Most MLM companies use some kind of matrix-based compensation plan. Broadly speaking, this refers to a system where you sign up some people one tier below yourself (this is your "frontline"); and those people sign up more people on the next tier, and so forth. A rough diagram of the resulting structure might look something like this :

 
     
 
(Note: If you are viewing this file using a program in which you can select the typeface, pick something that is mono spaced - that is, where every character has the same width. Courier is one such common choice.)
 
     
 
 
     
 

If that comes out correctly on your screen, it should indicate that You signed up A, B, and C - that's your frontline. A signed up F (who in turn signed up J and K), B signed up G (who signed up L) and H (who signed up M, N, and O). C signed up I (who signed up P).

 
     
 

If you sign up good workers and give them the proper support, and train them so they can do the same, in theory, each level will ultimately end up with more people than on the previous level.

 
     
 

Do you have enough money to execute your MLM business plan? Estimate revenues versus expenses. How long will it be before your business is profitable? Doing your homework on the front end can reap dividends later.

 
     
 

Typically, you get a commission on the purchases made by everyone who ends up within some fixed number of levels from you. For example, you may get a commission of 7% of all the sales generated by everyone who ends up in your first 7 levels. There are many variations on this. Many systems pay different percentages on different levels, For example, a company may pay 5% commission on purchases made by people in your first and second level, but 10% on the sales from the third level.

 
     
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Most objections that people have about getting into Multi level Marketing are due to not realizing the difference between MLM, Pyramid Sales and the Direct Sales methods of marketing.
 
This is understandable because most reputable MLM companies belong to the Direct Selling Association.
 
 
 
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