Multi-level marketing, or MLM, is a form of business that can provide members with income outside of formal employment. MLM companies follow a strategy where they market products, services and other output through distributors that are not retained by the company as employees. MLM distributors are not paid hourly or as salaried workers, but in proportion to their effort in promoting and selling the company’s products and services. Generally speaking, this involves using a compensation plan as the basis. These members not only make money for products sold personally, but also for the sales that their recruits make.
A company will commonly choose this business model because it can promote company output to traditionally difficult or unreachable markets. Usually, the company will encourage members to market company output to consumers directly, by means of face-to-face networking, referrals, and marketing materials.