors/members at wholesale price, and members can in turn sell the products or services for a recommended markup, or profit. Acquiring the merchandise at wholesale price is one way for network marketing members to earn profits, aside from the commissions acquired from the sales of downlines.