This topic has been incredibly popular. So much so that I have updated our site's MLM Industry Terms and Lingo. http://mlmsoftwarecentral.com/mlm-terms.aspx
Any green-horn is recognized by lack of knowledge based on their lingo.
Be sure to check this site out and become familiar with the MLM Industry terms.
-Scott
Wednesday, February 2, 2011
Friday, April 24, 2009
Common MLM Definitions
Definitions within this area are notated by the compensation plan type they are typically associated with. The following key further explains the notation:
Just because a definition is listed as being associated with a plan type does not certify that any particular compensation plan will use the definition. As an example, the term “Compression” can be associated with Unilevel plans, however not all Unilevel plans may use compression.
Active – the term Active is frequently used to indicate that an income center has attained a prescribed amount of Personal Volume (PV) in a commission period. Active is typically used as a compensation plan qualifier or for compression purposes.
Benefit- a reward- commission, bonus, title, etc. earned for successfully meeting qualifications within the compensation plan structure.
Breakage- Refers to dollars that could have been paid in the compensation plan, but which no one qualified to earn. The unearned dollars are returned to the company as breakage.
Customer- a customer is a person that wishes only to purchase product at retail price from the company. Customers are not eligible to build Downlines or receive commissions. Customer volume is added to that of the sponsoring income center during commission calculations; customers do not occupy a position in each level of Downline.
Distributor-a distributor is a person that has enrolled with the company, wishes to build Downline (s) and participate in the compensation plan.
Downline- refers to positions (distributor and customer) in the genealogy below a specific income center in the genealogy.
Enrolling Sponsor – refers to the income center that brought an individual into the opportunity. Although an Enrolling Sponsor may be the same as the Placement Sponsor, the two do not have to match. The term “Personally Sponsored” is used to refer to those that an individual is the enrolling sponsor of.
Frontline- refers to an income center’s first level of Downline.
Income Center- an income center is a position in the organization that can build Downlines and participate in the compensation plan. Distributors, people in the company working the pay plan, may have multiple income centers (or not at the discretion of the company) Each income center belonging to a distributor can build its own Downline. Qualifications and benefits are calculated independently for each income center position.
Levels-Levels refer to layers of Downline. Those income centers that an individual is the placement sponsor of comprise the first level (or front line). Those placed under one’s own frontline comprise the second level and so forth and so on. An income center’s own volume is not counted as being in any of its Downline levels. Customer volume is applied to that of its sponsoring income center in order to determine the position/level in the Downline that it falls in.
Personal Volume- Abbreviated as PV. PV is the sum total CV purchased by a particular income center and that income centers personally sponsored customers in the current commission period.
Placement Sponsor- refers to the income center that is immediately above a position in the Upline. The Placement Sponsor is not necessarily the income center that brought the individual into the opportunity – especially true in fixed width systems.
Primary Income Center-a primary income center (or 001) is the very first one created for a distributor, the first income center that a distributor is awarded at the time of initial enrollment. The second center generated is called the secondary income center (or 002), the third the tertiary (or 003) and so forth and so on.
Qualification-a condition (s) that must be met to achieve benefits within the compensation plan structure.
Rank- a rank is a name (e.g. Qualified Affiliate, 3 Star President, etc). That represents the achievement of qualifications and benefits within the compensation structure. Income centers must meet the necessary qualifications to receive benefits associated with a rank each and every commission period.
Title- an income center’s title is the name of the highest rank that the income center has ever earned within the compensation structure. Titles are permanent until a higher one is earned. Income centers are paid according to their rank, not title.
Upline- refers to a position (distributor) in the genealogy above a specified income center in the genealogy.
For more information on MLM definitions or The Compensation Plan Primer contact Scott at 888-221-0106 or email info@mlmsoftwarecentral.com
Just because a definition is listed as being associated with a plan type does not certify that any particular compensation plan will use the definition. As an example, the term “Compression” can be associated with Unilevel plans, however not all Unilevel plans may use compression.
Active – the term Active is frequently used to indicate that an income center has attained a prescribed amount of Personal Volume (PV) in a commission period. Active is typically used as a compensation plan qualifier or for compression purposes.
Benefit- a reward- commission, bonus, title, etc. earned for successfully meeting qualifications within the compensation plan structure.
Breakage- Refers to dollars that could have been paid in the compensation plan, but which no one qualified to earn. The unearned dollars are returned to the company as breakage.
Customer- a customer is a person that wishes only to purchase product at retail price from the company. Customers are not eligible to build Downlines or receive commissions. Customer volume is added to that of the sponsoring income center during commission calculations; customers do not occupy a position in each level of Downline.
Distributor-a distributor is a person that has enrolled with the company, wishes to build Downline (s) and participate in the compensation plan.
Downline- refers to positions (distributor and customer) in the genealogy below a specific income center in the genealogy.
Enrolling Sponsor – refers to the income center that brought an individual into the opportunity. Although an Enrolling Sponsor may be the same as the Placement Sponsor, the two do not have to match. The term “Personally Sponsored” is used to refer to those that an individual is the enrolling sponsor of.
Frontline- refers to an income center’s first level of Downline.
Income Center- an income center is a position in the organization that can build Downlines and participate in the compensation plan. Distributors, people in the company working the pay plan, may have multiple income centers (or not at the discretion of the company) Each income center belonging to a distributor can build its own Downline. Qualifications and benefits are calculated independently for each income center position.
Levels-Levels refer to layers of Downline. Those income centers that an individual is the placement sponsor of comprise the first level (or front line). Those placed under one’s own frontline comprise the second level and so forth and so on. An income center’s own volume is not counted as being in any of its Downline levels. Customer volume is applied to that of its sponsoring income center in order to determine the position/level in the Downline that it falls in.
Personal Volume- Abbreviated as PV. PV is the sum total CV purchased by a particular income center and that income centers personally sponsored customers in the current commission period.
Placement Sponsor- refers to the income center that is immediately above a position in the Upline. The Placement Sponsor is not necessarily the income center that brought the individual into the opportunity – especially true in fixed width systems.
Primary Income Center-a primary income center (or 001) is the very first one created for a distributor, the first income center that a distributor is awarded at the time of initial enrollment. The second center generated is called the secondary income center (or 002), the third the tertiary (or 003) and so forth and so on.
Qualification-a condition (s) that must be met to achieve benefits within the compensation plan structure.
Rank- a rank is a name (e.g. Qualified Affiliate, 3 Star President, etc). That represents the achievement of qualifications and benefits within the compensation structure. Income centers must meet the necessary qualifications to receive benefits associated with a rank each and every commission period.
Title- an income center’s title is the name of the highest rank that the income center has ever earned within the compensation structure. Titles are permanent until a higher one is earned. Income centers are paid according to their rank, not title.
Upline- refers to a position (distributor) in the genealogy above a specified income center in the genealogy.
For more information on MLM definitions or The Compensation Plan Primer contact Scott at 888-221-0106 or email info@mlmsoftwarecentral.com
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