MLM MarketingDefinition: Multilevel marketing (MLM) is a business structure in which products are marketed directly to consumers (which is known as direct selling) by sales representatives (or distributors) whose compensation is based on their own product sales as well as the sales of the distributors whom they recruited to the multilevel marketing company. These recruits are called their down line. MLM sales reps do not receive a salary. Compensation is based on commissions and/or bonusesven; no salary is given.

Multilevel marketing, also known as “network marketing,” is a legitimate way of selling goods or services through independent distributors. Generally, independent sales people do not receive a salary. Instead, they are compensated through commissions based on the sale of products, both for their own sales as well as on the sales of those they recruit and support. Legitimate  MLM's base compensation primarily on the amount of products sold - not on the mere act of recruiting. That is a key difference between Pyramid Schemes and  MLM's.


MLM's are also known as:

  • direct selling

  • network marketing,

  • affiliate marketing, or

  • home-based business franchising plans