What is Multi-level marketing?

From wikipedia: Multi-level marketing (MLM) or Network Marketing: A business-distribution model that allows a parent company to market its products directly to consumers by means of relationship referrals and direct selling

Independent salespersons of multi-level marketing, referred to as independent distributors, distributors or associates promote the parent company’s products and a commission is awarded for the sales they generate. Usually, incentives are also given based on the volume of sales.

Once a member, each independent distributor (ID) would have his own organization and has to concentrate only on his organization. His organization would comprise of all his downlines. The Independent distributor refers customers or other IDs under him (downlines), who in turn will do sales in a similar fashion. This process would continue and each Independent Distributor would get a commission for each sale made by anyone under his organization. So, the total commission would be the sum of direct sales made by an ID and also the leveraged sales done by the downlines.

Sunflower Model vs Binary Model of MLM

Pretty much all of the affiliate programs on the web follow the sunflower model. This means if you refer a 100 people to join a website, or make 100 sales, they would all be counted as direct sales and a decent % of each sale would be given to you. However, your commissions are in direct proportion to the direct referrals you bring in (only based on your direct referrals). Say that you referred a friend, who happens to be great at marketing. He too makes a 100 sales. This would, in no way affect you. You would have no advantage of his network.

Terms you should know:
Leverage: Strategic advantage; advantage gained by being in a good position
Upline: The person above you in the chain (probably he referred you into the network)
Downline: Persons below your position in the chain.

Now, coming to the Binary model that SQC follows. Refer the figure below. Say you were referred to the network by your friend (your upline).

Every person under you would generate revenue for you. It is immaterial if the persons under your position in the chain was brought by you into the network or someone above you brought him into the network.

The commission per sale would be lesser than that of Sunflower model, but in the longrun, binary model would result in a larger and continuous stream of revenue as someone below you would still continue sales even when you stopped working and you’d keep earning through leverage.

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