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| Page: Definition Downline |
This term has to do with Multi-Level Marketing (MLM) also called Network Marketing. To understand what a Downline is one has to have an understanding of the basic concept of MLM. Please see under the respective entry for more information.
The independent partners of MLM companies do not only sell products but also try to find and recruit other people who themselves sell products and recruit new people. The recruiting part is often called sponsoring.
When partner A recruits person B to become an independent partner of the company, he is then B’s sponsor. A does not only receive commissions for his own direct product sales but also for the sales of B and every other person he has sponsored. This also extends to further levels (therefore the designation Multi-Level Marketing), i.e. A also receives commissions for sales from B’s recruits, their recruits etc. A’s Downline then would include all persons who work as independent contractors for the same company and for who’s product sales he is entitled to receive commissions.
Graphic representation of a Downline from a MLM
recruitment site. The 2 persons in Level 1 were directly
sponsored by A. This is often also referred to as A’s
1stline. The
ones in Level 2 (A’s
2ndline) were sponsored by the partners in
Level 1 and so on. The picture includes only 3 levels
below A but this can reach further down in most
organisations. In this example a downline is organized in
units of 2, that is, each partner can only have 2
downliners in the direct level below. There are MLM
companies which organize Downlines that way, others allow
more or even an unlimited number of directly sponsored
partners.
All 14 partners in Levels 1, 2 and 3 belong to A’s Downline and
he receives commissions for all products these partners are
selling (usually he gets the highest percentage for sales of
his direct recruits in Level 1 and less the further down the
Levels).
Framed in black is B’s
Downline. The 2 persons in the green box are C’s
Downline.
The commission percentage for each level and how many levels down a downline extends depends on the companies compensation plan. There are almost as many different compensation plans as there are MLM companies.
The commissions from the Downline are what makes MLM attractive to many people. All successful Network Marketers are especially apt in recruiting a huge Downline and caring for them so they acquire the necessary skills and motivation to be successful themselves. Especially the latter is the key to a 5- or 6-figure monthly MLM-income. The biggest Downline is of no avail if these people do not or cannot sell the products or sponsor new partners.
According to studies of many MLM companies only 1 out of 10 independent partners can be considered as really productive.
[Down comes from Old English “of dūne” = off the hill;
Line comes from Old English line = rope and Latin linea = linen thread, string, line]
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