MLM Main Page

About Multi Level Marketing
Multi-level marketing (MLM), (also called network marketing or direct selling, and referral marketing) is a term that describes a marketing structure used by some companies as part of their overall marketing strategy. The structure is designed to create a marketing and sales force by compensating promoters of company products not only for sales they personally generate, but also for the sales of other promoters they introduce to the company, creating a downline of distributors and a hierarchy of multiple levels of compensation.
The products and company are usually marketed directly to consumers and potential business partners by means of relationship referrals and word of mouth marketing.
MLM companies have been a frequent subject of controversy as well as the target of lawsuits. Criticism has focused on their similarity to illegal pyramid schemes, price-fixing of products, high initial start-up costs, emphasis on recruitment of lower-tiered salespeople over actual sales, encouraging if not requiring salespeople to purchase and use the company's products, potential exploitation of personal relationships which are used as new sales and recruiting targets, complex and sometimes exaggerated compensation schemes, and cult-like techniques which some groups use to enhance their members' enthusiasm and devotion. Not all MLM companies operate the same way, and MLM groups have persistently denied that their techniques are anything but legitimate business practices

Largest direct selling companies

According to Direct Selling News, the largest direct selling companies, by revenue in 2008^[6], were -

Company Name Year Founded 2008 Revenues (USD)

Avon Products, Inc. 1886 10.9 billion

Amway Corporation 1959 8.2 billion

Vorwerk & 1883 3.15 billion

Herbalife Ltd 1980 2.4 billion

Mary Kay Inc 1963 2.4 billion

Primerica Financial Services Inc. 1977 2.3 billion

Tupperware Brands Corp. 1951 2.21 billion

Forever Living Products Intl. Inc. 1978 2.1 billion

Oriflame Cosmetics 1967 1.68 billion

Natura Cosmeticos SA 1969 1.52 billion

Nu Skin Enterprises Inc. 1984 1.23 billion

MLM Compensation Plans
Binary plan
The Binary plan is an organizational plan used by multi-level marketing (MLM) organizations wherein new organization members are introduced into a Binary Tree structure, or a left and a right subtree.
A typical MLM binary tree structure. The blue individual will receive compensation from the sales of the downline red members.

Normally, one subtree is referred to as a Power Leg while the second subtree is a Profit Leg.
The Power Leg structure has automatic placement of new members, even by members previously enrolled, or ancestors, to the current member. Since any new members must be placed below their enrolling member, they naturally must fall to an available leaf node of the Binary Tree. Order of placement may be any of Preorder, Inorder or Postorder as determined by either the organization or the enrolling member's nearest ancestor.
The Profit Leg of the Binary Tree normally contains those new members who are personally enrolled by the member.
Some members below any node on the tree are automatically placed by a member's ancestor, while other subordinate members are placed at a specific location in the tree by the member himself.
Compensation in a Binary plan is based upon a formula dependent upon a certain value of sales in the Power Leg matching up with a certain value of sales in the Profit Leg.
Often the stated appeal of a binary plan is that your downline or legs grow through the recruiting efforts of those in your upline, your ancestors, in addition to your own efforts and those of members in your downline. In truth this benefit is slight because the new members who are recruited by your ancestors are shared among all the available leaf nodes. For example, your immediate ancestor in the tree only puts half of his new recruits in your downline, on average. Likewise, his ancestor only puts one fourth of his recruits in your downline. Following this argument to the root of the tree, the total approaches just one person recruiting for your downline (1/2 + 1/4 + 1/8 + 1/16 + 1/32 + ... + 1/2n, where n is your tree depth). This is often insignificant in comparison to the number of people required in your downline to make yourself profitable.
Matrix plan